The incentive plan meant for staff at government-owned banks has been shelved for now, after employee unions pushed for a rethink of its current design. The centre has decided to put off rolling out this scheme for the 2025-26 cycle.
What passed between the finance minister and the delegation
A statement from the Finance Ministry on Monday said Finance Minister Nirmala Sitharaman held a meeting with a delegation of public sector bank employees led by the Bharatiya Mazdoor Sangh (BMS). During the discussion, the delegation placed several concerns related to banks and staff before the minister.
The demands the delegation put forward
According to the statement, the employee representatives sought payment of ex-gratia amounts, medical facilities for retired staff, and revisions to the incentive framework currently applied to public sector bank employees, among other asks. Notably, this entire development has surfaced just ahead of a nationwide bank strike, and the incentive scheme itself is one of the issues on that strike's list of grievances.
Scheme dates back to November 2024, rollout now paused
The ministry clarified that, taking into account objections raised by employee organisations, it has decided not to implement this scheme, which was originally notified on November 19, 2024, for the 2025-26 financial year. The government also said this matter will be taken up separately during the ongoing bipartite settlement and joint note negotiations. It further assured that, keeping the interests of bank employees, customers and the wider banking system in mind, a resolution would be sought through dialogue and mutual understanding.
Why the September 11 strike was called
The United Forum of Bank Unions (UFBU), the joint platform of bank labour organisations, had announced last month that it would hold a nationwide strike on September 11. The unions' central demands behind this strike include implementing a five-day banking week, changes to the performance-linked incentive plan, and resolving long-pending pension-related issues.
Why officers' PLI has drawn objections
The unions' biggest objection is specifically to the PLI scheme set for officers at scale-4 and above. They argue this does not match the earlier understanding reached with the Indian Banks' Association (IBA). Under that understanding, the entire incentive structure was supposed to be linked to a bank's overall performance and remain uniform for all employees and officers up to scale-7.
How much can be paid out under PLI
Under the government's current scheme, officers at scale-4 and above can receive incentive pay equal to as much as 365 days' basic salary, based on their individual performance. In contrast, the ceiling for employees and officers up to scale-3 is set at just 15 days' basic salary plus dearness allowance. This gap remains a key reason behind the unions' continued dissatisfaction.
