Amidst debate over high compensations offered to bank executives, RBI governor D. Subbarao on Tuesday made a strong case for increasing the compensatory packages of public sector bank (PSB) officials.

"There is a good reason to revise their (PSB executives) compensatory packages. If they are required to compete with private banks, we have to increase the pay packages," Subbarao said at a banking conference organised by the Indian Banks Association and FICCI here.

Subbarao also warned of attrition in PSBs, saying, "PSBs will lose talent to the private sector." In the aftermath of the financial crisis, the issue of compensation and specifically the variable pays offered to financial sector executives has been a matter of keen debate.

According to one view, the high variable pays resulted in the engineering of derivative products and their mid-selling which culminated in the crisis.

In his speech, Subbarao also spoke about the proposed Basel-III norms and said the Indian banking system is better-placed to adhere to the norms which will soon come into effect internationally.