Union Bank unilaterally deducts Insurance premium from employees

D.Ravikumar

Union Bank management has released a circular on 31/03/2022 announcing the modalities for covering all staff loans Viz. Housing, Vehicle and Staff Overdraft under Group Insurance Cover for a period of one year 01.04.2022 to 31.03.2023.  The circular also stipulates premium rates for various types of loans.

Type of Loan	Rates
Staff Housing Loan	Rs.3.8598 + GST per thousand
Staff Vehicle Loan	Rs.3.72 + GST per thousand
Staff Overdraft	Rs.3.79 + GST per thousand

With the release of Staff Circular on 31^st March 2022, it stipulates that the premium payable by the employees will be debited on 01.04.22 through backend process automatically without the consent of the employees. There was not even a timely notice to the employees in this regard.

The said staff circular states that the objective of the Group Insurance Scheme is to safeguard the bereaved families in case of any untimely demise of an employee. That is to say that in case of untimely demise of the employee, the loan outstanding of that staff member will be waived fully.

However, the unilateral unauthorized enforcement of deduction of a sizeable amount as insurance premium on the salary day has left the employees of Union Bank in total distress.  The monthly e- bills which usually get debited on the first week of the month were struck forcing the employees to fall in debt trap.

An employee with a housing loan of Rs.40.00 lakhs has to pay a premium of around 15400 + GST for the current year and has to continue to pay premium till the housing loan is closed.

Apart from the immediate hardships faced by the employees a few basic questions remain unanswered.

• If the Union Bank Management is so seriously concerned about the families of the bereaved employees and not to burden them with the loans taken by the staff members after their demise, it can very well waive the same by utilizing the staff welfare fund or by debiting the profit and loss account.
• How can an insurance cover be mandatory one without the consent of the employees?
• How can the management make a claim upon the property of an individual and will it not amount to violation of the constitutional right of the citizen?
• When single premium policy which covers the entire loan amount till the life is available in the market why yearly policies are preferred?
• When there is no direction from Reserve Bank of India / Ministry of Finance or any other authority to deduct Group Insurance Premium what is the need and urgency for Union Bank Management for evolving such a unilateral policy?
• There is no communication from the Management as to what will happen to Compassionate Scheme appointments of bereaved families when all the liabilities of the employee are to be settled through insurance coverage.
• As the cost of yearly premium are upwardly revised every year as seen in the past in several insurance schemes, the yearly premium burden will not come down commensurate to the yearly repayment made by the employees. 
• Even though it is stated that it is harmonization of facility available in three banks viz. Andhra Bank, Corporation Bank and Union Bank which were merged, the facilities already available in these banks before merger viz. waiver of Housing Loan outstanding up to 50% or Rs.2, 00,000 whichever is less, in the event of death while in service which was available in Union Bank or single premium of Rs.9000 for loan outstanding up to 1.00 crore available in Andhra Bank were not extended to any employee.

Several representations by Unions in the bank against this unilateral unauthorised deduction and to refund the amount recovered in toto remains unanswered by the bank, forcing the organizations to think of other alternatives available for redressing the issue.