On the heels of the RBI making out a case for better pay packages for PSU bankers, global consultancy KPMG said that not only senior personnel, but non -executive directors, too, should be paid salaries on par with their private sector counterparts.
In its report, 'Corporate Governance in the Public Sector - The Road Ahead', KPMG said the non-executive directors of PSU boards are "under-compensated" and "this poses challenges in getting the right composition".
"To maximise their input, non-executive directors on PSUs should be drawn from the private sector and adequately compensated on par with their private sector counterparts," it said.
Also, PSUs should be given the freedom to decide the salaries of their senior personnel, KMPG added.
"On aspects such as executive/senior level hires; executive compensation; performance management systems... PSU management and boards should have complete autonomy," it said.
Earlier this month, the RBI had expressed concern over the low salary structure in PSU banks and said that in the absence of a suitable compensation package, the state-owned lenders would lose talent to the private sector.
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"The executive compensation in the public sector, as is well known, is lower than that in the private sector. 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," RBI Governor D Subbarao said at a conference.
Incidentally, Subbarao gets a meagre Rs 15 lakh a year compared to salary packages worth crores for CEOs of private sector banks like ICICI Bank, HDFC Bank and Yes Bank.
KPMG also suggested the government should limit its say to policy matters and matters of national interest, as well as minimise its involvement in the functioning of PSUs, besides ensuring there is more accountability in the sector, especially when disinvestment is gaining momentum.
"As the government's disinvestment strategy gathers momentum, there is a genuine need to improve the levels of transparency and accountability within PSUs... Autonomy of PSUs, functioning of boards, failure on the part of many listed PSUs... Are some issues that need to be tackled on a war-footing," the report noted.
At present, there are about 250 central PSUs in the country, with around 70 per cent of them being profitable.
According to the KPMG report, the PSU disinvestment story has been a successful one, with 44 listed CPSEs contributing about 25 per cent to the BSE's total market capitalisation.