Friday, January 22, 2010

Public sector banks may pay wages as per profits

State-owned banks may soon be looking at a differential pay structure, based on profitability.

“The performance of all public sector banks is not the same.
There is a need for bank-wise pay revision based on performance, productivity and efficiency,” K C Chakrabarty, deputy governor of Reserve Bank of India, told DNA.

The suggestion could cheer the staff of banks that rank higher in terms of profitability — a key measure of performance.
Their pay packets could be much bigger than those of counterparts at less profitable banks.

For example, an assistant manager at State Bank of India (SBI) could get a much higher salary than an assistant manager at Central Bank of India, which posted profits of Rs 9,123 crore and Rs 571 crore, respectively last fiscal.

According to Chakrabarty, it is only after such a structure is put in place that public sector banks might agree to a variable pay regime under which 70% of the salary will be fixed and the rest will vary depending on the performance of the employee.

Experts feel such a move will help public sector banks compete more effectively with private sector banks.

“Each bank’s capacity to remunerate its staff differs with the bank’s performance. If this move is brought in place, then banks with good performance and profitability will be in a position to gather the best talent and will be able to compete better with private sector banks,” said J M Garg, chairman and managing director of Corporation Bank.

A pay structure based on performance and profitability may act as a deterrent against employee attrition. “If the pay structure is followed as per individual bank’s performance, then the banks with good performance will become more competitive as they will be able to attract and retain talent,” said M D Mallya, chairman and managing director of Bank of Baroda.

Large banks may lead the race in rewarding their employees.

“Initially this may be done independently by banks like SBI,” said K Unnikrishnan, senior vice-president and deputy chief executive of Indian Banks’ Association (IBA).

“While working out wage revisions, each bank’s capacity to compensate should be taken into consideration,” said Narayanan Raja, deputy managing director and corporate development officer, SBI.

This move will be taken forward in the next pay scale revision.

“Decisions on wage revisions are taken after negotiations with IBA and the United Forum of Bank Unions at an interval of every five years. So any decision on this will be taken forward in 2012 when the present five years duration will end,” Raja said.

Currently the pay scales in most public sector banks are almost at the same level and they are typically below those at private sector banks.

Private sector banks pay salaries as per their performance, profitability and capacity, feels Kalyan Swarup, dean, National Institute of Bank Management, from where many banks recruit entry level executives every year.

“Public sector banks like Bank of Baroda, Oriental Bank of Commerce and Central Bank of India were paying salaries in the range of Rs 5-5.5 lakh per annum to our students. On the other hand, ICICI Bank picked up students with Rs 6.25 lakh per annum, HDFC Bank at Rs 6.10 lakh per annum and Development Credit Bank at Rs 6 lakh per annum,” said Swarup.

Source : DNA

21 comments :

PM said...

At the time of 8th bi-partite talks itself there was a move in this direction by few of the profitable banks such as SBI and BOB etc.In order to compensate their workforce in a better way , based on their high productivity and profitability.Those banks they felt, they are above the remaining banks. According to them,collective bargaining as done hitherto by union with IBA cannot do justice to their employees.View of the executives of such bank is,that employee attrition can be avoided by providing higher perks However it is a matter for serious debate.It may pose following problems.
1.The philosophy of equal pay for equal work may be diluted in industry level.
2.Division of employees in banking sector with addition of a new class.
3. Profitability and productivity of banks are subject to change depending upon policies of govt.Determination of criteria for paying capacity of bank.
4.What will be the fate of employees when bank`s profit eroded.
5.Role of trade union in industry level may also have limitations.
Employees,Unions ,IBA and Govt should have indepth interactions on pros and cons of the proposal before next wage settlement takes place in 2012.

IYER said...

PM's views are absolutely true. I would like to add one more possible malady that may impact if and when the proposal is implemented. With this change, the stronger banks would attract quality people leaving the weak banks with substandard ones in the market for obvious reasons. This make the weak bank weaker,for, any revival plans for a turnaround may prove to be futile with inferior talents in their pool. Hence it is neither good for the banks nor for the employees.

karan said...

what is the outcome of today's meeting?plz reply as soon as possible

raamraam said...

Fixing pay as per profit is the tune playd by IBA.It is old wine in a new bottle.It is a divide & rule tatics ry the iba people. Every body should oppose this in one voice

SHANKAR said...

This move of pay structure as per profit of a bank is impractical. The profit of a bank may get eroded due to bad lending of one particular branch head or due to one big account going bad as a result showing loss whereas all other branches may be showing profit in their respective branches.However since the bank's profit is arrived at taking into account the profit of all branches together, an employee of a branch showing profit may get lesser salary even though he performed well but due to loss of another branch of his own bank.
Then comes the fact that pay structure of employees of each branch has to be worked out separately since an employee of a branch showing more profit has to get higher salary than his counterpart at another branch where loss is incurred.Hence leaving this salary part as it is separate incentives such as bonus or ex Gratia depending the profit of each bank has to be worked out.This ensures that an employee will not loose his salary because of the wrong doings of a particular Branch Manager or Regional Head.

Bank said...

The idea will not work till all enablers are in place.
1.A matrix needs to be designed for all employees as per their work and ultimately what they contribute in terms of profit,cost saving,managing risk,implementing new ideas.
2.unbiased infrastructure to measure the performance(not flattery).
3.360 degree evaluation should be there for all employees.
4.strong grievance redressal mechnism for employee,which is only an eye wash in PSBs

SHYAM SINGH said...

22/01/2010 - In the meeting of IBA & workmen unions today, further discussions took place on Pay Scales, Special Allowances, clubbing HRA & CCA and improvement in other allowances and items.Calculations will be reworked on the above lines. Next meeting will be on 9th February 2010.

IYER said...

I am still not able to comprehend the concept of prolonging the meetings. Is it that difficult to 're-work'any aspect of the salary when we have all electronic gadgets so it requires a couple of weeks time to call for another meeting to fix a date for further meetings! Even a Xth grade boy/girl will work on excel spread sheet with simple formula! Definitely they are making mockery of things!

workplace bullying said...

bank workers are considered Goats that's why ufbu and iba is making mockery

BALAN said...

AT THIS RATE THE BANK EMPLOYEES WILL RUN AWAY AND NOBODY WILL COME FORWARD TO TAKE UP BANK JOBS AS THE SCHEME IS GOOD BUT INTENTION IS BAD. LET THEM ADD WRITE OFF FIGURES AS NOTIONAL PROFITS AND CALCULATE THE INCENTIVE ACCORDINGLY. WHY A SET OF BUREUCRATS ARE DEAD GAINST THE BANK EMPLOYEES . GOD ONLY WILL ANSWER. IBA AND GOVERNMENT ARE FORCING THE FINANCIAL SYSTEM TO COLLAPSE BY NOT ALLOWING THE TALENTS TO COME FORWARD TO ACCEPT BANK POST WITH THIS KIND OF NEGATIVE IDEAS. WHY IDEAS HAS NOT COME WHILE GIVING A STRONG STIMULUS PACKAGE TO CENTRAL GOVERNMENT EMPLOYEES TO BUY VOTES ON THE EVE OF GENERAL ELECTIONS.HOW UNION LEADERS ARE PATIENTLY HEARING THESE TAMASHAS AND WHY IN THE NAME OF PETTY CALCULATIONS THEY ARE POSTPONING AND DRAGGING THE TALKS INSPITE OF THE GOVERNMENT GOT MORE THAN 50000 CRORES IN TO THEIR KITTY DURING THE LAST THREE YEARS.

NO BANK EMPLOYEE WILL CONTINUE WITH THIS TYPE OF SHABBY TREATMENT AND EVERY ONE WILL RUN AWAY MAKING THE SYSTEM WEAKEST EVER.

GOVERNMNET/IBA/UFBU WILL BE JOINTLY AND SEVERALLY AND SOLELY RESPONSIBLE;

K BALASUBRAMANIAN

chandan said...

Referring IYER January 22, 2010 6:39 PM:

Dear Sir,

While searching in this blog, I had noticed a small but very effective comment in the following Headlines, which I copy and paste here, on the context of the abnormal delay in inking the BPS by the Unions.Let Blog members have a thought on the gist of the text.


HEADLINES:
"Friday, November 20, 2009
Bipartite Meeting between UFBU and IBA probably on 26th November,"



"new said...


Nothing is to happened before February-2010.Meeting on 26th or 28th is just an eye-wash.Once the wage is settled the workers are required to dole out a levy i.e. a percentage of the arrears of their revised wages to their trade unions which they belong. Obviously you understand the trick, more the delay in wage revision, more the amount of arrears so bigger the amount of levies! Surprised! but this is the norm of wage negotiations and despite of deep resentment amongst the workers (whose voices are always suppressed) for the delay and the undue levy, the practice is on ever since bipartite wage negotiation between Indian Banker’s Association and several trade-unions.

November 21, 2009 5:03 PM"

chandan said...

Referring Headlines: Friday, January 22, 2010 'Public sector banks may pay wages as per profits'


Dear friends,
Don't pay much hint to these type of periodical statements delivered by the Executives of different financial organisations.These things are to come and go.Nothing to be panic.One can recalled in mid nineties a 'Commerce Secretary' of GOI had delivered a lot against the employees of Bank & LICI.The so called IAS officer,a 'Chamcha' of political leaders had try to exhibit himself more patriotic than others.

The persons who are expressing such type of views, whether will be in the helm of the affairs, or not by the next BPS, is not certain.So right now, it would be healthy,not to think so much on these subjects.

Thanks.

BALAN said...

INTRODUCTION OF VARIABLE PAY IN BANKS IDEA MOOTED BY RBI DEPUTY GOVERNOR


Bank unions and associations can make an in depth study on the proposal and come to a conclusion in consultation with its members after initiating a debate on the subject.

POSITIVE FEATURES
. It should act like a variable pay which is prevailing almost in every target based industries.INCLUDING IT GIANTS .
It will act as a stimulus to the employees to achieve more profit for the individual banks
Many more innovative features can be introduced and the employees can be compensated as an additional package branch wise for reaching deposit target/advance target/recovery of npa/house keeping/

Most important point is that a certain percentage of net profit can be fixed for distribution for the bank as a whole in lieu of bonus by calling it as INCENTIVE TO THE STAFF. This alone will ensure benefit to the bank as a whole as otherwise it is very difficult for bringing the administrative staff in to the variable pay component.
After finalizing this settlement with addition of proviso that from 2010-2011 financial year onwards variable pay will be introduced for the remaining period of the settlement ie FY 2010-11,2011-2012,2012-2013 in addition to this 17.5% settlement as additional package and with the result if both employees gross package on CTC basis AND PROFITABILITY IS IMPROVING this can be implemented for future settlement .
This alone will ensure some parity.
Definitely some sort of this should definitely ensure better productivity resulting in better pay packet for the bankmen.
NEGATIVE FEATURES:
There may not be uniformity in distribution of profits and element of adhocism will enter resuting in better managed employees some times may get less incentive then a comparable bank with less profit figures .
As usual our cunning IBA and ministry bureaucrat will bring some formula to the disadvantage of the employees making an attempt to even allocate variable pay with in this notorious 17.5% increase . UFBU will definitely agree because they are so much frightened because any protest will result in NO SECOND OPTION FOR PENSION. Hence their lips and hands are tied .
So anything can be talked only after inking this settlement and give another option for pension by the pf optees. TILL THEN ONLY PATIENCE PATIENCE PATIENCE –ONLY MANTRA.

KBALASUBRAMANIAN

RAVI said...

Problem is who will bell the cat?

hitler said...

PM & IYER are absolutely wrong. They must be from some 3rd rated PSU bank who dont want to compete and are sea of inefficiency. The banks which are profitable should pay higher salaries. The bigger banks will attract better talent. why bother aby small ineffcient banks. Let them die. Deserve before you desire. These inefficent banks should be merged or closed down. Any way they dont have the quality talent which bigger banks like SBI or BOB has. The responsibility on bigger banks is larger. they are more actively involved in social banking. The smaller banks are useless vampires, goddam blood suckers. In a market economy people should get rewarded based on their talent. Smaaller banks dont have good talent to derserve equl salary. To hell with banking industry union & collective bargainng. everyone should fght hs battle on hs own.

Kundan said...

I fully agree with the view of Hitler above.

chandan said...

Referring Mr. hitler & Mr. Kundan:

Nothing can be termed as First class or Third class in Financial Institution like ours. Look at Bank of India. What was its position three/four years back? Today it is the number one among nationalised banks in profit count. See to UTI. Have a look on India Bank's huge loss during the former chairman M. Gopalakrishnan who sentenced to 14 years in prison. So everything is not in the control of officers/employees of the concerned banks in PSBs. More over someone likely get into a profit making PSB never means the particular person is more efficient than others in a loss or marginal profit making bank. Apart from SBI recruitment through CRB- Bombay all other Nationalised banks' recruitment in PO during BSRB days up to eight/nine years back didn't maintain any parameter in allotment to weak or strong banks. BSRB-Delhi's topper could have been alloyed to Punjab & Sind and last one could have been allotted to PNB. In these cases how can you say that topper should get less than last- one because of his bank's performances? Is it natural justice?

The same Deputy Governor of RBI recently also presented another story.

--------------------------------------------------------------------------------------------

28th February, 2010: There are hot discussions going on among bankers since it has been reported that RBI Deputy Governor KC Chakravarty has now made it mandatory for promotion seekers in RBI to give an undertaking saying that they do not have any health problem or family problem.

Bankers are discussing whether soon, it be extended to bankers of public sector banks also? What will constitute a health problem? Whether having High / Low Blood Pressure, Diabetes will also be considered as a health problem. Does having old parents or wife or children, who have health problems will also constitute family problem?

If so, in today's time almost all bankers will be not eligible for promotions.

--------------------------------------------------------------------------------------------


I hope you duo must appreciate his, this move also.

Thanks.

chandan said...

A small rectification to earlier post:


'More over someone likely get into a profit making PSB'

Please read:

"More over someone luckily get into a profit making PSB"

Thanks.

chandan said...

Mr. hitler,

I am waiting for you hit on my post March 3, 2010 9:46 PM:


Mr. Kundan,

Why do you keep mum on K.C.Chakravarty?

Thanks

Kundan said...

Wait Mr Chandan,
You will get an appropriate reply by yourself. Its not not always necessary that some one will say you the truth.
It were you people who oppposed every step of banking reforms, be it coputerisation in 1990s. Networking in 2000s. Opening of banking sector post liberalisation. Whats were the fate of all your protests.
No body needs an answer, its obvious.
So I am of firm belief that one should always try identify the direction of wind and sail with that, lest one would be left out crying, just as the bankers in the preset contect.
Thanx and regards.
This discussion is closed frm my side, because I have felt that this blog is being used(misused) for raising issues which are not relevant, hence this is my last post in this blog.
Thanx n happy waiting(cursing)

chandan said...

Referring Kundan 5, 2010 7:14 AM:

Thanks. ALBIDA.

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