Finance Ministry in Action Mode! Ultimatum to Public Sector Banks: 'Close Salary Revision Files Within 12 Months'..

The government has directed Public Sector Banks (PSBs) to initiate the negotiation process for the 13th Bipartite Wage Settlement in a time-bound manner and to finalize it within the next 12 months. The wage revision for employees and officers of public sector banks will be effective from November 1, 2027. Financial institutions, including public sector banks and insurance companies, revise their employees' salaries every five years. Under this process, the Indian Banks' Association (IBA) engages in negotiations with employee organizations and unions to reach a mutually agreed-upon wage settlement.

**Letter Received by Public Sector Banks**
Through a letter, the Department of Financial Services has directed the heads of banks to take the necessary steps to commence negotiations for the upcoming wage revision. This letter, dated April 20, states that the negotiation process must be completed within a maximum period of 12 months. Before the previous settlement, the Ministry of Finance had instructed the IBA to ensure that all future wage negotiations are concluded ahead of the scheduled timeframe, thereby allowing the revised salaries to be implemented on time.

**Task to be Completed Promptly**
The letter also noted that, in the past, there have been significant delays in making the necessary amendments to regulations following the conclusion of wage settlements. Therefore, it must be ensured this time that the requisite changes to the relevant regulations are completed prior to the scheduled effective date of the next wage settlement. The government emphasized that the banking sector serves as the backbone of the Indian economy, and providing employees with fair remuneration helps maintain high morale among the workforce.

**Continuous Growth in Bank Profits**
Public Sector Banks have posted record profits in the financial year 2025, and this momentum is expected to continue into the financial year 2026. The aggregate profit of all public sector banks rose from ₹1 lakh crore in FY23 to ₹1.05 lakh crore; subsequently, this figure surged to ₹1.41 lakh crore in FY24 and further to ₹1.78 lakh crore in FY25. This improvement is attributed to enhanced asset quality, sustained credit growth, adequate capital buffers, and increasing returns on assets. 

Improvement in Balance Sheets
The balance sheets of public sector banks continue to show steady improvement. At the end of September 2025, Gross Non-Performing Assets (NPAs) stood at a record low of 2.30 percent, while Net NPAs were approximately 3 percent. The Provisioning Coverage Ratio rose to 94.63 percent, and at the end of the first half of the financial year 2026, the Capital Adequacy Ratio remained at a healthy level of 15.96 percent. Wage settlement negotiations generally benefit employees of public sector banks, old-generation private sector banks, and certain foreign banks.

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