Background
At present, bank branches generally remain closed on the second and fourth Saturdays, while other Saturdays are working days.
The unions want banks to operate from Monday to Friday, with appropriate extension of weekday working hours to ensure that customer service hours are not reduced.
Bank working hours and wages are largely determined through bipartite settlements between bank management and employee unions.
However, declaration of a bank holiday requires government action under the Negotiable Instruments Act, 1881.
Thus, although the employers' representative body has accepted the five-day week proposal, final implementation requires government approval.
Four Major Demands
Five-day banking week
Make all Saturdays bank holidays.
Revision of Performance Linked Incentive
Unions oppose the existing revised structure because it primarily covers senior grades.
Bilateral negotiations on the incentive scheme
Unions want the scheme to be settled through negotiations rather than unilateral government orders.
Settlement of pending issues
Resolve outstanding matters from previous wage settlements.
Performance Linked Incentive Scheme
The Performance Linked Incentive (PLI) was introduced under the 2020 wage settlement.
It links employee incentives to the performance of the respective bank.
The revised government scheme covers Grade 4A officers and above, leading to objections from officers' associations and concerns about unequal coverage across employees.
Impact of the Strike
The timing is significant because 30 September is the half-yearly closing date for banks.
Public-sector bank branches may face disruption in:
Cash deposits and withdrawals
Cheque clearing
Account-related services
Other branch-level banking operations
UPI, internet banking and ATMs are expected to continue functioning, although cash availability could become an issue if ATMs are not adequately replenished.
Private-sector bank branches are expected to remain largely operational.
Public-sector and regional rural banks opened on a Sunday to reduce the impact of the extended closure period.
The Finance Ministry has advised banks to ensure adequate ATM cash availability and encouraged customers to complete time-sensitive transactions in advance.
Challenges
Settlement–implementation gap
The employers may agree to changes in working arrangements, but the government has the authority to notify banking holidays.
Unequal incentive coverage
Restricting the revised incentive scheme to higher grades can create differences among employees and generate opposition from other categories.
Increasing digitalisation
The growing use of UPI, internet banking and ATMs may reduce the direct impact of branch closures on digitally connected customers.
Rural and cash-dependent customers
Customers dependent on physical branches and cash services, particularly in rural areas and through regional rural banks, may experience greater disruption.
Coordination problem
A banking holiday affects customers, businesses, clearing systems and financial markets, making coordination among banks, unions and government important.
Way Forward
Set a clear timeline: The government should establish a time-bound process for deciding the five-day banking proposal.
Include the competent authority: Government authorities responsible for notifying bank holidays should be involved in negotiations at an early stage.
Make incentives broad-based: The PLI framework could be designed to provide transparent and performance-based incentives across appropriate employee categories.
Strengthen bipartite dialogue: Outstanding wage and service-related issues should be resolved through structured negotiations.
Essential-services protocol: Banks and unions could establish arrangements for critical functions such as cash management, clearing and essential customer services during strikes.
Protect rural access: Contingency arrangements should specifically address customers who depend heavily on physical banking facilities.
Conclusion
The bank strike highlights a gap between collective bargaining and statutory authority: while bank managements may agree to changes in working arrangements, the declaration of bank holidays requires government action. The dispute therefore involves not only wage and service conditions but also the institutional relationship between bank unions, bank managements and the government.
