Government pauses public-sector bank executive incentive scheme for FY 2025-26
The Finance Ministry says the November 2024 scheme will remain in abeyance while its structure is discussed with bank employees.
The Finance Ministry has said implementation of the performance-linked incentive scheme for public-sector bank executives dated 19 November 2024 will be kept in abeyance for FY 2025-26.
The decision followed a meeting with a bank-employee delegation. The ministry said the incentive structure would be taken up during ongoing Bipartite Settlement and Joint Note discussions. The delegation also raised ex-gratia and medical issues affecting retired employees.
Why it matters
Executive incentives can influence management behaviour, employee relations and governance in state-owned banks. The choice of metrics can encourage either durable performance or short-term optimisation.
SCULTRA point of view
Any revised structure should disclose its performance measures, risk adjustments and consultation process. Asset quality, customer service, conduct and long-term outcomes should be visible alongside financial results.
Limitations
The release does not publish the disputed formula, estimated fiscal effect or a deadline for a revised decision. It confirms a pause, not cancellation of the scheme.
Source: Press Information Bureau / Ministry of Finance, 7 September 2026, 21:05 IST.