COPY OF LETTER TO CHAIRPERSON STATE BANK OF INDIA BY GENERAL SECRETARY AIBOC ON HER DELIBERATIONS IN DELHI ECONOMICS CONCLAVE
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Letter No. 2014/84 Date: 12/12/2014
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Letter No. 2014/84 Date: 12/12/2014
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Smt. Arundhati Bhattacharya,
Chairperson,
State Bank of India,
Respected Madam,
RE: YOUR DELIBERATIONS IN DELHI ECONOMICS CONCLAVE
It really gave us pleasant feelings when we went through the deliberation made by you in the Delhi Economics Conclave held on 10th-11th December, 2014 at New Delhi. We are thankful for your views particularly about remuneration of Public Sector Bank Employees and Officers.
We were earlier surprised when IBA was quoting your statement in their arguments against considering reasonable hike, as demanded by us in the negotiations under Xth Bipartite Settlement. One of the arguments given by IBA in support of their adamant approach was that you have questioned offer of more than 10% hike.
We also appreciate your pitching for a good whistle blower policy with the objective to protect innocent and punish guilty. Your concern for the anonymous and superfluous complaints against the staff is further appreciated by entire officers’ fraternity in the banking industry. This would surely help to build a fearless working atmosphere for the honest workforce of the Banking Industry.
To summarise, we would like to conclude that your deliberation would have a motivational effect on the Banking Industry staff enabling them to give their better than the best, which they already are ensuring.
We, once again thank you for making your views public which are very similar to the staff of Banking Industry, particularly those of officers. Your statement will go a long way in pursuing our justified demands for which we shall be indebted to you.
Thanking you,
Yours faithfully,
(HARVINDER SINGH)
GENERAL SECRETARY
PSBs can issue equity with differential voting rights, says SBI chief Arundhati Bhattacharya-The Hindu
With the government indicating that it would not continue to fund public sector banks (PSBs), State Bank of India (SBI) Chairman Arundhati Bhattacharya on Thursday said they could look at issuing shares with differential voting rights to raise funds to meet the Basel-III capital adequacy norms.
“Here, 70 percent of the banks are in public sector and they are paid very, very poorly compared to market," Bhattacharya said speaking at a conference in Delhi.
What is interesting to note here is the fact that the salary of SBI chairman itself is the lowest when compared to even the smaller competitors in private and foreign banks.
Here is the picture: In 2012-13, SBI chairman took home an annual compensation of Rs 23 lakh. As a point of comparison, the annual compensation of Chanda Kochhar, managing director and chief executive officer of ICICI Bank, is over Rs 5 crore. The SBI chairman’s post does come with lots of perks but the job is actually more challenging given the balance sheet size of the bank and its width of operations.
In 2010, former SBI chairman, OP Bhatt famously said he is the lowest paid CEO in the fortune 500 list of companies and he must work after retirement as the pension of SBI wouldn’t alone help to support his family.
It is needless to talk about officers and staff in lower ranks in state-run banks.
The irony is that state-run banks play a critical role by virtue of their sheer market size in India’s Rs 89 lakh crore industry but the salary structure of their employees has least correlation with the kind of business these entities handle.
That would also possibly explain the high attrition rate among the newly joined staff in public sector banks and the rising instances of state-run bank employees falling prey to the evil of bribery.
The attrition rate among fresh recruits has gone up in state-run banks in recent years. These junior officers take up jobs in private and foreign banks since the compensation policy is much more attractive there.
The disparity in the compensation structure has been highlighted as a major concern by former RBI governor D Subbarao and current chief Raghuram Rajan in the past. But neither the UPA nor the NDA governments have acted to address this problem.
The reason for such a big difference in the compensation structure of sarkari banks and their rivals in private sector is simple. Salaries in public sector banks are decided through mutual discussions between the Indian Banks Association, the industry body of banks, and the bank unions once every five years.
Often, there is no agreement between the trade unions and IBA on this, resulting in endless strike calls by bank employee unions, frequently disrupting the operations of banks.
In contrast, salaries of top executives at private sector banks are decided by individual bank boards and shareholders with the approval of the Reserve Bank of India.
Compensation packages to bank officials should not be offered on a uniform basis but should be offered in relation to the size of the bank and performance, which isn’t the case presently. And till this anomaly is rectified, the system will produce more SK Jains.
It doesn’t logically make any sense to offer identical packages to employees across banks with different business size—say a big bank like SBI and small bank like Dena Bank. Also, the performance indicators of individual employees should be taken into account.( Will AIBOC Like it)
Perhaps, time is right for the government to acknowledge this problem and work towards resolving it taking cues from the private sector given the rapid changes witnessed in the banking industry with the arrival of new set of banks.
Individual banks should be given the autonomy to offer deserving compensation to those who employees who perform well. Similarly, no free lunch should be offered to non-performers.
Often, the very concept of a government job comes with the notion of room for complacency at work, whereas this can’t be the same in the tight competitive environment of a private bank. This situation must be changed if public sector banks want to stay relevant in tight competition.
The government, which has time and again, expressed its intent to change state-run banks better-run institutions, should take note of the flawed compensation policy in the public sector banking industry and offer the much needed autonomy to individual banks to decide their own salary structure.
http://firstbiz.firstpost.com/corporate/public-banks-allowed-decide-salary-structure-112849.html
Chairperson,
State Bank of India,
Respected Madam,
RE: YOUR DELIBERATIONS IN DELHI ECONOMICS CONCLAVE
It really gave us pleasant feelings when we went through the deliberation made by you in the Delhi Economics Conclave held on 10th-11th December, 2014 at New Delhi. We are thankful for your views particularly about remuneration of Public Sector Bank Employees and Officers.
We were earlier surprised when IBA was quoting your statement in their arguments against considering reasonable hike, as demanded by us in the negotiations under Xth Bipartite Settlement. One of the arguments given by IBA in support of their adamant approach was that you have questioned offer of more than 10% hike.
We also appreciate your pitching for a good whistle blower policy with the objective to protect innocent and punish guilty. Your concern for the anonymous and superfluous complaints against the staff is further appreciated by entire officers’ fraternity in the banking industry. This would surely help to build a fearless working atmosphere for the honest workforce of the Banking Industry.
To summarise, we would like to conclude that your deliberation would have a motivational effect on the Banking Industry staff enabling them to give their better than the best, which they already are ensuring.
We, once again thank you for making your views public which are very similar to the staff of Banking Industry, particularly those of officers. Your statement will go a long way in pursuing our justified demands for which we shall be indebted to you.
Thanking you,
Yours faithfully,
(HARVINDER SINGH)
GENERAL SECRETARY
PSBs can issue equity with differential voting rights, says SBI chief Arundhati Bhattacharya-The Hindu
With the government indicating that it would not continue to fund public sector banks (PSBs), State Bank of India (SBI) Chairman Arundhati Bhattacharya on Thursday said they could look at issuing shares with differential voting rights to raise funds to meet the Basel-III capital adequacy norms.
“The writing on the wall is very clear...they (PSBs) have to think of differential voting rights. It is time to lay out some kind of roadmap on how much the banks need to do and how much support it would get,” she said while talking to reporters on the sidelines of a conference here.
The government on Wednesday allowed PSBs to raise up to Rs.1.60 lakh crore from markets by diluting government holding to 52 per cent in phases so as to meet the Basel III norms.
Pitching for consolidation in the banking sector, Ms. Bhattacharya said it was important to have 3-4 major banks. (Will AIBOC Like It )
According to Ms. Bhattacharya, “it is better to merge good banks with good banks.”
“The news that the government has allowed PSBs to bring down the government stake to 52 per cent kicks off the next round of reforms... because for the first time, clear signal has been given (to PSBs) to source capital from the market.
“The big daddy back there is not going to be around to give them capital as and when they need. If they need to be competitive and want to grow, then they definitely need to look at other places for more capital,” Ms. Bhattacharya added.
Basel III norms
The Basel III norms, which will come into effect from March 31, 2019, were put in place following the 2007-08 financial crisis triggered by the fall of Lehman Brothers.
The Basel III norms, which will come into effect from March 31, 2019, were put in place following the 2007-08 financial crisis triggered by the fall of Lehman Brothers.
The norms are aimed at improving risk management and governance while raising the banking sector’s ability to absorb financial and economic stress.
As per Basel-III norms, the minimum capital level for Tier-1 has to be 7 per cent.
Ms. Bhattacharya said bankers were paid poorly in India as compared to their counterparts elsewhere in the world.
Ms. Bhattacharya also suggested that the government should provide some kind of a roadmap for public sector banks on how much capital support they could expect from shareholders and how much they had to raise from the market.
“If some kind of a roadmap could be led out for the banks to understand what they need to do on their own and how much support would be available... that would enable the banks to properly lay out their own plans as to how they do things,” she said.
It would make the banks come up to the efficiency level that the markets demand and they would start working towards it with much greater fervour, she added. “So, I believe, along with the step the government took on Wednesday, they also need to now lay out the roadmap for the public sector banks in order to enable them to lay out their own plan and proceed accordingly,” she said.
Ms. Bhattacharya said smaller banks would find it extremely difficult to innovate and adopt latest technology, while remaining profitable at the same time.
Even in countries such as the U.S., she said, there were universal banks and community banks.
“May be with similar thoughts in mind, the RBI has just about brought in the new small bank licence,” Ms. Bhattacharya said.
She added that it would be better if “good banks (merge) with good banks and may be bad with bad so that they can come together and get some strength... mergers must be among...people who can see strength in each other rather than somebody rescuing a bad bank.”
Why public banks should be allowed to decide salary structure on their own-First Post
On Thursday, Arundhati Bhattacharya, chairman of India’s largest lender, State Bank of India, highlighted a critical challenge of government banks—the painful difference in wages of bank executives in these banks in comparison with their rivals in privately run lenders.
What is interesting to note here is the fact that the salary of SBI chairman itself is the lowest when compared to even the smaller competitors in private and foreign banks.
Here is the picture: In 2012-13, SBI chairman took home an annual compensation of Rs 23 lakh. As a point of comparison, the annual compensation of Chanda Kochhar, managing director and chief executive officer of ICICI Bank, is over Rs 5 crore. The SBI chairman’s post does come with lots of perks but the job is actually more challenging given the balance sheet size of the bank and its width of operations.
In 2010, former SBI chairman, OP Bhatt famously said he is the lowest paid CEO in the fortune 500 list of companies and he must work after retirement as the pension of SBI wouldn’t alone help to support his family.
It is needless to talk about officers and staff in lower ranks in state-run banks.
The irony is that state-run banks play a critical role by virtue of their sheer market size in India’s Rs 89 lakh crore industry but the salary structure of their employees has least correlation with the kind of business these entities handle.
That would also possibly explain the high attrition rate among the newly joined staff in public sector banks and the rising instances of state-run bank employees falling prey to the evil of bribery.
The attrition rate among fresh recruits has gone up in state-run banks in recent years. These junior officers take up jobs in private and foreign banks since the compensation policy is much more attractive there.
The disparity in the compensation structure has been highlighted as a major concern by former RBI governor D Subbarao and current chief Raghuram Rajan in the past. But neither the UPA nor the NDA governments have acted to address this problem.
The reason for such a big difference in the compensation structure of sarkari banks and their rivals in private sector is simple. Salaries in public sector banks are decided through mutual discussions between the Indian Banks Association, the industry body of banks, and the bank unions once every five years.
Often, there is no agreement between the trade unions and IBA on this, resulting in endless strike calls by bank employee unions, frequently disrupting the operations of banks.
In contrast, salaries of top executives at private sector banks are decided by individual bank boards and shareholders with the approval of the Reserve Bank of India.
Compensation packages to bank officials should not be offered on a uniform basis but should be offered in relation to the size of the bank and performance, which isn’t the case presently. And till this anomaly is rectified, the system will produce more SK Jains.
It doesn’t logically make any sense to offer identical packages to employees across banks with different business size—say a big bank like SBI and small bank like Dena Bank. Also, the performance indicators of individual employees should be taken into account.( Will AIBOC Like it)
Perhaps, time is right for the government to acknowledge this problem and work towards resolving it taking cues from the private sector given the rapid changes witnessed in the banking industry with the arrival of new set of banks.
Individual banks should be given the autonomy to offer deserving compensation to those who employees who perform well. Similarly, no free lunch should be offered to non-performers.
Often, the very concept of a government job comes with the notion of room for complacency at work, whereas this can’t be the same in the tight competitive environment of a private bank. This situation must be changed if public sector banks want to stay relevant in tight competition.
The government, which has time and again, expressed its intent to change state-run banks better-run institutions, should take note of the flawed compensation policy in the public sector banking industry and offer the much needed autonomy to individual banks to decide their own salary structure.
http://firstbiz.firstpost.com/corporate/public-banks-allowed-decide-salary-structure-112849.html
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