On March 8, 2024, a pivotal moment for the Indian banking sector unfolded in Mumbai with the signing of the 12th Bipartite Settlement Agreement and the 9th Joint Memorandum. These landmark agreements were the culmination of several months of negotiations between the Indian Bankers Association (IBA) and representatives of bank staff. The successful conclusion of these discussions reflects a positive resolution achieved despite numerous challenges faced during the negotiation process. Authorized officials from the Association of Officers’ Union and the Union of Workmen’s Unions engaged with the Indian Banks’ Association, which acts on behalf of bank management, to finalize wage increases for bank officers and employees. Both management and the executives and members of the Workers’ Union/Association concurred on the necessity of enhancing the banking system to better serve the requirements of stakeholders and customers.
The 12th Bipartite Settlement Features
This comprehensive wage adjustment is effective from November 1, 2022, and will remain in force for five years.
Introduction of a Five-Day Work Week
The joint memorandum acknowledges all Saturdays as public holidays, contingent upon government notification. The revised working hours are anticipated to be implemented following the government’s official announcement, which is expected within six months.
Significant Pay Revision
The total increase in the pay revision, specifically the price ticket component, surpasses Rs. 8,284 crore. This amount represents 17% of the salary fund’s cost allocated for public sector banks.
Revised Salary Scales
The establishment of new salary scales involves incorporating the dearness allowance corresponding to point 8088, along with its associated additional burden. Furthermore, the post-reunion family allowance includes an applied load of 3.22%, leading to an effective load of 4.20% calculated at 30.38% of the base pay.
A significant development is the approval of the officer community’s long-standing demand for two additional CAIIB increments (CAIIB Part II). Officers who have successfully cleared CAIIB Part II will be awarded a twofold increment, effective from November 1, 2022. Moreover, officers are now eligible for three Professional Qualification Pays (PQPs), an increase from the previous two. The PQP amounts are:
PQP-I – Rs 1370/-
PQP-II – Rs 3425/-
PQP III – Rs 5480/-
This revision is anticipated to substantially increase the actual benefit for officers who have completed CAIIB. The variances stemming from these additional CAIIB increases have been thoroughly analyzed, and the deviation attributed to PQP approval has also been incorporated. Commencing November 1, 2022, the new pay scales will span from Rs. 48480/- to Rs. 173860/-, encompassing all scales from I to VII.
Adjustments to Dearness Allowance (DA) and Compensation Formulae
The conversion factor resulting from the consolidation of dearness allowances has been adjusted downwards by 0.0549. Instead of rounding up to 0.05, it has been raised to 0.06, thereby extending benefits to both active and retired officers. The merit compensation index is transitioning from the 1960=100 series to the 2016=100 series, with the conversion factor changing from 0.06 to 0.99 for the 2016=100 series. This adjustment is designed to benefit officers with higher value. The adjuster of 0.99 for the 2016=100 series is being converted to the 1.00 series, which further increases the added value.
Additional remuneration will be provided as a percentage, reflecting these modifications. Value support will be disbursed at 1.00% of the “salary” for each percentage point of the index. As previously outlined, DA is payable for any fluctuation (increase or decrease) in the 2016 CPI Quarterly Average for Industrial Workers exceeding 123.03 points (where 123.03 points equals 100). A 0.01% change in DA “wage” will correspond to every other decimal change in the 2016 CPI above 123.03 points.
The aforementioned pension reduction will be paid semi-annually for every 123.03-point rise or fall based on the All India Industrial Workers CPI-Quarterly Average 2016 = 100.
Stagnation Increments for Officers
Officers in Senior MMG Scale III, including those recruited or promoted to this scale, currently receive six stagnation increments upon reaching the scale maximum. Effective November 1, 2022, these officers will now be eligible for eight biennial increments: the first four at Rs. 2980/- each, followed by the next four at Rs. 3360/- apiece.
For SMG Scale IV officers, who are presently eligible for two stagnation grades, the entitlement will increase. With effect from November 1, 2022, they will receive five fixed increases, each occurring at a two-year interval. The first of these will be Rs. 3360/-, with the subsequent four at Rs. 3680/- each.
SMG Scale V officers, currently entitled to a single static grade, will see a revision. Effective November 1, 2022, upon reaching the top of their scale, these officers will receive a four-stop increment, with a periodicity of Rs.4000 every two years.
TEG Scale VI officers, after achieving their scale limit, are entitled to three static increments at a two-year frequency: the first two at Rs.4000/-, and the third at Rs.4340/-.
Similarly, TEG Scale VII officials, once they attain the highest level on their respective scales, are entitled to three static levels of Rs.4340/- every two years.
Furthermore, every promoted officer will be assigned to a higher rung on the new pay scale. This assignment includes protection equivalent to at least one step of the pay gap he bridged in the previously promoted group or scale, after accounting for the relevant deviation.
Timeline and Context of the 12th Bipartite Settlement
As part of a year-long bilateral negotiation process, the UFBU and IBA officially signed a Memorandum of Understanding on December 7, 2023. A subsequent crucial meeting took place on January 12, 2024. Following extensive discussions that extended late into the night, the cost sheets were signed by the IBA and UFB. Despite these developments, official sources have continued to maintain confidentiality regarding the precise details of the expense statement. Consequently, this has led to ongoing discussions and debates, particularly concerning the circulation of unofficial or “hacked” information.
In addition to the monthly ex-gratia payment, Public Sector Banks (PSBs) will recognize pensions for pensioners and family pensioners as of October 31, 2022. This will be a one-time resource applicable to the existing bilateral/joint funding mechanism, even as unions and associations continue to advocate for a comprehensive update of pensions for all retirees.
Expected Date of Finalization and Recent Developments
The bipartisan meeting held on January 12, 2024, reportedly involved limited discussion, with decisions seemingly made unilaterally within a select working group. According to trustworthy sources, there has been a movement to renegotiate specific aspects of the agreement. This push is driven by concerns voiced by several unions within the UFBU, who perceive the current approach as arbitrary, and by considerable discussion among bankers on social media. Consequently, the finalization and release of the detailed cost data have been delayed.
The 12th Bipartite Settlement Salary Calculator
With the finalization of the 12th Bipartite Settlement for bank employees, there is considerable anticipation regarding the calculation of new salaries based on the agreed-upon increases. The pay hike across banks has been fixed at 17%, incorporating a 3% load factor. This signifies that an employee’s total gross pay on their salary slip will see a 17% increase. The Dearness Allowance (DA) has also been integrated into the existing base salary structure.
Below is a detailed explanation of the 12th Bipartite Settlement Salary Calculator, illustrating the impact of the 17% increase:
Understanding the Load Factor
The load factor, a key component of the 12th Bipartite Settlement, provides a benefit to bank employees by considering both their Basic Pay and Dearness Allowance. This 3% load factor is applied to both BASIC and DA elements.
Overall Salary Increase
The 12th Bipartite Settlement confirms an overall wage increase of precisely 17%. For illustration, if a gross wage before the 12th BPS was Rs. 74,125, it would rise to Rs. 89,601 after the settlement. This exemplifies the 17% increase reflected on the pay slip, as determined by the 12th BPS final negotiating committee.
Computation for Officer Salaries
To illustrate the changes, consider an employee who joined the bank in 2021 with a basic pay of Rs. 36,000 under the 11th BPS. Employees who have successfully completed the JAIIB and CAIIB certification courses are awarded one increment for each qualification. Factoring in two annual increases for 2022 and 2023, the total number of increments amounts to four (1+1+1+1). Each increment for officers’ Basic Pay results in an increase of Rs. 1490. This computation outlines the compensation for an officer employee holding CAIIB certification and having received two annual increments.
Achieving a Gross Salary of One Lakh or More in Banks
An officer in the banking sector who holds a CAIIB qualification and possesses two years of experience will receive a gross salary of 89k. When factoring in additional allowances like rent and petrol, an officer’s total gross income in a bank can potentially reach one lakh, marking a positive development for bank employees.
Components of the Salary Slip
An officer employee’s pay stub in a bank comprises several key components: BASIC pay, Dearness Allowance (DA), SPECIAL ALLOWANCE, and the LOAD FACTOR. The load factor is set at 3% and is calculated based on the new basic pay under the 12th BPS combined with the new DA. Specifically, it is computed as 3% of (56212+10286), which equals 1994.
12th Bipartite Settlement Salary After Wage Revision
This wage revision brings favorable changes for public sector bank staff. The Indian Bankers Association (IBA) and various banking confederations have signed the 12th Bipartite Settlement, which formalizes the 17% salary increase. The aggregate annual remuneration cost for all banks, including the State Bank of India, is estimated at Rs 12,449 crore. These modifications are effective from November 1, 2022, and will remain valid for five years. The new pay scales introduce a 17% increase in pay and benefits, excluding dearness allowance, and incorporate a 3% utilization rate. The IBA advocates for a five-day work week, a change that unions are keen to see implemented within 180 days, prior to the signing of a formal agreement next year. This current settlement builds upon a previous 15% salary increase that was provided to approximately 850,000 bank workers in July 2020.
Benefits of Utilizing the 12th Bipartite Settlement Salary Calculator
These calculators offer several distinct advantages for bank employees:
- Transparency: Users can access a comprehensive summary of their revised wage structure under the new methodology.
- Accuracy: The tools help in eliminating potential human errors associated with manual calculations.
- Financial Planning: Employees can effectively estimate their future salary increases, enabling better financial management and planning.
12th Bipartite Settlement Calculator in Excel: Streamlining Your Calculations
For those who favor Microsoft Excel for their various computations, a dedicated 12th Bipartite Settlement calculator is available in Excel format. This tool features a user-friendly interface, enabling you to input your specific data and promptly receive accurate results within Excel. By utilizing this Excel-based calculator, you can effortlessly ascertain your income without the necessity of complex formulas. This application simplifies the entire process and facilitates the organization of all your calculations in a single, convenient location.
Estimating Your Anticipated Increase with the 12th Bipartite Settlement Calculator
While the precise increase will naturally differ based on individual circumstances, the 12th Bipartite Settlement is projected to deliver an overall 17% rise in salary and allowances. Employees are encouraged to use the available calculators to ascertain their specific increase, tailored to their unique pay structure.
How to Calculate Your 12th BPS Salary
Based on the 12th BPS Memorandum of Understanding (MOU) signed on December 7, 2023, the calculation of your new Basic Pay follows a straightforward method. First, identify your current Basic Pay; this will be referred to as ‘A’. Next, calculate 30.38 percent of ‘A’, which will be designated as ‘B’. Subsequently, compute the load factor, ‘C’, by taking 3% of the combined total of ‘A’ and ‘B’. Finally, your new Basic Pay is determined by summing ‘A’, ‘B’, and ‘C’.
To illustrate this calculation method, consider an example where your current basic wage is Rs. 36,000:
- Current Basic Pay (A): Rs. 36,000
- 30.38% of A (B): 36000 x 30.38 = 10936.80
- Sum of A and B: 36000 + 10936.80 = 46936.80
- Load Factor (C): (46936.80 x 3)/100 = 1408.10
- New Basic Pay (A + B + C): 46936.80 + 1408.10 = 48344.90