A bankers view on proposed salary hike of 15%

A bankers view on proposed salary hike of 15%

A bankers view on proposed salary hike of 15%

A bankers view on proposed salary hike of 15%

Close to three years negotiation between the UFBU( United Forum of Bank Union), representing approximately 8.5 Lac Bank’s employee that includes officers and workmen both, and the IBA (Indian Banks Association) has finally come to an end. The two body on 22nd July 2020 signed a MOU settling the XI bipartite settlement of Bank’s employee wage revision.

Bank’s employees are set to receive a 15 percent hike in their salary according to the MOU signed.

Following is the notable points signed in the MOU:
  1. The effective date of wage revision will be 1.11.2017
  2. The annual wage increase in pay and allowances is agreed at 15% of the wage bill as on 31 March 2017.
  3.  Introduction of Performance linked incentive scheme based on operating profit/Net profit of individual bank.
  4. PL encashment of 5 days per year for any one festival for employee below 55 years of age. Same will be 7 days for employee above 55 years of age.
  5. Employer’s contribution in NPS will be 14% with prospective effect.
  6. Other non financial yet important matters such as 5 days banking, updation of pension are left for further discussion.
  7. The full fledged settlement would be finalised in the next 90 days.
 Is the settlement actually what it seems?
  1. Out of the agreed 15% increase in salary, only 2.5% increase is actually on basic pay. That means the remaining 12.5% will not be part of the pay slip component necessary for pension calculation. The 12.5% will be distributed in the other allowances component. This will render the employees who have retired during the process with negligible money in their hand further adding to their miserable situation.
  2. The major increase in the salary is what the employees are already receiving. It is done by merging the DA applicable during the quarter of July-Sep 2016 i.e., 6352 points. So, in reality no significant increase is going to be seen in the salary of the employees.
  3.  One of the major contentious issue was introduction of performance linked incentive in public sector bank by IBA (PLI is kept optional for private banks). The agreed PLI scheme is as follows:
Operating profit(Y-o-Y growth)
No of days for which salary would be paid (Basic+DA)
5% to 10%
5 days
>10% to 15%
10 days
15 days

The problem is with the 3rd and 4th slab. The 3rd and 4th slab will be paid only if the Bank has net profit. That means if a bank is earning Y-o-Y operating profit of more than 5% but don’t earn net profit, then PLI payable will be of 2nd slab. Analysing the past performance of the Public sector Banks, they have seen the growth in their operating profit but they failed to register net profit thanks to huge provisioning the Banks had to make for the defaulted assets. This situation appears to prevail in future years as well due to the COVID pandemic and downturn in the economy. COVID pandemic and declining economy will only result in the increase of the default in the loan account and as a result the provisioning shall also increase substantially. Therefore, the PLI scheme is not as glooming as it is shown.

4. Another important fallouts of the agreement signed is no conclusive end to albeit non financial yet very important issue like pension updation and 5 days banking, regulated working hours for officers etc. These issues are left for further discussion. It is not clear despite that when the negotiation is continuing for the last three years what aspects of these are still left for discussion.  It only signifies that the participants are not very convinced about the importance the non financial issue holds and kept it ignoring.

The only positive outcome of the above agreement signed is closure of the Xi bipartite settlement of the Bank’s employee wage revision. Now the employees will not have to go for strike and subsequently lose their salary for the number of days they are on strike.

Bank employees are working for the nation and its people no matter the emergent situation is be it demonetisation, Jan Dhan Yojana, DBTL, PMFBY, Debt Waiver scheme, COVID pandemic etc. Yet they are still waiting to get their share of acknowledgement as Economy warrior and Corona warrior.

2 Responses to "A bankers view on proposed salary hike of 15%"

  1. This 11th bps has already delayed about three years and still under discussions. Moreover, it is not at all honourable and pleasure feeling.

  2. सबसे मुख्य तो ये बात है कि हमारा हक़ का पैसा, arrear के रूप मे सरकार जो दे रही है उसका ब्याज तो union कभी दिलाती नहीं।
    Present value of money तो हम खो ही देते है।
    पर union का भाव चढ़ा रहता है की यही छीन कर ले आये IBA से वो क्या कम है। वो भी ३ साल लगे चाय समोसा खा के छीनने में।


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