India’s sweeping labor reforms, rolled out in late 2025, have triggered a cost explosion for private sector banks and insurers. Q3 FY26 results reveal opex ballooning across the board, with employee expenses at the epicenter of the surge.
Leading the pack, HDFC Bank clocked ₹18,770 crore in operating costs for the quarter ended December 31, 2025—a jump from ₹17,110 crore YoY. The bank attributed roughly ₹800 crore of this to new labor code mandates, booking it straight to P&L.
‘We are closely tracking regulatory clarifications from center and states,’ HDFC noted in filings, signaling potential future tweaks. Peers echoed the pain: ICICI Bank’s P&L took a ₹145 crore dent, Yes Bank added ₹155 crore, Federal Bank ₹20.8 crore, and RBL Bank around ₹32 crore.
Insurers aren’t spared. HDFC Life deducted ₹106.02 crore from revenues for enhanced employee provisions. ICICI Prudential Life estimated ₹11.04 crore, and ICICI Lombard ₹53.06 crore.
Contrast this with public banks, whose pre-existing pay frameworks cushioned the blow—no major overhauls required.
Experts dissect the codes’ wage architecture changes: elevated basic pay and allowances mean heftier outflows to gratuity, provident funds, and pensions. These four consolidated laws, notified November 21, 2025, replace 29 fragmented statutes.
With the Ministry of Labor releasing draft rules last month, companies rapidly assessed and provisioned for the fiscal fallout, reshaping Q3 earnings landscapes.