The Hindu Business Line : Bank of Baroda seeks variable pay, incentives for officers

Mumbai, Feb. 19 Bank of Baroda wants to have a separate salary structure for its officers. The bank is trying to be out of the industry-level-wage negotiation with the unions as it wants to introduce incentives and variable pay.

If the Government approves this proposal, it could signify a huge change in salary structure for public sector banks.

The bank has not given the mandate to the Indian Banks’ Association to negotiate with unions for officers’ wage revision. The bank has, however, given the mandate to the IBA to negotiate for salaries of the award staff (clerical staff).

While acknowledging that securing Government approval may be difficult, Mr A.K. Khandelwal, Chairman and Managing Director, Bank of Baroda, said: “We have made an attempt to at least voice our feelings on this. We will be very happy if the Government wishes to try an experiment with Bank of Baroda and gives us permission.”

Wage Agreement

Mr Khandelwal told Business Line, it is time to re-look at the way salaries of bank officers are structured. “We have to make a beginning. We have to start thinking fresh with regard to manpower, as that will be next biggest challenge for PSU banks. It is very difficult to retain officers,” he said.

The bank has 13,000 officers. “Once we decide the wages, we can decide the service conditions. Being a global bank, we need officers with different skill sets and who can do multiple banking.”

The earlier wage agreement, between IBA and bank unions, for the period 2002-2007, was signed in 2005 and it ended on October 31, 2007. After that the unions had submitted the charter for wage revision for the next five years to IBA.

IBA, too, had sent a charter to all its signatory banks in November 2007 and is waiting for the boards of all banks to give their mandates to carry out negotiations on their behalf.

The IBA cannot start the wage negotiations unless it gets mandate from all banks.

Attrition

All PSU banks are facing serious issues of attrition, as they are not able to offer the high salaries that are offered by their private counterparts.

According to an IBA official, all other 27 PSU banks have given the mandate to IBA for negotiating salaries, except Bank of Baroda. So, it is unlikely that the Government will amend the banking regulations just for one bank.

“There are both advantages and disadvantages with standardised salaries. On the one hand it may not be possible for individual banks to reward good performers. But at the same time, staff of banks that have lower profitability do not have to fear that they their salaries will be reduced,” he said.

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