Examine the role of trade unions in shaping public sector bank reforms in India, with reference to recent industrial action.

Public sector banks (PSBs) combine commercial objectives with a large, unionised workforce whose service conditions are settled through periodic Bipartite Settlements between the Indian Banks' Association and bank unions. Trade unions therefore function less as outside protesters than as embedded participants who shape the pace and terms of reform.

Institutional channels of union influence

• Collective bargaining: wage and service issues are routed through the Bipartite Settlement / Joint Note mechanism; the government referred the disputed incentive scheme to the ongoing settlement discussions rather than deciding unilaterally [1].
• Legal framework: the Industrial Relations Code, 2020 regulates this leverage — requiring prior strike notice and barring strikes during conciliation, thus channelling agitation into negotiation [3].
• Federated strength: the United Forum of Bank Unions (UFBU) aggregates officer and employee unions, giving a single bargaining voice across banks.

Recent industrial action as illustration

• The Performance-Linked Incentive (PLI) Scheme for PSB executives, notified on 19 November 2024 and due from FY2025-26, was kept "in abeyance" in September 2026 after a bank employees' delegation met the Finance Minister [1].
• Accompanying demands — review of ex-gratia, medical facilities for retired employees — were placed alongside a five-day banking week [1].
• UFBU's escalating strike calendar, from a one-day strike to a threatened indefinite strike, shows agitation used as calibrated bargaining pressure.

Assessing the role

• Constructive: unions force transparency and non-arbitrariness in performance metrics, and protect equity between grades.
• Constraining: they can delay efficiency-linked HR reform; yet structural decisions proceeded regardless — ten PSBs were amalgamated into four with effect from 1 April 2020 [2]. Union influence thus operates on employment terms, not on ownership or structure.
• Costs: prolonged strikes disrupt payments, clearing and credit flow to small borrowers.

Union action has made PSB reform consultative rather than imposed. The way forward lies in pre-notification consultation, objective and disclosed performance criteria, and phased rollout through the bipartite forum — converting unions from veto players into partners in building efficient, accountable public banking.