Bank unions calls DFS move to revise PLI framework 'discriminatory'

UFBU alleges proposed changes to performance-linked incentive structure in public sector banks are discriminatory and violate status quo agreed during conciliation

The United Forum of Bank Unions (UFBU) has opposed the Department of Financial Services’ (DFS) move to alter the performance-linked incentive (PLI) framework in public sector banks (PSBs), alleging that the proposed changes are “divisive” and violate the status quo agreed during conciliation proceedings.

 

The PLI scheme was finalised under the 11th Bipartite Settlement and 8th Joint Note in 2020, covering employees from part-time staff to general managers in Scale VII. Since then, incentives have been paid uniformly within each bank based on its overall performance.

 

However, last year, the DFS advised PSBs to shift from the settlement-based structure to a revised mechanism under which PLI for officers in Scale IV and above would be linked to individual performance.

 

“The PLI scheme under the Bipartite Settlement is uniformly linked to the overall performance of the bank. The DFS-advised model seeks to make PLI for Scale IV and above dependent on individual performance, placing officers in different ‘risk’ brackets and creating an artificial and divisive classification within the cadre,” AIBOC said in a statement issued by its General Secretary Rupam Roy.

 

Under the existing framework, more than 90 per cent of employees — including workmen staff and officers up to Scale III — are eligible for a maximum of 15 days’ basic pay plus dearness allowance as PLI. The proposed model, the unions said, would allow officers in Scale IV and above incentives of up to 360 days’ basic pay.

 

“On the one hand, this amounts to discrimination between Scale IV officers and above and the bulk of the workmen staff and officers up to Scale III. On the other hand, it divides senior officers by extending PLI on an individual performance basis,” the statement said.

 

The issue was included among the major demands in the strike notice served by unions in March 2025. During conciliation proceedings before the Chief Labour Commissioner (Central), banks were advised to maintain status quo and work towards an amicable solution through bipartite discussions between the Indian Banks’ Association (IBA) and UFBU.

 

“It is unacceptable in principle, untenable in law and practice, and corrosive to settled industrial relations if there is any departure from the recorded understanding,” the unions said, noting that representatives of PSBs, DFS and IBA were signatories to the conciliation minutes.

 

UFBU said it had suggested modifications to make the PLI scheme more equitable and that these proposals were forwarded to DFS for consideration.

 

The matter also figured during conciliation meetings held on January 22–23, 2026, in connection with the proposed strike over the demand for five-day banking. According to the unions, DFS indicated that proceeding with the strike could affect the government’s stance on other pending demands, including the PLI issue.

 

The unions have now alleged that PSBs have been advised to credit PLI for the year ended March 31, 2025, even though the issue remains pending before the labour authorities. They claimed that at least one bank has already credited the incentive.

 

“This is nothing but an attempt to browbeat UFBU and divide the workforce in banks,” the statement said, adding that the matter would be raised in the next round of conciliation talks.

 

UFBU has urged employees across banks to remain united and vigilant against what it described as unilateral changes to a negotiated settlement framework.