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RECENT TRENDS IN
COMPENSATION AND REWARD
MANAGEMENT IN

PUBLIC BANKING SECTOR

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 INTRODUCTION
| A public bank is that in which there are numerous partners or
shareholders, and they elect from their own body a certain
number, who are entrusted with its management

| India·s 27 PSBs have a combined manpower strength of 7

lakh

| The industry accounts for 70% of the banking business in the

country

| PSB·s follow an industry wide wage settlement brokered

every five-year by the , the industry body of India·s banks
 PUBLIC VS PRIVATE BANKS

| Public sector banks the pay scale is fixed for

different scales & salary would increase as you get
promoted to higher scale

| Private banks look for qualifications, experience &

knowledge of the candidate before fixing salary So
it could be on the higher side & moreover they
prefer MBA grads

| OB SECURITY= PUBLIC BANKS

| PAY PACKAGE= PRIVATE BANKS
 
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| Experiencing a shortage of talent in high-end areas like risk
management and treasury operations

| Salaries offered by the public sector banks are lesser than that of the
private sector banks, hikes in the salary can be quite less

| Opportunities for growth in the career depends on the basis of

seniority level, cannot expect a promotion if one does not have the
right seniority level

| September 26, 2010: Reserve Bank of India Governor D Subbarao

´That the emoluments of State Bank of India Chairman are just a
fraction of that earned by heads of largest private banks 

| 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
 REASONS FOR THIS STATE

| The range between the emoluments of those at the

bottom of the hierarchy and CEOs cannot be large
Irrespective of their performance, all public sector bank chiefs and EDs get the
same amount as bonus

| Second, the top executives' pay scales are conditioned

by what the government pays its own employees

| The current salary structure is not attractive enough

to stem attrition

| Private banks, including foreign banks, have no such

restriction
 CORRECTIVE MEASURES TAKEN

| Government planning to announce a performance-linked

incentive which will be over and above what bank employees get
at present

| Banks will be able to earmark over 1% of their net profit for

payment of incentives At present, public sector banks can pay up
to 1% of their net profit as incentive to employees

| The government is also going to increase the ceiling on welfare

schemes

| There are Certain targets such as loan and deposit growth and
target for non-performing assets If the targets are met, then the
incentive will be paid
 PERFORMANCE-LINKED INCENTIVE
| Any department, to qualify for financial incentives, will have to get a
performance rating of 70 per cent or more on its Results-Framework
Document (RFD)

| Employees of 62 central government departments could start earning a

performance-based incentive

| It offers a secretary-level officer an incentive up to 40% of the basic

salary, provided his department has met 100% RFD targets

| A scorecard of 70% and less in meeting RFD targets would however

attract zero incentive However, no penalty will be imposed on the non-
performing officers

| Formula to calculate the incentive for a secretary as well as the officials

lower down For a secretary-level officer, the incentive is proposed to be
15% of cost savings (budgeted expenditure - actual expenditure) by the
department multiplied by its composite score less 70, divided by 30
 TRENDS IN COMPENSATION &
REWARD IN PSBS (27

 2011)

| A government committee has recommended 15-20% variable component in

employees salary package, along with the removal of the existing upper
limit for their remuneration

| It has also pitched for a hike in retirement age to 62 years from the current
60

| Each public sector banks be allowed to settle salaries for its employees in
line with their specific skill sets and the bank·s overall performance

| Being an employee of a public sector bank, one can avail loans at

lower interest rates and they can also get a higher percentage of interest for
deposits
 OTHER TRENDS
| Dearness Allowance (DA)
| House Rent Allowance (HRA)
| City Compensatory Allowance (CCA)
| Conveyance Allowance
| Gratuity: To be eligible under SBT (Employees) Gratuity
Regulations 1972, minimum service required is 10 years
| Pension
| LFC
| Medical Aid and Hospitalization expenses reimbursement facility
| Staff Welfare & Holiday Home Facility
| Loan with negligible or no interest for employees
| Petrol allowance
| Newspaper bill reimbursement
| All India holiday for employee and dependent once in every 2 years
sponsored by bank
| 4995 % DA for bank staffs and officers - 2011 Feb Mar Apr
SOME EXAMPLES
 COMPENSATION TRENDS AT CANARA BANK
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CANARA BANK CONTI«



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| The Corporation is making all efforts to promote
Hindi in the official work Incentives are being
provided to the employees to make use of Hindi in
official correspondence

FOR THIS
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*Assistance of Rs10,000/- to the next of kin of
deceased employee/ retired employee for funeral expense