Bank employees’ unions have rejected the proposal during the current round of wage negotiations.
The government has asked a committee to take a fresh look at introducing performance-linked incentives for over 700,000 public sector bank employees, even though employees’ unions rejected the proposal during the latest round of wage negotiations currently underway.
While the report of the four-member panel headed by former Bank of Baroda (BoB) Chairman AK Khandelwal is expected only next year, the move is part of a long-term human resource (HR) plan being drawn up at the behest of the government. This is the first major HR exercise at the industry level being pushed by the finance ministry since the launch of voluntary retirement scheme at the start of the decade.
Apart from a status report, the committee’s mandate include preparing an action plan on how to professionalise 27 public sector banks. Besides, the government wants to work out a system of succession plan at these banks, which often have to do without a chairman for months altogether.
In addition, the committee has been asked to recommend how the banks should go about preparing their recruitment plans and whether it was desirable to follow common hiring and HR practices across all these banks, accounting for nearly 75 per cent of the business carried out in India.
The move comes at a time when the public sector banks are hiring in large numbers to fill up vacancies arising due to retirement. Between 2009 and 2012, nearly three-fourths of the senior executives at these banks would retire as they did not hire for a long time. In addition, these banks are trying to hire specialists, but the limit on payment of salaries is putting pressure on their drive to hire experts.
Apart from Khandelwal, the other members of the committee, set up a fortnight ago, included Indian Institute of Management-Ahmedabad’s TV Rao, Indian Institute of Technology-Bombay’s Deepak Pathak and Union Bank of India Chairman MN Rao, who also heads the Indian Banks’ Association.
In recent months, public sector banks have been trying to move over to a system of performance-linked compensation with a variable component of 25-30 per cent of the salary. Bank unions, however, have managed to stave off these attempts.
But IDBI Bank, which was not part of the negotiations, had decided to go ahead with the move and even received its board’s approval. But a last minute government intervention meant that the bank was unable to implement the move.
Bank unions have argued that in the absence of a system to measure performance, it would be difficult to implement the proposal. The committee has been asked to suggest how the assessment could take place.
