In a move aimed at retaining top talent and incentivising performance, the Finance Ministry has unveiled a revised Performance-Linked Incentive (PLI) scheme for public sector banks (PSBs). The scheme, which was previously limited to top executives, has now been expanded to include senior executives at the level of Chief Manager and above.
Expanding the Incentive Pool
The expanded PLI scheme seeks to bridge the significant compensation gap between PSBs and private sector banks (PSBs). By offering competitive incentives, the government aims to attract and retain skilled professionals, particularly in the face of increasing competition from private sector lenders.
Key Features of the Revised PLI Scheme:
- Eligibility: The scheme is applicable to all permanent employees, including lateral hires and deputationists, at the level of Chief Manager and above.
- Incentive Ceiling: The PLI ceiling varies based on the rank of the executive:
- MD & CEOs and EDs: 100% of annual basic pay
- Chief General Manager and General Manager: 90% of annual basic pay
- Deputy General Manager and Assistant General Manager: 80% of annual basic pay
- Chief Manager: 70% of annual basic pay
- Performance Evaluation: Banks’ performance will be assessed based on four key parameters: efficiency, business growth, asset quality, and financial inclusion.
- Approval Process: The government will approve PLI payments for Whole-Time Directors, while bank boards will approve payments for senior executives.
A Step Towards a Stronger Banking Sector
The revised PLI scheme is a significant step towards strengthening the public sector banking sector. By motivating top talent and rewarding performance, the government aims to improve efficiency, enhance risk management practices, and drive growth in these institutions. This move is expected to have a positive impact on the overall health of the Indian banking industry.
