IBA signs MOU with bank employee unions on wage revision & allowance increase of 17 percent

The 15 percent wage bill hike is for the five years between November 2017 and October 2022.

The Indian Bank Association (IBA) and bank employee unions have agreed to the 12th bipartite wage hike settlement. This settlement will be in effect for the next five years, starting from November 1, 2022. As per the officially signed MOU, which Moneycontrol has reviewed, bank employees will be receiving a 17 percent increase in salary.

"The final agreement is expected to be signed within two months, although the cut-off period is 180 days," said Rupam Roy, the General Secretary of All India Bank Officers’ Confederation (AIBOC), to Moneycontrol.

"The new pay scales will be constructed after merging Dearness Allowance corresponding to 8088 points (average Index point as applicable for the Quarter of July, August, and September 2021) to the basic pay as of 31.10.2022, and adding thereon a loading of 3 percent, amounting to Rs 1795 crore," the MOU added.

On additional loading of 3 percent after the merger of DA, Roy said that it would lead to improvement in pension for all pensioners from 1986 including retirees under the proposed 12th bipartite settlement.

"Without prejudice to the demand of unions for updation of pension for all retirees, it is also agreed that as a one-time measure applicable for the current bipartite monthly ex-gratitude amount will be considered along with pension by PSBs to pensioners and family pensioners, who were drawing pension as on October 31, 2022, "MOU added.

Last time, in November 2020, IBA and bank employee unions signed a bipartite settlement agreeing to a 15 percent increase in pay for bank employees.

The 15 percent wage bill hike is for the five years between November 2017 and October 2022.

Five-day banking before final bipartite agreement

According to the MOU between the IBA and bank unions/associations, the latter have requested that the implementation of the same be done before the final bipartite agreement is signed. The MOU also states that IBA has already recommended to the government that all Saturdays be declared as holidays under the Negotiable Instruments Act (NI Act) for the banking industry, which aligns with the previous negotiations with unions, and that IBA will pursue this recommendation.

On December 6, the Finance Ministry confirmed that they had received a proposal from India's banks on five days of banking. Bhagwat Karad, MOS Finance, stated in a written reply to the parliament in the ongoing winter session that IBA has submitted a proposal to declare all Saturdays as banking holidays.

Increase below banker's expectations 

Krishna Kumar, general secretary of all India Punjab National Bank Officers Federation told Moenycontrol that the 17 percent increase should have been 20 percent at least. "Keeping in mind annual operating profit of around 2.40 lakh crore of PSBs in FY 2022- 23 and 2.10 lakh crore in 2021-22, "he said.

Kumar further added that loading in basic should have been around 8 percent because 3 percent loading in basic means just a Rs 1400 increase in basic after five years which is peanuts in comparison to the corporate sector.

"And the initial basic of scale one officer in PSB will be around Rs 47500 which is very less in comparison to other government of India employees, "he added.

AIBOC Roy also expressed his dissatisfaction with the current hike, While talking to Moneycontrol he said., "I know my young bankers are not happy; but as a leader, we must pay respect to our retire people; as IBA has given Even, I'm not happy with the current situation but happy for our retiree people."

Another working public sector banker who does not wish to quote his name said, "I'm very frustrated and angry with today's decision; currently all the banks are making a record profit and bankers are working more than 150 percent of their limits due to staff shortage still what we got in the name of increment."