The new wage pact has also made subtle changes in the existing allowances of bank employees. They make interesting reading in the global context. While the US Federal Reserve and the Financial Services Authority of the UK are radically restructuring the compensation packages of bankers to discourage excessive risk-taking that many believe was one of the key reasons behind the global financial crisis, in India the unions and IBA continue to focus on a washing allowance and a cycle allowance for employees. The pattern and the structure of wages for employees of India’s public sector banks, which account for roughly 70% of the banking industry’s assets, have not changed since 1966 when the first such settlement was signed.

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Let’s take a close look at some of the wage components. Compensation of transfer: A married employee will be reimbursed the cost “actually incurred for transporting 3,000kg personal effects". An unmarried person will be reimbursed the cost of carrying up to 2,000kg of personal effects. This is about transportation by rail. If an employee is transferred to a place that is not connected by railways, the “actual expenses will be reimbursed for transporting the personal effects by an IBA-approved transport operator". (I was not aware that besides brokering the wage pact, IBA also keeps tabs on transport operators.)

Compensation for losses due to breakage to goods on transfer: The maximum amount an employee can get on production of “receipts or a statement of loss" due to breakages is Rs1,120. And if no receipt or statement is produced, the amount will be reduced to Rs745.

Washing allowance: Normally, the bank arranges for washing the livery of subordinate staff, but in the absence of this arrangement, Rs100 will be paid as washing allowance every month. This takes effect from May.

Cycle allowance: This allowance, Rs75 per month, and “payable to the members of the subordinate staff who are required to use a cycle on regular assignment for outdoor duties", takes effect, retrospectively, from November 2007.

Reimbursements of expenses on road travel: If an employee needs to travel for office work, the reimbursement will be “actual road mileage cost or Rs3 per km, whichever is less". (Can anyone tell me which mode of transport would cost Rs3 per km?)

Reimbursement of hospitalization expenses: The new settlement has capped the charges for bed per day at Rs450. If one needs to be kept in an intensive care unit, or ICU, then an additional Rs550 will be granted. If a doctor is called to visit the patient in the hospital, “during day time" one can spend Rs140 on such visits in Mumbai, Delhi, Kolkata, Chennai, Bangalore, Hyderabad and Ahmedabad. In other places, the cost of such visits cannot exceed Rs95. However, the visiting doctor’s fees can go up to Rs330 at night in big cities and Rs165 in other places. The employees can engage a nurse or attendant in hospital, but the agreement says that they won’t get any reimbursement for this.

From the IBA document, I have also learnt how many types of subordinate staff work in the Indian banking industry. Apart from liftmen, watchmen, armed guards, drivers, electricians and peons, there is also a “cash peon" who “stitches currency note bundles" and “seals parcels and packets of currency notes" and a “daftary" who assists in issuing stationery (whatever that means) and undertakes “the whole process of sorting, arranging, numbering and stitching the vouchers". There are also head messengers who carry messages from one branch to another and air conditioning plant helpers who “under the supervision of the technician, attend (to) the routine maintenance" of air conditioning plants.

IBA should be congratulated for concluding the wage negotiations, but I am sure more kudos would come its way if it is able to dismantle the process. Apart from public sector banks, most old private and foreign banks in India are also covered by this wage pact. However, old private and foreign banks have only the salaries of their clerical workers covered by this pact, unlike state-run banks whose officers, too, are part of the wage agreement. It should be dismantled because the industry does not need a standardized wage structure when productivity of employees and profitability of banks are very different from each each other. Since the benchmark for such a pact is the paying capacity of the weakest of the banks, it is always unfair to the employees of smart and profitable banks. Even if the management of such banks want to pay more to their staff, they can’t do so as they are bound by the industry pact. Any bank can walk out of the pact, but no bank has done it yet as the chief executives feel that they do not have the negotiating skills. It’s strange as they have handled more critical aspects of banking, including technology, which is far more complex than taking on trade union leaders, normally retired bank employees who want the industry pact to continue as, otherwise, they would lose their hold on the industry.

Tamal Bandyopadhyay keeps a close eye on all things banking from his perch as Mint’s deputy managing editor in Mumbai. Comment at