Indian Banks' Association proposes new wage hike formula to bank unions

Indian Banks’ Association (IBA) has proposed a new wage hike formula to bank unions. Under the proposal, while the fixed hike is set at 6 per cent, the variable component will be based on the grading of banks in three categories: A, B and C. 

The performance linked-compensation part will be computed annually based on the financial results of the bank. The two parameters proposed to be used for computing the variable-linked pay would be -- operational profits and return on assets. 

Thus for FY 2017-18, in terms of both the parameters, only two banks — Indian Bank and Vijaya Bank, qualify in the category A, according to the presentation by IBA to the bank unions. 

Meanwhile, the IBA reiterated that banks were not in a capacity to have more than 6 per cent hike. 

Bank unions have opposed the proposal of linking pay to performance. 

“The present formula is unacceptable. Bank unions have been fighting for doing away with any sort of gradation, and the objective was achieved after long struggle,” said Rajen Nagar, president, All India Bank Employees Association.

Earlier, as a part of the ongoing 11th bipartite agreement, the IBA had proposed a 2 per cent wage hike, which bank unions had rejected, and the hike was raised to 6 per cent. 

In the last wage revision in 2012, bank employees had received a 15 per cent wage hike, which roughly cost banks about Rs 83 billion. This time, bank unions were seeking a 25 per cent hike.

The current wage revision is due from November 2017, after the 10th Bipartite Settlement ended in October 2017. At present, out of 21 public sector banks, 19 are running in loss. 

Banks’ management had justified the nominal hike due to high losses incurred by in the past few quarters. However, according to bank unions, the fall in profit are on account of higher provisioning towards non-performing assets, and employees have no role in that.