New Delhi: Finance Ministry has agreed in-principle to allow public sector banks to offer stock options to their employees from next fiscal — a move aimed at retaining experienced hands with better incentives.

According to sources, Employee Stock Option plans (ESOPs) could be given by those banks which have not only earned substantial profit but also made remarkable improvement in managing NPAs.

It will help motivate employees to work towards strengthening the financial status of their banks so that their share value rises, sources said.

Although the Finance Ministry has given in-principle nod, the finer details are being worked out like what percentage of profit can be earmarked for ESOPs, sources said, adding, this is based on the suggestion of Banks Board Bureau (BBB).

One of the proposals is to issue shares equivalent to a certain percentage of banks’ net profit to employees which is being examined.

For large banks, the ESOPs could be as much as 5 per cent of profit after tax while for the smaller…