Indian banks association (IBA) and bank employees union agreed upon a 15 percent wage hike for PSU bank employees in 2017, which resulted in additional yearly outgo of approximately INR 7,900 crore by lenders.
A meeting has held between IBA representing the management of bank and Union Forum of Bank Unions (UFBU) representative officers and Workmen Unions Association. In this meeting, the decision has taken on to grant a 15% hike in wages. According to the decision taken by IBA and bank unions, the wage revision would be in effect from November 2017 till October 2022, which will benefit around one million bank employees.
The Chief executive officer of IBA termed the agreement as “historic” and bifurcated that a 15% hike will include a 2.5% rise in the basic pay and dearness allowance components worth Rs 1,155 crore. He also told that banks and unions had granted in-principle approval to remove the cap on the family pension of INR 9,000, and bank employees are entitled to a pension of 30% of their basic pay.
All India Bank Employees Association General Secretary CH Venkatachalam said, “We are happy that despite the ongoing Covid-19 pandemic, a MoU could be signed for wage settlement. But the 15 per cent wage hike does not include pension and superannuation benefits. We will continue to discuss the final terms of the agreement in the coming days.”
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This wage hike has become a burden for banks as an increase in wage bill stood at INR 7,900 crore (approx.) on payslips as compared to previous settlement hike of INR 4,725 crore.
The new agreement will cover officers up to scale-VII grade, which include general managers, deputy general managers, assistant general managers, and divisional managers. And it was decided that banks with a profit of less than 5% will not get any additional pay and those with a 5-10% increase in profit will have to provide with the additional pay of 5 days and the banks with 10-15% profit will be given additional pay of 10 days. And those banks who will earn a profit of more than 15% will be getting additional pay of 15 days.
“The balance sheet of banks will not be affected as one goes as most of the banks have been incorporating some of the impacts of the wage negotiation on their books”, a PSB chief executive said.