The decision followed a meeting between Finance Minister Nirmala Sitharaman and a bank employee delegation headed by the Bharatiya Mazdoor Sangh. Performance-linked incentives give employees additional pay tied to their bank’s performance. The delegation also raised ex-gratia payments, healthcare facilities for retirees and concerns about the incentive framework in public sector banks.

The pause comes against a strike programme announced by the United Forum of Bank Unions. Its demands cover both the revised incentive formula and the pending five-day banking week. The programme listed a September 11 stoppage, another from September 28–30 and a possible indefinite strike beginning October 26.

The dispute has continued through negotiations and legal proceedings. A proposed March 2025 strike was deferred after the Chief Labour Commissioner sought discussions between unions and the Indian Banks’ Association. Unions allege that the government bypassed those discussions by directing banks in March 2026 to adopt the revised formula. A related case remains pending before the Delhi High Court.

Tensions increased after an August 21, 2026 direction from the Department of Financial Services to proceed with implementation. Unions argued that changing the arrangement during labour conciliation violated the Industrial Disputes Act. The temporary halt returns the incentive issue to negotiations, but the report does not state whether the announced strikes have been withdrawn.