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 December 1, 2023, said a senior official.
The wage revision for employees and officers of the public sector banks is due from November 1, 2022.
The early wage revision would help improve working conditions and incentivise the banking sector employees, the official said.
Further, the official said, 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.
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," said the official.
Highlighting that the banking sector is the backbone of the Indian economy, the official said it is incumbent upon the management of banks to ensure that employees are adequately compensated and it is necessary for the health and stability of the entire economy as well.
It also comes at a time when the financials of the Public Sector Banks are healthy with the net profits almost tripled to Rs 1.04 lakh crore in FY'23 as compared to Rs Rs 36,270 crore earned in FY'14.
At the same time, the Return on Assets (ROA) in PSBs rose from 0.51 per cent in FY'14 to 0.78 per cent, while Net Interest Margin (NIM) has also increased from 2.73 per cent to 3.23 per cent in FY'23.
Wage settlement talks normally benefit employees of public sector banks, old generation private banks and some foreign banks.
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 per cent pay revision for PSBs employees.
Almost 3.79 lakh officers and close to 5 lakh bank employees of PSBs, old-generation private banks and foreign were covered under the wage hike due from November 1, 2017.
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