Perform better and get fat cash rewards, PSU banks to tell staff -Hindustan Times 4th April 2015
( Read my views of April 2013 )
“Acche din” is here, and in a big way, for public sector bank employees.The government has said lenders can dole out higher cash incentives to their staff if performances exceed expectations.
The aim is to motivate them to perform better, and keep “some sort” of parity with private sector peers.
The issue was discussed during the review meeting held between finance minister Arun Jaitley and public sector bank chiefs earlier in the month, sources said.
“We are aware of these issue and we will see what steps can be taken including providing cash incentives to employees,” a government bank chairman who did not wish to be identified told HT.
Besides, banks may even decide to give out-of-turn promotions, fancy postings, and assign special projects to retain talent at a time when competition is fierce in the banking space. State-owned banks are already facing a severe talent crunch.
Bank chiefs typically provide a statement of intent to the government, outlining their goals for the year at the start of a fiscal year. Their performance is measured based on their achievements vis-a-vis the statement of intent.
State Bank of India chairperson Arundhati Bhattacharya recently said that compared to private sector counterparts, state-owned bank employees are poorly paid, and also underlined the need to provide better remuneration to retain talent.
Several bank chairmen have already said that most employees have “out performed” to ensure the success of Prime Minister Narendra Modi’s flagship scheme Pradhan Mantri Jan Dhan Yojana.
The finance ministry is also likely to consider a proposal to revisit the incentive structure of bank chiefs and executive directors. At present, incentives can vary anywhere between Rs 4 lakh per annum and Rs 6 lakh, depending on performances of banks.
In a few cases, where the performance of a particular bank has been exceptionally good, the incentive pay out has touched Rs 8 lakh too, sources said.
RBI nixes bank plan for additional holidays on alternate Saturdays-Financial Express 4th April 2015
The Reserve Bank of India has nixed a plan for additional bank holidays on alternate Saturdays. The banking sector regulator feels that the infrastructure for keeping key deposit related functions need to be strengthened before the banks can down shutters to enjoy a five day week.
Recently the public sector banks, including State Bank of India had decided they will remain shut on alternate Saturdays as part of a deal reached between employee unions and the Indian Banks Association.
While staff matters are usually decided at the level of the banks or at best that of the Indian Banks Association the apex body of bankers, since this involved a change in banking practices a reference was made to the RBI. The RBI has, however, told SBI it would need more time to study the implications before coming to a decision, said a source at the regulator.
The employee unions at the public sector banks have for long been demanding a five day week as part of their wage settlement. After the meeting with the IBA in February this year, an agency report quoted AIBEA general secretary C H Venkatachalam to say; “Our long pending demand of holiday on second and fourth Saturdays for the bank employees have also been reached”.
The wage related deal was sewn up between the bank managements and the workers just before the tabling of the Union Budget this year averting a national strike. There are about a million employees in all scheduled commercial banks in India as per RBI statistics. Of these about 0.75 million are in the public sector banks. The deal between the state run banks and their employees is likely to impact working hours in private and other banks in India too.
Since the new financial year began from April 1, SBI had sent the reference to RBI to clear the new holiday schedule. The bank employees have argued that as the stock markets and clearing houses remain closed over the weekend, it made little sense to keep the banks open on Saturdays. The compromise of the alternate Saturdays as a day off for the banks is meant to gauge the extent of pressure if the banks follow a five day week.
With the RBI not willing to clear it soon the banks face the prospect of losing a bargaining chip with the unions. It approved late the banks will have to make a mid-year change in the holiday schedules.
I Submit my blog dated Monday, April 22, 2013
Cost To Company and Incentive Plan Proposed For Bank Staff In Wage Revision
Private companies or Multinational companies announce bonus or incentives every year , most of them do not allow late sitting, they do not like flattery and bribery etc .They try to keep their staff happy and devoted to work. They pay for Leave and LTC in form of salary. They pay HRA and many other benefits as non -taxable and non-visible part of salary. They give cash cards or Free Food coupons. they have canteen for staff where delicious food is served at cheap rate just as Members of Parliament get cheap but delicious food in Parliament Canteen.
Executives in Private companies like work and only work , they never encourage flattery and bribery. They never like that their juniors should extend red carpet welcome to them when they visit their location. They like those staff whose contribution is maximum in enhancement of business of the company whereas executives in public sector companies like those who take personal care of bosses.
Will Indian bankers and Indian government like to follow this culture?
Work in non banking companies may be assessable and quantifiable in rupees. In banks it is not possible to quantify the work load of any staff. An officer may get 10 crore of deposit from a government department by bribing key officers there whereas another officer who is dry honest cannot afford bribe government officer to mobilize deposit .
A branch manager may be posted at a rural remote area and in a urban or metro area cannot give same output.
A branch head with adequate staff in branch can give better result than a branch head with shortage of staff.
An officer can do better in an area where customers are cordial and cooperative whereas an officer cannot perform well where area people are very much militant and the area is naxal inflicted.
A location of branch is more important, one location may have better potential for business than many others.
Quality of staff is more important. If skilled and matured staffs are supporting a branch head, he may perform better whereas if a staff is militant or unskilled or unwilled or untrained, output may be below standard
A branch where court cases, frauds cases, litigation, bad borrowers are more, growth in business may not be satisfactory.
Staff working in audit, KYC, risk rating, monitoring, Recovery staff , NPA management , Law, Credit processing, planning, guard , security personnel, account opening, counter work, peons, sweepers etc will seldom get incentives whereas a few branch head who could luckily or by their little effort get good deposit may get higher incentive. An area where big corporate, big trade houses, and big industries are available , scope of credit growth and rise in non-interest income may be more but not elsewhere .
If Regional head is corrupt, he will never give incentive to those who do not flatter and who do not earn bribe to share with boss. He has power to transfer the services of a staff to any good or bad place as per his whims. He may transfer a person to a critical place before he or she is selected for incentive.
If a Regional Head like an officer and want to give him the benefit of variable pay , he will provide him two or three extra cream staff to enable him to cross the benchmark set for variable pay or incentive. On the other if the Regional Head ( RH ) does not like an officer who is performing the best and who is likely to be entitled for incentive and variable pay , he will simply withdraw best staff from his branch.
There are many such cases where marketing officers working under a RH fails to achieve his target and hence found not eligible for any incentive but the sum total of total business mobilized by the same team of marketing officers in selling insurance policies enables a RH to cross his target and he becomes eligible for incentive sitting in his AC office.
Similarly if a Branch Head (BH) sanctions a loan of ten crore to a few bad companies to achieve targeted credit growth , he along with his RH may get additional package of variable pay, incentives and bonus. But when the same loan goes bad and becomes irrecoverable, the clever team of top ranked officers will blame natural calamities , or global recession , or higher interest rate or unfavourable market condition etc to establish that he was right in lending decision but GOD was not supportive.
Most of top executives in banks think for the betterment of their families, their kith and kin, their friends and relatives. They lend money to those corporate houses who give them precious gifts and huge amount of cash as bribe. These officer think for their self interest whereas bosses in private companies think for the profit of the company only. Bad staff in private companies may be kicked out without loss of time whereas in public sector companies like banks only weak staff is punished and powerful are never punished.
None of work in bank is quantifiable and hence any incentive based on performance in banks will further damage work culture and further add fuel to fire . Copying of Cost to Company culture to retain bank staff and to attract talented youth in banking fraternity is not at all practically feasible and viable. It will create more IR problems and more disruption in banking activities. Private banks have already burnt their fingers in the cases of recent sting operation carried out by Cobra post. Axis Bank HDFC and ICICI bank exposed in money laundering case only due to incentive scheme in all insurance related businesses.
As such plan of imposing CTC and incentive schemes or variable pay in bank is Utopian plan and it is enough to say that government is trying to divide banking fraternity , weaken the militant power of unions and finally delay the wage revision as much as possible . Their conspiracy is clear : not to allow banks to accede to wage revision more than 10 percent .so that net take pay will not be more than 2 to 3 percent more than their present net take home pay.
Not only this , the scheme of variable pay and that of incentives will lead to more corruption and cause much risk to assets created by bank officials and ultimately it will prove to be burden on depositors, taxpayers and investors in bank shares. It will promote money laundering and protect black money hoarders and prove to be a boon for bad officers only. Good performers whose work is not visible and whose contribution cannot be measured will suffer the most.
I am unable to understand why those clever ministers and clever top executives of banks who are part of Committee to look into wage revision for bank staff and who are advocating C2C concept and incentive scheme in banks do not suggest the same to employees working in state government and central government departments and other public sector undertakings like BSNL, Airlines, Railways etc.
Why not the salary and allowances of ministers, MPs and MLAs should also be linked to amount of work they do for their constituencies ?
Why these public representatives should not be taken to task for not attending their work and not attending Parliament and State Assemblies?
Why all social welfare schemes are not implemented by state government offices like Block and circle offices?
All types of payment are made through banks only because they say that banks can only ensure ensure timely and full payment to beneficiaries. Ministers also know that there is large scale corruption in Block and District level administrative offices. They know and understand it well that employees working in the office of BDO, CO , DM or SDO are not accountable for nay lapse and any deficiencies in performance. Government of India cannot monitor their staff and cannot stop corruption there but they are bent upon making all bank employees the best performer without hike in their wages.
They know that they cannot punish a corrupt staff without affecting their vote bank. As such they always try to give maximum hike in the pay of central and state government employees and try always to crush bank staff only.
In banks too, most of officers are given more than 90 marks out of 100 and hence all are outstanding as per APAR , But during promotion process many of these so called excellent officers are rejected by Interview panel and those who got 60 to 70 marks are selected. When all or majority of officers get more than 90 marks , the members of interview panel become more powerful to make or mar the career of an officer
It is worthwhile to mention here that maximum loss caused to government banks either due to fraud or due to rise in bad assets is contributed by so called star performers. When bosses are corrupt they like corrupt only and hence they give maximum marks to those officers only who help them in becoming wealthier and powerful by hook or by crook Following is the classic example of how the star performers looted the bank and cause loss to public , tax payers and investors.
If APAR of banks is also put under scanner I think majority of bank officers who are now top executives or who have retired from bank as top executives will go behind bar.I have been advocating CBI investigation into all APAR,Promotion processes and transfers which took place during last ten years to expose the fraudulent game going on in banks in the name of Human Resource Development.
When the entire system of assessment is defective, faulty and biased , how Government and bank management can imagine of getting success in imposing Variable pay scheme or performance linked pay or incentive scheme .
To read more please click on following link
http://dkjain4970901092007.blogspot.in/2012/06/average-pay-per-employee-in-private-and.html
To understand the concept of CTC please click on following link
http://importantbankingnews.blogspot.in/2013/04/chit-fund-scam.html
RBI for lower commission to curb KYC abuse like money laundering
NEW DELHI: The Reserve Bank may push private sector lenders to rationalise the commission they pay to wealth and relationship managers, as it tries to check dubious transactions and flouting of know-your-customer norms.
An online portal had alleged last month that some banks were involved in money laundering and were not complying with know-your-customer (KYC) norms. According to an RBI official, a probe by the central bank has indicated that the policy of some banks to reward employees with high commissions leads to staff overlooking KYC norms.
"It has been observed that various incentive schemes and commission structures were the foremost reasons for lower- and mid-level bank staff disregarding KYC Norms," the official, who did not wish to be named, said, adding that the RBI may ask private sector banks to rationalise the commission they pay to wealth and relationship managers.
In 2012, the central bank had issued guidelines that restricted bank staff's variable pay to 70% of fixed pay in a year. Further, private and foreign banks were directed to obtain prior approval from the RBI for remuneration of CEOs and full-time directors.
"In this case, there cannot be an overarching guideline from RBI. The banks themselves have to put caps over such commissions and ensure that all such incentivised employees have met all regulatory norms," the official said.
The issue may soon be taken up with other banks, the official added.
The central bank had initiated a probe after online portal Cobra Post alleged that the country's three largest private banks-ICICI Bank, HDFC Bank and Axis Bank-were indulging in money laundering. The three banks have denied the allegations, saying none of the conversations led to any transaction.
Private banks offer incentives to relationship and wealth managers mostly in the form of commissions and foreign travel. Banks also set steep targets for their staff to get business through insurance and other high-commission paying financial instruments.
"These structures need to be defined or more cautiously regulated," the official said.Financial services secretary Rajiv Takru had said last week that the RBI audit report had found certain "aberrations" in its probe into allegations of money laundering, but no risk of systemic failure was discovered.
"There is no risk of systemic failure. There are certain aberrations that we have discovered in the audit report. These would be addressed," Takru had said, adding that the RBI will take whatever action needs to be taken.
RBI deputy governor HR Khan had said that the central bank would initiate action against the erring banks. "Scrutiny has been done. Action is being taken both in respect of systemic level and at the individual banks," he had said.
But private sector banks say it will be imprudent to cap commissions. "Incentives are a part of all employment. Just because some may have not conformed to the norms does not mean all employees are violating them," said a senior executive with a private sector bank.
An online portal had alleged last month that some banks were involved in money laundering and were not complying with know-your-customer (KYC) norms. According to an RBI official, a probe by the central bank has indicated that the policy of some banks to reward employees with high commissions leads to staff overlooking KYC norms.
"It has been observed that various incentive schemes and commission structures were the foremost reasons for lower- and mid-level bank staff disregarding KYC Norms," the official, who did not wish to be named, said, adding that the RBI may ask private sector banks to rationalise the commission they pay to wealth and relationship managers.
In 2012, the central bank had issued guidelines that restricted bank staff's variable pay to 70% of fixed pay in a year. Further, private and foreign banks were directed to obtain prior approval from the RBI for remuneration of CEOs and full-time directors.
"In this case, there cannot be an overarching guideline from RBI. The banks themselves have to put caps over such commissions and ensure that all such incentivised employees have met all regulatory norms," the official said.
The issue may soon be taken up with other banks, the official added.
The central bank had initiated a probe after online portal Cobra Post alleged that the country's three largest private banks-ICICI Bank, HDFC Bank and Axis Bank-were indulging in money laundering. The three banks have denied the allegations, saying none of the conversations led to any transaction.
Private banks offer incentives to relationship and wealth managers mostly in the form of commissions and foreign travel. Banks also set steep targets for their staff to get business through insurance and other high-commission paying financial instruments.
"These structures need to be defined or more cautiously regulated," the official said.Financial services secretary Rajiv Takru had said last week that the RBI audit report had found certain "aberrations" in its probe into allegations of money laundering, but no risk of systemic failure was discovered.
"There is no risk of systemic failure. There are certain aberrations that we have discovered in the audit report. These would be addressed," Takru had said, adding that the RBI will take whatever action needs to be taken.
RBI deputy governor HR Khan had said that the central bank would initiate action against the erring banks. "Scrutiny has been done. Action is being taken both in respect of systemic level and at the individual banks," he had said.
But private sector banks say it will be imprudent to cap commissions. "Incentives are a part of all employment. Just because some may have not conformed to the norms does not mean all employees are violating them," said a senior executive with a private sector bank.
http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/rbi-for-lower-commission-to-curb-kyc-abuse-like-money-laundering/articleshow/19687016.cms
Govt mulls linking bank staff wages to performance-Hindustan Times 25th April 2013
State-owned banks, which employ over 800,000 people, could move towards performance-based pay soon, a move that would put them on the same platform as their private sector peers, while helping keep costs under check.
A committee headed by Anil Khandelwal ,former Chairman and managing director of Bank of Baroda, which had looked into outdated human resource practices at public sector banks, had proposed that salaries be linked to performance. The committee submitted its report two years ago.
Govt mulls linking bank staff wages to performance-Hindustan Times 25th April 2013
State-owned banks, which employ over 800,000 people, could move towards performance-based pay soon, a move that would put them on the same platform as their private sector peers, while helping keep costs under check.
A committee headed by Anil Khandelwal ,former Chairman and managing director of Bank of Baroda, which had looked into outdated human resource practices at public sector banks, had proposed that salaries be linked to performance. The committee submitted its report two years ago.
This suggestion could now become part of the new wage structure. Talks have already started between banking unions and IBA on wage revision. In 2009, when the last pay revision was announced, public sector bank employees got a 17.5% hike, with retrospective effect from November 1, 2007.
While Indian Banks' Association is in favour of bringing uniform compensation culture among private and public sector banks, banking unions are opposed to moving to a performance-based pay structure.
About 30% of the staff in government banks would retire by this year. "Talent crunch is a major factor and until we look into the HR policies, it would be difficult for us to attract talent, especially in this competitive environment," a senior executive at large public sector bank, who did not wish to be identified, told Hindustan Times.
The attrition rate in state-owned banks has also increased significantly in the last few years, with a large number of banks coming up in the private sector space and offering substantially more attractive pay packages.
The Khandelwal Committee report noted that there was an acute shortage of talent in PSU banks, and fresh graduates were reluctant to join a government bank as they failed to provide concrete career growth path to their employees.
The report also underlined that instead of the present industry-level arrangement, wage decisions should percolate to the bank level.
At present, there are 26 public sector banks in India.
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