IBA seeks steep rise in PSB chiefs' salaries

The Indian Banks' Association (IBA) has made a strong pitch before the government for around a seven-time hike in the salary of the chairmen of public sector banks.

In a letter to the Union finance ministry, the IBA has suggested that the government fix a bank chairman's basic salary between Rs 1 lakh and Rs 3 lakh. Public sector bank chairmen currently draw a salary of around Rs 40,000 to Rs 45,000.

IBA has also sought a rise in public sector bank executive directors' salaries. It has suggested that executive directors be paid a basic salary between Rs 80,000 and Rs 2 lakh. The association has said that the chairmen and executive directors should get dearness allowance of 40 per cent of their basic pay.

The association is also in favour of a performance-linked bonus for chairmen and executive directors up to 100 per cent of their salaries. It has also sought the ministry's permission to offer stock options subject to the decisions by individual bank boards.

The IBA also wants hefty entertainment allowance or rent-free accommodation for senior bank executives. IBA feels that the CEOs must get market-determined salary and the gap between public and private sector banks in terms of salary and perks must be bridged.

Senior bankers have sought to negate the government's argument that the chairmen of public sector banks are on par with the joint secretaries of the Central government.

IBA said the secretaries continue to be on the rolls of the government as regular employees till they retire and they get pension on the basis of the last salary drawn.

In the case of banks, officials moving above the rank of a general manager stop being a regular employee. An official above the rank of a general manager is engaged on contract and his pension gets decided on the basis of the last salary drawn as a general manager, they have argued.