Private banks and insurance firms in India are reeling from the financial blow dealt by the government’s new labor codes, implemented in November 2025. The third quarter of FY 2025-26 saw a sharp rise in operating expenses (opex) for these companies, primarily driven by escalated employee-related costs.
HDFC Bank, the nation’s largest private lender, reported opex of ₹18,770 crore for October-December 2025, up from ₹17,110 crore in the same period last year. In its exchange filing, the bank disclosed an additional ₹800 crore impact on employee costs due to the new laws, reflected directly in the profit and loss account.
HDFC Bank emphasized its ongoing monitoring of central and state government guidelines, ready to adjust accounting practices as needed. ICICI Bank faced a ₹145 crore hit, Yes Bank ₹155 crore, Federal Bank provisioned ₹20.8 crore, and RBL Bank estimated ₹32 crore in extra expenses.
The ripple effects extend to the insurance sector. HDFC Life Insurance set aside ₹106.02 crore for employee benefits, deducted from total income. ICICI Prudential Life projected ₹11.04 crore, while ICICI Lombard General Insurance anticipated ₹53.06 crore in impacts.
Public sector banks, however, escaped major disruptions as their salary structures already aligned closely with the new norms, avoiding significant provisions.
Analysts point to structural shifts in wage components under the codes, mandating higher basic salary and essential allowances. This boosts employer contributions to gratuity and pension funds, inflating overall costs.
Enacted on November 21, 2025, the four codes—Wage Code 2019, Industrial Relations Code 2020, Social Security Code 2020, and Occupational Safety, Health and Working Conditions Code 2020—consolidate 29 prior laws. The Labor Ministry’s recent draft central rules and FAQs have enabled firms to quantify these economic shifts, prompting swift account adjustments.