Public Sector Banks may soon fix their own wage structure, Maharatna status sought for SBI

Public sector banks (PSBs) may get to decide their own pay structure for their employees if the recommendations of a government-appointed panel gets the nod of the Union Finance Minister, Mr Pranab Mukherjee. The committee has also recommended 'Maharatna' status for State Bank of India.

Instead of the current industry-level arrangement, the entire wage decision should come to the bank level, the Committee on HR issues in PSBs, headed by the former Bank of Baroda Chairman and Managing Director, Dr Anil Khandelwal, has suggested. The report of the committee was submitted to Mr R Gopalan, Secretary-Financial Services in the Capital.

The suggestion to do away with industry-level wage settlements is in line with the overall approach of the committee that there cannot be one-size-fits-all solutions, whether it be for remuneration, incentives, welfare or according navratna status, Dr Khandelwal told reporters here.

“Each bank has a unique set of problems as well as capacity to pay. We are saying that wages should be decided at the bank level and connected with the capacity to pay and factors such as profitability. It should not be decided at the industry level”, Mr Khandelwal said.

The Khandelwal committee report has now come up with a slew of reform measures aimed at transforming the current status-quo standard policy framework to a performance-driven, bank-level, policy framework. “The focus of our report is on performance management, irrespective of the categories. Every staff, including banking associate (clerical cadre), will be covered under the performance management system. There is clear departure towards performance management, succession planning and leadership”, he said.

“The focus of our report is on performance management, irrespective of the categories. Every staff, including banking associate (clerical cadre), will be covered under the performance management system. There is clear departure towards performance management, succession planning and leadership”, he said.

To sustain a high-performance culture in PSBs, the Khandelwal committee report has proposed 2 per cent of net profit to be allocated for incentives and rewards. The committee has also recommended employee stock option plans (ESOPs) to 15 per cent top performers.

Meanwhile, the committee has also recommended that State Bank of India (SBI) be categorised as a “Maharatna”. To induce further dose of competition among PSBs, the committee has suggested that the concept of Maharatna, Navratna and mini-ratna be framed for the PSBs. “We have suggested that government appoint a study group to decide the criteria. We have proposed that efficiency ratio be the key criteria. Today's approach is one-size-fits-all. There cannot be one-size-fits-all. You have to distinguish between the well performing and others”, he said.

Several corporate governance reforms have been suggested, including the need to review the entire board composition so as to bring in more domain specialists and separation of the post of chairman and managing director. Adopting committee approach in PSBs for sanctioning large credit has also been suggested.

Source : The Hindu