New Delhi: Indicating that a major overhaul of the banking system is on the cards, Bank Board bureau chief Vinod Rai said the organization is trying to ensure that top officials of state-run banks are appointed to lead these institutions only if they have a remaining tenure of six years.
The compensation packages of officials in state-run banks may also be overhauled to provide a more flexible variable component like bonuses, employee stock options and performance-linked packages to attract professionals to join these banks.
“The compensation package of the public sector banks needs to be improved. We may not be able to do much about the fixed component but we can change the variable component. From the next financial year, we should be able to introduce bonuses, Esops, and performance linked packages. The idea is to provide monetary and non-monetary incentives to attract professionals,” Rai said at an event organized by industry body Assocham.
Rai said the idea behind a longer tenure was to ensure accountability of these institutions.
“Efforts are on to appoint executive directors and chief executive officers who have a minimum of six years or more to go in the institution. If we provide a six-year tenure, there is a greater degree of compulsion of accountability that these officials will be subject to,” he said, adding that this will provide a break from the trail of lack of accountability.