The implementation of the New Labour Codes has increased employee-related costs for private sector banks and insurance companies, leading to higher operating expenses in the October–December quarter of FY26.
HDFC Bank reported operating expenses of ₹18,770 crore in Q3FY26, up from ₹17,110 crore in the previous quarter, after accounting for an estimated ₹800 crore incremental employee cost linked to the new labour codes. ICICI Bank said the impact on its profit and loss account was ₹145 crore during the quarter.
Other private lenders also made provisions, with Yes Bank accounting for ₹155 crore, Federal Bank ₹20.8 crore, and RBL Bank estimating an additional ₹32 crore impact due to the revised norms.
Private sector insurers reported similar effects. HDFC Life Insurance provided ₹106.02 crore towards higher employee benefits, ICICI Prudential Life Insurance ₹11.04 crore, and ICICI Lombard General Insurance estimated an impact of ₹53.06 crore.
Public sector banks, however, were largely unaffected as their salary structures were already aligned with the new framework.
Analysts said the new codes mandate a higher share of basic pay and allowances, increasing employer contributions towards gratuity and pension funds. The four Labour Codes were notified in November 2025, consolidating 29 existing labour laws, while draft rules and FAQs were issued in December to help companies assess the financial impact.