FinMin asks PSBs to complete wage revision process in next 12 months

The government has asked public sector banks to initiate the process of negotiations for the 13th Bi-partite settlement in a time-bound manner and finalise it in the next 12 months.

The wage revision for employees and officers of public sector banks would be due from November 1, 2027.

Public sector banks (PSBs) and financial institutions, including insurance companies revise wages of their employees every five years. As part of the settlement, the Indian Banks' Association (IBA) is expected to engage in dialogues with the employees' unions/associations and arrive at a mutually agreeable wage settlement.

As the timely conclusion of the settlements is essential for maintaining industrial harmony, the Department of Financial Services advised Public Sector Banks (PSBs) in a communication to their heads to initiate the necessary measures to commence negotiations for the impending wage revision.

 

PSBs are advised to complete the negotiation process within a maximum period of 12 months, the communication dated April 20 said.

Just before the last settlement process, the finance ministry had 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.

It has been observed that on previous occasions, consequential amendments to the permanent regulations have been effected after a considerable delay following the settlement, it said.

"As negotiations for the upcoming settlement are now being initiated in a timely manner, it is underscored that the consequential amendments to relevant regulations should also be completed prior to scheduled date of the next wage settlement," it said.

It is a known fact that the banking sector is the backbone of the Indian economy and healthy and adequate compensation keeps morale of employees high.

Public sector banks have generated record profits in FY25 and is expected to continue the momentum in FY26. Combined PSB profits crossed Rs 1 lakh crore to reach Rs 1.05 lakh crore in FY23, before rising to Rs 1.41 lakh crore in FY24, and to Rs 1.78 lakh crore in FY25.

The improvement has been driven by stronger asset quality, sustained credit growth, comfortable capital buffers and rising return on assets.

PSBs' balance sheets continue to show improvement. Gross non-performing assets stood at a record low of 2.30 per cent at the end of September 2025, while net NPAs were around 3 per cent. The provisioning coverage ratio improved to 94.63 per cent, and the capital adequacy ratio remained healthy at 15.96 per cent at the end of the first half of FY26.

Wage settlement talks normally benefit employees of public sector banks, old generation private banks and some foreign banks.