‘Working on improving PSB compensation package’

The Banks Board Bureau (BBB) will work towards ensuring a level-playing field for the top echelons in the public sector, who are often called upon to take major banking decisions having social or infrastructure-related overtones, and hence, deserve to be adequately compensated, BBB chairman Vinod Rai said.

Delivering his convocation address at the National Institute of Bank Management in Pune on Wednesday, the BBB chairman said there was a need to innovate on compensation packages for public sector banking executives. “If they have to face complex challenges, and do so in the face of competition from foreign and other entities, their efforts and capabilities need to be adequately rewarded and to some extent at least be made comparable to similarly placed executives in the private sector,” Rai said.

While the public sector had limitations on the score of compensation package per se, an adequate reward structure around ESOPS, performance-linked incentives and other benefits could be designed to attract the best talent to the public sector, he said.

The BBB was committed to innovating solutions on this score, he said, so that professionalism and domain experience could be infused into the banking system.

Bank boards need to focus on long-term business strategy, risk management, IT application and the required degree of oversight to facilitate a well-calibrated recovery from the current imbroglio, he added.

Rai also called for strengthening of governance in banks. “Banking activity has become very complex. It has become very competitive. It attracts the best of professionals and hence, compensates them handsomely,” he said.

Talking to the graduating students of the PG diploma in management (banking and financial services), Rai said they were commencing their career at a time when the global banking sector was facing huge challenges. He called this a renaissance moment for the Indian banking industry and said they would be the principal drivers of this renaissance movement in the Indian banking industry.

He considered this renaissance moment as gifted with macro-economic stability and said there was a need to bring about structural changes so that “the stressed assets of the kind that we were currently experiencing become a thing of the past”.