HR Crisis In Public Banks

MY Opinion :----

Bank cannot afford wage hike of bank staff but can afford loss in lacs of crore of rupees caused by unrecoverable  bad debts and loss incurred due to frauds. Work culture in public sector banks is moving from good to worst due to misuse of banks by politicians. Chiefs of Banks make excuse that they do not have seniors but in fact they do not have respect for senior officers . Only flatterers bribe earners and manipulators have prosperous career in bank. Neither top bank officials nor politicians have any place for merit in their mind.

Government is trying to appoint best officers for the vacant posts of Executive Directors, Managing Directors and CEO or Chief of bank but could not get success . Many banks are without ED and CMD. Bank without head of bank will suffer in many parameters, there is no doubt in it. But if branch runs without Branch Head or with poor quality of officers , volume of loss is bigger and wide spread. History of promotions which took place during last one or two decades will prove that merit is of no use for getting promotions to higher scale and higher post. One needs backing of some VIP and / or need  to arrange some bribe for seniors to get elevation in career.

Top officials on the other hand complain of crisis of senior officers  for key posts, In my opinion , this excuse is absolutely false and unbelievable. Even now, each public sector bank has many senior officers and senior clerks and this is why average age of public bank is far more than that of private banks. Bitter truth is that talented seniors have been forced to work in junior posts and  have been forced to work under the leadership of incompetent and inefficient officers sitting at higher post. This is because only flatterers and bribe earners are promoted to higher scale and posted at higher post. Incompetent and inefficient officers are getting promotion every two or three years whereas officers with experience of two to three decades are working on insignificant post. Good performers think do not participate in Interview because they know that they will not be promoted.

To add fuel to fire ,Government has been imposing various non-productive and economic non-viable works to public sector banks for last few decades. Present government too has imposed additional various schemes on banks which  will further destroy future of public banks. Top officials are inclined to please Ministers and for this purpose , they have advised all subordinate officers to focus on quickest completion of task of insurance as directed by FM and PM. As a result , regular customers of bank who provided good business to public banks are being ignored by bank staff. to please their immediate bosses. Self interest is prime objective of bank officials than that of the bank they serve. Outcome will surely affect business adversely, increase volume of bad assets and destroy standard of customer service and finally business will be taken over by private banks.

Government does not think it necessary to assess whether banks have adequate quality manpower . Government has forced banks to indulge in non-banking activities like insurance, demat, stock trading , portfolio management etc which has adversely affected banking activities and bank's profitability . It is true that banks earn a few crore of rupees as non-interest income by doing non-banking jobs like insurance , but it is also true that by such avoidable work, management of bank have caused loss to bank amounting to  hundreds and thousands of crores of rupees every quarter due to rise in bad assets and rise in frauds.

I therefore appeal to learned Finance Minister and matured Prime Minister to study in depth the reality of  public banks and then impose work like opening of accounts , linking of account to insurance, selling of insurance products etc . It is not prudent, justified  and desirable  to be "penny wise and pound foolish". There is a proverb " Gau Marker Juta Dan" Bank assets worth lacs of crore of rupees is at stake and bank officials are made busy in works which will further add fuel to fire and which will aggravate the miseries of sick banks. Banks are already burning and government is carelessly sprinkling oil on it.

Branch expansion undertaken by banks during seventies and eighties under the pressure of the then government , banks had to incur heavy losses .Now in the name of financial inclusion , banks are undertaking reckless expansion of branches and ATM and thus causing direct loss to bank.  During nineties, in the era of reformation, banks were advised to earn profit and compete with private banks . But government did not take any step to change culture of bankers and politicians did not stop misuse of banks for vote bank. As a result, sickness of public banks grew unabated and it will continue to move from bad to worse.

Government banks could expand their branch network or could spread its ATM network . Mere expansion can help in increasing business for some short period but ultimately it affects profitability of bank in the long run if the expansion takes place without perfect planning and without perfect supporting infrastructure and quality manpower planning. Unfortunately  clever bankers could not do real business as private bankers despite disproportionate expansion.

However, to cope with adverse situation, clever bankers manipulated books of account, concealed bad assets , avoided provisions , curtailed staff benefits and did a lot of unfair acts to inflate profit and business by window dressing. But the volume of sins committed by them have been exposed by Technology . Now these banks are facing crisis due to bad debts and due to bad officers. For last five years and more, volume of bad assets and stressed assets and frauds in each public sector bank has been increasing every quarter despite all efforts appear to have been taken by top officials and government of India.

Government will have to strike at the root of sickness and try to cure from the root instead of making surgical operation on the surface by changing ED or CMD of bank or by bifurcating the post of CMD. Bankers who are clever accuse interest rate for poor growth in credit or for poor asset quality and it is funny that even RBI and FM  accept their fake excuse wilfully and strategically  made to conceal  evil deeds of bankers and politicians.

It will be important to point out here that FMs like Pranab Da, Manmohan Singh  and Chidambram damaged the fundamentals of public bank during ten years rule f UPA by forcing bankers to use short term fund to use in lending to infrastructure projects, power sector and high value industries of bad corporate houses. They damaged the culture of repayment by waiver schemes and by forcing bank to compromise with bad borrowers. Present government is affecting banks badly by engaging their services in non-productive services like zero balance accounts and insurance activities. It will be better if government declare that public banks are not profit entity and will be used  to accomplish social welfare schemes only and there will be no target for profits. And then , it  will be also justified to give a good wage hike to bankers to make them loyal and devoted workers in line with employees of central government.
Danendra Jain

The human resources crisis at public sector banks-LiveMint By Tamal Bandyopadhyay

If the govt isn’t able to identify the chiefs of those banks where the top positions have been lying vacant for months, by end-June, corner offices of seven public sector banks will turn vacant

 

C.V.R. Rajendran, chairman and managing director (CMD) of Andhra Bank, retired on 30 April. V.R. Iyer, CMD of Bank of India, will retire by the end of this month and M.S. Raghavan, IDBI Bank Ltd’s CMD, will retire at the end of June. If the government, the majority owner of the public sector banks (PSBs), is not able to identify the chiefs of those banks where the top positions have been lying vacant for months, by end-June, corner offices of seven PSBs will turn vacant. Four other banks that do not have occupants in their corner offices for months now are Bank of Baroda, Canara Bank, Punjab National Bank and Syndicate Bank.

 

A few months back, the government split the top position in the PSBs. It was decided that here would be a non-executive chairman to guide the board of such banks while the day-to-day management would be looked after by a managing director (MD) and chief executive officer (CEO). In sync with this, the new heads of PSBs who have been appointed in past few months (at United Bank of India, Oriental Bank of Commerce, Indian Overseas Bank and Vijaya Bank) are called MD and CEO. When Indian Bank CMD T.M. Bhasin’s term ended last month, he got an extension (as he is not 60 as yet) but his designation has changed.

 

Top positions at three large banks (Punjab National Bank, Bank of Baroda and Canara Bank) have remained vacant and two more will fall vacant in the next two months (Bank of India and IDBI Bank) simply because the government has not been able to find suitable candidates to fill the vacancies. In other words, there are no serious takers for such posts—not a very happy omen for the PSBs, which have a roughly 70% market share in the Indian banking industry’s assets.

 

Making a deviation from the normal appointment process, where executive directors are promoted to head banks, being picked up by an appointment committee of the finance ministry, the government is scouting for talent from the open market for the chiefs of the so-called category 1 banks, which have a balance sheet size of at least Rs.3 trillion each.

 

However, the search is not yielding the desired results. Initially, the government looked for candidates not more than 55 years old and with at least three years of board-level experience, but since the response was muted, the government has relaxed the eligibility criteria. While the age limit has been increased to 57 years, the mandatory board-level experience for the applicants has been reduced to one year. I am told that many junior executives of PSBs who have board-level experience by virtue of heading regional rural banks applied for the top posts in the first round and the government had no choice but to relax the criteria in search of the right candidates. An external head-hunting agency—Hay Group—is believed to be involved in the recruitment process.

 

The vacuum at the top is the proverbial tip of the iceberg. The talent crunch is evident across the spectrum and, to make matters worse, there will be a large-scale retirement of senior employees over the next few years. Junior finance minister Jayant Sinha, in a written reply in the Rajya Sabha, the upper house of Parliament, recently said that about 25% of the staff would retire by 2020. Going by a 2013 McKinsey and Co. report on the Indian banking structure, 87% of general managers of PSBs will superannuate by 2016-17 and between 60% and 90% of deputy general managers will hang up their boots by that time. General managers, who are placed two levels below the level of the managing director, are a very critical cog in the wheel of the decision-making process in PSBs. The Reserve Bank of India (RBI) has termed 2010-20 as the “decade of retirement” for public sector banks.

 

These banks went on a recruitment overdrive in the 1980s after they were nationalized but once the massive balance sheet clean-up drive was launched in the mid-1990s following the introduction of income-recognition norms, there was a blanket ban on new recruitments. And, on top of that, early this century, about 125,000 bank employees were shown the door through a voluntary retirement scheme after these banks embraced computerization, albeit reluctantly. New recruitments have started, but they have not been able to keep pace with the growth in business and retirement of old colleagues.

 

How are the banks filling in the vacancies at senior level? Most have fast-tracked the promotion process and senior executives are now being produced on a conveyor belt. In the absence of proper grooming, many among the over-promoted executives are just not equipped to meet the business exigencies.

 

Meanwhile, the government has constituted a panel, headed by RBI governor Raghuram Rajan, to select non-executive chairmen in PSBs. Other members of the panel are Usha Thorat, a former RBI deputy governor; Hasmukh Adhia, secretary of financial services in the ministry of finance; and N. Vaghul, former chairman of Industrial Credit and Investment Corp. of India Ltd, the erstwhile financial institution. The panel will prepare the eligibility norms, such as maximum age, qualification and tenure, as well as identify the candidates. Let’s hope and pray that retired bureaucrats do not end up hijacking the posts.

 

In the second half of the last fiscal year, the entire public sector banking industry threw its weight behind the Pradhan Mantri Jan-Dhan Yojana (PMJDY), the flagship financial inclusion programme of the National Democratic Alliance government, which saw a record 140 million bank accounts being opened. The bankers are once again busy linking health insurance and pension schemes to PMJDY to ensure flow of money into such accounts. When will they have time to recruit staff and groom them? I am also curious to know whether appointment of bank bosses features on the government’s priority list.

 

http://www.livemint.com/Opinion/jKhWll6Jv6xcZyjpPqCGBI/HR-crisis-at-public-sector-banks.html

Editorial: Bank of trouble-Financial Express-16.05.2015

RBI Governor warns that NPA-hike cycle still has legs

RBI Governor Raghuram Rajan’s warning, that the bad loans cycle has not peaked, should come as a surprise only to those who haven’t been following the sector. Indeed, while the earlier set of loans going bad were those of big companies, even small firms with very large exposures are finding their loans looking dicey. A combination of reckless lending—ambitious revenue targets and poor collateral—and poor government performance in terms of making clearances available on time, for land as well as for fuel supplies from PSU-monopolies, made it obvious that NPAs still had a way to go before they peaked.

In the case of sectors like electricity, the poor financial condition of most SEBs is the problem; in areas like steel, the collapse in global prices suggests that a lot more loans will get stressed in the months ahead. As a recent Crisil report points out, as much as 40% of assets restructured between 20011 and 2014 have degenerated to NPAs—this is a dramatically higher number than the 15-20% assumed by most while discussing the stress levels in Indian banks.

Crisil estimates that around R80,000 crore of stressed loans will get restructured under the new 5/25 rule of RBI during FY16—while it is not clear how much of this will turn bad, the result of the 5/25 restructuring will be further camouflaging of stress levels in banks. And, based on its estimate of loans going bad from earlier restructuring, the credit rating agency estimates NPAs rising by R60,000 crore in FY16, taking the total to R4 lakh crore, or 4.5% of bank advances.

This has various consequences since, in the absence of the government being able to capitalise banks—Crisil estimates they will need R2.6 lakh crore in the next 4 years—PSU banks will grow at a much slower pace than their private counterparts as a result. Crisil says their growth will be around half that of private banks over the next 4 years. This is quite serious and, given its larger implications, the government has to seriously consider privatising several PSU banks.

While there is little that can be done about the loans going bad, the government has to ensure the earlier hurdles, like not having enough debt recovery tribunals, hinder the banks from getting closure on their legal suits. Also, banks have to be encouraged—now that Sebi has changed its rule on converting debt to equity—to take up higher stakes in projects and use this to sell off companies.

 A good place to begin will be the Dabhol power plant where, till now, the Maharashtra government was not allowing the gas terminal to be hived off and sold. And, as has been seen in the case of the sale of Kingfisher assets, the fight between various government arms—in this case, the taxman and SBI—is only hurting the banks. RBI also needs to move fast to put in place its proposed ceiling on bank exposures to large groups. From around 55% of tier-1 funds right now, the central bank has proposed loans to a single group be limited to 25%—putting this in place is important since the group risk for banks is very high; this will also force companies to move to the corporate bond market. What is unfortunate, however, is that while the group norms are being tightened, banks get more headroom to lend to individual corporate—it is, of course, true that banks also need to exercise prudence, the job cannot be just that of the central bank.
http://www.financialexpress.com/article/fe-columnist/editorial-bank-of-trouble/73474/