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Value of Human Resource In PS banks Must Improve to Change the Work Culture To Make Them Capable to Compete with Private Banks




Danendra Jain





Futures of State Run Banks depend on their understanding of root causes of present crisis and their ability to take remedial measures. If they still say that bank is safe and future is bright they will never take corrective step. But their false ego may jeopardize the interest of investors and poor customers and also their employees:  


 Present Trend :---Bulk Deposit down, Asset Liability mismatch problems will arise, Long Term lending impossible on short term deposits  and so on .But  through Focus on Retail Deposit, Cost of Deposit will come down and Profitability will increase and finally core value of bank will go up.


 Credit Growth will be poorer: ---- Deposit growth lower, Liquidity will shrink; Credit growth will be low because focus will be more on Recovery than on Fresh credit. Recovery of Bad loans will increase and hence Quality of Asset will improve.


 Gross NPA: ---- Ratio will go up for a few coming quarters because of poor Credit growth. Banks could show less Gross NPA ratio in the past either by concealment of bad assets or due to bulk lending to big corporate which helped in reduction of Gross NPA to Gross Credit ratio. 

Now the position of these banks will turn pathetic because Ministry of Finance and RBI have advised them to refrain from indulging in mobilization of bulk deposit and sanction of short term lending. They will have to focus on real banking and discard window dressing .


 Due to various guidelines issued by Ministry of Finance and RBI in recent past , Overall quality Business will grow and the same will be visible after a few years just as bad policies of the past ten years are showing their consequences now. But after a year or two the real growth will start emerging out and real profit will precipitate and finally the real purpose of banks will be served.



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Root causes of downfall and strategy to ensure future bright:---


 Field officials are not well experienced and well trained. They will adopt defensive strategy to survive. Banks will have to remove ninety percent of Branch Managers and Regional Heads who are of poor quality. It is painful that during last four decades after nationalization of bank or during last two decades of reformation era , banks have not yet framed any policy for picking up officers to Head a Branch. This is why there are hundreds of such branches in each bank where ratio of bad asset is more than 50 percent of their total credit. There are many branches where Gross NPA is more than 10 percent.


 Officers who flatter bosses are picked for the post of Branch Head as also for promotion to higher scale whereas Officers who are really matured, skilled, experienced and talented enough to identify good customers and who have the potential  and who have grown capacity to read the credit worthiness of credit seekers are languishing in non-serious, non-critical and at less potential places and leading a life in frustration due to their non promotion and due to inefficient and ill management of their bosses .


 If banks have to improve their bottom line they have to revisit and replan their policy of promotion and posting. They have to encourage good Branch Manager and understand the family problems of officers and bank staff .They have to refrain from making policy only to please the leaders of majority trade unions of officers or bank employees. They have to learn how to punish bad officers and encourage good officers and prove their knowledge by their actions.

 Qualities of bank employees have to be judged not by their qualification or by achievement of targets or their closeness with executives but with the quality of business they mobilize.


Top Ranked Officials:----- It not enough to preach these sermons in business plan meeting only. Top executives have to exhibit by their actions that they are real lovers of good workers. They have to prove that they do what they say. They have to prove by their actions that they are real owners of the bank. They have not to be happy by red carpet welcome and costly gifts and set of flower bouquets offered by field functionaries during their visit to their locations .They have to stop awarding officers who give them grand red carpet welcome and speak all good words for visitors. They have to stop punishing officers who fail to extend red carpet welcome according to their wishes. They have to stop earning name and fame through unwarranted spending on inaugural functions in praise of and in flattery of some or the other dignitaries.They have to stop their fraudulent manipulation in promotion processes to favour persons of their choice.


Policy of recruitment and Promotion:---- What I feel is that policy of recruitment and that of promotion and transfer was much better in seventies and to some extent in eighties i.e. before the introduction and piecemeal implementation of of Pillai Committee Report or Khandelwal Committee report. But unfortunately these policies have deteriorated a lot during last decade or two. Every year policies are changed to suit their whims and fancies. It is painful that bankers and regulators have not followed the recommendations of any committee in true spirit but followed only those lines which suited them and without any hesitation their successors deviated from the main theme of such committee reports. 

 It is astonishing that banks recruit officer directly in scale II, scale III or IV from education campus and post them as Credit Officer or Risk Officer or Auditors or credit officers or branch heads. Banking is such a business which cannot be safe in the hands of those who are unable and incapable to read the character of person with whom they deal in money.

 How can a direct officer ascertain credit worthiness of a loan seeker or the inherent risk in a credit decision until he or she is aware of the intricacies of credit decisions and the credit worthiness, integrity, capacity and character of the loan seekers?


 Bank management have to learn the value of senior officers, the value of experience and the value of character of an officer .Banks have to learn how to recognize the good officers and save them from frustration. 

Top officials have to learn that whimsical promotion and arbitrary transfers kills the working spirit of the officers at least those who are sincere and devoted performer. When good officers are not respected, officers in general tend to ignore the quality and tempted to apply all easy tools to keep their bosses in good spirit mostly at the cost of their organization. 


This trend has to be reversed if state run banks desire to survive and prosper like private banks.

Political interference: ----Lastly Politicians have to stop exploitation of state run banks for political gain and indirectly help private banks in earning more and more profit and achieving more and more growth.Nationalisation of banks was done in 1969 to stop exploitation of poor by money lenders and then in 1991 absolute freedom was given to banks to get rid of exploitation by bank employees. 


But unfortunately politicians did not stop exploitation of these banks for their vested interest and hence the erosion of banks continued. Trade union leaders who were made to protect the interest of employees also started playing in the hands of officers sitting at top posts. As a result, government could neither stop exploitation by money lenders nor that by politicians or trade union leaders.


Banks were nationalised for welfare of common men but it is painful that banks has become a tool for welfare of politicians, top ranked officials and top ranked corporate houses. This trend has to be reversed in the interest of investors, customers and employees.




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