India's central bank concerned that public sector may lose talent to private sector that offers crores.
Concerned over low salary structure in PSU banks, the Reserve Bank on Tuesday said that in the absence of suitable compensation package they would lose talent to private sector lenders.
“The executive compensation in the public sector, as is well known, is lower than that in the private sector...If public sector banks are required to compete with private sector banks on a level playing field, there is a good case for compensating them too on a competitive base”, RBI Governor D. Subbarao said a conference organised by IBA and FICCI.
Incidentally, Mr. Subbarao’s compensation is about Rs. 15 lakh ($32,082) a year compared to packages worth crores for CEOs of private sector banks like ICICI Bank, HDFC Bank and Yes Bank.
“There is a good reason to revise their (PSU bank executives) compensatory packages...There is also a risk that if the public sector bank compensation is not improved, the public sector may lose talent to the private sector,” Mr. Subbarao said.
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