Mumbai: Reserve Bank of India (RBI) Governor Raghuram Rajan on Tuesday appealed to the government to take steps to ensure a levelling of imbalances in pay scales in public sector banks (PSBS) to ensure greater fiscal efficiency and effectiveness.
Maintaining that PSB staffers are overpaid at the bottom and underpaid at top, Rajan pitched for ending government role in top-level appointments at PSBs
He said there is need for the RBI to be allowed to empower bank boards more to take all major governance decisions without being under pressure to satisfy the demands of multiple constituencies and authorities.
He also proposed withdrawing central bank nominees from these boards.
“Today, a variety of authorities – Parliament, the Department of Financial Services, the Bank Board Bureau, the board of the bank, the vigilance authorities, and of course, various regulators and supervisors including the RBI – monitor the performance of the public sector banks.
“With so many overlapping constituencies to satisfy, it is a wonder that bank management has time to devote to the management of the bank,” he added.
“One of the problems, of course, is that as with all public sector entities, you overpay at the bottom, and underpay at the top. Compensatory, the difference is that, yes, you feel that you are doing the job for the broader public but you just make it harder to attract top talent, specially a lateral entry,” Rajan said.
He said there is a need to streamline and reduce jurisdictional overlaps.
He was addressing bankers at the annual FIBAC, FICCI’s premier conference on the Indian banking industry. (ANI)