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Rajesh Goyal, Executive Consultant,


Last week a news item under the heading "Banks can't have more than 10 general managers for business up to Rs 1.5 lakh crore" had appeared in Economic Times.   According to the sources, all PS banks have been sent a letter where they have informed about the "mismatch in the number of posts in senior positions"   The ministry has directed banks to submit their views on the proposed changes in a week's time.

The government has not been happy for last few months,  the way the size of the top executives had recently  been expanded by some bigger public sector banks.   Moreover, the way such promotions of CMs, AGMs, DGMs and GMs had been done purely on the whims of the CMDs blatantly  ignoring the merits  in large number of cases, has caused dissatisfaction among the rank and files.   Reports indicate that government is unhappy with the fast track promotions, wherein the younger lots with short experience have been promoted by ignoring more experienced personnels.   With this feedback, the government felt that bank top management is becoming too partisan, and thus recently even suggested that all the promotions from Scale V onwards be on industry level rather than on individual bank wise. 

The finance ministry wants that banks with a business of upto Rs. 1.50 lakh crore business should not have more than 10 General Managers, against the previous rule of 20 GMs for Rs 1 lakh crore. The bigger banks will be allowed to add one GM each for every Rs 15,000 crore of incremental business. 

The workman's unions had  often been seen crying  that with the increase in the business of banks, the number of top executives has steadily gone up,  whereas the number of workman staff and officers at the junior  had been reducing.  In the early 1980s, even big banks like PNB, BOB and Canara Bank used to have only 3 to 5 General Managers, whereas the strength of the junior officers and workman staff was more than what it is today.   In last 25 years or so,  the number of GMs in such banks has gone upto 25 to 40 i.e. increase of about 800%, but the strength of the junior officers and workman staff is stagnant or rather has gone down in few PS banks.  Does this mean that with the increase in business, there is a need for more top executives but you need lesser and lesser junior staff?  The argument that with computerization, there is a need for less staff does not hold good, as with availability of MIS  at a click of button at HO and other administrative offices, and excellent mobile communication channels with the field staff, you may need less and less people at the top level for monitoring the ever reducing  number of workers.  There is a need to ponder on this issue by the PS bank top management. 

The government for the first time has also suggested that the ratio of GMs : DGMs : AGMs should not be more than  1:3:9 for PS banks.  

In case the above guidelines are implemented, there are chances that there will be about 20% surplus staff in the ranks of GMs, DGMs and AGMs in the most of the PS banks,  especially in bigger banks,  who in recent years have undertaken indiscriminate expansion at the top level.   On the other there is an acute shortage of staff at branch level, specially in rural areas.   Thus, banks have to immediately stop promotion to such posts and wait for the vacancies to arise as per new guidelines after the existing surplus top executives retire.    The situation can get worse, if ever the demand for increasing retirement age to 62 year is implemented.   Promotions will be halted for longer periods.  However, government has saved the bank management from bigger embarrassment by suggesting that the existing surplus officials will continue till retirement. 

This type of knee jerk reactions from the government is sure to further aggravate the situation in banks which are already under pressure owing to various issues like liberation of SB interest rates, ever increasing NPAs, poor HR policies of banks, high attrition rate of the employees now being recruited.   There is a need for long term good HR policies rather than lopsided policies of suddenly stopping all recruitment for 20 years and then after two decades go for large scale recruitments.  Bank officers have to again suffer as whenever there is extreme, the outside intervention takes place.   Now, it appears Government is bent upon to enter the area of bank promotions as banks have failed to come upto the expectations and mismanaged these issues.