In 2012, the Department of Financial Services, Ministry of Finance, Government of India, had released a circular for payment of performance linked incentive (PLI) to Whole Time Directors of Public Sector Banks. This PLI circular has been superseded by the new PLI circular released by DFS on 19.11.2024.
In this article, we will have a detailed look into this old PLI scheme that was active in public sector banks since 2012.
How Public Sector Banks were Evaluated as per 2012 DFS Circular (Old PLI Scheme)?
In this old PLI scheme, the PLI was paid only to Whole Time Directors and not to other senior executives of Banks such as Scale IV and above officers.
The performance of Public Sector Banks was assessed via various parameters. Marks were assigned to those parameters, and banks received marks based on their performance. The assessment was done on two parameters – Quantitative Parameters and Qualitative Parameters.
Quantitative Parameters
| S. No. | SOI Parameters | Maximum Marks |
|---|---|---|
| (i) | CASA Deposits as % of Total Deposits | 10 |
| (ii) | Growth in Direct Agricultural Advances | 5 (10)* |
| (iii) | Growth in MSE Advances | 5 |
| (iv) | Advances to Weaker Sections | 5 |
| (v) | Level of Gross NPAs (Amount) | 5 |
| (vi) | Return of Average Assets (ROA) | 5 |
| (vii) | Net Profit (After Tax) | 10 |
| (viii) | Staff Cost Income Ratio | 5 |
| (ix) | Other Costs towards P.L. (%) | 5 |
| (x) | Financial Inclusion | 10 |
| (xi) | Performance of RRBs | 5* |
Total marks were 70 for Quantitative Parameters. Banks that did not sponsor any RRB were assigned 10 marks for Direct Agricultural Advances.
Qualitative Parameters for CMDs & EDs
| S. No. | Parameter | Marks |
|---|---|---|
| (i) | Strategic plan covering business strategies, operational milestone to be achieved | 05 |
| (ii) | Human Resource Development plan | 05 |
| (iii) | E Governance and e-payment | 05 |
| (iv) | RRB – Functional integration with Sponsor Banks | 05 |
| (v) | Business Process Re-engineering (BPR) | 05 |
| (vi) | Innovation | 05 |
Total marks were 30 for Qualitative Parameters. So the total marks were 100 (Quantitative 70 + Qualitative 30).
For qualitative parameters the Bank would require a Board approved plan covering period upto March, 2017 with quantitative milestones for each year. Marks would be awarded as per the following criteria the achievements against annual milestone.
How much PLI was provided to Whole Time Directors (MD & EDs) of Public Sector Banks (Old PLI Scheme)?
The Performance Linked Incentive (PLI) was provided to Whole Time Directors as per the marks obtained by Bank.
| S. No. | Performance Parameter | Incentive |
|---|---|---|
| 1 | Below 80% | Nil |
| 2 | 80 – 90% | 70% |
| 3 | 90 – 100% | 90% |
| 4 | 105 – 115% | 110% |
| 5 | > 125% | 125% |
The evaluation of performance was done by a Sub-Committee of the Board of Directors called ‘Remuneration Committee’ consisting of (i) Government Nominee Director (ii) RBI Nominee Director and (iii) two other Directors.
The Whole Time Directors were eligible for the following maximum PLI:
| For scores out of 100 marks | For CMD (₹ in lakhs) | For ED (₹ in lakhs) |
|---|---|---|
| 100 | 8.0 | 6.5 |
| 81–99 | 7.0 | 5.5 |
| 61–80 | 6.0 | 4.0 |
| 60 and less | Nil | Nil |
Download DFS Circular and Guidelines 2012 PDF for Payment of Performance Linked Incentive (PLI) to Whole Time Directors of PSU Banks (Old PLI Scheme)
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