Finance Ministry Urges Public Sector Banks to Wrap Wage Revision Process in Next 12 Months

The Finance Ministry has reportedly asked Public Sector Banks to begin negotiations for the 13th bipartite wage settlement and complete the process within 12 months, as per The PTI report.  

The direction was issued by the Department of Financial Services in a communication dated 20 April to heads of banks.  

The instruction comes ahead of the next wage revision cycle, which is due from 1 November 2027 for employees and officers of public sector banks. 

5-Year Revision Cycle 

Wage settlements in public sector banks, along with financial institutions and insurance companies, are revised every 5 years.  

The process involves discussions between the Indian Banks’ Association and employee unions to arrive at a mutually agreed structure covering pay, allowances and service conditions. 

The government has indicated that negotiations should begin early to avoid delays in implementation once the new cycle begins. 

Focus on Timely Closure 

In its communication, the department noted that earlier settlements saw delays, particularly in making consequential changes to regulations after agreements were finalised.  

It has now asked banks to ensure that both negotiations and related regulatory amendments are completed before the next wage period starts. 

The ministry had earlier advised that future wage agreements should be concluded before the due date so that revised salaries can be implemented without lag. 

Banking Sector Performance 

The directive comes at a time when public sector banks have reported improved financial performance. Combined profits rose from over ₹1 lakh crore in FY23 to ₹1.41 lakh crore in FY24 and further to ₹1.78 lakh crore in FY25. 

Balance sheets have also strengthened. Gross non-performing assets declined to 2.30% by September 2025. The provisioning coverage ratio stood at 94.63%, while capital adequacy was reported at 15.96% in the first half of FY26. 

Coverage of Settlements 

Bipartite wage settlements typically cover employees of public sector banks, certain old private sector banks and some foreign banks operating in India. These agreements determine compensation structures across a large section of the banking workforce. 

Read More: L&T Finance Board Approves ₹6,012 Crore Non-Convertible Preference Share Issue in FY27! 

Conclusion 

The government has set a defined timeline for the next round of wage negotiations, with an emphasis on completing discussions and regulatory steps within schedule. The aim is to align implementation with the start of the 2027 wage cycle. 

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