SBI, BoB, PNB Introducing Performance-Based Payment For Senior Management

State Bank of India (SBI), Punjab National Bank (PNB) and Bank of Baroda (BoB) are intending to present performance-based payment structure for the senior administration — the first-of-its-kind move among public sector banks (PSBs).

PNB Managing Director and Chief Executive Officer Sunil Mehta told Business Standard: “The bank is seriously thinking of introducing a system of performance-based incentives for officers above the general manager grade. There will be a component of fixed and variable pay. But it will evolve slowly.”

SBI, BoB, PNB Introducing Performance-Based Payment For Senior Management

SBI and BoB may also take after the same model and are dealing with a remuneration system, sources said. In any case, the banks would require endorsement from the administration for such a move. Many private banks as of now have a part of variable pay in their pay structure. In light of the person’s and bank’s performance, workers are offered variable pay as money or stock-connected instruments along with representative investment option plans. For PSBs, the pay and allowances of various levels of representatives are ordinarily chosen through bipartite settlements between the Indian Banks’ Association (IBA), the bank’s management and trade association body United Forum of Bank Unions (UFBU).

Bank unions are quite agitated against six PSBs — PNB, SBI,  BoB, Indian Bank, United Bank of India and Oriental Bank of Commerce — for confining the most recent wage negotiations up to scale-III officers or up to the senior supervisor level. They have additionally restricted a 2 percent hike for bank representatives suggested by the IBA. The associations are requesting a pay hike for officers up to scale-VII, which will incorporate general directors, delegate general supervisors, aide general administrator and divisional chiefs — as has been the training in all the past wage negotiations.

“There is a misconception that we are not in favour of salary negotiation for such officers. We may rather give such officers more hike under the new framework. You have to compete with the private banks, and, for that, you have to adopt some of their remuneration models for higher level officials,” Mehta said. “They may not be getting adequate rewards under the existing bilateral settlements with the kind of risks the senior management takes.”

However, the banks will take a choice after the bipartite settlement between the bank administration and laborer associations happen. After a long stalemate, the IBA is set to hold wage settlement chats with the UFBU on July 30.

“The IBA will take a final call on the wage settlement and then the banks will decide whether they want to adopt a common framework or do it separately,” said a public sector banker.

Bank union leaders are not in favour of a performance-linked incentive system. “The demand of the trade unions has been one rank, one pay. We are not in the corporate sector, where people are hired for performing a particular job. It will be difficult to evaluate performance in all positions in PSBs,” said Ravinder Gupta, joint general secretary, All India Bank Officers’ Confederation.