Banks, however, will work full-day on remaining Saturdays. At present banks work half-day on Saturdays.
All India Bank Employees Association General Secretary C H Venkatachalam said that following a formal agreement with India Banks Association (IBA), the RBI would be informed about changes in working hours on Saturdays.
After notification by the Reserve Bank of India (RBI), changes in banking hours on Saturdays would come into force, so the new system would take some time, he added.
The unions had originally demanded five-day weeks.
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According to the agreement, employees' wages will also be increased by 15 per cent which will put an additional burden of Rs 4,725 crore a year on banks.
"In today's talks with Indian Banks' Association (IBA), wage revision has been settled at 15 per cent with effect from November 2012," United Forum of Bank Unions (UFBU) Convener M V Murali said.
The wage revision would benefit about 8.5 lakh employees and officers in 45 banks, including old generation private sector banks and a few foreign lenders.
The unions had threatened to go on four-day strike from February 25 demanding a 19 per cent hike in wages, five-day weeks, among other things.