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Why are bank unions striking?

For bank employees, the five-day week is the principal unresolved demand. At present, bank branches are closed on the second and fourth Saturdays but generally operate on the first, third and where applicable, fifth Saturdays. The unions want all Saturdays to become holidays.

The issue has a longer history. The Indian Banks Association had earlier agreed to the existing arrangement of two Saturday holidays a month. In the wage negotiations, the proposal for all Saturdays to be holidays was taken forward, with the understanding that working hours on weekdays could be increased to compensate. The unions argue that this would not mean fewer customer-facing hours because the additional working time would be accommodated from Monday to Friday.

“From the UFBU, we pointed out that there is no response to our demand for implementation of 5 Days Banking which was agreed and signed in March, 2024 under the last wage revision settlement. Hence, we are going ahead with the strike action,” UFBU said in a letter to various unions and members.

PLI is the second major point of contention. The system was introduced as part of the 2020 wage settlement and was linked to the performance of individual banks. A revised government scheme for senior bank officials has since triggered opposition from bank officers’ associations. The revised PLI covered Grade 4 and above officers, while excluding lower-scale officers, prompting objections over the distribution of incentives.

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What will be the impact of the bank strike?

The timing is particularly sensitive: September 30 is the half-yearly closing date for banks, making it important for reconciliation, provisioning and treasury and market operations. The government has warned that a three-day strike, coming immediately after the weekend, could therefore cause wider disruption.

The biggest impact will be felt at physical bank branches, particularly those of public sector banks. Cash deposits and withdrawals, cheque clearing, account-related work and other branch-level services could face disruption. But this will not amount to a complete shutdown of banking.

UPI, internet banking, mobile banking and ATMs are expected to continue functioning. State Bank of India and other public sector banks have advised customers with time-sensitive branch transactions to complete them before the strike and use digital channels and ATMs during the disruption. Private sector banks are also expected to be less affected because the strike is principally directed at the participating unions and public sector banking operations.

Why are banks working on Sunday?

This is where the calendar matters. September 27 is a Sunday — normally a bank holiday. But public sector banks and regional rural banks will open that day ahead of the September 28-30 strike. The reason is straightforward: without this Sunday opening, customers would face the weekend immediately followed by three days of strike action. That could effectively stretch the disruption to five consecutive days.

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The Finance Ministry therefore sought to ensure that customers had an additional day to conduct essential branch banking before the strike. The Reserve Bank of India has approved the full operation of bank branches, offices, ATM-linked branches and currency chests on September 27.

The immediate question is whether the government and unions can resolve the five-day-week and PLI disputes before September 28. If not, the three-day strike could be followed by the larger threat of an indefinite strike from October 26.

What is the government’s response?

The government and bank managements have asked the unions to defer the strike and continue discussions. The Finance Ministry has said the five-day banking proposal remains under consideration and that several stakeholders have to be taken into account before a decision is made. At the same time, the government has begun contingency planning. The Finance Ministry has asked public sector banks and regional rural banks to keep adequate cash in ATMs and take steps to maintain essential services during the strike.

IBA and the Department of Financial Services (DFS) had participated in the conciliation meetings of the Labour Ministry. IBA and DFS had agreed to keep the PLI scheme in abeyance.

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The DFS representatives submitted that the demand of five-day banking is under consideration but the timeline cannot be given, the government said. “However, apart from the 5 days banking, there are a lot of welfare measures Government has taken in the past for the bank employees and still taking including initiation of the process of 13th bipartite settlement,” the Office of the Chief Labour Commissioner in the Ministry of Labour said in a note.