Talent Crisis In Public Sector Banks

PSU banks face bankruptcy of talent as thousands set to retire in coming years

Nearly 40% of Bank of Baroda's top management, from chairman to executive
directors to chief general managers, will retire in the next nine months,
creating a vacuum in the nation's second biggest lender by total business. Its
top brass is worried about how to fill the management gap — it does not have an
answer in a set up where it does not have the freedom to hire and fire.

It is not the only bank that's staring at a human resources crisis. Almost all
state-run banks are in a state where if the current practice of joint wage
negotiations and prohibition of lateral hiring are not abandoned, they will end
up handing over their entire future growth to private sector peers on a platter.
State Bank of India, the biggest, will see as many as 35,000 to 40,000 of its
staffers retire in the next four years. These are not people who could be
replaced by hiring freshers from colleges, but they need to be replaced by skilled people at the middle  management level.

The squeeze on hiring in the past is coming back to
haunt state-run banks. The lack of improvement in productivity over the past two
decades and not investing enough in training people is worrisome. The pay
structure is so skewed with pensions and other benefits that PSU staff cost
comprises a quarter more than private peers. It is so skewed that at
entry-levels PSU banks are the best pay masters. But at the middle level and above, private peers pay well while  payouts plateau out at PSUs. There is an incentive to seek a job but not to
perform consistently

"If you ask me how the HR function (in public banks) has fared against the
expectations, my unqualified answer would be that they have failed miserably,"
KC Chakrabarty, former deputy governor at the Reserve Bank of India and a
life-time banker had said. "Part of it, especially in the case of PSBs, can be
blamed on the quality and competence of people that manage the HR function.
Quite often, the officials in HR departments virtually have no expertise or
training in HR management and they  land there more as a matter of providence than by design." Chakrabarty, a  life-time banker who was also the chairman and managing director of Punjab  National Bank before jumping to central banking, should know.

The  contrast related to human resources is captured in the way two of the biggest
banks in the country had treated the positions of the head of the department.
ICICI Bank's K Ramkumar, executive director since 2009, has been looking after
HR since 2001. Its state-run rival SBI has had Shailesh Verma as chief general manager since April this  year.

Part of the problem lies in the fact that the overdrive to cut excessive flab of the pre-liberalisation era has led to deficiencies now. "We  have to do things very fast because this vacuum is going to hit us very soon  because the earlier generation is going to retire and the new ones will take  time to come up,'' says Arundhati Bhattacharya, chairman at State Bank of India.  "So how do I make new ones co ..

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Link Economic Times

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Promotion Based On Seniority

‘Seniority must be basis for top jobs in financial sector’-Indian Express

The Department of Personnel and Training (DoPT) which reports to Prime Minister Narendra Modi has made it clear that top-level appointments in the financial sector will have to be on the basis of seniority.

The instruction of DoPT, which recently asked the finance ministry to follow the norms in a specific case involving the appointment of the managing director of Life Insurance Corporation (LIC), will also be applicable to public sector banks while filling up top posts like executive director and chairman and managing director.

As many as six PSU banks will go headless in the next few months. While chairman and managing director positions at Indian Overseas bank and Bank of Baroda will fall vacant in August, Canara Bank and Oriental Bank of Commerce will go headless in October. Two managing director posts have been lying vacant at State Bank of India, the largest lender in the country. United Bank of India has been without a chairman for some months now.

The DoPT asked the ministry of finance to follow the principle of seniority while filling up the vacant post of managing director in LIC. The directive from the DoPT has come after some senior officials of the corporation who have put in more than 32 years of services and have residual services of three years or more had represented to it about how the finance ministry is excluding their names from selection process meant to appoint the fourth managing director of the corporation.

One post of managing director has been lying vacant after Sushoban Sarkar retired in May. DoPT norms are uniform for all financial institutions.

DoPT, after getting the representation, had asked the Appointments Committee of Cabinet (ACC) to ask the finance ministry to stick to the rules of seniority for selecting a candidate for the post of managing director of LIC.

The finance ministry, during the UPA government’s tenure, had justified its decision to exclude LIC officials from the selection process on the basis of a “policy” which warrants that all those officials who appear for the interview thrice consecutively but not been selected have to be excluded from the selection process for any new posts and fresh eligible candidates in order of seniority should be included in the zone of consideration.

The finance ministry argued that all these officials were part of selection process when chairman and three other managing directors of the corporation were selected and cannot be considered any further.

However, these officials had protested the application of such a guideline in their cases, saying that this guideline has no application in the case of a candidate who has been selected or recommended for selection but has not been appointed for want of vacancies.

Further, a top source pointed out that such guidelines relating to omission of people are not applied while making appointments for other PSUs, including public sector banks.

This is the second time when the finance ministry method of filling up top posts in LIC has been asked to be corrected.

Earlier, the cabinet secretary had found fault with the finance ministry’s attempt to fill up the fourth post of managing director which was created in 2013 in corporation without getting sanction from the cabinet. The ministry then corrected its move and appointed SB Mainak after formally getting sanction from ACC.

Link Indian Express