Bank employees 15 per cent hike in salary, Performance Linked Incentive explained

Bank employees salary hike, PLI, Banks, IBA — Image Source : FILE PHOTO
Bank employees' salary hiked by 15 per cent, first of its kind Performance Linked Incentive (PLI) also introduced. (Representational image)

Bank employees' unions and the Indian Banks' Association (IBA) have reached an agreement for a 15 per cent annual hike in wages, a move that will result in an additional yearly outgo of nearly Rs 7,900 crore by lenders. The decision was taken at a meeting held between the IBA -- representing managements of banks -- and members of the United Forum of Bank Unions (UFBU) representing workmen unions and officers' association. As per the MoU between IBA and the workers and officers unions, the wage revision, which will benefit nearly 10 lakh employees, will be effective from November 1, 2017. The two parties also agreed for the introduction of Performance Linked Incentive (PLI), for of its kind for state-owned public sector banks, based on operating/net profit of the individual bank.

Bank employees salary hike, PLIs explained

The wage revision would be effective from November 2017, according to the agreement signed by bank unions and the IBA.
The annual wage increase in salary and allowances has been agreed at 15 per cent of the wage bill as on March 31, 2017, which works out to be Rs 7,898 crore on payslip components, as per the agreement.
Employees of state-owned banks, old generation private banks including Federal Bank, Dhanlaxmi Bank and some foreign banks will also be benefited.
Performance Linked Incentives (PLIs), a first of its kind will be operational for private and foreign banks who will be the part of the agreement reached between Bank Employees' Union and Indian Banks' Association. It will be based on lenders' annual operating or net profit. Earlier these banks were continuing the practice of fixed salary hike.
15 per cent salary hike means a raise of 2.5 per cent in the basic pay.
Employees' Union, IBA have mutually agreed to remove cap on the family pension of Rs 9,000 crore.
However, 15 per cent raise in wage does not include pension and superannuation benefits.
No Performance Linked Incentives for employees of banks reporting less than 5 per cent increase in operating profit.
Banks reporting operating profit between 5-10 per cent will have to give an additional salary of 5 days; those reporting between 10-15 per cent have to give 10 days additional salary and for those having over 15 per cent operating profit will give 15 days additional pay to its employees. But conditions are applied.
The agreement covers officers up to scale - VII grade including General Managers, deputy general managers, assistant general and divisional managers.
MoU will be converted into a formal agreement within next 3 months.
Close to 37 banks, including public, private and foreign banks, have mandated the IBA to decide on wage hikes for their employees.
The distribution of the annual wage increase between workers and officers will be worked out separately.
It has also been agreed in the MoU for encashment of privilege leave at 5 days every year - 7 days for workers and officers aged 55 and above - during any festival.
The bank's contribution to National Pension Scheme will be raised to 14 per cent from the current 10 per cent.