Market salary for a few in a public sector bank could be a chimera

The possibility is that high calibre chief risk officers in the PSBs already earn Rs 1 crore to Rs 2 crore, whereas even SBI chairman could be earning less than Rs 30 lakh

The government’s decision to hire a chief risk officer (CRO) for public sector banks (PSBs), from the private sector for a market-linked salary, won’t be an easy task to pull off when the managing director (MD) of the bank earns a pittance compared with his private sector counterpart.

The possibility is that high calibre chief risk officers in the private sector banks already earn Rs 1 crore to Rs 2 crore, whereas even State Bank of India (SBI) chairman could be earning less than Rs 30 lakh, but there are some other perks for PSB chiefs, such as sprawling accommodation in prime locations.

What would most likely happen is that the banks will advertise for the positions, with salaries defined, and invite applications. Already such things have been done for Bank of Baroda and Canara Bank. Small Industries Development Bank of India (SIDBI) has also hired people from the private sector, but not exactly at a market-linked salary. There are some market recruits in SBI too.

So, the traditional concept of poaching from competition may not hold true for such appointments. What the banks can do instead is look elsewhere.

“In tier-1 private banks, the CRO salary can range from Rs 45 lakh to Rs 1 crore, which could be more than what the PSB MDs get. So the banks can always hire from tier-II private banks, or even retired persons as CROs,” said Ajay Shah, vice-president and head of recruitments, TeamLease Services.

An executive director of a large public sector bank said such hiring would be inevitable as banks grow in size post-merger.

“There is no denying the fact that there is a dearth of competency in the cadre for such complex roles. We will need to go to the private sector for talent. The CTO, in this case, will have to weather a lot of responsibilities and his job will be tough. The existing cadre may not be adequately trained for that,” said the executive director.

But, CTO may not be the end of it. There could be more such designations coming on the way as banks become much larger and complex.

“There will again be the need of other designations, such Chief Happiness Officers, Chief Innovation Officers, HR Synergy officers, Chief Digital Officers. There are a couple of such designations in existing setups. They get paid about Rs 25-35 lakh and that should work as the standard format,” said Shah.

And so, the whole compensation package will have to change. According to a senior private sector banker, there should be a compensation package framework, spelt out on an immediate basis for the whole senior management.

“Nowhere the CEO is paid less than a person below him. That’s not going to work. There will be huge acrimony internally, there will be disharmony. And there will be non-cooperation. If one person has to have a market-linked salary, then others should have that too,” said the person, requesting anonymity.

Admittedly, till the middle management level, public sector bank employees are better off, but the private sector employees start getting a lot more than their public sector counterparts as they move higher the rank. However, the private sector doesn’t have a job security, a major downer for people working in their mid-career.

“You cannot have a market-linked salary and have a job security too, and vice-versa,” said the banker quoted above.