The wage hike would be effective from November, 2007 and would result in an additional outflow of Rs. 4,816 crore annually. This includes a sum of Rs. 2,239 crore for officers and Rs. 2,577 crore for workmen employees for five years. The outflow in case of pension scheme is estimated at Rs. 6000 crore annually.

MV Nair, IBA's Chairman, said, "Of the gap (Rs 6,000 crore), 70 per cent cost (Rs 4,200 crore) will be borne by banks, while the remaining 30 per cent will be borne by the employees."

MV Nair, IBA's Chairman, said, "Of the gap (Rs 6,000 crore), 70 per cent cost (Rs 4,200 crore) will be borne by banks, while the remaining 30 per cent will be borne by the employees."

Nair who is also the Chairman and Managing Director of Union Bank of India pointed out that the unions had agreed to outsource some task.

The IBA will come out with the details of the wage hike and the pension scheme in the next 90 days. According to banks' chiefs, there would be no additional burden as the higher pay and the pension benefit had already been factored in.

This is the second pension option for public sector banks and would cover 272,000 serving employees and 60,000 employees who did not opt for the scheme in 1993 and have retired since then.

Those who join government-owned banks from April next year would be covered under the New Pension Scheme. As per the new pension scheme 10 percent of the basic salary and dearness allowance would be deducted as the contribution of the employees. Banks would also make a similar contribution.