The United Forum of Bank Unions (UFBU) has strongly objected to the Department of Financial Services (DFS) taking a unilateral decision on the Performance Linked Incentive (PLI) for Whole Time Directors and Senior Executives of Public Sector Banks, particularly officers in Scale IV and above.
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UFBU is disappointed that the DFS rejected its representation even though the matter is still under statutory conciliation before the Chief Labour Commissioner (Central).
1. Why UFBU is opposing the DFS decision
The original PLI scheme covered everyone:
The PLI scheme introduced in 2020 was designed as an integrated scheme covering employees from sub-staff to Scale VII. The incentive was linked to the overall performance of the bank, rather than individual rankings.
UFBU argues that changing the scheme only for Scale IV and above disturbs the pay and service-condition relativity established under the 11th Bipartite Settlement and 8th Joint Note.
The Joint Note cannot simply be overridden:
According to UFBU, the 8th Joint Note has statutory effect. Therefore, service conditions agreed under it cannot be changed merely through an executive communication issued by DFS.
DFS acted while conciliation was still going on:
UFBU points out that DFS issued an advisory on 18 March 2026 asking banks to disburse the revised PLI to Scale IV and above, even though the dispute was still under conciliation.
The union argues that this amounts to a violation of the restrictions applicable during pending conciliation proceedings under Section 33(1) of the Industrial Disputes Act and Section 82 of the Industrial Relations Code.
DFS’s position is contradictory:
UFBU says DFS itself participated in the conciliation process for more than 17 months. Therefore, its later statement that the dispute is “without basis” is difficult to justify.
2. Why UFBU opposes the revised PLI scheme
UFBU believes that the revised PLI structure is divisive and demotivating.
Only a small section of employees benefits:
The revised scheme covers only around 5–7% of the workforce, while approximately 93–95% of employees and field-level officers are excluded, even though they contribute directly to business growth and bank performance.
The bell-curve system creates unhealthy competition:
The scheme places employees into forced performance brackets, starting from the top 20% and going down to a residual category that may receive zero incentive.
UFBU argues that this changes PLI from a collective reward for bank performance into a tool for ranking and dividing employees.
Bank Boards lose their autonomy:
UFBU also objects to the role of a committee headed by the DFS Secretary in determining eligibility. According to the union, this reduces the decision-making authority and autonomy of individual bank Boards.
3. What UFBU wants
UFBU has requested the Chief Labour Commissioner (Central) to take immediate corrective action:
- Reject the DFS’s position contained in its letter dated 26 May 2026, as UFBU believes it contradicts the records of the conciliation proceedings and applicable labour laws.
- Direct DFS to consider payment of FY 2024–25 PLI to Scale IV–VII officers according to the existing provisions of the 8th Joint Note.
- Keep the revised November 2024 PLI scheme in abeyance and maintain the existing position until the dispute is resolved.
- Immediately convene the next conciliation meeting to resolve the matter.
- If the issue is not resolved through conciliation, UFBU has warned that it may restart its agitational programme, including strike action.
In one line
UFBU’s basic argument is: PLI was originally designed as a bank-wide incentive linked to overall performance; changing it selectively for senior officers, while the matter is under conciliation, is unfair, legally questionable, and damaging to the principle of collective performance and employee motivation
