In response to recent messages from the Department of Financial Services (DFS) about the
Performance Linked Incentive (PLI) program, the United Forum of Bank Unions (UFBU) has written to the Chief Labour Commissioner (CLC) requesting immediate action.
Joint Secretary of AIBEA Devidas Tuljapurkar and General Secretary of INBOC Prem Makker voiced serious concerns about the action in remarks given, especially in light of the ongoing conciliation process.In a letter dated March 19, 2026, UFBU objected to the DFS communication that was sent out the day before, claiming that it essentially implements a redesigned PLI scheme while conciliation proceedings are still in progress.
The union emphasized that any unilateral modifications would be against the agreed status and that the PLI structure is still being discussed, particularly for officers from Scale IV and higher.Concerns about extending updated PLI payments beyond Scale III were also brought up, and it was cautioned that doing so may interfere with the conciliation process, spark labor unrest, and jeopardize collective bargaining.
The CLC has been called by UFBU to step in, call an urgent meeting, and halt the implementation."This development appears to be a deliberate and calibrated attempt by sections of the banking leadership, with tacit policy support, to create divisions within the unionized workforce," AIBEA Joint Secretary Devidas Tuljapurkar told in response to the incident. Selectively rewarding top officials in Scale IV and above—often referred to as "Executives"—who participate in the decision-making process within banks appears to be the key to the method.
These CEOs are gradually separating themselves from the more general concerns of the workforce by tying their pay rewards to short-term performance indicators. This could undermine long-standing customs of collective representation in the banking industry and impair the workforce's collective bargaining power.
More significantly, history provides a sobering caution. The Global Financial Crisis was largely caused by a similar incentive-driven strategy. Aggressive bonus-linked arrangements in the US promoted excessive risk-taking, chasing short-term profits, and diluting prudential standards. Such remuneration schemes skewed decision-making and undermined institutional stability, as demonstrated by later investigations, including those examined under the Federal Reserve's supervision. It's hard to deny the similarities.
If the Indian financial sector adopts a similar strategy, especially in institutions that are crucial to the system, it could: Promote making risky decisions that are unrelated to long-term sustainability, undermine institutional accountability and governance standards, and cause a rift between management and employees.
Executives may view these incentives as lucrative and empowering in the near term. But when the banking cycle takes a negative turn, which it eventually does, those same CEOs may find themselves vulnerable, alone, and responsible for structurally poor choices. As a result, this incentive structure is a systemic risk concern rather than just a labor-relations issue.
Neither the executives' own long-term interests nor those of the banking institutions are served.
Collective responsibility, not segmented loyalty
Long-term stability, not short-term gains
Ethical governance, not incentive-driven compromises
Any deviation from these principles risks repeating mistakes that the global financial system has already paid a heavy price for.”
"It is really very unfortunate, painful in fact," INBOC General Secretary Prem Makker said. All of us leaders at UFBU have similarly struggled to comprehend how the government operates. The CLC claims that the issue is being discussed and that PLI will be put into effect following the revised plan. It was initially applied up to Scale III. What is this? We spoke with the CLC. You're phoning us, but why? The administration is not following your counsel, so whatever you say is not sacred. If we continue to obey while the government disobeys, what good is conciliation?
It's not that we oppose paying Scale IV and higher employees more PLI. The earlier settlement, which is up to Scale VII—you pay them based on the banks' performance—was one cause for anxiety. It was going quite well. This one, however, is an individual performance. We can comprehend this to some extent as well, but with individual-based performance, you are once again dividing into several categories. Someone is getting paid more, and that higher is now comparable to what private sector companies do, when they pay one employee 10 lakhs and the remaining team members 30–40 thousand.
They are poisoning the atmosphere, but I don't think they will gain anything by splitting the people. It's true that they are widening the gap. We won't allow individuals who will receive higher PLI tomorrow to just choke those on the ground. We'll fight for a long time.Consulting for financial services.Concerns about the PLI framework, its implementation procedure, and its possible effects on labor relations and worker dynamics in the banking industry are reflected in the UFBU letter and statements made by union leaders.
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