[sbinews] Autonomy fails to enthuse public sector bank chiefs (Economic Times)
- From: Rajendra S Pai <rspai@xxxxxxxxxxxxxxx>
- To: sbinews@xxxxxxxxxxxxx
- Date: Wed, 23 Feb 2005 18:39:56 -0800 (PST)
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Autonomy fails to enthuse public sector bank chiefs
TIMES NEWS NETWORK[ THURSDAY, FEBRUARY 24, 2005 12:13:09 AM]
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MUMBAI: The governmentâs granting of managerial autonomy to public sector
banks is likely to make life easier for bank managements, even though sections
think itâs a half-hearted move.
âWe wanted to be outside the purview of the CVC and CBI and needed complete
freedom on compensation packages. These issues were not addressed in the
package,â said a bank CEO.
However, there could be changes in the way banks recruit. UBI chairman K
Cherian Verghese said more autonomy would allow âpoachingâ of staff among
various public sector banks too, a trend, which is prevalent among new private
sector and foreign banks.
The crux of the announcement is that bank chairmen will not need to run to the
finance ministry each time they want to make a critical decision like setting
up overseas subsidiaries or announcing a voluntary retirement scheme for
employees.
âThe working group headed by AK Purwar (SBI chairman) recommended operational
autonomy to PSU banks. The government was keen that something needed to be
done.
Some micro issues such as (seeking ministry approval on) how many general
managers a bank needs or different categories of branches, has been dispensed
with,â said HN Sinor, CEO, Indian Banks Association.
âBanks will be able to offer differential pay structures to staff. This could
include a variable component,â he added.
âThis goes on to show that the government has realised that it cannot
continue to look after the day-to-day operations,â said AK Khandelwal,
chairman of Dena Bank.
The autonomy package will allow banks to acquire businesses and open
subsidiaries without government approval. This policy has been categorised in
two â one for stronger banks and the other for weaker ones.
Banks can acquire a new business, acquire partners and can exit certain
businesses like home finance. They can set up overseas subsidiaries and have
freedom over recruitments and promotions. However, bank CEOs are not too sure
whether this would facilitate M&As among PSU banks which has been opposed by
trade unions.
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