Flagging difficulties in getting top talent at public sector banks, RBI Governor Raghuram Rajan said on Tuesday that they tend to over-pay at the bottom but under-pay their top executives, even as he rued, albeit jokingly, himself being “under-paid”.
“One of the problems, of course, is that as with all public sector entities, you overpay at the bottom and underpay at the top... Yes, you feel that you are doing the job for the broader public but you just make it harder to attract top talent, specially a lateral entry,” Rajan said here while talking about public sector banks (PSBs).
As per the latest data on monthly salaries made public by RBI, Rajan’s total monthly emoluments stood at Rs 1,98,700 for the month of July 2015.
Public sector behemoth SBI’s Chairperson Arundhati Bhattacharya got just about Rs 31.1 lakh in the fiscal year 2015-16, while private sector major HDFC Bank’s Managing Director Aditya Puri’s total remuneration for the same period was more than 30 times higher at Rs 9.7 crore.
Rajan also suggested giving rewards like ESOPs by public sector banks, which is very common in the private sector, by taking advantage of the current low share valuations of PSBs.
Rajan said a better payscale at bottom levels can also be a source of opportunity, and pointed out that the RBI’s compensation packages even for class III employees are attractive enough to get really highly qualified people in.
Rajan said that while one of the strengths of the public sector sometimes is the absence of pay and promotion that is very sensitive to performance, too little sensitivity can also be a problem as high performers get demotivated, and the slothful are not penalised.
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