Reserve Bank of India Governor Raghuram Rajan on Tuesday said the "poor pay scale" was the reason public sector banks were failing to get talented top-level executives. He said, “One of the problems, of course, is that as with all public sector entities, you overpay at the bottom and underpay at the top… and that make it harder to attract top talent, specially a lateral entry.” Rajan joked that he too felt underpaid.
According to PTI, there is a large difference between the salaries of top executives in the public sector and private banks. The data, disclosed by the banks in their respective annual reports, showed that State Bank of India’s Chairperson Arundhati Bhattacharya earned around Rs 31.1 lakh in the 2015-16 financial year, while HDFC Bank’s Managing Director Aditya Puri got Rs 9.7 crore during the same period.
The outgoing RBI governor suggested a slew of corrective measures to attract talented people and encourage good performers. He recommended that public sector banks should start giving rewards such as employee stock ownership plans – a common practice in the private sector. In addition, Rajan said it is high time that state-run banks should focus on performance evaluation and thus encourage good performers and motivate poor performers to do better. The RBI governor, who will step down on September 4, said entrance exams for banks should be made hassle-free and the results should be out quickly.
Rajan also suggested that the appointment of top executives and non-official directors be put in the hands of the Bank Board Bureau and not the government. He, however, made it clear that all these were his personal views and did not represent the official stance of RBI.