was not sufficiently independent. we also learnt that we must ensure clear responsibilities and limits to delegation. the fund is a long - term savings plan and capable of riding out large market swings. this is the very foundation of the investment strategy with its high allocation to equities. our ability to adhere to this strategy in a critical phase – even if this should last some time – is crucial if the fund is to deliver the returns we expect in the longer term. norges bank ’ s executive board has reinforced its oversight of the bank ’ s investment management. it has issued a new mandate that delegates investment management responsibility and introduces additional limits in the risk profile for investment management. as with the fund ’ s long - term investment strategy based on active management and active ownership, the results of our operational management of the fund need to be measured over time. to that extent, we need to maintain an incentive structure in order to retain and build long - term competence. we also need to ensure the quality of the investment management. in our view, the search for excess return has had a strong disciplinary effect on the organisation. i am confident that the operation we have built up will deliver good results in the long term. thank you for your attention!

with the implementation of basel iii, banks ’ return of equity is likely to go down, the same can be recouped by improving the return on their human capital by enabling the ordinary people to produce extraordinary results so as to prop up their sinking bottom lines. 13. i would also like to utilize this opportunity of interacting with the heads of hr function in the banking sector to share my views on some of the other hr issues which would have a bearing on “ fool proofing of the banking personnel ” going forward. a ) employees compensation 14. finding skilled, experienced, responsible employees is a challenge for human resource departments in any industry, more so in a service - oriented industry like banking. the main task of the hr policy of banks is to create a favourable atmosphere where people get the opportunity to showcase their potential and receive adequate compensation. inadequacy of compensation is made out as an issue in the psbs, which encourages attrition. let me set the record straight here. i have done comparative analysis of the staff compensation in the public sector and private sector banks and my finding is that the average compensation of the public sector bank employees is more than that of the private sector bank employees in this country. add to that, the job security in a public sector and the scale tilts decisively in favour of the public sector. i think the challenge for the hr heads of psbs is to percolate this message down to the lower levels. it will help in tackling the challenge of staff attrition and improve employee morale. 15. a related issue that i want to raise is why do public sector banks still conclude industry level wage settlements rather at individual bank level. some of the banks have precarious financial conditions and if forced to give a raise at par with other banks, that would severely constrain their ability to do business going forward. therefore, in the long term interest of the banks, it is necessary that each bank revises the wages of its employees as per its ability to pay. further, why the psbs cannot even do employee wise negotiations on salary hike as in the private sector? this would be a motivating factor for the performers. b ) differential salary structure 16. the recruitment policy of the banks should be oriented towards having a right - sized and right - skilled workforce in tune with their medium to long term business plans. for instance, in line with the national emphasis on financial inclusion and spreading banking services to unbanked remote areas,