Finance minister to revisit perks of PSU bank chiefs
The finance ministry is considering a proposal to revisit the incentive structure of public sector bank chiefs and executive directors, a practice typically followed by private sector lenders.business Updated: Mar 10, 2015 01:37 IST
The finance ministry is considering a proposal to revisit the incentive structure of public sector bank chiefs and executive directors, a practice typically followed by private sector lenders.
At present, public sector bank heads earn incentives anywhere between Rs 4 lakh per annum and Rs 6 lakh over and above their salaries, depending on the performances of the respective banks.
And in a few cases, where performance exceeds expectations, the incentive payout even crosses Rs 8 lakh, sources said.
“There is a plan to revisit the structure, considering that private sector lenders have a completely different remuneration pattern and it is important to at least do something at a time when banks are playing an important role in the overall development of the country,” a source familiar with the development said.
The finer points of the scheme are yet to be decided.
Bank chiefs have to provide a statement of intent to the government outlining their goals for the year at the beginning of every fiscal. Performances are measured based on achievements vis-a-vis the statement of intent.
The government has also indicated that it could rope in private sector executives to fill in the top slot. Meanwhile, public sector lenders are also looking to adopt several measures including providing performance-linked incentives, out-of-turn promotions, assignments of special projects, fancy postings to retain talent at a time when competition is getting hotter in the banking space.
State-run banks are facing a huge talent crunch. State Bank of India chairperson Arundhati Bhattacharya recently pointed out that public sector bank employees are poorly paid compared to their private sector counterparts.