Market Linked Pay For Bank Chiefs But Profit Linked Pay For Bank Staff

There is one news item in the corridors of Government that they are going to link pay of CMD of banks to market to attract talent and to save bank from disaster. Government is of the view that if their pay is increased and made equal to that of private banks , these Chiefs will take the bank to greater height , they will safeguard assets of the banks , will stop assets going from good to bad and finally increase profitability of the banks. It appears fully  ridiculous to me and Aam Bankers.
 
 This news however will make it clear to Aam bank employees that CMD of Public sector banks who are in IBA negotiating team for finalisation of wage revision for bank staff are more focussed on hike of their own pay. They are not at all bothered whether bank staff are low paid and whether  demand of wage hike made by bank staff  is genuine or not. They talk of hike in their pay and it is pity that bank staff have not yet understood this bitter truth even after lapse of more than two years in fighting for getting demanded hike in Bipartite Settlement.
 
When government talks of rise in bad debts or erosion in profit they use to  blame bank staff or global recession and they only talk of poor salary of bank Chiefs due to which talented officers in their ill-motivated views do not like to accept the charge of public sector banks. Though there is no such case in the history of PS banks when any officials have refused the post of CMD or ED on the ground of lower pay. It is only junior or middle management ranked officers who were talented and hard performers who resigned from PS banks and joined private banks and they are now at top post in private banks.

There is not a single example when ED ranked officer of PS bank resigned from PS bank to become directly Chairman and MD of private bank. Private banks create culture and suitable environment where talented employees get elevated and others rejected. On the contrary PS banks are cheating their employees in each promotion process in the name of merit . They promote mostly flatterers and bribe earners who share bribe with them directly in cash or in kind in the form of golden gifts. Without getting top officials in PS banks, one cannot dram of promotion in any scale and one cannot get dram of sanction of big loan.
 
Therefore if junior officers and middle management officers are not given due weightage and not given adequate salary despite their talent and devotion to banks , they may shift to private bank in greed of higher pay package. They know very well that management of PS bank do not recognise talent and hard workers in internal promotions and they only promote flatterers and bribe earners. Need of the hour is to stop exodus of junior officers and retention of talent in PS banks and it is the demand of time that their pay is given a greater hike and only talented and experienced  officers are promoted .
 
It is unfortunate that in mad rush for branch expansion without proportionate  increase in manpower and in an effort to please their political masters that management of PS banks are giving fastest and risk-prone promotion to officers who do not have adequate knowledge and expertise. Due to such irrational quick promotions to officers neglecting and ignoring seniors , work culture in all banks have suffered a lot . This has resulted in hike in bad assets and will continue to rise without any stop .
 
I have no hesitation in saying blatantly that due to worst Human Resource Management undertaken during last ten years, assets of banks have gone bad or fraud volume have gone up causing huge loss to bank and huge erosion in profit.
 
It  is pity that even Senior officers of RBI and GOI have not yet understood the real cause of bank's sickness. This is why they are prescribing wrong medicine to cure the sickness.

It is well known to all bankers that private banks of modern era did not bring man power from Mars planet but they attracted talented workers and officers from public sector banks only. It is employees of PS banks only who opted for private banks sacrificing secure service of government banks. And it is they who used their talent in private banks and could reach top level. It is these employees of PS banks who after joining in private banks have catapulted and taken private banks to such a height . It is they who earned profit for private banks and it is they who stopped rise in bad assets.
 
Chief of bank do not work and do not process an credit proposal. They rather pollute the work culture and the must by punished for bad works they did in last ten years. The promote culture of flattery and bribery in lending, recruitment and promotions. Their pay hike is not going to solve any problem . Rather they will further spoil the future of bank.
 
On the contrary if Aam bank staff are made happy , if their pay package is increased adequately to retain them and if they are given justice in promotions, they will work sincerely for the betterment of bank and for growth of bank. They have huge potential to take their bank to greater height if they are given due respect and compensated with good pay package in line with prevalent pay package in other sectors.
 
If CBI investigation is carried out of top 100 officers of PS banks, it will be proved that they have accumulated wealth far more than their counterpart in private banks. On the contrary one cannot  find a few hundred clerks or subordinate staff  or even officers in Junior or middle or senior management who have accumulated wealth by unfair means.

CMD and ED are already leading lavish and luxurious life at the cost of life of poor Aam bankers. So many CMD, ED and top ranked officers of PS banks have been caught in corruption, but there are very few instances of junior officers or Aam bankers caught in corruption.
 
I therefore feel that the decision of government to increase the pay of Bank chiefs and make it market linked, it will be another blunder and will further  ruin the future of PS banks. Chiefs of banks can do nothing if mass Aam bankers are demotivated and made unhappy due to exploitation by top officials.  Aam bankers are leaving banks only because they get better pay package elsewhere. 



It is further astonishing and dangerous too that Government is contemplating to attract officers from private banks to accept the post of ED and CMD of PS banks by paying higher pay package. Officer of private who are not well versed with culture and work style of PS banks cannot get desired success in PS banks.

Further there is no such instance in any private bank that they have attracted/ appointed  officer from PS bank and given the post of CMD for private bank directly. Management of private banks give weightage to officers who have been loyal for decades to their banks and who have been well tested and attested. Officers of private banks need not pay Rs.25 to Rs.50 lac to get the post of CMD as happens in PS banks.
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Govt to consider market linked salaries for PSB chiefs-Business Standard

Experience in core areas like treasury, credit could be made mandatory

 

The finance ministry, which is in the process of appointing managing directors and chief executive officers for  Bank of Baroda, Canara Bank and Punjab National Bank, might consider hiring candidates from private banks and paying them market-linked salaries.

The move is a part of steps the government is taking to reform public sector banks (PSBs).

The post of chairman and managing director has been split and the government has appointed managing directors and chief executive officers in four banks — Indian Overseas Bank, United Bank of India, Oriental Bank of Commerce and Vijaya Bank.

A new chief executive officer will also be appointed in Syndicate Bank

 

Hiring senior executives in PSBs is constrained by the wide difference in salaries with private banks. Market-linked salaries will also help the banks retain talent. PSBs also grapple with short tenures of chairmen and managing directors who barely have a year at their post.

The finance ministry is now looking to appoint chief executive officers who can serve longer.

The current State Bank of India chairman was appointed for three years. The next two chairmen will be appointed for four and five years. The government proposes to replicate this model in other banks.

Bankers have suggested candidates must have experience in four fields before they can be appointed as bank CEOs, treasury, credit, human resources and information technology. The government is considering this as an eligibility criterion.

There have been instances when bank chairmen were appointed without experience in the core functions of a bank.

Last year, a committee set up by Reserve Bank of India Governor Raghuram Rajan and headed by P J Nayak recommended reforms in state-owned banks. The committee said the government should give up control of banks and reduce its stakes below 51 per cent.