The finance ministry has decided to hold off on introducing a Performance Linked Incentive, or PLI, scheme for staff at government owned banks in the financial year 2025-26, a move that comes just days before unions were set to walk out on a nationwide strike.
Why the rollout was paused
Employee representatives had been arguing for weeks that the yardstick used to judge individual and bank wide performance needed a fresh look before any bonus scheme tied to it could be rolled out fairly. Once that demand reached the finance ministry, officials chose to pause the rollout rather than push it through while the assessment framework itself remained under dispute. The bigger question employees are now asking is whether the scheme, once it does return, will end up helping their take home pay or working against it.
What was discussed with the finance minister
According to the finance ministry, Finance Minister Nirmala Sitharaman held talks with a delegation of employees from various public sector banks, led by the Bharatiya Mazdoor Sangh (BMS). The delegation raised three separate concerns: the ex-gratia amount paid out to staff, medical facilities available to retired bank employees, and changes needed in the PLI structure currently applicable to PSB staff. The timing of the decision is notable too, arriving just ahead of a countrywide bank strike called over a set of demands that includes the PLI issue itself.
A scheme announced last November, now under review
The PLI scheme itself is not brand new. The government had announced it on November 19, 2024, after taking employee organisations' concerns into account at the time. What has changed now is the decision to pause its implementation specifically for 2025-26. The finance ministry has reiterated that it remains committed to resolving these issues through dialogue, discussion and mutual understanding, keeping in mind the wider interests of bank employees, customers and the banking sector as a whole. The scheme, officials said, will be reviewed before any decision is taken on reintroducing it.
Unions plan a nationwide strike on September 11
The United Forum of Bank Unions (UFBU), the joint platform of bank labour organisations, had already decided to go ahead with a nationwide strike on September 11. Among the unions' central demands are the introduction of a five day banking week, changes to the performance linked incentive scheme, and resolution of long pending pension related issues. Bank unions have specifically objected to the government's PLI scheme as it applies to Scale-4 officers and above, arguing that it does not match the terms agreed upon earlier with the Indian Banks' Association (IBA).
The Scale-4 dispute over bonus amounts
Under the original understanding with the IBA, the performance linked incentive was meant to be tied to a bank's overall performance and was supposed to be uniform for both employees and officers up to Scale-7. The government's scheme departs from that in a significant way. Officers at Scale-4 and above can receive a PLI amount equal to up to 365 days of basic pay, calculated on individual performance. Employees and officers up to Scale-3, on the other hand, are eligible for a maximum PLI equal to just 15 days of basic pay plus dearness allowance. Employee organisations have pointed directly to this gap between the two categories and are demanding a review that makes the rules consistent across ranks.
