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Pay-to-performance may make it tough for banks to lure top talent

The mandate, intended to motivate the top management and make it more responsible, may instead end up reducing the lure of banking sector among domestic and global professionals, some experts warned even while others welcomed the new pay guidelines based on “pay for performance principle”.

By Rica Bhattacharyya, ET Bureau |Updated: November 12, 2019, 11.11PM IST
MUMBAI: The Reserve Bank of India’s recent mandate to link at least half of the salary of private bank chiefs to their performance and put a cap on their variable pay may make it difficult for the sector to attract talent, executive search consultants say. The mandate, intended to motivate the top management and make it more responsible, may
of the respective banks, he said. Many banks have moved to vesting of stock options based on key performance metrics to ensure fundamental performance of bank is strong. Going ahead, boards of Indian banks might also want to consider moving away from plain vanilla ESOP structures where the gains are based purely on increase in share price, Gupta said.

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