How to Calculate Performance Linked Incentives (PLI) under 11th BPS ?

Know the process to calculate Performance Linked Incentives (PLI) under 11th BPS - Step by step process to calculate the newly introduced PLI concept for Public Sector Bankers.  PLI is signed by the Bankers Union as per the mutual agreement with IBA. 
The performance linked Incentives will be given on mandatory achieving the YoY growth in operating profit/Net Profit. The PLI will be paid on the basis of certain fixed slabs as introduced in the 11th BPS agreement.

What is Performance Linked Incentives (PLI) ?

1. Percentage Increase YoY in Operating Profit
2. Payout as Annual Increment on Establishment cost
3. Bank will payout as Maximum of 15 Days salary and Minimum of  5 days as annual increment on Establishment cost.
4. The Annual increment will be paid addition to the existing  salary hike which would be fixed component.
Performance Based Annual Increment 
As per IBA proposed complex formulae, all the banks are categorized on the basis of performance components i.e. Operating Profit and Profitability majorly.
As per offer given by IBA :
All such bank's employees, which are having operating profits as per the charts here by below will be given incentive with certain days of salary as and above the regular salary. YoY Operating Profit must be higher than 5%. 
The base year considered for the calculation will be 31st March for YoY.
PLI Matrix Index - Mandatory Criteria : 
S.No.YOY Growth in Operating ProfitNo. of Days for which salary (BP+DA) shall be paid
1.< 5%NIL
2.5% To 10%  5 Days
3.> 10% To 15%10 Days*
4.>15%15 Days*

NOTE: S.No 3 & 4 will be paid only in case of Net profit. If bank has growth in operating profit of 5% and more , but there is no Net Profit then Min second slab of 5 days will be payable.

Percentage of Increment Paid on Annual Basis

All such banks, which are having YoY Growth in Operating Profit/Net Profit higher than 5% will get the annual increment as Min 5 days salary and Maximum of 15 days. 
For e.g. Indian Bank having positive Net Profit. It will achieved both the criteria as on 31st March 2018 hence qualified. The Annual increment offered to this bank as per new scheme will be 10 Days of establishment cost. 

What is an Establishment cost ?

This is the cost incurred on the staff expenses in general by the organization. Hence these Banks' employees will be paid '10 Days salary' on establishment expenses of average 30 days.

PLI Formula Explains :

Suppose the Establishment expenses of Vijaya bank as on 31st March 2019 is Rs 100 and there are 50 employees in the Bank, in such case the 
Annual Increment with new formula will be  :

For e.g. in Indian Bank
Establishment Expenses For Year  : Rs 100
Establishment Expenses of 10 Days : (100/365)*10 = 2.73
Increment for each employees : 2.73/50 = 0.0546
Gross Salary of employees as on 31st March 2018 : Rs 100
Gross Salary with Annual Increment : Rs 100 + (Rs 100 X 0.0546)  =  Rs  105.46 (Other than Fixed hike)
Annual Increment offered to each employees in above banks will be factored as above. Similarly each of the bank will be classified and paid as per their categories.
We will update the details salary structure of all the banks based on Operating Profit/Net Profit and profitability soon.

Disadvantage of PLI

1. PLI will be paid to all the employees 
2. This will again doesn't create the competitiveness among the employees
3. Whether work or doesn't work, the incentive will be paid to all.
4. The performance linked incentive is for banks and not for employees.
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