PSU banks count on new coalition government for more lucrative PLI for employees

Banks hope that the new government will lead to better pay and a five-day banking week.

PSU banks are hopeful of a more lucrative performance-linked incentive (PLI) for employees as a new coalition government takes charge, the Economic Times reported.

Representational (Mint)

They are also likely to push for a five-day banking week.

Both bank unions and employee associations have been demanding a review of the existing PLI scheme and approval for a five-day banking week. “We are hopeful that our demands will be heard by the government and force the Indian Banks' Association (IBA) to revise the existing structure,” a union member told the Economic Times, requesting anonymity.

The PLI was first introduced in 2020 under the 11th Bipartite Agreement between the IBA, officers associations of banks and employee unions.

Accordingly, bankers were eligible for a maximum of 15-days salary if year-on-year profit growth of the bank exceeded 15%.

PSBs' cumulative profit crossed Rs.1.4 lakh crore in the financial year ended March 2024, recording a growth of 35%. The 12 PSBs together earned a net profit of Rs.1,04,649 crore in the financial year 2022-23, according to the article.

“Some of the parameters governing the PLI, like the final settlement, should not be only based on operating profit, but take into account performance on other financial parameters,” another bank executive told the Economic Times.

Last year, the IBA had unions agree to the 12th bipartite wage hike settlement, under which bankers were to get a 17% increase in salary.

This settlement will translate into an outgo of Rs.12,589 crore for 12 public sector banks (PSBs), including State Bank of India.

"While banks have made provisions for PLI outgo as per the existing matrix, it was decided that more discussions will be held for a revised PLI structure, and accordingly, payments will be made," said another official aware of the matter, adding that PLI will also need a government nod.

In the recently-concluded wage settlement between unions and the IBA, there was also an agreement on a five-day banking week, subject to government approval, according to the article.