The Indian Banks' Association (IBA) announced a 0.70 percentage point increase in Dearness Allowance (DA) for bank employees covering May, June, and July 2026. According to the IBA notice dated 2 May 2026, the increase is based on the All-India Average Consumer Price Index for Industrial Workers (AIACPI-IW) for the quarter ended March 2026. The average CPI for the three months stands at 148.73, which works out to a 25.70 differential over the 123.03 baseline (CPI 2016).
The DA increase ranges from ₹435 to ₹1,050 across employee levels with basic salary between ₹48,000-1,17,000. For employees under XII BPS / 9th Note, the DA rate will be 59.92% of basic pay for May, June, and July 2026. Employees still under XI BPS / 8th Note will receive the same percentage increase based on their respective salary structures. This revision comes after the Finance Ministry announced DA revision for central government employees from 58% to 60% of Basic Pay effective from 1 January 2026.
The current DA revision follows a consistent upward trend in recent months. According to IBA data, DA stood at 148.6% in January 2026, 148.5% in February 2026, and 149.1% in March 2026. For employees under XI BPS / 8th Note, the average CPI of the three months is 9777.52, resulting in an 856 differential over the baseline. DA is revised twice yearly by the All-India Consumer Price Index to counter inflation fluctuations and is a percentage of employees' basic salary specifically meant to help with increased cost-of-living.
DA forms part of an employee's cost-to-company (CTC) and is credited as part of monthly salary. As per Income Tax Rules, payment involving fractions of 50 paise and above may be rounded off to the next higher rupee, while fractions below 50 paise may be ignored. For salaried employees, DA is subject to income tax in its entirety and must be stated separately in tax returns. The allowance is specifically designed to help employees cope with inflation and rising living costs.
The IBA and Centre are currently engaged in negotiations regarding salary and benefits of employees at state-owned banks since March 2026. According to bank union pacts, demands include monthly salary increase of 17% for PSU bank employees effective from 1 November 2023, with DA expected to correspond to 8088 points. The pact also seeks confirmation of five-day work weeks for public banks, making all Saturdays holidays. These negotiations will determine future DA revisions and salary structures for bank employees.
