The government is mulling to extend State Bank of India’s proposal of sharing 3-5% profits with its employees to other state-run banks.This move will not only drive reforms but also attract young talent to opt for government banks.
In this regard, the finance ministry has asked Indian Banks' Association (IBA) for its opinion, and a feedback is expected in next couple of weeks.
SBI’s deputy managing director and corporate development officer, Ashwini Mehra, said that profit sharing with employees will be on an incentive basis.
If the plan is cleared, 27 government-owned banks would share 3-5%, or Rs 1,134 to 1,891 crore profits, with lakhs of employees.
This will also lead to competition with private and foreign banks.
RBI Governor Raghuram Rajan has also been advocating banking reforms in the public sector space.
"Wherever possible, we have to move steadily but firmly, ever expanding the scope of reforms while always limiting the uncertainty they create," he said in the central bank's 2014-15 annual report.