The finance ministry has set up a committee to suggest a formula for revision in compensation of employees of public sector bank after the central bank has raised concern that low salaries could lead to attrition.
The committee will be headed by Joint Secretary Financial Services Alok Nigam and will have Bhaskar Sen, CMD United Bank of India and MV Nair CMD Union bank of India as members amongst others.
“If public sector banks are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive base,” the governor of D Subbarao had said earlier this month.
The new committee will also examine the recommendations made in the Khandelwal report on Human Resource Issues in Public Sector Banks, submitted to the government in June this year.
As of now, public sector banks follow an industrywide wage settlement brokered every five-year by the , the industry body of India’s banks. “This new committee will look into the specific structure issues and how they can be made applicable across all state-owned banks,” said a senior finance ministry official.
This mandate is against the suggestions in the Khandelwal report that had suggested each bank negotiate its salary separately taking into account profitability and productivity.
The employees union of regional rural banks (RRBs) had already rejected the suggestion. Pay and allowances of regional rural bank employees are at par with the employees of the sponsor banks
The Khandelwal committee had also recommended the extension of the idea of according maharatna and navratna practiced in the case of other public sector employees to state-run banks as well. Such a status would give banks more freedom in deciding compensation. “There should be some separate allowance provided for rural stint, as financial inclusion is the top priority for both the government and the banks,” said the chairman of a state-run bank. The government may also set up a time frame for this committee given that over one lakh employees would retire from public sector banks over the next five years.
Source - The Economic Times