Finance Ministry asks IBA to finalise wage revision of bankers of PSU banks by December 1
A senior official has announced that the government has instructed the Indian Banks’ Association (IBA) to commence negotiations promptly for the 12th Bi-partite settlement and finalize it by December 1, 2023. The revision of wages for employees and officers in public sector banks is scheduled for November 1, 2022. According to the official, conducting the wage revision earlier will enhance working conditions and provide incentives for banking sector employees.
Additionally, the finance ministry has directed the IBA to ensure that all future wage negotiations are concluded prior to the commencement of the subsequent period. This will allow for the implementation of wage revisions from the due date itself. As part of the settlement, the IBA is expected to engage in constructive dialogues with employees’ unions and associations to reach a mutually agreeable wage agreement. The government emphasizes the importance of fairness and equity in the revision process, aiming to maintain a competitive compensation structure compared to other players in the banking industry.
The official remarked that wage settlements in the banking sector have historically been arduous and time-consuming, involving challenging negotiations between bank managements, represented by the IBA, and employees’ unions. Delays of 2-3 years in wage settlements have resulted in significant arrears, which are eventually disbursed in a lump sum. The official advocates for a more sustainable approach of integrating revised wages into regular monthly salaries.
Highlighting the banking sector’s role as the backbone of the Indian economy, the official emphasizes that it is the responsibility of bank management to ensure employees are fairly compensated. This is crucial for the overall health and stability of the entire economy. The timing of these negotiations coincides with the financial well-being of Public Sector Banks, which saw their net profits nearly triple to Rs 1.04 lakh crore in FY’23 compared to Rs 36,270 crore earned in FY’14. Furthermore, Return on Assets (ROA) in PSBs increased from 0.51 percent in FY’14 to 0.78 percent, while Net Interest Margin (NIM) rose from 2.73 percent to 3.23 percent in FY’23.
Wage settlement talks typically benefit employees of public sector banks, old-generation private banks, and certain foreign banks. In the previous agreement, 12 state-owned banks, 10 old-generation private sector banks, and seven foreign banks participated, while new-generation private banks like HDFC Bank and ICICI Bank were not involved. The 11th Bipartite Wage Negotiations concluded in 2020 after three years of negotiations, resulting in a 15 percent pay revision for employees of PSBs. This wage hike covered approximately 3.79 lakh officers and nearly 5 lakh bank employees from PSBs, old-generation private banks, and foreign banks, with the due date set for November 1, 2017.
