The recent modifications to the Performance-Linked Incentive (PLI) program for top bank executives made by the Department of Financial Services (DFS), which is part of the Finance Ministry, have been vehemently challenged by the All India Bank Employees' Association (AIBEA). According to the union, the new formula is unjust, goes against earlier agreements, and causes conflict among workers.
Bank workers can receive additional financial rewards through the PLI scheme, which is dependent on their performance. In 2018, the Indian Banks' Association (IBA) first proposed a plan in which rewards would be granted according to each employee's performance.
PLI should be based on the overall success of a bank, not on the performance of individual employees, according to the United Forum of Bank Unions (UFBU), which represents bank unions. Services related to credit cards Following talks, PLI would be determined by each bank's total performance, as affirmed by the 11th Bipartite Settlement (BPS) and 8th Joint Note, which were signed in November 2020.
June 2024 saw additional revisions to this agreement, but the fundamental framework stayed the same: rewards were to be given according to on collective performance.
What has changed now?
In November 2024, the Government of India (DFS, Finance Ministry) changed the system without consulting bank unions. The new rule states that PLI for Scale IV officers and above (senior management) will now be based on individual performance instead of the collective performance of the bank.
This change only affects officers in Scale IV and above, while junior officers and clerical staff will continue to receive incentives based on the bank’s overall performance.
Why are bank unions opposing this change?
The AIBEA and other bank unions have raised strong objections to the government’s move. They argue that:
It is a unilateral decision: The PLI scheme was originally decided bilaterally between IBA and UFBU. The government did not consult bank unions before making this change.
It creates division: Under the new rule, some senior officers will receive huge incentives, while lower-level employees will get much less.
It is discriminatory: While a few officers will get a very high PLI, many deserving employees will not receive anything.
It is unfair to banks as a whole: If a bank performs poorly due to external reasons (such as fraud or government policies), the entire workforce suffers, even if some employees worked hard.
It violates previous agreements: The UFBU had already agreed on a collective PLI system in previous wage agreements, and this sudden change goes against that.
In opposition to this decision, the AIBEA and other bank unions have chosen to demonstrate. They insist that the government go back to the original collective performance model and remove the current individual-based PLI system. Bank officers and staff are currently awaiting additional talks between the government, the Indian Banks' Association, and bank unions. In the upcoming months, there might be bank staff strikes and widespread rallies if the government doesn't change its mind.
The government's new PLI system has been met with fierce criticism from bank unions. Bank unions are concerned that this may result in discrimination, inequality, and needless competition among employees, despite the government's claim that individual incentives will improve performance.
The coming weeks will be crucial in deciding whether this issue will escalate into a major confrontation between bank employees and the government.
