The Finance Ministry announced the pause on Monday after Finance Minister Nirmala Sitharaman met an employee delegation headed by the Bharatiya Mazdoor Sangh. The decision puts the disputed performance-linked incentive rules on hold, rather than ending the scheme.

At the centre of the dispute is the circular issued on November 19, 2024. It allowed officers from Scale IV upwards to receive incentives worth as much as 365 days’ basic salary, depending on individual performance. For clerical staff and officers through Scale III, the ceiling was 15 days’ basic salary with dearness allowance.

The United Forum of Bank Unions and other unions opposed this difference, saying it departed from the earlier understanding with the Indian Banks’ Association. They want a common PLI framework covering employees through Scale VII, with rewards linked to the bank’s collective results instead of large individual payouts for senior officers.

The delegation also sought an ex-gratia review, improved healthcare for retirees and pension updates. Five-day banking remains another pending demand. The pause comes ahead of the nationwide strike called by UFBU for September 11. The ministry has backed dialogue, with the issues moving into bipartite and joint-note discussions.