IBA to pen managerial autonomy roadmap

The Indian Banks' Association (IBA) is working out the guidelines on managerial autonomy with the finance minister hinting at market-related salaries for chairmen of public sector banks and more managerial autonomy.

A senior IBA official said, "We will work out the guidelines on managerial autonomy and submit it to the government. We will call a meeting of the committee before the weekend."

The finance ministry on Friday asked for some "radical" suggestions from bankers. The minister has made it clear that other than four critical areas, the government is ready to give a free hand to the banks.

The four areas where the grip will not be loosened are national policy on lending to agriculture or SME, constitution of banks, appointment of chief executives and new MoU on performance commitment.

Some of the things that the committee was likely to look at will be appointment of more executive directors for larger banks, increase remuneration outside the prescribed scale for officers and chief executives, make lateral recruitment possible by offering higher pay, swapping of branches between commercial banks in urban areas and swapping of overlapping branches between commercial banks and regional rural banks.

Retention of talent has been a very big problem with public sector banks. "Every bright officer is poached by a private bank," lamented a bank chairman.

A PSB chairman earns a gross monthly salary of Rs 43,000 and a take home-pay of just over Rs 25,000, which is equivalent to the entry-level salary in a private bank.

The IBA's managerial autonomy committee is headed by V P Shetty, chairman of Industrial Development Bank of India and has S C Basu, CMD of Bank of Maharashtra, Cherian Varghese, CMD, Union Bank of India, A K Khandelwal head of Bank of Baroda and MBN Rao head of Indian Bank. This committee was constituted soon after the government announced its first managerial autonomy package for PSU banks a few months back.