Latest News | Revised PLI Scheme Undermines Autonomy of Banks' Boards: AIBOC
Get latest articles and stories on Latest News at LatestLY. Banks' officers union AIBOC on Friday said the recently announced revised Performance Linked Incentives (PLI) for Whole Time Directors and senior executives infringes upon autonomy of boards of public sector banks.
New Delhi, Nov 22 (PTI) Banks' officers union AIBOC on Friday said the recently announced revised Performance Linked Incentives (PLI) for Whole Time Directors and senior executives infringes upon autonomy of boards of public sector banks.
Earlier this week, the Department of Financial Services announced a revised PLI scheme for Whole Time Directors. The revised scheme also included officers from Scale IV to Scale VIII of public sector banks.
However, the PLI for officers up to Scale VII has already been determined through bilateral agreements between the Indian Banks' Association (IBA) and officers' associations at the industry level.
These agreements, based on mandates provided by member banks' boards, also encompass officers in Scale VIII, All India Bank Officers' Confederation (AIBOC) said in a letter written to the Financial Services Secretary.
The Department of Financial Services (DFS) directive undermines this well-established framework, violating the sanctity of collective bargaining and the essence of bilateral settlements.
"This selective approach to incentive-only officers from Scale IV to VIII (counting less than 5 per cent of the total workforce), while excluding over 95 per cent of employees who primarily drive business at the field level, is inequitable," it said.
"During the Gyan Sangam held at Pune on January 2-3, 2015, the Prime Minister had said that banks would run professionally, and there would be no interference. It was also decided that the bank's board should be given full autonomy on HR decisions such as on recruitment," it said.
Following this, the DFS issued an office memorandum dated January 13, 2015, emphasising the same citing the Prime Minister's interaction with the Chief Executives of Public Sector Banks and Financial Institutions (PSBs/ FIs).
During the discussion, it was conveyed from the highest level in very clear terms that the government will not interfere in the working of the Banks/ FIs, the letter said citing the office memorandum.
"The current directive, which prescribes how senior officers should perform and prioritise their work to earn incentives, surely infringes upon the autonomy of public sector banks. It disregards their governance structures and imposes centralised control, which could stifle strategic decision-making aligned with individual banks' unique challenges," it alleged.
Such micro-management by the government sets a dangerous precedent, undermining the independence of functions of the boards of the public sector banks, it said.
Chief executives of PSBs and SBI have performed better than their private bank peers despite being paid comparatively less, it said, adding that it is evident that money or incentives are not the motivators.
"We, therefore, urge the Department of Financial Services to respect the autonomy of public sector banks and entrust the Indian Banks' Association, along with bank managements, with the responsibility to design compensation mechanisms taking the Unions/Associations along as hitherto," it said.
These mechanisms should align with the collective growth of the banks and their workforce, ensuring fairness and sustainability, it added.
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