Pay Fixation in Banks for Exservicemen

The re-employment of ex-servicemen in Public Sector Banks (PSBs), Reserve Bank of India (RBI), Public Financial Institutions (PFIs), and Insurance Companies is an important social and economic objective. However, inconsistent pay fixation practices across institutions led to complaints from re-employed veterans. To address this, the Department of Financial Services (DFS), under the Ministry of Finance, issued uniform guidelines on 17 February 2014 for pay fixation of ex-servicemen re-employed on or after 1 January 2006.

📜 Applicability of the Guidelines

These guidelines are applicable to:

All Public Sector Banks (PSBs)
Reserve Bank of India (RBI)
Public Sector Insurance Companies
Public Financial Institutions
GIPSA, IRDA, and PFRDA

They are to be implemented uniformly across institutions for all ex-servicemen, including Emergency Commissioned Officers (ECOs) and Short Service Commissioned Officers (SSCOs), re-employed on or after 01.01.2006.

🔍 Governing Documents

DoPT O.M. No. 3/19/2009-Estt(Pay-II) dated 5th April 2010
DoPT clarification O.M. dated 8th November 2010
Ministry of Defence letter No. 1/69/2008/D(Pay/Services) dated 24 July 2009
Ministry of Finance letter No. F4/1/98-SCT(B) dated 2 September 1998

🧾 Detailed Pay Fixation Guidelines

### 🔹 2.1 – Ex-Servicemen Joining in Workmen Cadre

Pay Protection: Ex-servicemen re-employed in the clerical or subordinate cadre (workmen cadre) are eligible for pay protection based on last drawn basic pay plus Dearness Allowance (DA) in the Armed Forces.

⚖️ Pre-Retirement Pay Defined:

For those retired after 1.1.2006:
- Pay in Pay Band + Grade Pay + Non-Practicing Allowance (if any)
For those retired before 1.1.2006 or did not opt for revised pay:
- Basic Pay + Rank Pay + Stagnation Increments + Dearness Pay + DA at retirement

🧮 Fixation Method:

Bank will fix the new basic pay by deducting bank DA from the total protected pay (military pay + DA).
The pay will be fixed at the stage closest to the resultant amount in the re-employed pay scale.

❌ MSP Exclusion:

Military Service Pay (MSP) is excluded from pay fixation but continues to be part of pension.

🧾 Additional Benefits:

Full pension and retirement benefits can be drawn without deduction from the re-fixed pay.
Maximum Pay Limit: The sum of re-employed pay and pension should not exceed the minimum scale of General Manager in the bank.

### 🔹 2.2 – ECOs/SSCOs Joining in Officer Cadre

Pay is fixed at the minimum of the pay scale for Junior Management Grade Scale-I (JMGS-I).

➕ Increments Based on Service:

One increment is allowed for each completed year of commissioned service, provided:
- Total emoluments (excluding HRA and CCA) do not exceed what was drawn in Armed Forces at time of release.
- Pay will be adjusted downwards if the calculated pay exceeds military emoluments.

🧾 Important Points:

ECOs/SSCOs are only entitled to pay fixation from date of commissioning, not including pre-commission training.
If appointed in higher pay scale than JMGS-I, pay should be fixed at a level ensuring benefit equivalent to JMGS-I with year-based increments.

### 🔹 2.3 – Ex-Service Officers Joining in Workmen Cadre

There is no bar to Ex-Service Officers joining the workmen cadre. Their pay fixation follows these rules:

🧾 Case 1: Pension Not Ignored

Initial pay is fixed at the same or next lower stage of last drawn pay.
If last pay > max of re-employed scale → Fix at maximum of new scale.
If minimum of re-employed scale > last pay → Fix at minimum.

✳️ In all such cases, the non-ignorable part of pension is deducted from re-fixed pay.

🧾 Case 2: Pension Ignored (Fully)

Fix pay at appropriate stage based on protected military pay + DA (as in 2.1).

### 🔹 Additional Provisions

🎓 Graduation Increments

Two increments allowed if the ex-serviceman is a graduate.
Graduation must be through civil examination.
If graduation pay benefit was already included in military pay, it must be withdrawn first, and then fresh increments granted.

📅 Pre-Commission Training

The time spent in pre-commissioned training will not count for pay fixation or increments.

📑 Summary Table of Fixation Criteria

Category	Fixation Rule	Increments	Pension Treatment
Ex-Servicemen in Workmen Cadre	Pay + DA protected	Graduation + Rank-based	Entire pension ignored
ECOs/SSCOs in Officer Cadre	Minimum of JMGS-I + year-based increments	One per completed year	Draw full pension separately
Ex-Officers in Workmen Cadre	Same or nearest pay stage	Graduation increments	Pension partially ignored (or not)

📌 Conclusion

The Government has provided a clear and uniform framework for pay fixation of re-employed ex-servicemen in PSBs and other financial institutions. Institutions must ensure:

Equal treatment across banks
Proper pay protection and increment benefits
No arbitrary denial based on internal HR interpretations

Ex-servicemen should ensure they submit:

PPO (Pension Payment Order)
LPC (Last Pay Certificate)
Service certificate
Option forms for pay fixation
Graduation certificates (if applicable)

These rules honour the military service and help in a smoother transition to civilian employment. Institutions are advised to strictly adhere to these guidelines to avoid disparity and ensure justice to veterans.

📂 References: