PSBs ESPS, employee stock purchase scheme – The Economic Survey 2020, prepared by chief economic adviser Krishnamurthy Subramanian and his team, has proposed skin in the game for public sector bank (PSB) employees through employee stock ownership plan (ESOP). That time it was told that ESOP would enable employees to become owners in the banks and incentivize them to embrace risk-taking and innovation continually.
In order to become the owner of the bank, employees lost their existing money also. The current status of stocks for all the public sector banks are now more than 50% lesser than the actual allotments.
The current market price of all the stocks are down by average 50% and more. The worst hit are the employees of merged banks like Syndicate Bank. Andhra Bank. OBC, UBI, Allahabad Bank and corporation bank. The stocks price of these banks are reallocated on the rate of owner banks with the market price for the date of allotment which was much higher than the merged bank, for e.g. Syndicate Bank had allotted shares to their employees at the average rate of Rs 25.75, post merger the shares were credited to the employees trading account at anaverage rate of Rs 159. There is a huge difference and after seeing the current market situtation, it is an impossible
With the current slowness in the economy due to COVID-19,and moratorium announcement by the government, the banking stocks are worst hit. Experts have advised not to trade in the banking stocks for a year or two. After considering all these it is believed that the ESOP is a lost game for the bankers.