Attractive salaries for public bank staff from FY18: Vinod Rai

PSBs are facing a talent crunch, and the entry of payments banks are expected to add to this

The Banks Board Bureau (BBB) is working on an attractive compensation package — including bonus, employee stock options plans (ESOPs) and other non-monetary perquisites — for all management levels, to attract the best professional talent in public sector banks (PSBs), chairman Vinod Rai said on Thursday.

In a lecture on the occasion of business chamber Assocham's foundation day, Rai said this could apply from the coming financial year.

 “Maybe we are not able to do much with the fixed part of the compensation package but on the variable part, we are hopeful that in the next financial year, we will be able to introduce a far more attractive package, with monetary or non-monetary benefits, to make it more attractive for professionals to enter into the PSB space.”

Private banks offer ESOPs, based on employee performance. At present, the chief executives and executive directors of PSBs are eligible for a bonus, which could be converted into ESOPs.

PSBs are facing a talent crunch, and the entry of more universal and payments banks are expected to add to this. 

An ESOP scheme for PSB staffers was part of the seven-pronged reform, 'Indradhanush', announced by the government in September 2015.  BBB was set up as an advisory body by the government last year, to recommend on appointment of directors in PSBs, and to advise on ways to raise funds, besides mergers and acquisitions among the lenders. Rai also suggested that PSB managing directors be appointed for a minimum of six years. 

“The attempt is being made with the idea to infuse accountability in the system, to find executive directors or whole-time directors or a CEO at an age where he has got a minimum of six years or more to go in the institution so that he can be held accountable for decisions,” he explained.

A large number of problems have arisen because the tenure of the people responsible was short, maybe 15 or 18 months, having left behind a trail of decisions which are being questioned now, Rai said. 

 “If we provide six years of tenure to a professional, he will do the business with a great degree of accountability that he is going to be subject to,” he said.