Tuesday, Dec 06, 2022

For retaining talent, BBB chairman Vinod Rai says need attractive pay, other perks

Also suggests that MDs of govt-run banks should be appointed for a minimum of 6 years

Banks, Bank Board Bureau, BBB, Vinod Rai, BBB chairman Vinod Rai,  public sector banks , PSUs, ban compensation, economy, bank plans, business news BBB Chairman Vinod Rai addresses an 97th ASSOCHAM Foundation Day Lecture in New Delhi on Thursday. (Source: PTI photo)

The Banks Board Bureau (BBB) plans to roll out an attractive compensation package comprising bonus, stock options and variable pay to retain and attract talent for public sector banks (PSBs) from next year, BBB chairman Vinod Rai said on Thursday. He also suggested that the managing directors of the PSBs should be appointed for a minimum of 6 years to ensure stability and accountability.

“In some ways the compensation package of these public sector institutions needs to be improved, maybe we are not able to do much with fixed part of compensation package but variable part we are hopeful that in the next financial year we will be able to introduce a far more attractive package which do have bonuses, ESOPs and other performance linked incentives as part of the package,” Rai said at an event organised by industry chamber Assocham.

The finance ministry has held discussions with the state-owned banks to devise Employee Stock Option Plans (ESOPs). The government had also discussed plans to share a higher portion of banks’ profits with the employees.

Arguing for a longer tenure for the top officials of banks, Rai said short tenure leads to a number of problems. “Also the attempt is being made with idea to enthuse accountability in the system to find executive director or whole time director or a chief executive officer at an age where he has got a minimum of 6 years or more to go in the institution so that he can be held accountable for the decisions,” he said.

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“A large number of problems have risen because the tenure of the people were very short, maybe 15 or 18 months and left behind a while trail of decisions which are being questioned now. If we provide 6 years of tenure to the professional, he will do their business with great degree of accountability that they are going to be subject to,” he said.

BBB was set up as an advisory body by the government last year to recommend on appointment of directors in public sector banks and advise on ways to raise funds and merger and acquisitions to the lenders among other things. Rai said discussions are on mergers in the banking sector are happening but it will take long time to materialise.

“The entire process is being thought of, it is not going to materialise in two or three months, it is a long drawn process, there is a lot of work which has to be done and once the roadmap is ready and hopefully in the next two to three years it will be rolled out,” he said.

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Speaking on demonetisation, he said that there is no harm in trying to cleanse the system and demonetisation one way of doing that.. “Any attempt to cleanse the economy is a very noble attempt and we should lend our energies in ensuring that process of cleansing takes place…It is far too early for us to say it is a success or not a success,” he said.

First published on: 06-01-2017 at 02:33:27 am
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