The All India Bank Employees’ Association (AIBEA) has strongly opposed the recent changes made by the Department of Financial Services (DFS) under the Finance Ministry regarding the Performance-Linked Incentive (PLI) scheme for senior bank officers. The union claims that the new formula is unfair, violates previous agreements, and creates division among employees.
What is the Performance-Linked Incentive (PLI)?
The PLI scheme is a system that provides extra financial benefits to bank employees based on performance. It was originally introduced in 2018 when the Indian Banks’ Association (IBA) proposed a model where incentives would be given based on individual performance. However, bank unions, under the United Forum of Bank Unions (UFBU), strongly opposed this, arguing that PLI should be based on the collective performance of an entire bank rather than on individual employees.
After discussions, the 11th Bipartite Settlement (BPS) and 8th Joint Note, signed in November 2020, confirmed that PLI would be based on the overall performance of each bank. This agreement was further revised in June 2024, but the basic structure remained the same – incentives were to be paid based on collective performance.
What has changed now?
In November 2024, the Government of India (DFS, Finance Ministry) changed the system without consulting bank unions. The new rule states that PLI for Scale IV officers and above (senior management) will now be based on individual performance instead of the collective performance of the bank.
This change only affects officers in Scale IV and above, while junior officers and clerical staff will continue to receive incentives based on the bank’s overall performance.
What was the previous system?
Under the bilateral agreement between IBA and UFBU, the PLI system was uniform for all employees, based on how well the bank performed.
For example:
- If a clerk’s basic salary is ₹1,00,000 per month, the maximum PLI could be ₹60,000 per year.
- If a Scale IV officer’s basic salary is ₹1,40,000 per month, the maximum PLI could be ₹85,000 per year.
- If a Scale VII officer’s basic salary is ₹1,88,000 per month, the maximum PLI could be ₹1,12,000 per year.
What is the new system?
Under the new government-imposed rule, PLI for Scale IV officers and above will be calculated differently, leading to huge differences in payments. Scale 1, Scale 2 and Scale 3 Officers will get normal PLI but Scale IV and above officers will get almost double salary.
- Scale IV officers can get 70% of their annual basic pay (approximately ₹11.75 lakh per year).
- Scale V and VI officers can get 80% of their annual basic pay (approximately ₹14.40 lakh per year).
- Scale VII officers can get 90% of their annual basic pay (approximately ₹22.50 lakh per year).
This new system will not apply to clerical staff and junior officers, who will continue under the older, collective-based PLI scheme.
Why are bank unions opposing this change?
The AIBEA and other bank unions have raised strong objections to the government’s move. They argue that:
- It is a unilateral decision: The PLI scheme was originally decided bilaterally between IBA and UFBU. The government did not consult bank unions before making this change.
- It creates division: Under the new rule, some senior officers will receive huge incentives, while lower-level employees will get much less.
- It is discriminatory: While a few officers will get a very high PLI, many deserving employees will not receive anything.
- It is unfair to banks as a whole: If a bank performs poorly due to external reasons (such as fraud or government policies), the entire workforce suffers, even if some employees worked hard.
- It violates previous agreements: The UFBU had already agreed on a collective PLI system in previous wage agreements, and this sudden change goes against that.
What happens next?
The AIBEA and other bank unions have decided to protest against this decision. They demand that the government withdraw this individual-based PLI system and return to the original collective performance model.
Bank employees and officers are now waiting for further discussions between bank unions, the Indian Banks’ Association, and the government. If the government refuses to reconsider, there may be nationwide protests and possible strikes by bank employees in the coming months.
Conclusion
The new PLI system introduced by the government has created strong opposition from bank unions. While the government argues that individual incentives will boost performance, bank unions fear that this will lead to discrimination, inequality, and unnecessary competition among employees. The coming weeks will be crucial in deciding whether this issue will escalate into a major confrontation between bank employees and the government.
