Capping nearly three years of intense negotiations, bank employees’ unions and the Indian Banks’ Association (IBA) have agreed for an annual wage hike of 15 per cent, a move that will result in an additional yearly outgo of around Rs 7,900 crore for the lenders. As many as 8.5 lakh bank employees are set to benefit from the wage hike, which will be effective from November 2017.
Under the agreement reached on Wednesday, Performance Linked Incentive (PLI) will also be introduced for public sector bank staff and it will be based on operating or net profit of individual banks concerned. Basic pay has been merged with dearness allowance, the IBA said in a statement. Close to 37 banks, including public, private and foreign banks, have mandated the IBA to negotiate with unions on wage hikes for their employees.
The annual wage increase in salary and allowances has been agreed at 15 per cent of the wage bill as on March 31, 2017, which works out to be Rs 7,898 crore on payslip components, as per the agreement signed between the IBA and bank unions. The agreement on the 15 per cent annual wage hike was reached at a meeting between the IBA and members of the United Forum of Bank Unions (UFBU) representing workmen unions and officers association.
PLI will be applicable for public sector banks from the current fiscal, while it will be optional for private and foreign banks. There will also be an increase the banks’ contribution to the NPS (New Pension Scheme) fund to 14 per cent — 14 per cent of pay and dearness allowance — instead of the present 10 per cent from the prospective date of signing the settlement subject to approval of the government, according to the agreement.