Pay increases, especially when they are decent, should make employees smile, but monetary incentives don’t seem to have enthused a section of senior public sector bank executives – especially those at the very top.
An April 1 government note allows public sector banks to raise the pay scale of chief general managers (CGMs) by as much as 62%. This makes their remuneration almost on a par with that of executive directors. The new pay scale structure, several top bank executives said, is against the principles of natural justice.
“At present, the issue has created a lot of heat among top bank executives. More clarity is needed on the matter,” an executive director with a mid-size bank said.
“If the issue is not addressed, there may not be any incentive for people to apply for ED positions.”
The new pay scale for bank CGMs has been fixed at Rs 1,66,350-1,83,950 from Rs 1,03,000-1,13900 and this would be effective retrospectively from the date when they assumed charge in their respective banks, the Department of Financial Services said in its note to chief executives of nationalised banks.
This is in line with the CGM pay scale in
, the note, reviewed by ET, said.
Pay scale for executive directors has been Rs 1,76,800-2,24,000, which was last revised in December 2016. Bank managing directors and executive directors draw salary following the 7th national pay commission recommendation. CGM pay increases followed the latest bipartite wage settlement, as it has been for other bank employees.
Since the CGM positions in state-run banks are created with board approval, the revision in their pay scale, allowances and other terms and conditions require the government’s nod.
“When we (CGMs from the SBI group) joined as EDs in other public sector banks, our salary was fixed much lower than what we were already drawing. The government did not bother to review this despite so many reminders,” said a former bank chief executive who retired in 2020.
In SBI, CGM heads of several circles handle business that’s bigger than many PSB. So, the comparison of the CGM of a PSB with that of SBI is not logical, the veteran banker said.
“The anguish among bank executives is not surprising. The responsibility of an ED is much larger than a CGM and therefore, they should draw a much higher salary than CGMs,” another former bank managing director said.
Banks were given the flexibility to create CGM levels with separate pay structure in August 2019. Following this,
, , Punjab National Bank and Union Bank of India created the position in March 2020. Bank of India created the position in October last year. Some of the banks such as erstwhile United Bank of India had created the CGM position equivalent to general managers and therefore there was no pay scale benefit attached to that.