June 11, 2009

About 800,000 employees of state-run banks are set to get a 17.5% increase in their wages. The Indian Banks’ Association (IBA), the premier bankers’ body, is close to signing an agreement with trade unions after protracted negotiations that have lasted one-and-a-half-years.The last wage agreement, that offered a 13.3% hike to bank employees, expired on 31 October 2007. Wage agreements in the banking industry last for five years.

A 1% hike in wages translates into a Rs275 crore expenditure for public sector banks, which account for about 80% of the Indian banking industry.An IBA committee met in New Delhi on Wednesday to give final touches to the agreement and discuss it with finance minister Pranab Mukherjee.The wage negotiations have also been able to break the stalemate on bank employees’ demand for pension.