How Dearness Allowance (DA) in Banks, Insurance Companies, PSU is Calculated?

Bank DA Calculation and Formula DA is revised for bankers for every quarter as mentioned below 1. February, March, April 2. May, June, July 3. August, September, October 4. November, December, January Based on All India Consumer Price Index Numbers for Industrial Workers, the DA for Bank Employees calculated for each quarter. Three months AICPIN previous to one month from the starting month of the quarter for revising DA are considered for calculating Bank DA. For example, DA for the quarter starts from February to April is calculated from AICPIN for Industrial Workers for the Months of October, November and December. Because the AICPIN for this month will be released by the Labour Bureau on the last day of next month. So, the Average of consecutive three months slabs, prior to one month to the quarter for DA will be counted for revising DA. Calculation DA for Bank employees is revised every quarter, which increases or decreases based on the CPI (Consumer Price Index, CPI is released by Ministry of Labour, Govt. of India on monthly basis based on year 2001). Here is how the DA is calculated for bank employees: Collect the month wise CPI data from April, May and June for the quarter of revising DA from August to October. The CPI is converted using conversion factor 4.63 and 4.93 to link the same to base year 1960. For example, CPI for April, May and June 2016 was 271, 275 and 277. By applying conversion factor April May June 271 x 4.63 x 4.93 275 x 4.63 x 4.93 277 x 4.63 x 4.93 6185.82 6277.12 6322.28 Average CPI works out to 6261.91 Deduct 4440 slabs from average CPI (Calculated is step 2). 4440 DA slabs have been merged in 11th bipartite settlement. [6262-4440=1822] For converting above points into slabs, we must divide 1822 by 4 which is equal to 455 slabs. The DA rate is at 0.10% per slab as decided in the X BPS. So, DA percentage on 455 slabs at 0.10% = 455 x 0.10% = 45.50%. Divide 1822 by 4 to convert to quarterly DA slabs [1822/4 = 455] According to this calculation, the DA slab for next quarter will be 455 on which 0.10% is payable as DA. So DA payable for next quarter (Aug to Oct 16) will be 45.50%. By deducting the same from previous quarter DA, increase in DA can be calculated. Calculate average of CPI data for last quarter (3 months). DA is calculated based on CPI data of quarter ending one month before the quarter for which DA is payable because CPI data is released by Ministry of Labour on the last day of next month. DA is revised for bankers every quarter i.e., February-April, May-July, August-October and November-January