Govt puts disputed PSB incentive scheme on hold after employee pushback

New Delhi: The government has put the implementation of a disputed performance-linked incentive (PLI) scheme for public sector bank employees on hold for 2025-26 after employee representatives sought a review of its structure.

The decision followed a meeting between Finance Minister Nirmala Sitharaman and a delegation representing employees of different public sector banks. The delegation, led by the Bharatiya Mazdoor Sangh (BMS), raised concerns over the PLI framework as well as medical facilities and ex-gratia benefits for retired bank employees, the Finance Ministry said on Monday.

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After considering the representation, the government decided to keep the implementation of the PLI scheme dated November 19, 2024, in abeyance for 2025-26. The disputed framework will now be taken up as part of the ongoing bipartite settlement and joint note discussions.

The decision amounts to a temporary suspension of the scheme and not its withdrawal. The ministry did not specify a timeline for completing the review or indicate what changes could be considered.

Wide disparity at heart of dispute

Bank unions have opposed the incentive framework primarily over the sharp difference between the potential payouts available to senior officers and those applicable to other employees.

Under the government’s framework, officers in Scale IV and above could receive an incentive equivalent to as much as 365 days of basic pay, depending on their individual performance.

In comparison, workmen employees and officers up to Scale III are eligible for a maximum incentive equivalent to 15 days of basic pay plus dearness allowance.

The unions maintain that this departs from the understanding reached with the Indian Banks’ Association (IBA), under which the incentive was to be linked to the overall performance of each bank and applied uniformly to employees and officers up to Scale VII.

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Decision comes ahead of strike

The suspension comes days before a nationwide bank strike called by the United Forum of Bank Unions (UFBU) for September 11. The strike call, which does not include BMS-affiliated unions, covers several unresolved demands, including the introduction of a five-day banking week, changes to the PLI framework and pension-related issues.

UFBU has also announced a three-day strike from September 28 to 30 and threatened an indefinite strike from October 26 if its demands remain unresolved. (Strike announcement and union demands)

The PLI dispute is reportedly under conciliation before the Chief Labour Commissioner and is also pending before the Delhi High Court. Unions had objected to public sector banks proceeding with payouts under the revised framework while the dispute remained under consideration. (Details of the PLI dispute)

The Finance Ministry said the government remained committed to resolving employee-related issues through consultation and dialogue. Its statement, however, did not clarify whether the latest decision would have any bearing on the September 11 strike.

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