Shillong, March, 19: The United Forum of Bank Unions (UFBU) has strongly objected to a recent directive issued by the Department of Financial Services (DFS), cautioning that the move could undermine ongoing conciliation proceedings and disrupt industrial harmony in the banking sector.
The directive, dated March 18, 2026, advises public sector banks to implement a revised Performance Linked Incentive (PLI) scheme for officers in Scale IV to Scale VIII, as well as Deputy Managing Directors in State Bank of India, based on a policy framework issued earlier in November 2024.
UFBU said the directive is “premature and inappropriate,” noting that the issue of PLI is currently under active discussion in conciliation proceedings before the Office of the Chief Labour Commissioner (Central). The latest meeting between unions and management was held on March 9, where both sides agreed to continue deliberations on the matter.
According to the unions, issuing implementation instructions while discussions are still ongoing renders the conciliation process ineffective and goes against established principles of bipartite industrial relations in the banking industry.
The forum further argued that the revised PLI scheme departs from the existing framework under bipartite settlements and joint notes, where incentives are linked to overall bank performance and paid uniformly. In contrast, the new directive introduces a differentiated, performance-based structure for senior officers, which UFBU claims could create divisions within the workforce.
Raising concerns over financial implications, UFBU stated that while current PLI payouts are capped at up to 15 days’ basic pay plus dearness allowance for most employees, the revised scheme allows incentives of up to 365 days’ basic pay for senior officers. This, the unions warned, could lead to a significant increase in expenditure and raise questions about financial prudence and governance.
The unions also cautioned that such a selective incentive structure may lead to internal disparities, weaken team cohesion, and create dissatisfaction among the majority of employees who remain under the existing framework.
Citing global trends, UFBU pointed out that performance evaluation systems based on forced ranking or bell-curve models have largely been abandoned by major corporations due to their adverse impact on employee morale and collaboration.
Emphasising that the revised scheme was not a demand raised by employees or unions, UFBU alleged that it has been “imposed from above” and could have wider repercussions on industrial relations, institutional stability, and shareholder interests.
The forum urged DFS, the Indian Banks’ Association, and public sector bank managements to keep the directive in abeyance and resolve the matter through established consultative mechanisms.
Warning of possible agitation, UFBU stated that unilateral implementation of the scheme during ongoing conciliation proceedings may escalate unrest in the sector and compel unions to consider lawful protest actions.
