The government has asked the Indian Banks’ Association (IBA) to start the negotiation process for the 12th bilateral agreement in a time-bound manner and finalize it by December 1, 2023, a senior official said. The pay revision for employees and officers of public sector banks is due from November 1, 2022. The official said that early wage revision would help in improving the working conditions and encourage the banking sector employees.
Besides, the official said, the finance ministry has asked the IBA to ensure that all future wage negotiations should be finalized before the start of the next term so that the wage revision is implemented from the due date itself. As a part of the settlement, the IBA is expected to negotiate with the unions/associations of the employees and work to arrive at a mutually agreeable wage settlement.
The government has emphasized the importance of fairness and equity in the revision, to ensure that the compensation structure remains competitive with other players in the banking industry, the official said.
“Wage settlement for banks has always been a difficult and time-consuming process, with bank managements and employee unions represented by IBA engaged in strenuous negotiations. Historically, wage settlement has been delayed for 2-3 years. There is a substantial accumulation of The balance amount, which is eventually distributed in lump sum.
“This is in contrast to the more sustainable approach of integrating the revised pay into the regular monthly pay,” the official said.
Highlighting that the banking sector is the backbone of the Indian economy, the official said that it is up to the management of banks to ensure that employees are adequately compensated and this is also essential for the health and stability of the entire economy.
This comes at a time when the financial health of public sector banks is healthy and their net profit has almost tripled to Rs 1.04 lakh crore in FY23 as compared to Rs 36,270 crore earned in FY2014.
At the same time, the return on assets (RoA) in PSBs increased from 0.51 per cent in FY14 to 0.78 per cent, while the net interest margin (NIM) also increased from 2.73 per cent to 3.23 per cent in FY23. ,
Wage negotiation generally benefits employees of public sector banks, old generation private banks and some foreign banks. The previous agreement was signed by 12 public sector banks, 10 old generation private sector banks and seven foreign banks.
New generation private banks like HDFC Bank and ICICI Bank are not part of these negotiations. The last 11th Bipartite Wage Negotiations concluded in 2020 after three years of negotiations, in which a 15 per cent wage revision for PSB employees was agreed upon. Around 3.79 lakh officers and around 5 lakh bank employees of PSBs, old generation private banks and foreign were covered under the wage hike with effect from November 1, 2017.