RBI Governor Raghuram Rajan recently stated that pay scales in Public Sector Units including Public Sector Banks are uneven. Rajan further added that it is difficult to get the Top-Notch talent in Public Sector Banks since the top brass is underpaid.
As per the latest media reports, the pay scales in public sector banks, up to the Middle Management Grade are higher in comparison to their private sector counterparts and PSU Bank employee salaries are expected to get higher in 2017.
An instance of this is that an entry-level officer in a public sector bank receives almost 50 percent more salary in comparison to his private sector counterpart. Gradually as the executive attains higher position, his pay scale starts to lag.
How much do Private Vs. Public bank CEOs earn?
Some private sector banks CEOs receive almost 30 times higher salary in comparison to their private sector counterparts.
A comparison of the pay scale drawn by the CEOs of India’s largest Public and Private Sector Banks accentuates the disparities.
As per the reports in July 2015, Raghuram Rajan, Governor of RBI drew an annual gross salary of Rs. 23.84 lakh.
Chanda Kochhar, CEO of ICICI Bank, drew Rs. 4.76 crore per annum in the fiscal year 2015-16.
SBI Chairman, Arundhati Bhattacharya drew an annual gross salary of Rs. 31.10 lakh in the fiscal year 2015-16.
On the other hand, Aditya Puri, Managing Director & CEO of HDFC Bank drew a gross salary of Rs. 9.7 Crore for the fiscal year 2015-16 that is about 30 times more than the SBI chief received.
Salary of Private Vs. Public Sector Bank Managers:
However, the situation reverses at the Managerial level (Bank-PO).
The pay scale of a Probationary (entry-level) Officer in a Public Sector Bank is nearly 6 lakh per annum whereas the pay scale is nearly 4 lakh per annum in a Private Sector Bank.
Indian Institute of Banking and Finance CEO, JN Mishra stated that pay scales in Public Sector Banks are better in comparison to Private Banks up to the Scale III (Senior Manager). He further added that the trend reverses from the scale IV (Chief Manager) onwards. He added that the variation in pay scales increases as you go towards the Higher Positions.
Highlighting the issue of disparity in pay scales between PSUs and Private Banks, Rajan raised his views to emphasize on Reviewing Governance of Boards of Banks in India.
The committee stated that one of the major constraints on the Public Sector Banks is the significant and wide variation in the pay scales between the PSUs and the private sector banks that leads to the erosion of the specialist skills.
Why People Still Prefer Public Sector Bank Jobs?
It is widely noted that despite the huge variations in the Pay Scales, people still prefer jobs in Public Sector Banks. It is not surprising that over 20 lakh candidates apply for almost every Clerical and PO level recruitment exam of Public Sector Banks (SBI and IBPS).
Here are the benefits of Public Sector Bank jobs, which motivate people to join them:
- High Job Security: Jobs in Public Sector Banks offer High Job security since there is no anxiety of being fired owing to performance, economic crisis or work pressure.
- Regulated Working Hours: Working Hours in the Public sector banks are much more regulated in comparison to the private banks. It is however not like old times when job timings were fixed.
- Lower Stress: In Private Bank Jobs, there is a tremendous pressure on the Employees to achieve targets within time in comparison to the Public Sector Banks. Public Sector Banks offer relatively low-pressure environment where you are given targets but the targets are achievable.
- Lower Interest Rates on Loans: Offers Low Interest Rates on Loans in comparison to Private Sector Banks to employees.
- Better Work-Life Balance: Public sector banks offer a more liberal leave policy in comparison to their Private peers.
- Growth Opportunities Across Verticals: The competitive Environment of the Public Sector Banks provides growth opportunities across verticals. Public sector banks provide an ambience, which is conducive to achieving new personal heights and improving job profiles.
- Exposure Through Communication: Public sector banks usually have a large customer base. Communication and interaction with the customers greatly enhances one’ skill sets and confidence in the long run. It is no more just a desk job where you are just pushing papers all day.
We hope that this gives you a clearer view about the salary war between public sector and private sector banks. Weigh your options before you apply. Good luck!
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