Why in the News?

• Public sector bank employees across India went on strike on September 11, despite the government agreeing to put the proposed Performance-Linked Incentive (PLI) scheme on hold.

What’s in Today’s Article?

• About PLI Scheme (Background, Features, etc.)
• Strike by Employees (Reasons, Demands, Govt Response, Impact, etc.)

Background: The PLI Scheme for Bank Employees

• The Department of Financial Services introduced a revised Performance-Linked Incentive scheme in November 2024, applicable to public sector bank employees for 2025-26.
• A major feature of the revised system was that it applied only to Scale IV officers and above.
• Eligible senior officers could receive PLI of up to 365 days of basic pay, depending on individual performance.
• Bank employee unions opposed this structure on the grounds that it created a significant disparity within the workforce.
• Under the existing formula applicable to the wider workforce, PLI was linked to 15 days of basic pay plus dearness allowance. The unions therefore considered the new arrangement discriminatory because of its substantially different treatment of senior officers.

Why Did Bank Employees Oppose the New PLI Scheme?

• The unions argued that the revised PLI scheme departed from the 2020 agreement between bank unions and the Indian Banks' Association (IBA).
• Under that arrangement, PLI was to be linked to the overall performance of individual banks and applied uniformly to employees and officers.
• The revised scheme, by contrast, placed greater emphasis on the individual performance of Scale IV officers and above. This difference became one of the principal reasons behind the strike call.

Other Major Demands

• Five-Day Work Week
  • The most prominent unresolved demand, apart from the PLI issue, is implementation of a five-day work week for bank employees.
  • Bank employees had proposed in 2024 that daily working hours be increased by 40 minutes so that the total number of working hours per week would not decline.
  • The proposal has remained pending with the government. The United Forum of Bank Unions (UFBU) stated that the meeting did not produce positive movement on this issue, leading it to continue with the strike.
• Pension-Related Demands
  • Employees have also sought a uniform dearness allowance formula for all pensioners.
  • Another demand is that employees covered under the National Pension System (NPS) should be given an option to shift to the Old Pension Scheme (OPS).
  • These demands remained unresolved at the time of the strike.
• Other Employee Welfare Issues
  • The unions have also raised issues concerning revision of ex-gratia payments and medical facilities for retired employees, among other employee-related concerns.

Government's Response

• A delegation of bank employees met Union Finance Minister Nirmala Sitharaman and officials of the Department of Financial Services.
• Following the meeting, the Ministry of Finance announced that the PLI scheme would be put on hold pending further discussions.
• However, the UFBU acknowledged the decision while maintaining that no progress had been made on the five-day work week. Consequently, the strike remained in place.

Immediate Impact of the Strike

• The strike significantly disrupted physical banking services, particularly at public sector bank branches. Services affected included:
  • Cash deposits and withdrawals
  • Cheque clearance
  • Administrative and branch-level work
  • Other physical banking services
• The timing of the strike amplified its impact. September 11 was a Friday, followed by the second Saturday, Sunday and a public holiday in several States on September 14 for Ganesh Chaturthi. Thus, branch-based banking services were disrupted across several consecutive days.
• Although digital and Internet banking have reduced dependence on physical branches, branches remain important for senior citizens and customers in rural and semi-rural areas. Certain services, including some cash and cheque-related transactions, continue to require physical access.

Future Course of the Protest

• The bank unions have warned of further industrial action if their demands remain unresolved.
• They have threatened a three-day nationwide strike from September 28 to 30, coinciding with the half-yearly closing period. They have also warned of a continuous indefinite strike from October 26.

Conclusion

• The bank employees' strike demonstrates that the dispute extends beyond the revised PLI scheme.
• While the government's decision to pause the PLI addresses one major grievance, demands relating to the five-day work week, pension benefits and employee welfare remain unresolved.
• This highlights the challenge of balancing banking-sector productivity, employee compensation and institutional reforms with the need to ensure uninterrupted access to essential financial services.