Public sector banks underpay at top; I too feel under-paid: RBI Governor Rajan

One of the problems, of course, is that as with all public sector entities, you overpay at the bottom and underpay at the top... 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 here while talking about public sector banks (PSBs). Addressing a banking conference here, the outgoing Governor jokingly added, “I also feel under-paid.” 

As per the latest data on monthly salaries made public by RBI, Rajan’s total monthly emoluments stood at Rs 1,98,700 for the month of July 2015. Rajan, on-leave professor of finance at Chicago University and former Chief Economist and IMF, will return to academia after his term at RBI ends on September 4. The top-level salary disclosures made by the banks in their respective annual reports show a sharp difference between the total remuneration paid at the public sector and private sector entities. 

Public sector behemoth SBI’s Chairperson Arundhati Bhattacharya got just about Rs 31.1 lakh in the fiscal year 2015-16, while public sector major HDFC Bank’s Managing Director Aditya Puri’s total remuneration for the same period was more than 30-times higher at Rs 9.7 crore. Rajan also suggested giving rewards like ESOPs by public sector banks, which is very common in private sector, by taking advantage of the current low share valuations of PSBs. 

Rajan said while one of the strengths of the public sector sometimes is the absence of pay and promotion that is very sensitive to performance, too little sensitivity can also be a problem as high performers get demotivated, and the slothful are not penalised. An increased emphasis on performance evaluation, including identifying low performers with the intent of helping them improve, may be warranted, he said.