Over 800,000 employees working with different public sector banks (PSBs) could soon have a reason to cheer.

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) .