In November last year, the IBA had issued a take-it-or-leave-it note to bank unions offering 8 per cent wage hike for nine lakh and odd bank employees at the seventh bipartite settlement. Subsequently, it offered the same package to the officers' bodies. It had also made it clear that the wage settlement would be made effective prospectively and not from November 1997 when the last wage pact had expired.

Bank unions have rejected the offer and called for a one-day token strike on January 12 demanding higher wage hike.

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

"Keeping in view the present scenario and the banks' paying capacity IBA has made the final offer of wage revision equal to 8 per cent increase in establishement expenses as on March 31, 1997, to be implemented prospectively. It would not be possible to revise the offer, IBA secretary and CEO MN Dandekar said.

The bankers' association is unlikely to change its stance as it has the full backing of the finance ministry.

According to industry sources, at a recent meeting the labour commissioner's office in Mumbai had asked the union leaders whether they would like to reduce the tenure of the wage agreement to three years (from the five years) and accept the proposed eight per cent wage hike. However, the unions rejected the proposal.

Some of the weak banks have 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.

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 the bank officers will put an annual burden of Rs 400 crore on the industry taking the total burden to Rs 930 crore.

At present, 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 on a relatively higher base the quantum of hike would be a decent one, particularly in the context of the present economic scenario and banks' capacity to pay.