The government has put on hold the payment of performance-linked incentives (PLI) to executives of public-sector banks (PSBs) for FY2025-26, days before bank unions are scheduled to stage a nationwide strike over several pending demands, including issues related to the incentive framework.
In a letter dated 7 September addressed to the chairman of State Bank of India and the managing directors and chief executive officers of all nationalised banks, the Department of Financial Services (DFS) said implementation of the PLI scheme for executives in Scale IV to Scale VIII would remain in abeyance until further orders.
The Finance Ministry said the matter would now be considered as part of the ongoing 13th Bipartite Settlement and 10th Joint Note discussions. These negotiations cover wage revisions and service conditions for public-sector bank employees and officers.
Under the existing government framework, officers in Scale IV and above can be eligible for PLI of up to 365 days of basic pay, depending on their individual performance. For workmen and officers up to Scale III, the maximum incentive is equivalent to 15 days of basic pay along with dearness allowance.
The PLI structure has been a point of contention between bank unions and the government. Unions have opposed the framework applicable to senior officers, arguing that it does not align with the understanding reached with the Indian Banks’ Association (IBA).
Reportedly, the agreed approach was for PLI to be linked to the overall performance of individual banks rather than being determined primarily through an individual performance-based structure. They have also maintained that the incentive framework should apply uniformly to employees and officers up to Scale VII.
The government’s decision to defer the FY2025-26 PLI payment comes at a significant time for the banking sector, with the United Forum of Bank Unions (UFBU) preparing for a nationwide strike on 11 September. The unions have several demands pending with the government and the banking industry, including the implementation of a five-day banking week, changes to the PLI framework and pension-related issues.
The unions have also announced another three-day nationwide strike from 28 to 30 September. They have warned of an indefinite strike from 26 October if the pending issues are not resolved.
The latest decision means that the PLI payment for senior PSB executives will not be processed under the existing FY2025-26 framework until the matter is reviewed through the ongoing settlement discussions. The outcome of those negotiations could therefore determine whether the current structure is retained, modified or replaced.
The development also brings the issue of performance-linked compensation into the broader discussions around pay and service conditions in public-sector banking. While the incentive scheme is intended to link a portion of compensation to performance, employee representatives have raised concerns over how the framework is structured and how it differs from the understanding reached during wage negotiations.
With the 13th Bipartite Settlement and 10th Joint Note discussions already underway, the PLI issue is now expected to form part of the wider negotiations between employee representatives, officers’ organisations and the banking industry. The government’s decision to keep the FY2025-26 payments in abeyance effectively leaves the incentive structure open for reconsideration as these discussions continue.
