Pon1965,
Only State and Central government employees are entitled for tax exemption for leave encashment on retirement/superannuation.
The definition of “Government Employee” is not specifically given in I T Act-1961. But the Act has incorporated the PSU employees, Government undertaking employee, Local Authorities employees etc in various other Sections / clauses of the Income Tax Act-1961 wherein benefit is meant to be conferred to them. The same is not there in Section 10(10AA).
So PSU bank employee would need to cross check before working out tax.
This is my opinion unless some rule has changed in this context recently.