Govt puts public sector bank executive performance pay on hold amid strike call

New Delhi: The government has decided to keep in abeyance the payment of performance-linked incentives to executives of public sector banks (PSBs) for fiscal year 2026 (FY26), in a move that comes just days before a nationwide bank strike called by the United Forum of Bank Unions (Ufbu).

In a letter dated 7 September addressed to the chairman of State Bank of India and the managing directors and chief executive officers of all nationalised banks, the department of financial services (DFS) said the payment of performance-linked incentives (PLI) to executives of PSBs in Scale IV to VIII for fiscal year 2026-26 (FY25-26) will remain in abeyance until further orders. The matter will be taken up during the ongoing 13th Bipartite Settlement/10th Joint Note discussions to determine future wage revisions and service conditions, among others, for public sector bank employees and officers.

The letter refers to the PLI scheme for whole time directors and senior executives of PSBs issued by the department through its 19 November 2024 communication. Bank unions have strongly opposed the PLI framework, calling it discriminatory and favouring senior executives (Scale IV and above).

“On the representation received on the PLI structure, it was decided to keep in abeyance the implementation of the PLI Scheme dated 19.11.2024 for FY 2025–26 and take up the same during the ongoing Bipartite Settlement/Joint Note discussions,” the finance ministry said in a statement.

The decision followed a meeting between Union finance minister Nirmala Sitharaman and a delegation of bank employees representing different public sector banks and led by the Bharatiya Mazdoor Sangh (BMS). The employees raised several issues concerning the banking sector, including review of ex-gratia, medical facilities for retired employees and the existing structure of the PLI scheme, according to the ministry statement.

Mint reached out to the BMS president, but received no response.

The latest decision is significant as the PLI structure has emerged as one of the key points of contention between bank unions and the government. The Ufbu has called a nationwide strike on 11 September over the PLI scheme, implementation of a five-day banking week and other pending employee-related issues. The unions have also announced a three-day nationwide strike during 28-30 September and threatened an indefinite strike from 26 October if their demands remain unresolved.

"The government has reportedly kept the proposed PLI for executive grades in abeyance... However, our key demand of five-day work week remains unresolved. The agreement was signed long ago and must now be implemented. The conciliation meeting tomorrow in the office of CLC (chief labour commissioner) is slated tomorrow and Ufbu will take appropriate call based on developments," said Rupam Roy, general secretary of All India Bank Officers’ Confederation (Aiboc).

The unions have opposed the revised PLI framework for senior officers and have sought its withdrawal and modification through bilateral discussions. According to the unions, the government’s framework provides for a substantially higher potential incentive for officers in Scale IV and above based on individual performance, while employees and officers up to Scale III have a much lower maximum incentive. The unions have termed the structure discriminatory and have demanded that it be reworked through discussions with employee representatives.

The PLI dispute has been running alongside the unions’ long-standing demand for implementation of a five-day week. The Ufbu has said that the Indian Banks’ Association had agreed to the five-day arrangement as part of the 12th Bipartite Settlement/9th Joint Note signed in March 2024, with an additional 40 minutes of work from Monday to Friday to compensate for the additional weekly holiday. The proposal has, however, been awaiting government approval.

The unions’ current demands also include pension-related and other residual service issues. The September strike programme represents an escalation after recent talks between the Ufbu and the Indian Banks’ Association failed to resolve the key demands.

The finance ministry said the concerns raised by bank employees had been taken cognizance of and that the government remained committed to resolving issues through dialogue, consultation and mutual understanding in the larger interest of bank employees, customers and the banking sector.

The government has not announced a fresh timeline for PLI payments for FY25-26. The issue will now form part of the ongoing discussions between the stakeholders.