Will 8th Pay Commission Benefit Public Sector Bank Employees?

Will Public Sector Bank (PSB) employees get benefits from the 8th Central Pay Commission (CPC) recommendations? The eagerly awaited 8th CPC recommendations directly impact the central government employees, pensioners, and family pensioners. While CPC’s recommendations are often followed by the state governments, public sector banks (PSBs) follow a different system for salary revision.  

When parliamentarian Konda Vishweshwar Reddy raised the question of a 10 per cent increase in pension for the Reserve Bank of India (RBI) and National Bank for Agriculture and Rural Development (NABARD) pensioners, and whether the government has any proposal under consideration to hike pension of the PSB pensioners, too, this is what the government replied.  

Pankaj Chaudhary, Minister of State in the Ministry of Finance, replied that the Ministry of Finance has accorded approval to the Reserve Bank of India for an increase of 10 per cent in basic pension plus dearness relief with effect from 01.11.2022, for all pre-01.11.2022 retirees.

For National Bank for Agriculture and Rural Development (NABARD) pensioners, the minister replied that, “The Ministry has revised the pensions of all pre-01.11.2017 retirees. The said revision is effective from 01.03.2019 for pre-01.11.2012 retirees and from 12.06.2023 for pre-01.11.2017 retirees. Further, no proposal for revision of pension of pre-1.11.2022 retirees of NABARD has been received.”

For the PSB pensioners, the Chaudhary clarified that the pension rules of the nationalised banks are governed by the Bank (Employees’) Pension Regulations, 1995, which are framed with the approval of the board of the respective banks. He added, “These regulations do not have a provision for revision of pension.” However, their dearness relief (DR) is increased on half yearly basis, and as per the agreed terms of the 12th Bi-partite Settlement and 9th Joint Note, a monthly Ex-gratia is also paid to the pensioner or the family pensioners who were eligible to draw pension on or before October 31, 2022.

This explains that PSB staff are not covered under the central government pension rules and 8th CPC recommendations.

Abhishek Kumar, a Securities and Exchange Board of India (Sebi)-registered investment advisor (RIA), and founder of SahajMoney, a financial planning firm, says, “Public sector bank employees are not covered under the 8th Central Pay Commission as their compensation is determined by a separate industry-level agreement. Their wages and benefits are established through the Bipartite Settlement process negotiated between the Indian Banks' Association and representative employee unions. This framework operates independently of the pay commissions designed for central government staff.”

However, the 8th Pay Commission plays some role in their salary-related discussions as well.

Will Bank Employees Be Affected By The Recommendations Of The 8th Pay Commission?

“Although there is no direct financial benefit for bank employees from the 8th Pay Commission revisions however commission's findings often serve as a vital benchmark for bank unions to negotiate better terms during their own settlement rounds. Recommendations regarding dearness allowance and other perks can set a market precedent that influences future banking industry agreements,” says Kumar, and adds, “Salary revisions for bank employees are generally conducted every five years through Bipartite Settlements rather than the ten-year cycle used by the Central Pay Commission. The process involves structured negotiations between the Indian Banks' Association and the United Forum of Bank Unions to reach a mutual agreement on wage hikes and service conditions.”

On the government's part, Chaudhary clarified that there is no proposal to revise pension beyond the existing provisions under consideration for PSB retirees.