Wednesday, September 8, 2010

RBI for bank pay parity

Reserve Bank of India governor Duvvuri Subbarao today advised state-owned banks to increase the pay packets of its executives if they wanted to head off an inevitable exodus to private banks that offer better compensation packages.

At present, the government fixes the compensation structure for executives of nationalised banks. Over the years, the remuneration gulf between private and public sector bank executives has widened to embarrassing levels.
For instance, State Bank of India chairman .P. Bhatt earned a little over Rs 26 lakh in 2009-10, while Chanda Kochchar — managing director and CEO of ICICI Bank — raked in just over Rs 2 crore in the same year.
The SBI is the country’s largest bank.
Delivering the inaugural address at a Ficci-IBA conference on “Global Banking: Paradigm Shift’’ here today, Subbarao said there was an immediate need to review the pay structure of top executives at nationalised banks.
“If public sector banks are required to compete with private banks, there is a good case for compensating them, too, on a competitive basis. There is also the risk that if the public sector bank compensation is not improved, it may lose talent to the private sector,” he told a conclave of bankers.
Echoing Subbarao’s views, a senior banker who did not wish to be identified told The Telegraph that pay packages of both senior executives and officers at PSU banks should be reviewed so as to attract and retain talent.
“Because of a legacy of several decades, the PSU banks will witness an unprecedented loss of skills and competencies in the form of retiring senior and middle management executives over the next few years,” Boston Consulting Group (BCG), the management consulting firm, said in a report.
The talk of a better pay package for executives in PSU banks comes at a time the central bank is also looking to cap the increments of whole-time directors and CEOs of banks that are not state-owned. In July, the RBI had come out with draft regulations suggesting that their salary hikes should be capped at 10-15 per cent and remuneration should be slashed in case of a poor financial showing by the bank.
“The intent behind the guidelines is to encourage banks to ensure effective governance of compensation, align it with prudent risk taking, improve supervisory oversight of compensation and facilitate constructive engagement by all stakeholders,” Subbarao said.
Source : The Telegraph.

3 comments :

SHYAM SINGH said...

it is good to hear some whisper from somewhere and that too from top of the Central Bank of the country ! We lost faith even in God, but now we are hopeful again that the God will to justice to us.

I wish all the CEOs of all the public sector banks stand in-front of Govt. on the line of RBI cheif and Govt. should be clearly told that the humiliation of Banking sector employees will no longer last.

Aggrieved Bank Officers Bankers said...

The RBI governor spoken about improving the compensation at executive level.In his earlier report also he spoke about improving compensation but the babus sitting in the MOF are the most intelligent lot in the country who decide the salary with non-sense(IBA-Indian Broker Association) and selfish union leader(cheaters).The unions neither function in democratic manner nor transparent.They have become a tool in the hands of Management to cut the wage bill without looking at long term organisation goals and they are always with the Management whether it is Salary or perks.In fact these people have always protected inefficiency and always suppressed people who fight for justice in the name of maintaining unity in cadre to suit their needs.They have committed a big fraud in the name of 9th BPS.The fallout is visible and in our Bank two people with 16 years of experience resigned today and many more to follow.
As far as RBI governor is concerned he is talking about talent at the TOP not the grooming of Talent which will take Management positions in the future.
The freedom to recruit people directly from B-Schools has resulted in picking the people who have either their father or mother as Banker or in key position govt.
The situation is hopeless and many more resignations will follow once the new pvt Banks are allowed to enter.
jai hind and god bless IBA/MOF for saving a lot of money in the name of 9th BPS

SHYAM SINGH said...

you are right my friend. Let's hope that the issue raised in interest of Top Executives will some day attract attention in favour of Junior Level also. "but tab tak kahi der na ho jaye"

I have also competed 16 years service and once I join Pension I will also consider to join some other institution if some lucrative offer is made to me.

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