State Bank of India is seeking the government's permission to dole out up to 3 per cent of its annual profits to staff in incentives in an attempt to draw top talent that normally make a beeline for private sector behemoths such as ICICI Bank and HDFC Bank.
The state-run giant also plans to give stock options to employees above the rank of assistant/deputy general manager, hoping that it will help retain talent and improve performance, two people familiar with the matter said.
If the proposals are approved by the Centre, it could lead to more than 2 lakh SBI employees sharing about Rs 390 crore of its profits and set the stage for other staterun lenders to follow suit, which will end decades-old collective bargaining by trade unions. The details of how the incentive schemes would work are yet to be finalised. The profit number is based on 2014-15 earnings.
"We are taking all regulatory approvals to incorporate a new performance-based incentive structure," said Ashwini Mehra, deputy managing director and corporate development officer at SBI, without elaborating on the proposals.
The proposals are in line with the government's initiative to induct private talent in state-run banks, which have accumulated huge bad loans due to poor credit analysis and a slowdown in the economy. The government has already split the position of chairman and chief executive, and is in the process of hiring private talent to head Punjab National Bank and other lenders.
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