Public sector banks want to use more profits for staff rewards

Public sector banks have pitched for the right to use up to 5% of their net profits for compensation purposes. As of now, the government policy allows them to use only up to 1% of their profit to compensate performers. Speaking at an HR conference organised by Indian Banks’ Association (IBA) on Friday, Bank of Baroda CMD Anil Khandelwal indicated that IBA has made such a proposal. He further said the restriction to use only 1% of profit has not yielded proper results. Though public sector banks are still giving huge competition to private and foreign banks, rigid compensation packages are the biggest disadvantage they face in attracting and retaining talent. Canara Bank chairman and managing director MBN Rao raised concerns over PSBs being constrained by “structured compensation packages with limited flexibility”. Mr Rao, who is also the IBA chairman, further said, “PSBs need to find ways to nurture their available talent base rather than hiring fresh talent.” Mr Khandelwal said, “Nationalised banks are losing more than a thousand employees to private and foreign banks every year. Union Bank CMD MV Nair said it was the time to take a call on whether all PSBs should have the same salary structure. Most felt that serious engagement of employees, providing ownership and instilling a feeling of institutional pride in them were the main ways of employee retention, apart from compensation. Mr Chakrabarty felt there should be a common objective that the CEO of the bank as well as the head of human resources work towards, which should be effectively communicated to every employee of the organisation