Goverenment revises performance-linked incentive scheme for directors, senior executives of PSBs

New Delhi: The government has introduced a revised performance-linked incentive scheme for senior executives of public sector banks, including return on assets and NPA levels among parameters.

The eligibility of banks for the scheme will be assessed by a government-appointed committee on the basis of four parameters, including that Return on Assets (RoA) should be positive and lower net non-performing assets (NPA).

In a circular, the finance ministry said the scheme, which aims to provide to suitably reward and motivate employees for significant value creation for various stakeholders, will be effective from financial year 2023-24.

The committee, headed by Department of Financial Services (DFS) Secretary, will have Additional Secretary (DFS), Joint Secretary (Banking) and Chief Executive of Indian Banks' Association (IBA) as members.

According to the communication, the panel shall assess the governance mechanism in the banks for the PLI evaluation period with respect to occurrences of any major/ serious cases of violations, malpractices or those severely impacting bank credibility and reputation.

"The committee shall after assessment, list out the banks which shall be eligible to be considered under the PLI scheme. The committee may also decide on (in) eligibility of officer(s) for PLI scheme," it said.

As per the circular, PLI for EDs and MDs of nationalised banks and DMDs, MDs and chairman of SBI could be up to 100 per cent of annual basic pay.

It also specifies 4 criteria, including positive RoA, for banks to be eligible to operate the PLI scheme. Banks will have to meet at least three of the 4 criteria. The circular revises the August 2018 norms related to PLI.