The central bank came up with the plan after detecting huge discrepancy in income of employees of executive level and those in bottom rungs of the hierarchy. [break]
If such a policy is introduced, it will also apply on staff members deployed at banks and financial institutions by outsourcing companies.
“We were forced to think in this line after studies showed huge difference in salaries of staff at top level and those in the lower level,” a reliable source of the central bank told Republica. “But since our research is not complete, we haven´t made any concrete decision on steps that need to be taken.”
However, one thing that the central bank is certain about is that “the current pay structure at banks and financial institutions is not fair for everyone”. “So our basic attempt would be at instilling an equity-based culture in banks and financial institutions, which values efforts of low-level employees as well,” the source said.
Although the central bank did not reveal the pay scale of staff at top level and those in the bottom, it is said bank CEOs on average take home Rs 1 million per month, while low-level employees hardly make Rs 15,000 per month.
As per the guideline introduced by the central bank, chief executives of commercial banks should not be entitled to annual remuneration in excess of 5 percent of the total staff expenses of the past three years or 0.025 percent of the gross assets of the past year. In the case of chief executives of development banks and finance companies, remunerations are determined on the basis of return on assets, business volume, condition of operating income, business expansion possibilities and risks entailed by institutions, among others, of the past three years.
Earlier, the Insurance Board, the insurance sector regulator, had also limited remuneration of a CEO of an insurance company at 15 times the remuneration of the lowest-level staff of the company.
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