Shillong, Mar 19: The United Forum of Bank Unions (UFBU) has expressed serious concern and objected to the directive issued by the Department of Financial Services (DFS), Ministry of Finance, advising public sector banks to pay Performance Linked Incentive (PLI) to eligible officers from Scale IV to Scale VIII and to Deputy Managing Directors in SBI.
“The directive is premature and inappropriate in as much as the matter of PLI remains under active discussion in conciliation proceedings before the Office of the Chief Labour Commissioner (Central),” UFBU said in a statement.
The union said that the most recent conciliation meeting was held on March 9, wherein the unions and the management side deliberated on the very issue now sought to be unilaterally implemented. The signed minutes of that meeting clearly record that the question of PLI for Scale IV to VII officers for FY 2024–25 was under active consideration, with further steps to be pursued through the conciliation and bilateral process, it added.
“For DFS to issue bank-specific implementation directives barely nine days later is a step that renders the conciliation process nugatory,” UFBU pointed out.
It said that the unilateral implementation of such a scheme, while formal proceedings are pending, is wholly inconsistent with the spirit and principles of bipartite industrial relations that have sustained the banking sector for the last six decades.
The directive also disregards the deliberations and minutes of several CLC meetings, to which DFS representatives, IBA, Bank Managements and all constituent unions and associations are parties and signatories.
The union said the revised PLI scheme was never a demand raised by the employees or trade unions in the banking sector. The scheme has been imposed from above and seeks to replace a well-established, collectively negotiated dispensation with an individual-performance-based mechanism for officers in Scale IV and above.
“Obviously, the attempt is to shift from the present common performance based incentive to individual productivity based incentive. This will have the effect of placing senior officers into differential risk brackets, creating an artificial and divisive classification within the officer cadre, and undermining the collective character of the workforce,” UFBU said.
The union further drew attention to the serious financial implications of the revised scheme stating that under the existing dispensation, PLI for staff and officers up to middle management is limited to a maximum of 15 days Basic Pay plus DA. The revised framework reportedly allows incentives up to 365 days’ basic pay for eligible officers.
“At a time when the banking industry is focused on prudential norms, cost efficiency, capital discipline, and sustainable growth, such a disproportionate increase in a single component of remuneration for a select category of officers raises legitimate questions of propriety, prudence, and governance,” it said.
The union cautioned that such a selective and elevated incentive structure could have wider implications for governance, institutional equity, and shareholder interests, while also potentially affecting morale and teamwork within banks. It said that more than 95 per cent of employees would remain under the existing PLI structure, creating what it described as a “divisive differentiation” between categories of staff.
The measure is also bound to create avoidable internal disparities and weaken the collective unity that has long been the hallmark of the banking industry’s workforce.
UFBU reiterated that the conciliation proceedings are a statutorily recognised forum for the resolution of industrial disputes and that any action during their pendency to unilaterally implement a contested scheme is prejudicial to industrial peace. It warned that such developments may lead to agitation and unrest within the banking sector.
The union demanded that implementation be kept in abeyance pending resolution through established consultative mechanisms in order to maintain fairness, collective dignity, institutional harmony, and constructive industrial relations.
