RBI brings in performance pay for contractual staff

In a first of its kind, the Reserve Bank of India (RBI) has introduced a variable pay structure for the employees it plans to hire on contract basis.

The central bank has released advertisement in its website that it will hire 200 executive interns between the age group of 21-30 years on a contract basis for three years with an annual package of Rs 500,000 in the first year in addition to a variable pay upto Rs 50,000 per year.

This is also the first time that RBI is hiring professionals of this magnitude on a contract basis. Though the central bank has not specified in the advertisement which department the new employees will join, sources said most of the new recruits will join the information technology department.

The rolling out of a performance-linked pay structure for contractual employees is seen as the first step towards a variable pay scheme for all its employees. However, this decision is likely to face criticism from its existing employees — there is a view that the mandate of regulatory bodies is neither profit maximisation nor to increase its market share, unlike corporate houses.

As a result, the parameters that will decide on the extent of variable pay become subjective, a RBI official said.

The central bank has initiated a reforms process on human resources management and the decision to get specialists from the private sector is also a part of the process. The central board of RBI had recently approved hiring of specialist outsiders.

Apart from information technology, recruitment is also likely in areas like reserve management, which comes under the department of external investments and operations; derivates, foreign exchange department; inspection and audit, and risk management, both fall under department of banking supervision.

RBI has not recruited employees in grade A position (assistant manager) since 1997 and no class III staff was recruited since 1989. It only recruits Grade B (managers) on a yearly basis.

According to RBI’s internal estimates, 300-500 grade A officers are expected to retire every year for the next ten years and that may lead to a shortage of staff at the base level.