The main reason for the strike is an internal circular issued by the Bank at the behest of the Finance Ministry to withdraw an updated pension scheme to pre-November, 1997 retirees, United Forum of Reserve Bank Officers and Employees spokespersons said. The circular implied a drastic reduction of pension to retired RBI employees in relation to that drawn by government retirees of comparable levels, it said. Besides, the union demanded increase in the interest rate on Provident Fund and grant of family pension at the rate of 30 per cent.
RBI had declared the protest as ilelgal and uncalled for. Such an action on the union's part amounted to cessation of work and concerted refusal to work it had said.
Meanwhile, trading in government bond and overnight markets was affected today by the protest. Trading in the currency market was also be affected. The RBI had informed market participants last week about the strike through the electronic trading system. The central bank said the strike was likely to disrupt the payment and settlement system. Banks and primary dealers struck two-day deals in the overnight market on Monday, Oct 20.The call money rate ended at 5.5-6 per cent Monday, Oct 20, while yield on the 13-year, 2021 bond ended at 7.7 pc, from 8 pc on Friday.
Inter-bank trading was absent, while deals were being entered by banks only if there was dollar demand or supply. Some action in the dollar/rupee is expected to pick up, if volatility in the stock market persists. But with most market participants away, trading could remain thin for most of the day.