Dearness Allowance Hiked to 25% for Bank Employees

Introduction

Dearness Allowance (DA) for bank employees in India has been revised upward to 25%, effective from February 1, 2026.

This revision reflects a 1.07% increase over the previous DA rate of 23.93% and comes amid continued inflationary pressures.

The revision has been carried out in line with the provisions of the 12th Bipartite Settlement.

Latest DA Rate for Bank Employees 2026

As per the latest announcement, the revised Dearness Allowance structure is outlined below.

New DA Rate: 25%
Earlier DA Rate: 23.93%
Net Increase: 1.07%
Effective Date: February 1, 2026

The increase applies to employees covered under bipartite settlements, primarily those working in public sector banks.

CPI Data Used for DA Calculation

Dearness Allowance for bank employees is revised based on the quarterly average of the Consumer Price Index (CPI).

The CPI figures used for the current revision pertain to October, November, and December 2025 (Base Year: 2016 = 100).

October 2025: 147.70
November 2025: 148.20
December 2025: 148.20

The average CPI for the quarter stands at 148.03, indicating sustained inflation during the period.

DA Calculation Under 12th Bipartite Settlement

The 12th Bipartite Settlement prescribes a base CPI index of 123.03 for Dearness Allowance calculations.

Any increase in CPI beyond this base index directly translates into a corresponding increase in DA percentage.

Base CPI Index: 123.03
Current Average CPI: 148.03

This mechanism ensures that bank employees’ salaries remain aligned with changes in the cost of living.

Impact of DA Hike on Salary

Since Dearness Allowance is calculated as a percentage of basic pay, the increase will result in a higher take-home salary for bank employees.

Employees with higher basic pay will experience a proportionately larger increase in monthly earnings.

The hike provides modest but meaningful financial relief amid rising prices of essential goods and services.

Who Benefits from the DA Increase?

The DA revision applies to a wide range of bank employees covered under bipartite settlements.

Beneficiaries include officers, clerical staff, and subordinate staff working in public sector banks.

Employees drawing DA-linked salaries will directly benefit from this increase.

Why Dearness Allowance Matters

Dearness Allowance plays a critical role in protecting employees’ purchasing power against inflation.

It helps offset rising living costs and prevents erosion of real wages.

While DA does not increase real income, it ensures wage stability in an inflationary environment.

Pending Clarifications

Certain aspects of the DA revision are yet to be clarified through official bank circulars.

These include details on arrears payment, applicability to retirees and pensioners, and bank-wise implementation timelines.

Further instructions are expected from individual banks in due course.

Conclusion

The hike in Dearness Allowance to 25% from February 1, 2026, highlights the inflation-linked wage protection mechanism under the 12th Bipartite Settlement.

Based on an average CPI of 148.03, the 1.07% increase offers timely relief to bank employees.

The revision reinforces the importance of DA as a vital component of compensation in India’s banking sector.