Indian public sector bank employees get 15% wage hike and performance-linked incentives after three years of waiting

Bank employees terms for wage revision that has been pending since 2017 has been agreed to at 15%BCCL
  • Bank employees wage revision that has been pending since 2017 is teetering at the edge of resolution.
  • The notification by the Indian Banks’ Association has pitched a 15% wage bump, which would mean an increase of only ₹1,100 per month for a bank employee.
  • With the wage hike cutting into dearness allowance, incentives now will also be linked to the net profits of a bank for all public sector banks.
The wage revision for bank employees that has been pending since three years ago has now been finalised. Many are not happy with the 15% pay bump that will only add ₹1,100 to their salary per month.


The final terms of the MoU also state that public sector banks will now introduce Performance Linked Incentives (PLIs) for their employees. This will be based on the operating or net profit of the bank.

“In order to inculcate a sense of competition and also to reward the performance, the concept of PLI is felt to be introduced,” said the notification by the Indian Banks’ Association (IBA). It will be payable to all employees annual over and above the normal salary payable.
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While the wage hike looks like 15% on paper, it will will compensated by merging with what bankers were already earning as their dearness allowance, since it comes as with a 2.5% load in basic pay. The union's original demand was for at least a 20% jump. The bankers union hopes to have a bipartite settlement within a period of 90 days.

Full list of terms of the wage revision MoU:

  1. The annual wage increase in salary and allowance agreed at 15% of the wage bill effective from 1 November 2017.
  2. Most of the new salary will compensated for by merging what bankers were already earnings as dearness allowance.
  3. The new pay scales will be constructed after merging dearness allowance and adding thereon a loading of 2.5% basic pay plus dearness allowance as on 31 March 2017.
  4. The distribution of increase between workmen and officers will be worked separately and proportionately based on the breakup of establishment expenses as on 31 March 2017.
  5. PLI will be introduced in all public sector banks, which will be based on the operating or net profit of the bank, which is optional for private and foreign banks.
  6. Encashment of privileged leaves (PLs) will be permitted at 5 days every calendar year aside from encashments of PLS at the time of retirement or during LFC.
  7. Banks contribution to NPS will be increased from 10% to 14%.