Govt to offer fat pay packages to heads of public sector banks

SBI chairman Arundhati Bhattacharya

AT A time when some PSUs are struggling hard to stay afloat and some even facing close, the government is mulling to change the pay structure of chiefs of public sector banks. This is in...

a bid to attract top talent from the private sector, a media report said.

This is seen as part of its move to reform the banking sector. The government may look at experts from the private sector for chairpersons in Bank of Baroda, Punjab National Bank and Canara Bank.

The search committee for PSU bank chiefs may recommend changes in compensation structure to attract talent from the private sector.

Earlier, Arundhati Bhattacharya, chairman of SBI, had favoured the need to provide better remuneration at public sector banks to attract better talent.

She said that there is an urgent need to improve quality of board members by providing them suitable remuneration so that the overall efficiency improves.

The PSBs are rattled with a pile of bad loans and are lagging private sector banks in profit.

Financial services secretary Hasmukh Adhia also aired similar views.

The report comes at a time when the Prime Minister Narendra Modi will be holding discussions with chiefs of public sector banks today (January 3) in Pune to work out an action plan for reforms in the banking sector.

The two day long 'Gyan Sangam' got underway on January 2-3 in Pune.

The one-of-a-kind of retreat of bankers started today in Pune.

The government controls 22 of the 27 public sector banks through majority holding. In the remaining five banks, state-run State Bank of India holds majority stake.

In his maiden annual budget in July, Finance Minister Arun Jaitley said that the capital of state-run banks will be raised through sale of shares to the public.

Around Rs.240,000 crore of capital by equity is required to be infused into India's banking sector by 2018.

Earlier, in a departure from tradition, the government on December 31 split the post of chairman and managing director for PSU banks and named MD-and-CEOs of four banks including United Bank and Oriental Bank of Commerce.

PSU banks will have a non-executive chairman, another first, giving operational responsibility to managing director and chief executive officer (CEO).

The government instead wants to install non-executive chairmen at most public sector lenders.