Better Pay 💼 means Less Corruption? Not really.....
In the wake of the Punjab National Bank scam, some old arguments have once again resurfaced. The first one is that unless wages and compensation are improved drastically in public sector banks (PSBs), incidents like these will continue to recur. The second argument, which Chief Economic Adviser Arvind Subramanian also endorsed, is that the only lasting solution to stop this seemingly endless cycle of fraud in PSBs is to cut the Gordian knot of ownership — privatise banks, and let the private sector’s better management, controls, ability to pay for superior talent and market-driven efficiency deal with the perennial PSB problems of lack of skills, absence of proper accountability and cronyism. These are seductively logical arguments. After all, it is a fact that compared to their private sector counterparts, public sector managers (in banking and elsewhere) are vastly lower paid, particularly at the top, where the risks are far greater but the rewards starkly lower. And it i...