State-run banks are hopeful of a more lucrative performance-linked incentive (PLI) for their employees as a new coalition government takes charge. They are also likely to push for a five-day banking week.
Both bank unions and employee associations have been demanding a review of the existing PLI scheme and approval for a five-day banking week. “We are hopeful that our demands will be heard by the government and force the Indian Banks’ Association (IBA) to revise the existing structure,” said a union member, requesting anonymity.
The PLI was first introduced in 2020 under the 11th Bipartite Agreement between the IBA, officers associations of banks and employee unions. Accordingly, bankers were eligible for a maximum of 15-days salary as PLI if year-on-year growth exceeded 15%. “Some of the parameters governing the PLI, like the final settlement, should not be only based on operating profit but take into account performance on other financial parameters,” said another bank executive.
Last year, the IBA had unions agree to the 12th bipartite wage hike settlement, under which bankers were to get a 17% increase in salary. This settlement will be in effect for the next five years, starting November 1, 2022, and translate into an outgo of ₹12,589 crore for 12 public sector banks (PSBs), including State Bank of India.
“While banks have made provisions for PLI outgo as per the existing matrix, it was decided that more discussions will be held for a revised PLI structure, and accordingly, payments will be made,” said an official aware of the matter, adding that PLI will also need a government nod.
In the recently-concluded wage settlement between unions and the IBA, there was an agreement on a five-day banking week subject to government approval. PSBs’ cumulative profit crossed ₹1.4 lakh crore in the financial year ended March 2024, recording a growth of 35%. The 12 PSBs together earned a net profit of ₹1,04,649 crore in 2022-23.
Last month, finance minister Nirmala Sitharaman said the government will continue to take decisive measures to strengthen and stabilise the banking system, “ensuring banks’ support India’s growth path to Viksit Bharat by 2047”.
In a post on X, Sitharaman said India’s banking sector turned around due to Prime Minister Narendra Modi’s strong and decisive leadership, and recently achieved a significant milestone by recording its highest-ever net profit of over ₹3 lakh crore.
