Bank employees in India have agreed to a 17% annual wage hike, which will benefit 8 lakh workers and cost public sector banks around Rs 8,284 crore more per year. The agreement also recognises all Saturdays as holidays, subject to government approval.
Wage Hike Details
Bank employees in India have something to cheer about as they have agreed to a 17% annual wage hike with the Indian Banks’ Association (IBA), which represents the management of public sector banks. The wage hike will be effective from November 2022 and will benefit around 8 lakh bank workers across the country. The agreement will result in an additional yearly outgo of around Rs 8,284 crore for public sector banks.
The new pay scales have been formulated by merging Dearness Allowance corresponding to 8088 points and additional load. The basic pay of the bank employees will increase by Rs 2,370 to Rs 85,270 per month, depending on the scale and seniority. The special allowance will also increase by 1.5% to 16.4%, depending on the scale of pay.
The agreement also provides for a performance-linked incentive scheme for public sector bank employees based on operating or net profit and return on assets. The incentive will be paid annually after the finalisation of the balance sheet. The quantum of incentive will vary from 5% to 15% of the pay depending on the performance of the bank and the employee.
Saturday Holidays Pending Approval
The agreement also recognises all Saturdays as holidays, pending government notification. The revised working hours will come into effect only after the government approves the proposal. Currently, bank employees work on the first and third Saturdays of every month.
The IBA and the bank employee unions have been demanding a five-day work week for a long time, citing the need for work-life balance and stress management. They have also argued that a five-day work week will not affect the banking services as most of the transactions are done online or through ATMs.
The government, however, has not yet given its nod to the proposal, citing concerns over customer convenience and business continuity. The government has also asked the IBA to ensure that adequate arrangements are made for smooth functioning of banking operations on Saturdays, especially for government-related transactions.
Other Benefits and Provisions
The IBA and the bank employee unions signed a joint note on March 9, 2024, after months of negotiations and several rounds of strikes by the workers. The joint note covers various aspects of the wage revision, such as pay scales, allowances, leave rules, medical benefits, pension and gratuity.
Some of the other highlights of the agreement are:
- All women employees would be allowed to take one day sick leave per month without giving a medical certificate.
- Accumulated privilege leave may be encashed up to 255 days at the time of retirement or upon death of an employee while in service.
- A monthly ex-gratia amount will be paid in addition to the pension or family pension provided by public sector banks for those eligible to draw pension on or before October 31, 2022.
- Retired employees will also get an annual medical aid of Rs 12,000 per annum.
- The hospitalisation expenses reimbursement limit will be increased from Rs 3 lakh to Rs 5 lakh for self and dependent family members.
- The funeral expenses reimbursement limit will be increased from Rs 10,000 to Rs 15,000.
Significance and Impact
The IBA Chief Executive Officer Sunil Mehta said that the agreement marks a milestone for the banking industry and reflects the commitment of both the parties to work together for the growth and development of the sector. He also thanked the Finance Minister Nirmala Sitharaman for her support and guidance during the negotiations.
The bank employee unions also expressed their satisfaction with the outcome of the talks and thanked their members for their solidarity and patience. They said that the agreement is a result of their collective struggle and sacrifice and will improve the living standards and working conditions of the bank employees.
The agreement is expected to boost the morale and motivation of the bank employees, who have been working tirelessly during the Covid-19 pandemic and providing essential banking services to the customers. It is also hoped that the agreement will enhance the productivity and profitability of the public sector banks, which are facing challenges such as bad loans, capital adequacy and competition from private players.
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