Bank unions oppose DFS PLI directive, flag impact on industrial harmony

Srinagar, Mar 19: The United Forum of Bank Unions (UFBU) has strongly objected to the Department of Financial Services (DFS) directive asking public sector banks to implement a revised Performance Linked Incentive (PLI) scheme for senior officers, warning that the move could disrupt industrial harmony and undermine ongoing conciliation proceedings.

In a statement, the UFBU said the March 18 directive—covering officers from Scale IV to Scale VIII and Deputy Managing Directors in SBI—is “premature and inappropriate” as the issue remains under active discussion before the Chief Labour Commissioner (CLC). The latest conciliation meeting was held on March 9, where both unions and management deliberated on the same matter.

The forum argued that issuing implementation instructions during the pendency of conciliation renders the process ineffective and violates the spirit of established bipartite industrial relations in the banking sector.

The UFBU further said the revised scheme departs from the existing framework, where PLI is linked to overall bank performance and paid uniformly. In contrast, the new model introduces individual performance-based incentives for senior officers, which the unions claim could create divisions within the workforce.

Highlighting financial concerns, the unions noted that under the current system, PLI is capped at 15 days’ basic pay plus dearness allowance for most employees. The revised scheme, however, allows incentives of up to 365 days’ basic pay for senior officers, potentially leading to a sharp rise in expenditure for a limited group.

“This disproportionate benefit for a small segment, without a collective agreement, raises serious concerns around equity, governance and prudent financial management,” the UFBU said.

The forum also cautioned that such differentiation could weaken team cohesion, create internal disparities, and impact morale across the sector, where the majority of employees would remain under the existing lower incentive structure.

Citing global trends, the UFBU said performance models based on forced ranking and differentiation have been widely abandoned by major corporations due to their adverse impact on collaboration and workplace culture.

The unions warned that unilateral implementation of the scheme during conciliation could trigger unrest and compel employees to consider lawful agitational measures.

The UFBU has urged the DFS, Indian Banks’ Association, and bank managements to keep the directive in abeyance and resolve the issue through established consultative mechanisms to preserve industrial harmony and fairness in the sector.