Govt to take a call on Khandelwal committee report soon

The government is likely to decide on implementing the Khandelwal committee report on human resources (HR) issues in public sector banks (PSBs) over the next one month.

The government recently formed a panel of bankers and government officials to examine the report.

Some recommendations of the report on aspects like recruitment and training of employees could be implemented over the next one month, said K V Eapen, joint secretary, department of financial services, government of India, on the sidelines of a CII Banking Colloquium here on Monday.

“Already, a committee, which consists of bankers and government officials, is examining the report. I hope in the next one month, there will be clarity on what can be implemented in the short and medium term,” said Eapen.

Led by AK Khandelwal, the ex-chairman of Bank of Baroda, the committee had proposed sweeping changes in the functioning of PSBs, particularly in recruitment and compensation.

According to Eapen, while matching salaries of PSB employees with their counterparts in the private sector might not be feasible, the issue of compensation of senior bankers was being discussed.

The committee had also recommended that each PSB be allowed to settle salaries for its employees in accordance with their specific skill sets and the bank’s overall performance. Now, most government-owned banks follow an industry-wide wage settlement, brokered by the Indian Banks Association once in five years.

The committee had recommended certain variable components in the salary package. Eapen said if at all implemented, the variable pay structure was more suited to top employees at the decision-making level.

Over 100,000 employees — 7,736 executives, over 50,000 officers and around 48,000 clerical staff — would retire from PSBs over the next five years.

The combined manpower of the country’s 27 PSBs stands at about 700,000.

Recently, the All-India Regional Rural Bank Employees Association, the representative body of bank officers and employees of the country, opposed the recommendation for scrapping the industry-wise wage settlement system made by the Khandelwal panel.

Government bats for more banks

The government is in favour of having more banks in the country to facilitate financial inclusion. In August, RBI came out with a discussion paper on new banking licences and regulations to foster greater competition in the sector.

K V Eapen said granting of new licences should be linked to the criterion of having branches in un-banked areas. "We have gone through the discussion paper circulated by RBI. We will also give our views on it to the apex bank," said Eapen.