Call this a New Year gift from the Banks Board Bureau (BBB) to public sector bank (PSB) employees. As part of the efforts to attract more professionals into the PSB space, the BBB will revamp the compensation package of employees and introduce bonuses, employee stock options (ESOPs) and performance-linked incentives from April 1 this year, its Chairman Vinod Rai said.

The BBB is also toying with the idea of ensuring a longer tenure for those appointed as executive directors and chief executive officers.

“If we provide, say, a six-year tenure, there is greater degree of compulsion of accountability that these officials will be subject to,” Rai said while delivering the 97th Assocham Foundation Day lecture in the capital on “Good governance is esential for sustained economic development.”

Rai said that the compensation package of the PSBs needed to be improved in order to attract more professionals. “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. There would be both monetary and non-monetary incentives,” he added.

Later, asked whether the improved package would be applicable only for senior management, Rai told BusinessLine that it would be available across all segments, including senior management and middle-rung executives.

On whether BBB was on track to fill up all vacancies at the helm of PSBs, Rai said the Bureau was doing the needful. “We are in the process of filling up vacancies. We are looking for the right people. We are trying to ensure that we choose the best and not the second best. Maybe there are one or two vacancies to be filled. But most of them have been done,” he said.

In his lecture, Rai said the need for greater probity, transparency and accountability in governance had gained added significance, going by India’s experience in the past two decades since the opening of the economy in the 1990s.

“While we have performed well in almost all sectors in the economy since liberalisation and we could withstand the global economic slowdown, we did fail to achieve the true potential of liberalisation reforms,” Rai added.

Rai said there can be no denying the fact that there have been instances of lack of probity, transparency and accountability at various levels of government and corporations.

As a result, growth tapered off before fully exploiting the sizeable domestic market; profits of individual companies dipped; and investors’ interest declined. The financial position of the government remained under pressure with not enough funds to spend on various welfare schemes.

“The gains reaped earlier may also get wiped out, if the government has to intervene financially to bail out individual companies or a sector,” he said.

Demonetisation

Rai, who hailed the government’s demonetisation move, said any attempt to cleanse the economy should be seen as a noble move and “we should lend our energies to ensure that the process of cleansing takes place”. It is far too early to say it was a success or not, he added.

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