PRESENTED BY : NIKITA JAIN C-15

NIHARIKA PAHWA C- 58

NANCY SOOD C-

PRESENTATION ON

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.

JOB SECURITY= PUBLIC BANKS

PAY PACKAGE= PRIVATE BANKS

STATE OF PUBLIC SECTOR BANKS

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 FEBRUARY 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.

49.95 % D.A. for bank staffs and officers - 2011 Feb Mar Apr

SOME EXAMPLES

COMPENSATION TRENDS AT CANARA BANK

It is decided to restrict the number of claims to one claim per employee (either

for self or for one child) by retaining the existing ceilings under

reimbursement of educational expenses scheme.

CANARA BANK CONTI…

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PUNJAB NATIONAL BANK

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 Hindi workshops are regularly organised.

Hindi Cell has been set up at the Corporate Office.

The library has good stock of Hindi books as more than 50% expenditure

had been made on purchase of Hindi books as per allocation of budget for

purchase of books in library.

STATE BANK OF TRAVANCORE

PROMOTION OF CANTEEN FACILITIES

PROVISION OF LIBRARIES AND READING ROOMS

ENCOURAGEMENT OF INDOOR/ OUTDOOR SPORTS AND GAMES

PROMOTION OF CULTURAL ACTIVITIES

FUNERAL EXPENSES: Assistance of Rs.10,000/- to the next of kin of

deceased employee/ retired employee for funeral expense.

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