Rs 8-lakh bonus for efficient PSB chiefs

New Delhi, Jan 23 | Updated: Jan 24 2007, 06:28am hrs
The governments new performance-based remuneration package for public sector bank chiefs and executive directors will earn them Rs 8 lakh a year if they achieve 100% of the target specified in their statement of intent (SoI).

The SoI indicates the target for profits and growth in credit and deposits, among other things. While the bank board sets its own annual performance target, the SoI has to be approved by the finance ministry. At present, state-owned bank CMDs and EDs get Rs 4-6 lakh a year depending on the size of the bank. If the bank achieves only 80% of the target set for the year, the brass will be entitled to an incentive of Rs 7 lakh, while 70% achievement will earn them Rs 6 lakh.

Under the structure, the top brass will be entitled for life-long medical facilities for themselves and their spouses. These are similar to their entitlement while in service. According to finance ministry sources, the government is also considering a proposal to maintain an in-depth performance record of the top brass on an annual basis, in line with private sector work culture.

This is the first time the government has gone ahead with a pay structure based on performance, a government source pointed out. The same model may be rolled out for chiefs of other public sector undertakings, he added.

However, if the performance of the bank CMDs and EDs is significantly below the stated intent, the finance ministry may even consider taking action against them.