The wage revision talks between bank unions and the Indian Banks' Association (IBA) have run into a deadlock as the United Forum of Bank Unions has rejected IBA's revised offer of 15 a per cent raise, and is insisting on the 17.5 per cent offered earlier.

On Wednesday, the IBA conveyed to the UFBU, a representative body of nine bank unions, that its earlier offer of 17.5 per cent stands reduced to 15 per cent annual increase over the wage bill as on 31 March 2007. The move to prune the offer is reportedly on the advice of the union government, which is chary of inflating banks' wage bills.

The last time the bank unions and the IBA discussed the wage revision issue was on 9 June. At the meeting, the IBA was willing to improve its offer from 15 to 17.5 per cent, subject to approval by the management committee. In view of this, the UFBU deferred the strike it had called for 12 June.

But now, UBFU convenor C H Venkatachalam said IBA had told the unions that it could not offer more than a 15 per cent increase, based on the government's advice. ''The talks, which were progressing smoothly to date, have met a hurdle. The reduction in the offer shows a lack of credibility on IBA's part,'' he said.

The UFBU convenor has now written to the new IBA chairman, M V Nair, seeking a meeting with the latter on the issue. Interestingly, Nair is also the chairman of the IBA's negotiating committee that is in talks with the bank unions on the wage revision issue.

Nair said the negotiations were still on and the final result would be available only after nine sittings of the managing committee. He reiterated that a 15-per cent rise was what the committee was looking for. Nair, who has been spearheading the negotiations from the banks' side, is likely to meet finance ministry officials in New Delhi on Friday to discuss the issue.

The public sector banks' wage bill for the year ended 31 March 2007 stood at Rs27,500 crore. The ongoing wage revision negotiation is for a five-year period beginning November 2007. A 15 per cent increase would result in additional wage outgo of Rs4,125 crore for the public sector banks. The earlier offer of 17.5 per cent would have led to an annual additional expense of Rs4,812.50 crore.

IBA and the unions had also almost settled the issue of sharing the pension burden. Out of a total cost of Rs6,000 crore, the banks' share was Rs4,200 crore, while the balance was to come from the employees. IBA has now informed the unions about continuing the existing pension scheme till the end of March 2010.

Every five years, the managements of public sector banks, represented by IBA, negotiate a wage revision with the United Forum of Bank Unions (UFBU). Under the last agreement that expired on 31 October 2007, IBA had agreed on a 13.3 per cent hike.

Almost all government-owned banks have set aside some capital to absorb the wage-hike impact that will be implemented with effect from the last fiscal. State Bank of India has kept a provision of Rs1,380 crore for payment of arrears, Punjab National Bank Rs600 crore and Bank of India Rs187 crore.