The finance ministry has issued a guideline specifying the parameters and qualitative achievements that will be considered for giving performance-linked incentives to wholetime directors.
The chiefs of public sector banks will get extra Rs 8 lakh, Rs 7 lakh (Rs 700,000) and Rs 6 lakh (Rs 600,000) per annum if they achieve the targets set for them 100 per cent, 81-99 per cent and 61-80 per cent, respectively.
The executive directors will get extra Rs 6.5 lakh (Rs 650,000), Rs 5.5 lakh (Rs 550,000) and Rs 4 lakh (Rs 400,000), respectively, if the targets are met in the above manner. The incentive scheme will be effective from 2005-06.
There are common nine parameters for bank chiefs and executive directors. These are -- growth in core deposit (10 mark), growth in advances (10 mark), growth in agriculture lending (10 mark), growth in SME advances (5 mark), advances to weaker sections of society (5 mark), reduction in gross non performing asset (15 mark), return on average assets (10 mark), net profits (10 mark) and cost to income ratio (10 mark) -- and the total mark on parameters is 85.
Another 15 mark will be given to the chairpersons and directors on three different set of qualitative achievements. They are -- leadership and brand building (5 mark), human resource management (5 mark) and information technology and other initiatives (5 mark) -- for CMDs.
For executive directors 15 mark will be given taking into account performances in customer centricity, adherence to Know-Your-Customer/anti money laundering guidelines and quality of compliance of inspection and audit reports.
For rewarding performing brass of banks, an evaluation will be done by a sub committee of board of directors called remuneration committee consisting of government nominee director, the Reserve Bank nominee director and two others.
While evaluating, if a bank chief or director achieves 95 per cent of any target, the official will be given 10 out of 10 mark. If the target is achieved 90 per cent, 85 per cent, 80 per cent and 75 per cent, the official will be given 9 mark, 8 mark, 7 mark and 6 mark, respectively.
There will be no incentive for those who fail to achieve less than 60 per cent of the targets. The performance-based incentive guidelines were issued by the finance ministry on Wednesday.
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