IBA moots hiring leeway for banks

Public sector banks could soon be poaching talent from the private sector if public sector bankers have their way. The Indian Banks' Association (IBA) has sent a list of suggestions to the finance ministry to increase the managerial autonomy of public sector banks (PSBs).

Public sector banks are of the view that all recruitment and promotion issues should be left to the discretion of the boards. This would mean that banks would be able to offer market-related salaries and poach talent from their peers.

The finance minister had called for some radical suggestions from bankers in his meeting with PSB chiefs earlier this month. In February the finance minister had announced an autonomy package for banks, which prescribed that variable salaries could be offered to officers based on performance but within the overall industry-wide wage settlement package.

Bankers had found the February package inadequate for freeing up their operations and have now put together a more effective wishlist through the IBA. It is now up to the finance minister to announce the next stage of autonomy.

Public sector banks should be allowed to do all that private banks do, said a senior IBA official. The finance minister spelt it out in his last meeting that other than on the four areas of nationally important policies, appointments of directors, CEOs and executive directors, board constitution and monitoring of macro numbers of banks the government would leave everything else to the discretion of bank boards.