Govt mulls ESOPs for PSB employees; decision expected after Lok Sabha election 2024, Deloitte to advise on framework

livemint.com:

Economic Times reported that the proposal to introduce employee stock ownership plans (ESOPs) has been on hold for some time, but it may gain momentum after the Lok Sabha elections. "There have been talks with the government last month on issues pertaining to PSBs, including ESOPs," a bank executive told ET, adding that lenders will soon present a framework to the government. Livemint could not independently verify the development.

A government official, however, confirmed to ET that the discussions were preliminary, and any decision on the proposal would be taken after the polls. "Bankers informed us that they had appointed consultancy firm Deloitte to give them suggestions on this matter...We will wait for banks to come up with a structured framework and then discuss it further," the official further added, as quoted in the ET report. There are currently 12 strong PSBs catering to the nation's financial needs.

These include the well-established State Bank of India (SBI), Punjab National Bank (PNB), and Bank of Baroda (BoB). Other prominent players are Bank of India (BoI), Central Bank of India (CBI), and Canara Bank. Rounding out the list are Union Bank of India (UBI), Indian Overseas Bank (IOB), Punjab and Sind Bank (PSB), Indian Bank, UCO Bank, and Bank of Maharashtra (BoM).

The framework would consider various factors impacting state-run banks, with employee ESOPs being a long-standing demand of PSBs. They believe that this initiative will help them attract and retain talent amid intense competition from private lenders, the report added. Experts suggest that stock options have proven their effectiveness in the private sector and could offer similar benefits to the public sector ecosystem.