New Delhi: Bank employees across India will receive a marginal salary increase as Dearness Allowance (DA) has been revised for the May–July 2026 quarter. However, the modest hike has drawn criticism from employee unions, who argue that the increase is insufficient to offset rising living costs.
The revision, announced through a notification by the Indian Banks’ Association (IBA) on May 2, reflects changes in inflation based on the All-India Consumer Price Index for Industrial Workers.
Small increase in take-home pay
The revised DA will result in an increase of approximately Rs 435 to Rs 1,050 for employees with basic salaries ranging between Rs 48,000 and Rs 1,17,000. While the adjustment provides some relief, employees say the impact on monthly income remains limited.
The hike is calculated based on the three-month average Consumer Price Index (CPI) data for January to March 2026. The CPI stood at 148.6 in January, dipped slightly to 148.5 in February, and rose to 149.1 in March, resulting in an average of 148.73.
Compared to the base index of 123.03 (CPI 2016), the differential works out to 25.70, leading to a DA increase of 0.70 points for the quarter.
Different calculation for older settlements
Employees still covered under earlier wage agreements—XI Bipartite Settlement (BPS) and 8th Joint Note—will see a separate DA calculation.
For this group, CPI figures stood at 9,768.75 in January, 9,762.18 in February, and 9,801.62 in March 2026. The average CPI of 9,777.52 results in a differential of 856 points.
Accordingly, DA for these employees has been fixed at 59.92 per cent of basic pay for the May–July period, as per the November 11, 2020 settlement.
Why employees are dissatisfied
Despite the revision, bank employees and unions have described the hike as “too little,” pointing out that inflation in essential commodities, housing, and services has risen faster than the DA adjustment.
Many employees argue that the incremental nature of the hike fails to significantly improve their purchasing power. The limited increase, they say, does not adequately reflect real-world cost pressures faced by households.
Union representatives have also highlighted that DA revisions are reactive, based on past CPI data, and therefore often lag behind current inflation trends.
Taxation and salary impact
Dearness Allowance forms a key component of an employee’s cost-to-company (CTC) and is paid monthly. It is fully taxable under income tax rules and must be declared separately in income tax returns.
Standard rounding rules apply: amounts of 50 paise or more are rounded up to the next rupee, while lower fractions are ignored.
Although the DA hike increases gross salary, the net benefit may be slightly reduced after taxation, further contributing to employee dissatisfaction.
Ongoing negotiations with unions
The latest revision comes amid broader discussions between bank unions, the IBA, and the government over wage restructuring and working conditions in public sector banks.
Employee unions are demanding a 17 per cent increase in salaries, with retrospective effect from November 1, 2023. They have also sought alignment of DA with 8088 index points.
Another key demand is the implementation of a five-day workweek in public sector banks, making all Saturdays non-working days—a long-pending issue in the sector.
What lies ahead
The current DA revision is part of routine quarterly adjustments, but it has once again brought attention to larger concerns around wage growth and employee welfare in the banking sector.
Experts believe that unless broader structural changes are introduced, periodic DA hikes alone may not be sufficient to address employee expectations.
Conclusion
While the DA hike offers some incremental relief, it falls short of employee expectations in the face of rising inflation. With unions pushing for higher pay and improved working conditions, the coming months are likely to see intensified negotiations between stakeholders.
For now, bank employees will have to settle for a modest increase, even as calls for more substantial reforms continue.
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