The government earlier this year announced plans to merge the three state-run banks to create the third-largest bank as part of efforts to clean up the banking system, which has been overburdened by bad debts.

The bank unions say they fear the mergers will lead to job cuts and allow private sector banks to dominate the industry.

Wednesday's strike marks a second one in past one week.

Workers at state-owned banks had on Friday called a nationwide strike in protest at proposed mergers that could cause job losses and demanded immediate wage rises. However, private sector lenders were not affected by the bank strike on Friday.

The 21 state lenders hold two-thirds of banking assets and account for the bulk of the record $150 billion of soured loans in the banking sector last year.

"During the conciliation meeting held in Delhi today, the Additional Chief Labour Commissioner advised the three banks and IBA (Indian Banks' Association) to hold negotiations with the unions and convey the Union's concerns to the government," news agency IANS quoted AIBEA General Secretary CH Venkatachalam as saying.

"No assurance came from either IBA or the government. Hence the conciliation talks failed and the December 26 strike stands," he added.

The AIBEA is part of the nine unions in the banking sector under the umbrella body of United Forum of Bank Unions (UFBU).

With Christmas on December 25, banks would effectively be closed for two days, affecting the banking public.