Confirmed Rate Update
The Dearness Allowance (DA/DR) for bank employees and retirees for the August to October 2026 quarter is confirmed at 27.83% under the 12th Bipartite Settlement (12th BPS)—a significant 2.13% increase over the previous quarter's rate of 25.70%.
Introduction
Dearness Allowance (DA) forms a vital component of the monthly salary and pension for commercial bank staff in India. Designed to buffer income against consumer price inflation, DA rates are revised quarterly by the Indian Banks' Association (IBA) following the release of Consumer Price Index for Industrial Workers (CPI-IW) figures by the Labour Bureau.
This article outlines the finalized Bank DA/DR rate for the August to October 2026 quarter, the calculation formula under the 12th Bipartite Settlement, its impact on employee paychecks, and how it compares to older settlement frameworks.
Previous vs. Revised DA Status
With the Labour Bureau's release of the June 2026 CPI-IW index (151.9), the quarterly average CPI-IW for the April–June period stands finalized, determining the DA rate for the upcoming quarter.
| Parameter | May – July 2026 (Previous) | August – October 2026 (Confirmed) |
|---|---|---|
| Settlement Framework | 12th BPS (Base 2016=100) | 12th BPS (Base 2016=100) |
| Quarterly Average CPI-IW | 148.73 | 150.86 |
| DA / DR Rate | 25.70% | 27.83% |
| Quarterly Revision | + 0.70% increase | + 2.13% increase |
| Effective Period | 1 May 2026 – 31 July 2026 | 1 August 2026 – 31 October 2026 |
How Bank DA is Calculated
Under the 12th Bipartite Settlement, DA is directly linked to the Consumer Price Index for Industrial Workers using the 2016=100 base series.
The baseline index for 12th BPS DA calculations is fixed at 123.03.
DA (%) = Quarterly Average CPI-IW − 123.03
CPI-IW Data Points (April – June 2026)
- April 2026 CPI-IW: 149.9
- May 2026 CPI-IW: 150.8
- June 2026 CPI-IW: 151.9
August 2026 DA/DR Computation
The average index across the three months determines the final payout rate:
(149.9 + 150.8 + 151.9) ÷ 3 = 150.86
150.86 − 123.03 = 27.83%
Impact on Salary Components
Dearness Allowance in banks applies across multiple pay components, compounding the benefit of the 2.13% rate hike:
Basic Pay
The core component across all scales, grades, and cadres.
Special Allowance
Attracts full DA as mandated under 12th Bipartite provisions.
PQP & Stagnation
Professional Qualification Pay and Stagnation Increments rank for full DA entitlement.
Learning Allowance
Included under applicable cadre frameworks for quarterly DA updates.
11th BPS vs. 12th BPS Framework Comparison
The calculation mechanism differs between staff governed by the 12th Bipartite Settlement and those under the older 11th BPS scale:
| Feature | 12th BPS Settlement | 11th BPS Settlement |
|---|---|---|
| CPI Base Year | 2016 = 100 | 1960 = 100 |
| Base Index Level | 123.03 | 6352 points |
| Previous DA (May–Jul 2026) | 25.70% | 59.92% |
| August 2026 Final Rate | 27.83% | Notified via separate IBA circular |
Why Bank DA Revises Quarterly
While Central Government employees receive DA revisions twice a year (January and July), bank employees receive updates four times a year:
- 1 February: Based on Oct, Nov, Dec CPI-IW data
- 1 May: Based on Jan, Feb, Mar CPI-IW data
- 1 August: Based on Apr, May, Jun CPI-IW data
- 1 November: Based on Jul, Aug, Sep CPI-IW data
This quarterly schedule allows bank compensation to adjust rapidly to retail price shifts.
Frequently Asked Questions
Conclusion
The confirmed revision of Bank DA/DR to 27.83% for the August to October 2026 quarter provides an effective salary and pension increase to offset recent inflation.
Serving employees and pensioners will see this updated calculation reflected directly in their August 2026 salary statements and pension credits.
KumarSir Team
Experts in Indian Banking, JAIIB, CAIIB and CCP
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