New Delhi:The government has resumed talks with public sector banks (PSBs) on offering stock options to eligible employees, rekindling hope for this longstanding demand of the lenders.
The proposal to offer employee stock ownership plans or ESOPs, has been on the backburner for a while but it may advance after the Lok Sabha polls, said people familiar with the development. “There have been talks with government last month on issues pertaining to PSBs, including ESOPs,” abank executive said, adding that lenders will soon present a framework to the government.
A government official told ET that discussions were preliminary and any decision on the proposal would be taken after 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 said.
The framework would consider various factors impacting staterun banks with employee ESOPs being a longstanding demand of PSBs. They believe this will help them attract and retain talent amid intense competition from private lenders.
Experts opine that stock options have a proven track record in the private economy space and could offer similar benefits to the PSU ecosystem as well.
The government had held some discussions on the ESOP issue in 2020, but the proposal did not gain traction. The same year, the Economic Survey also made a case for giving ESOPs to PSB employees, saying it would enable them to become owners of the banks and incentivise them to embrace risk-taking and innovation.
In 2015, the government’s Indradhanush framework for transforming PSBs also recommended ESOPs for the top management.
The previous UPA government had in 2013 allowed PSBs to offer shares to employees at a discounted price under the Employee Share Purchase Scheme. In the last few years, most lenders offered this option to their employees, but it failed to garner much interest.
