The current wage agreement for PSU bank employees expired on November 1, 2022. The IBA and the unions representing PSU bank employees have been negotiating a new wage agreement since then.
The Ministry of Finance has asked the Indian Banks' Association (IBA) to finalize the wage revision of bankers of public sector banks (PSU banks) by December 1, 2023.
The current wage agreement for PSU bank employees expired on November 1, 2022. The IBA and the unions representing PSU bank employees have been negotiating a new wage agreement since then.
FinMin's letter to the IBA said that the government is "committed to ensuring that the interests of bank employees are safeguarded." The letter also said that the government is "confident that the IBA and the unions will be able to reach an early and amicable settlement."
The early wage increase would assist in improving working conditions and incentivize staff in the banking sector, PTI quoted officials as saying.
Furthermore, the finance ministry has urged IBA to ensure that all future salary talks are completed before the start of the next period, so that the wage revision can be applied from the due date.
The wage revision of PSU bank employees is a complex issue. There are a number of factors that need to be considered, such as the financial health of the banks, the cost of living, and the salaries of employees in other sectors.
As part of the settlement, the IBA is expected to engage in dialogues with the employees' Unions/ Associations and work out a mutually agreeable wage settlement.
The IBA has said that it is committed to reaching an agreement with the unions that is fair to both the banks and the employees. The unions have said that they are hopeful that the IBA will be able to offer a fair wage increase.
The government has emphasised the importance of justice and equity in the adjustment, ensuring that the remuneration structure stays competitive with other competitors in the banking business, PTI quoted an official as saying.
"Wage settlement for banks has always been a tedious and time-consuming process with bank managements, represented by IBA, and employees' unions engaging in tough negotiations. Historically, delays of 2-3 years in wage settlement have led to a substantial accumulation of arrears, which are eventually disbursed in a lump-sum.
"This contrasts with the more sustainable approach of integrating the revised wages into the regular monthly salaries," said the official.
It also comes at a time when the Public Sector Banks' financials are in good shape, with net earnings nearly tripling to Rs 1.04 lakh crore in FY'23, up from Rs 36,270 crore in FY'14.
Simultaneously, the Return on Assets (ROA) in PSBs increased from 0.51 percent in FY14 to 0.78 percent in FY23, while the Net Interest Margin (NIM) increased from 2.73 percent to 3.23 percent in FY23.
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