Bank unions are set to reject the offer and go on a warpath demanding a higher wage hike. However, at the bipartite discussion held on Friday, the unions did not formally issue any strike threat.

The unions have demanded a 25 per cent wage hike. At the last five-year wage settlement -- which expired in November 1997 -- bank employees and officers were given a 10.5 per cent hike.

"Keeping in view the present scenario and the banks' paying capacity, IBA has made a final offer of wage revision equal to 8 per cent increase in establishment expenses as on March 31, 1997, to be implemented prospectively," an IBA release said. According to sources, the bankers' association is unlikely to change its stance as it has the full backing of the finance ministry.

At the IBA management committeemeeting, which preceded the bipartite talks with bank unions, some of the weak banks hinted at opting out of the wage settlement as they cannot afford any wage revision. According to sources, at least three banks -- Uco, UBI and Indian Bank -- are planning to withdraw the mandate given to the IBA to broker the wage deal on their behalf.

When contacted, IBA secretary and CEO MN Dandekar confirmed the development but refused to name the banks.

The 8 per cent hike in employees' wage, if implemented, will impose an annual burden of Rs 530 crore on the banking industry. An identical wage increase for bank officers will put an annual burden of Rs 400 crore on the industry, taking the total burden to Rs 930 crore. Currently, the banking industry spends Rs 6,700 crore and Rs 5,000 crore, respectively, to meet the wage expenses of staff and officers annually.

Dandekar justified the proposed 8 per cent wage hike, saying that on a relatively higher base the quantum of hike would be a decent one, particularly inthe context of the present economic scenario and banks' capacity to pay.

However, bank unions and officers' organisations are unlikely to accept the offer. "There is no question of accepting anything less than 10.5 per cent which was offered in the previous wage settlement," a trade union source said.