India’s largest bank State Bank of India (SBI) on Friday said it plans to offer up to 3 per cent of annual profit to employees as part a talent retention and motivation initiative.
The bank has sought permission from the Finance Ministry in this regard, said Chairperson Arundhati Bhattacharya.
“If you consider the fact that incentivisation is a good way of ensuring people meet up to whatever are the challenges…they respond to them. So to that extent government allows us to share 1 per cent. We are saying that it is necessary for us to hike that amount to 3 per cent,” she said.
The matter is now before the Finance Minister who will take decision in this regard. The bank has about 2.3 lakh employees.
“The amount that they (senior management and mid-level management) get in the private sector is much higher than they get in the public sector,” she said.
As a result, employees who come up to the higher levels because of their merit and hard work, are easily picked up by private sector, Ms. Bhattacharya said. “They have a tendency of leaving and going and this will become more so with newer banks coming in and more players entering the field of banking. Therefore, for meeting competitive pressures, we need to ensure that we are able to remunerate our people better,” she said.
For the fiscal ended March 2015, SBI’s net profit increased 20 per cent to Rs. 13,101.57 crore as compared to Rs. 10,891.17 crore for the year ended March 2014. SBI group’s consolidated net profit rose 20 per cent to Rs. 16,994.30 crore during 2014-15 fiscal as compared to Rs. 14,173.77 crore in the previous fiscal.
Besides, SBI is also considering a share-purchase scheme for all employees, irrespective of their posts. The largest public sector lender expects to raise between Rs. 800-1,200 crore through this scheme.