Sarbajeet K. Sen
New Delhi, July 10
THE Government might soon spring a pleasant surprise to the top brass of public sector banks.
The next autonomy package, under discussion within the Finance Ministry, could gift-wrap a new remuneration structure for the chief executives and executive directors which may result in a manifold jump in their compensation package.
Senior Finance Ministry officials said that the initial discussion on the new autonomy package for PSU banks has centred on the need to look into ways to provide higher compensation to the chairmen and managing directors and the EDs, including the possibility of providing annual performance-based incentives.
"We are looking at the possibility of hiking the compensation of CMDs and EDs. There is also a likelihood of performance-based compensation. This could come as part of the fresh autonomy package being planned for the PSU banks," a senior Finance Ministry official told Business Line.
The move for a new autonomy package comes in the wake of the Finance Minister, Mr P. Chidambaram, recently asking PSU bank CEOs to identify new areas where they would like the Government's grip to be eased or eliminated.
Officials said that though no figures have been arrived, the compensation hikes could be "substantial". Moreover, instead of any major tampering with the basic pay element, the new compensation is likely to be structured in a manner that would provide remunerations in the form of various allowances.
Officials feel that the compensation structure of the top executives need to be reviewed since the present salary levels are not in keeping with the general trend in the banking industry, with the compensation packages of the top brass of private sector banks beating their public sector counterparts by miles.
While the salary packages of other staff of the banking industry is determined through wage negotiations between the unions and the management, the compensation for CMDs and EDs are determined by the Government. According to banking sources, the present slab of basic pay of a CMD of the public sector is between Rs 24,050- Rs 26,000.
The top brass of the banking industry has also made informal representations to the Finance Ministry renewing their earlier demand for a re-look into their compensation packages. It has been pointed out that the rigid and comparatively low pay inhibits them from offering higher packages to specialist officials since often the salary demanded by the recruits are higher than the compensation to the CEOs of the banks.
"We find it difficult to offer compensation to specialist officials that are higher than the bank's chief executives," a CMD of a public sector bank said.
The Government has already allowed banks to offer higher compensation to specialists such as information technology professionals.