The wage revision for the staff of public sector banks is expected to be finalised by 1 December, after negotiations between the IBA and the unions.

The wage revision for employees and officers of the public sector banks is due from 1 November 2022.

The government has asked the Indian Banks' Association (IBA) to initiate the process of negotiations for the 12th Bi-partite settlement in a time-bound manner and to finalise it by 1 December 2023, PTI reported quoting a senior official.

The finance ministry has asked IBA to ensure that all future wage negotiations should be finalised before the beginning of the subsequent period so that the wage revision could be implemented from the due date itself, the official added.

As a part of the settlement, the IBA is expected to engage in dialogues with the employees' Unions/ Associations and work out to arrive at a mutually agreeable wage settlement. 

The government has stressed the importance of fairness and equity in the revision, ensuring that the compensation structure remains competitive with other players in the banking industry, the official said.

"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," PTI quoted the official as saying.

The new wage settlement comes at a time when the public sector banks are financially healthy with their net profits have almost tripled to Rs 1.04 lakh crore in FY’23 compared to Rs 36,270 crore earned in FY'14.

The Return on Assets (ROA) in public sector banks rose from 0.51% to 0.78% during this period, while net interest margin (NIM) has also increased from 2.73% to 3.23% in FY'23.

Wage settlement talks normally benefit employees of public sector banks, old generation private banks and some foreign banks, PTI reported.

In the previous agreement, 12 state-owned banks, 10 old-generation private sector banks and seven foreign banks signed up. New-generation private banks like HDFC Bank and ICICI Bank are not part of these settlement talks.

The last 11th Bipartite Wage Negotiations concluded after three years of negotiations in 2020 agreed for 15% pay revision for public sector banks employees.

Almost 3.79 lakh officers and close to 5 lakh bank employees of public sector banks, old-generation private banks and foreign were covered under the wage hike due from 1 November 2017.