New Labour Codes push up operating costs for private banks, insurers

The Central Government’s New Labour Codes have introduced major changes in the salary structures and benefits of employees of the private and public firms. Released on November 15, 2025, the Labour Codes have announced an increase in the salaries and benefits of the private firm employees. The existing employee costs of the public firms are close to the new regulations of the recent Labour Codes. Major private firms like the private sector banks and insurance companies are implementing the changes. They have reported a huge impact on their functions due to the Central Government’s new labour rules. 

The operational costs of these firms have significantly increased in the October to December quarter of Financial Year 2026. However, the salary structure of the public firm employees has not attracted any changes.

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Impact on Private Sector Banks

According to a report by the Business Standard, HDFC Bank has recorded an increase in its operational costs. The bank has reported ₹18,770 crore operational expenses in Q3FY26 due to the New Labour Codes. This is higher than the operational cost in Q2FY26 records, which were ₹17,110 crore in Q2FY26. 

As per the bank’s statement, quoted by Business Standard, it recorded an increment of ₹800.00 crore under the ‘Employee Cost’ of the Profit and Loss Accounts in the quarter and nine months of the financial year that lasted till December 31, 2025. 

According to HDFC’s statement,  “The bank continues to monitor the finalisation of Central and State Rules and clarifications from the Government on the New Labour Codes, and would provide appropriate accounting effects on the basis of such developments, as needed.”

Following the trail, ICICI Bank, too, recorded an impact of ₹145 crore in its Profit and Loss Accounts in Q3FY26. The reformed labour codes have impacted other banks too. 

According to the Business Standard report, Yes Bank recorded an increase of ₹155 crore in Q3FY26 in its operational costs. RBL Bank has estimated the incremental impact of the New Labour Codes as high as ₹32 crore. 

Owing to the changes introduced in the new labour codes of the Central Government, many private banks have added provisions to their existing functions, worth ₹20.8 crore.