The introduction of Performance Linked Incentive (PLI) in the eleventh bipartite settlement has been a point of contention among the unions and associations. The bank managements led by Indian Banks Association somehow managed to introduce this concept.

PLI is not a demand from UFBU but a counter demand of the IBA. It was during the negotiations held at Mumbai on 27 10 2017, IBA placed its counter demands. Among various others, it said “For Officers, Performance related variable pay method to be introduced”. UFBU stated that “While  we  are  for  better  performance,  efficiency,  more  productivity  etc.,  any differentiated  wage  compensation  will  result  in  subjectivity,  unilateralism, discrimination  and  may  become demotivating  and  counter-productive”.

UFBU discarded IBA’s proposal

Yet again, IBA in its discussions with UFBU held on 29 09 2018 and 12 10 2018 reiterated “The proposal of linking wages to operating profits, return on assets and performance of employees/officers”. This was again rejected by UFBU. This counter demand of IBA stems from the concept of bank-wise wage settlement instead of industry-wide wage settlement. It may be noted  that  the uniform  wages  in  the  banking  sector  has  evolved  over  decades starting  from  1948  (Sen  Award). It was during the discussions between IBA and UFBU held on 29th August 2019, IBA laid discussions on Performance Linked Pay (PLP) as a precondition and wanted to constitute a small committee so that other issues on wages and connected matters may be discussed. The UFBU in its meeting on 11th September 2019, decided to discard the proposal of IBA.  In the meeting between IBA and UFBU held on 17th September 2019 in  respect  of  Performance  Linked  Incentive, IBA  submitted  a  power point  presentation. They  proposed  that  PLI  would  be  over  and  above  the  fixed  increase and will  be  different  from  bank  to  bank  on  the  basis  of performance  and  will  be  paid  on  yearly  basis  with  prospective  effect. The employees and officers opposed such move of the IBA through their active participation in all the organizational actions.  

In-principle approval given

In the meeting held between IBA and UFBU on 15th November 2019, UFBU gave an in-principle approval as majority of the constituents (except BEFI) were in agreement to discuss introduction of PLI in banks. UFBU came out with a suggestion to introduce PLI as a separate agreement. IBA in turn informed that the scheme of PLI would be applicable to Public Sector Banks and optional for private sector member banks. Thus IBA could introduce its counter demand on a crucial aspect, which may be game changer in the days to come.

The discussions on 13th January 2020 led to a broad understanding between the parties to the concept of PLI. The Memorandum of Understanding signed on 22nd July 2020 between the IBA and UFBU excepting BEFI included Performance  Linked  Incentive   as per  a  proposed  matrix  of  individual  bank’s  performance  and  made applicable  from  FY  2020-2021. This was reduced to writing on 11th November 2020 through the 11th bipartite settlement between IBA and UFBU excepting BEFI. Accordingly, the employees of each bank shall get incentive depending on where the matrix that particular bank’s performance fits in.  

Sr. No.YOY Growth in Operating ProfitNo. of days for which Salary (Basic + DA) shall be paid
25% to 10%5 days
3>10% to 15%10 days*
4>15%15 days*

*3rd and 4th slabs are payable only if the Bank earns Net Profit. If a Bank has growth in Operating Profit of 5%  & more, but there is no Net Profit, then minimum 2nd slab of 5 days will be payable.

How PLI creates division among employees

The opposition to the introduction of Performance Linked Incentive in the industry level settlement is for many reasons, some of which are: i) it will distort the unique character of earlier settlements; ii) it will not be uniform over the whole tenure of a settlement; iii) performance/result of a bank depends on the extant accounting norms adopted by the regulators; iv) as the performance is calculated on change in y-to-y basis there is an ample scope of not getting any incentive; v) once bank specific facility is accepted, it may lead to bank level agreement in future; vi) in a service sector like bank, any pay/incentive should not be linked with performance of a bank or an individual employee/officer and  vii) may encourage  the  managements  to  ignore collective  bargaining.

Through PLI, the XI bipartite settlement had created a division among the employees of different banks. Subsequently, it may lead to difference of pay and wages between individual employees of the same bank. There is a danger that the uniformity of pay and wages of bank employees achieved till now may become a history of the past. Bank men are not happy with such discrimination. Instead they want bonus to all in lieu of PLI.


  1. PLI is a tangling carrot. The concept of marketing accepted by Unions in 10th Bi-partite. These things will hamper the interest of employees in the long run.

  2. This article is to enlighten the readers about the dangers in PLI. Hope the employees and officers of the banks see a logical end to such discriminations. Readers views / opinions are welcome

  3. PLI creates a huge disparity among the employees of bank. Banking industry a service to the public should not be linked with the performance of individual bank. PLI has definitely created a division and disparity among the employees of different banks. Which is a discrimination from an employee to employee.
    Knowing the danger of this PLI, BEFI never supported this, keeping in mind the interest of the bank employees. PLI also being one of the major issues BEFI didn’t get into the agreement signed between UFBU and IBA.
    In my view, this is a discrimination policy and should be rolled back..

  4. PLI scheme not good for employees both public and private sectors banks, in our bank (KVB) after we have achieved operational profit also, we have not received any incentive since PLI is optional for private sector banks…

  5. Well written.The hidden agenda of PLI is exposed in clear terms.The performance of bankers, especially PSB is linked to macro economic management of Govt,the policies of RBI,the international forces operating in our market due to globalisation,the undue influence of bigwigs,politicians etc.Time to awake n fight unitedly.You have explained the nefarious designs in a lucid way.

  6. PLI, in the sentence itself, it shows that it is incentive to the employees for their performance. It is good , if it’s not lead to the situation that bad performance leads to reduce their salary package.

  7. The article is well written. Congratulations.With the Union Government’s introduction of the privatisation of the PSBs PLI will affect the wages and earnings of the bank employees and officers in the coming years. PLI is also one of the reason for not signing the 11th BPS by BEFI

  8. Very sad. There will be partiality and a tool to exploit labour which is very much agiainst the concept of labour and wages from the Marxist economic theory. Individuals would be happy to get extra wages surrendering their dignity of labour.🧐😢

  9. லாபத்துடன் இணைக்கப்பட்ட ஊக்க ஊதியத்தின் பின் விளைவுகள் சிறப்பாக முன் வைக்கப்பட்டுள்ளது.

  10. அது ஏஐபிஇஏ மற்றும் ஏஐபிஓசி சங்கங்களின் தலைமையில் நடைபெற்ற ஊழியர்கள் அதிகாரிகள் விரோத ஒப்பந்தத்தின் ஒரு அம்சம்.எனவேதான் பிஇஎஃப்ஐ எதிர்த்தது.எனவே 30 மாதங்களுக்கு மேலாக இழுத்தடிக்கப்பட்ட ஒப்பந்தத்தை முடிக்க வேண்டி வங்கி ஊழியர்களின் எதிர்கால ஒப்பந்தங்கள் பற்றியெல்லாம் அக்கரை கொள்ளாமல் போடப்பட்ட ஒப்பந்தம்.பிஇஎஃப்ஐ இந்த ஊழியர் விரோத அம்சம் எதிர் காலத்தில் ஊழியரிடையே பிரிவினையை உருவாக்கும் என்று எடுத்து கூறியது.ஆகையால் அந்த சங்கம் மேற்கூறிய இரண்டு சங்கங்களால் ஒதுக்கி வைக்கப்பட்டு ஒப்பந்தம் காணப்பட்தல்லாமல் பிஇஎஃப்ஐ மீது சேறும் வீசப்பட்டது.கேவிபி தோழர் குறிப்பிட்டதுபோல் இலாபம் இருக்கும் ஆனால் இன்சென்டிவ் கிடைக்காது.எதிர் காலத்தில் ஊழியர்கள் இதை புரிந்துகொண்டு அவர்களின் செயல்பாடு இருக்கவேண்டும்.வங்கி ஒப்பந்தத்திற்க்கு பின்னால் நடந்த இன்ஷுரன்ஸ் ஒப்பந்தம் .அதில் பல நல்ல முன்னேற்றங்கள்.குறிப்பாக ஒரே அளவான DA புள்ளி கள் இணைக்கப்பட்டப்பின் அவர்களுக்கு 1 ஸ்லாபுக்கு 0.08.ஆனால் வங்கிக்கு0.07.
    இவற்றையெல்லாம் களைந்திட‌ வங்கி ஊழியர்கள்தான் சரியான தலைமையின் கீழ் தயாராக வேண்டும்.

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