Bank PLI Scheme: Government bows down to strong opposition from bank employees! Controversial PLI scheme banned in government banks; Big decision before the nationwide strike of September 11

The long-running standoff between employees of public sector banks and the central government has reached a turning point. The new Performance Linked Incentive (PLI) scheme being implemented by the Department of Financial Services (DFS) of the Finance Ministry has been postponed (Hold / Kept in Abeyance) by the Central Government with immediate effect for the financial year 2025-26.

This big decision has come after a high-level meeting held in New Delhi between Union Finance Minister Nirmala Sitharaman and a delegation of bank employee organizations affiliated to the Bharatiya Mazdoor Sangh (BMS). Bank unions had termed the scheme as 'divisive and discriminatory' due to the huge incentive gap between senior officers and lower cadre employees. The government's move, just ahead of the nationwide bank strike called by the United Forum of Bank Unions (UFBU) on September 11, is being considered a major strategic victory for the employees.

The main reason for this dissatisfaction among bank employees and officials was the huge inequity present in the new PLI framework introduced by the government:

• Basic Bilateral Agreement (IBA Formula): Under the agreement between the Indian Banks Association (IBA) and unions in November 2020, PLI was linked to the overall profit (Operating/Net Profit) of the bank. Under this, all the employees from clerk to scale-7 top officers get maximum 15 days basic pay + DA There was a provision to give a uniform incentive amount equal to Rs.

• Unilateral Amendment by Government (DFS Scheme): The Department of Financial Services issued unilateral instructions on 19 November 2024 on the basis of individual performance for officers of Scale-4 (Chief Manager) and above. Basic salary of 365 days (full year) Made a rule to give huge PLI of Rs.

• Employees protest: The unions argued that giving only 15 days' incentive to 95% of the bank's employees (clerks, sub-staff and scale-1 to 3 branch managers) and 12 months' basic pay to only 5% of the top officers is open discrimination. This posed a serious danger of eroding team spirit in workplaces and creating unhealthy internal competition.

The United Forum of Bank Unions (UFBU) had filed a petition in the Delhi High Court against the controversial scheme and the dispute was also under conciliation process before the Central Chief Labor Commissioner (CLC).

The unions' strong objection was to the fact that when the matter was pending before the court and the Labor Commissioner, the banks had made payments up to Scale-3 for the financial year 2024-25, but pressure was being created to impose new arbitrary rules for those above Scale-4. The employee organizations had termed it as a flagrant violation of the legal decorum of the Bipartite Settlement.

According to the official statement issued by the Finance Ministry, taking cognizance of the concerns and memorandums of the employees, the PLI circular dated November 19, 2024 has been put on hold for the year 2025-26. The Ministry has clarified that:

• Now a complete review of this incentive scheme will be done during the formal meetings of the ongoing Bipartite Settlement / Joint Note.

• The Government is committed to working out a transparent and universally accepted formula through 'dialogue and mutual understanding' in the larger interest of the banking sector, customers and employees.

• Issues like medical insurance facilities for retired bank employees and ex-gratia pension revision have also been assured to be considered in the meeting.

Many far-reaching political and administrative implications are being drawn from this decision:

First, due to the pressure of collective unity and strike of about 8 lakh employees working in public sector banks, the Central Government has been forced to postpone its unilateral decision.

Second, the major demands of the proposed nationwide bank strike on September 11 included the cancellation of the PLI scheme. However, the biggest and pending demand of the unions '5-day banking' (working five days a week and complete holiday on Saturday) The government has not yet given official approval. Along with this, notice of indefinite strike is also effective from 28th to 30th September and 26th October.

Now all eyes are on the next step of UFBU whether the September 11 strike will be postponed after the ban on PLI or whether the bank employees will take to the streets demanding 5-day banking and pension updation.