Centre Revises PLI Scheme for Senior Executives of Public Sector Banks
By: Admin
Date: November 22, 2024
Category: PLI News
Reading Time: 4 Minutes
The government has introduced a revised Performance-Linked Incentive (PLI) scheme for senior executives of public sector banks (PSBs). This updated initiative assesses banks using key performance parameters like Return on Assets (RoA) and Net Non-Performing Assets (NPAs). It is designed to reward executives for significant contributions to stakeholder value.
Key Highlights of the Revised Scheme
Eligibility Parameters for Banks
The eligibility of banks under the revised PLI scheme will be determined by a government-appointed committee. Specifically, four key parameters will guide the evaluation process:
- Positive Return on Assets (RoA): Banks must demonstrate profitability.
- Reduction in Net NPAs: A decline in bad loans is essential.
- Compliance with Governance Mechanisms: Robust governance systems are mandatory.
- No Major Violations: Banks must maintain a clean track record free from practices harming their credibility.
Importantly, banks must meet at least three of these criteria to qualify.
PLI Benefits for Executives
Eligible Roles
Executives in the following positions are entitled to the PLI scheme:
- Executive Directors (EDs) and Managing Directors (MDs) of nationalized banks.
- Deputy Managing Directors (DMDs), MDs, and Chairpersons of the State Bank of India (SBI).
Maximum Incentive
The revised scheme offers eligible executives up to 100% of their annual basic pay, making it a significant motivator for improved performance.
Governance and Oversight
To ensure transparency and accountability, a committee will oversee the implementation of the scheme. The committee includes:
- The Secretary of the Department of Financial Services (DFS).
- Additional Secretary (DFS).
- Joint Secretary (Banking).
- Chief Executive of the Indian Banks’ Association (IBA).
This body will regularly review governance practices, investigate potential violations, and finalize eligibility for both banks and executives.
Implementation Timeline
The revised PLI scheme is effective from the financial year 2023-24. It officially replaces the previous guidelines issued in August 2018.
Implications for Public Sector Banks
The updated scheme is anticipated to have far-reaching effects:
- Motivating Senior Executives: Enhanced incentives will encourage leaders to focus on improving financial and operational performance.
- Promoting Accountability: By linking rewards to performance and governance, the scheme aims to drive stakeholder value.
- Strengthening the Banking Sector: This move aligns with the government’s broader efforts to fortify India’s banking infrastructure.
For additional information, refer to the circular issued by the Ministry of Finance.
