The government is weighing performance-linked incentives for the senior management of public sector banks.
“The government is examining the recommendations of the A.K. Khandelwal committee and, in all likelihood, a majority of the recommendations will be accepted.A final decision is expected in another couple of months,” joint finance secretary K.V. Eapen told reporters on the sidelines of a banking seminar organised by the CII here today(4th Oct).
The Khandelwal committee had suggested training for the top management at PSU banks and performance-linked variable pay.
According to Eapen, the government is considering “incentives based on certain parameters”. “The recommendations are currently being considered by a group consisting of bankers and ministry officials and a decision is expected with a month’s time,” he said.
The committee headed by former Bank of Baroda chairman Anil Khandelwal submitted its report to the ministry in June this year. The committee suggested that banks should do away with the present practice of an industry-wide wage settlement. Instead, it had proposed wage settlement at the individual bank level.
There are no such proposals for officers in the middle or lower levels.
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.
(With Inputs from The Telegraph, The Financial Express and Business Standard.)