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Showing posts with label ESOP. Show all posts
Showing posts with label ESOP. Show all posts

Tuesday, 7 March 2017

18:09

Government agrees on the Employee Stock Option Plans (ESOPs) Offer by PSU banks

Government agrees on the Employee Stock Option Plans (ESOPs) Offer by PSU banks

The Finance Ministry has agreed in-principle to allow public sector banks to offer stock options to their employees from next fiscal -- a move aimed at retaining experienced hands with better incentives.
According to sources, Employee Stock Option plans (ESOPs) could be given by those banks which have not only earned substantial profit but also made remarkable improvement in managing NPAs.
It will help motivate employees to work towards strengthening the financial status of their banks so that their share value rises, sources said.
Although the Finance Ministry has given in-principle nod, the finer details are being worked out like what percentage of profit can be earmarked for ESOPs, sources said, adding, this is based on the suggestion of Banks Board Bureau (BBB).
One of the proposals is to issue shares equivalent to a certain percentage of banks' net profit to employees which is being examined.
For large banks, the ESOPs could be as much as 5 per cent of profit after tax while for the smaller ones, it could be about 3 per cent but no decision has been taken yet, sources said.
Apart from ESOPs, bonuses and other performance-linked packages are also being discussed as suggested by BBB, sources added.
ESOPs are common in the private sector, where companies offer stocks to reward and retain key and top-performing employees.
Since the employees stand to benefit from any appreciation in stock price, ESOPs also help in aligning the interests of the employees with those of shareholders.
Earlier in January, BBB chief Vinod Rai had said the compensation package across the board of public sector banks needs to be improved.
"Maybe we are not able to do much with the fixed part of compensation package but variable part we are hopeful that in the next financial year we will be able to introduce a far more attractive package which will have bonuses, ESOPs and other performance linked incentives as part of the package," he had said.
It can be monetary or non-monetary benefits to make it more attractive for professionals to enter public sector banking space, he had said.
Last year, the then RBI Governor Raghuram Rajan also made a case for offering ESOPs to bank staff.
"With public sector banks' shares trading at such low levels, a small allocation to employees today may be a strong source of motivation, and can be a large source of wealth as performance improves," Rajan had said.


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Thursday, 4 August 2016

07:18

Public sector bank employees may get ESOPs from next April

Public sector bank employees may get ESOPs from next April
Over 800,000 employees working with different public sector banks (PSBs) could soon have a reason to cheer.
The government and the Banks Board Bureau (BBB) are in a hurry to announce employee stock ownership plans (ESOPs) for PSB employees, especially in the backdrop of the entry of 21 new small and payments banks, and a number of mid-management professionals reaching retirement age soon.
The government also wants to bring in “some” parity in the remuneration structure of state bank employees with their private sector peers. ICICI Bank, Axis and HDFC Bank, among others, regularly offer ESOPs to employees based on their performances.
The plan is likely to be in place by March next year, which means employees would be issued shares by April, government sources said. Each lender will have its own schedule and payment mechanism.
“We don’t want to have a one-size-fits-all formula for this... each bank will have its unique and independent scheme.. the plan is almost ready… the BBB is giving the final touches,” sources added.
The ESOP scheme for PSB employees is part of the seven-point reform programme — Indradhanush — announced by the government last year.
Besides giving ESOPs, the finance ministry and the BBB are looking at innovative ways to increase the compensation packages of employees. While, it is difficult to tamper with the fixed component of the package, the BBB is keen to increase the variable part. According to sources, a human resource policy is also likely to be worked out, comprising out-of-turn promotions and fancy postings within and outside the country. Bank officials may also be allowed to apply for jobs in other state-owned lenders. At present, postings are determined by the Centre.
“We are looking at innovative ways for the variable part. It may include ESOPs or increasing the amount of performance-linked incentives, or bonuses, or some other perks,” Vinod Rai, chairman, BBB, had earlier told HT.
Finance minister Arun Jaitley has also said that the government is considering offering ESOPs to PSB employees.
The plan, however, is likely to face opposition from trade unions. “Share prices will fluctuate and we don’t believe we will be owners of the banks if we get ESOPs... why should employees buy and sell shares?” said CH Venkatachalam, general-secretary, All India Bank employees Association (AIBEA) .
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Thursday, 7 July 2016

07:48

Government considering ESOPs to bank employees: Jayant Sinha

Government considering ESOPs to bank employees: Jayant Sinha 

NEW DELHI: Government is considering to issue ESOPs to bank employees, Minister of State for Finance Jayant Sinha said today.

He also asked bank employees to make the public sector competitive so that they get higher compensation and other benefits.

"This government is of view that we should create ESOPs for PSB bank staff," he said at a function organised by BMS and NOBW.

The employees, Sinha said, should be working towards making PSBs competitive, raising market sharing and improving profitability. 

It will help improving profit to book ratio so that banks can raise capital from market.

On non-performing assets in the banks, the minister said strict measures will be taken by law in case of criminal negligence. 

The Reserve Bank of India has said the gross non-performing assets of the banks can rise to as high as 9.3 per cent in 2016-17 after hitting 7.6 per cent in March 2016. 


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Thursday, 10 March 2016

18:41

State-run banks mull Employee Stock Options Plan (ESOP) to retain employees

State-run banks mull Employee Stock Options Plan (ESOP) to retain employees

State-run lenders like Bank of Baroda and IDBI Bank are planning to offer stock options to staff in a bid to retain top talent. This assumes significance in the backdrop of the imminent entry of 21 new niche banks which have been granted licences by the RBI to begin operations, as well as the prospect of a clutch of mid-management professionals reaching retirement age soon.

IDBI Bank:
For instance, IDBI Bank, which has started to transform itself by realigning its business, has also drawn a roadmap for human resources. The lender, which is planning to increase the employee strength to 21,500 by March 31, 2019 from the 15,500 at present, is not only working out a scheme for career progression but also mulling an employee stock option plan (ESOP) to incentivise them, said Kishor Kharat, MD and CEO, IDBI Bank.

Bank of Baroda:
Bank of Baroda MD and CEO P.S. Jayakumar said the bank was considering an ESOP for its employees which could bridge the compensation gap between public and private sector employees. “In general, at a lower level, public sector institutions pay better than their counterparts. But while progressively going up (in the rank), there is a gap that is arising and at a senior level, the gap really becomes unmanageable,” Mr. Jayakumar said. The board had already approved the ESOP. Now, the bank will write to the government for its approval. “We need to create a variable incentive system without creating perverse economic interests. If we can get an ESOP plan, then, at least it will cover some part of the gap,” Mr. Jayakumar said.

Most banks plan to offer stock options to their employees in the rank of assistant general manager and above.

State Bank of India:
State Bank of India (SBI), the country’s largest lender, had floated the idea of ESOP for its employees some time ago. However, the proposal is still awaiting government’s approval. Union Finance Minister Arun Jaitley had said recently that the government was actively discussing the proposal for Employee Stock Ownership Plan (ESOP) for public sector bank employees. “The government is considering (the proposal of ESOP for bank employees). It is in a very advanced stage. It has been a long-standing demand and is (under) active consideration,” Mr. Jaitley said at Gyan Sangam, the annual retreat for bankers, last week.

Public sector banks are facing headwinds on the human resources front as many mid-management officers are retiring over the next five years, prompting the central bank to term it a ‘retirement decade.’ In addition, the 21 new banks, which have received differentiated licences from the Reserve Bank of India (RBI), will try to poach employees from existing banks. In August-September last year, RBI has granted licences to 11 payment banks and 10 small finance banks to start operations. While these banks were given 18 months’ time to roll out services, most of these entities are expected to start operations in 2016.


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Saturday, 5 March 2016

20:07

ESOP for PSU bank staff likely: Jaitley

ESOP for PSU bank staff likely: Jaitley
Gurgaon, March 5
The government will soon set up an expert group to look into the consolidation of public sector banks as the country needs stronger rather than a large number of banks, Finance Minister Arun Jaitley said here on Saturday.

He also said the government was considering ESOPs for PSU bank officials besides strengthening the SARFAESI Act and Debt Recovery Tribunals to deal with the problems of stressed assets that are estimated around Rs 8 lakh crore.

Addressing a press conference at the conclusion of the second edition of Gyan Sangam, Jaitley said that consolidation in the banking sector was discussed at the meeting and bankers themselves had suggested that an expert group be set up soon to look into the issue.

"We will consider that suggestion," the minister said, adding that the country needed stronger banks rather than large number of lenders.

There could be niche banks and banks which could survive independently and sustain themselves well, he said, observing that Gyan Sangam strongly supported the idea of consolidation in the banking sector.

The other idea which was suggested at the meeting was to reward the public sector bank employees with employee stock ownership plan (ESOP), he said.

"The government is considering (the proposal of ESOP for bank employees). It is in a very advanced stage.... It has been a long standing demand, and is (under) active consideration," Jaitley said.

With regard to the rising non-performing assets or bad loans, Jaitley said that besides strengthening the institutional mechanism, the government had been taking sector specific decisions to deal with the problems in segments like power, highways, sugar and steel.

Giving details of the deliberations during the conclave, Jaitley said there are suggestions to amend the SARFESI ACT and also expedite the DRT process by some more amendments to law.

Source:The Tribune
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