New labour codes enacted by the central government in November 2025 are impacting the bottom line of private sector banks and insurance companies. These firms reported increased operating expenses in the October-December quarter (Q3FY26) as a direct result of the new regulations.
Financial Impact on Key Institutions
HDFC Bank, the country’s largest private sector lender, reported operating expenses of ₹18,770 crore in Q3FY26, a rise from ₹17,110 crore in the previous quarter (Q2FY26). The bank estimates an ₹800 crore incremental impact to employee costs during the quarter and nine months ending December 31, 2025.
ICICI Bank anticipates a ₹145 crore impact to its profit and loss account in Q3FY26. Yes Bank has accounted for an additional ₹155 crore, while Federal Bank has provisioned ₹20.8 crore and RBL Bank estimates an additional ₹32 crore. Private sector insurance companies are also feeling the effects, with HDFC Life Insurance estimating an incremental ₹106.02 crore, ICICI Prudential Life Insurance ₹11.04 crore, and ICICI Lombard General Insurance ₹53.06 crore.
Public Sector Banks Less Affected
Unlike their private sector counterparts, public sector banks have reported minimal impact. Their existing salary structures already largely align with the requirements of the new labour codes, meaning no significant changes or additional provisions were necessary.
Analysts indicate the new codes necessitate a restructuring of salary structures, increasing the proportion allocated to basic pay and key allowances. This shift is expected to increase employer contributions to gratuity and pension funds.
Frequently Asked Questions
What are the New Labour Codes?
The New Labour Codes are four codes – the Code on Wages, 2019, the Industrial Relations Code, 2020, the Code on Social Security, 2020, and the Occupational Safety, Health and Working Conditions Code, 2020 – that consolidate 29 existing labour laws.
When were the New Labour Codes notified?
The Government of India notified the four Labour Codes on November 21, 2025.
How are public sector banks different?
The salary structure of public sector banks was already close to the new structure mandated by the codes, and therefore they did not need to make any changes or additional provisions.
As companies continue to adapt to these new regulations, will we see further adjustments in operating costs and potential impacts on consumer financial products?
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