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October 27, 2009
Compensations and Governance
Financial institutions in India - particularly Banks, 82 percent of which are in public sector - are no where their global counterparts. Private sector big brothers however are different and they come close to the FIs in the west. The code has not been built. Timothy Rayon, CEO of SIFMA released interesting guidelines last week and they are worthy of emulation in Asian FIs. The Boards should oversea the compensation packages with appropriate oversight through the Compensation Committee. In India, these compensation committees just do not exist. The public sector banks shall get their endorsement from the Government of India - Secretary, Banking of the Union Ministry of Finance. You will be surprised to note that even their membership to PRMIA or any professional association shall also be approved by the Department of Banking where a junior official, far far junior to the Chairman of a Bank presides over the decision!! The Regulator - in the case of Public Sector Banks, more the Government than the Reserve Bank of India, the Central Bank that would decide several governance issues. Despite a Board existing, it is more puppetry and looks at some technical issues.
Posted by rajubehara at October 27, 2009 02:22 AM
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