We need an ‘Indian Banking Service’----S. ADIKESAVAN
An elite service on the lines of IAS can attract the youth back into banking and address the impending skills shortage in public sector banks.
Finance Minister P. Chidambaram recently announced that public sector banks (PSB) would hire some 63,200 employees during the current financial year, with the State Bank of India — the country’s largest —alone taking in 21,200.
Banking, as he put it, offered many opportunities for young men and women to build a career, and “they must take advantage that the banks are recruiting so many people”.
On the other hand, attracting talent has actually been an issue of concern for bankers for quite a few years now. The Khandelwal Committee on human resources (HR) issues in PSBs, appointed by Chidambaram’s own ministry, had pointed to the fact that nearly one lakh bank staff are set to retire before 2015.
Further, the resultant HR vacuum created would be even more pronounced at the leadership levels. According to the panel’s report submitted in June 2010, 80 per cent of General Managers (GM), 65 per cent at Deputy GM, 58 per cent at Assistant GM and 44 per cent at Chief Manager rank reaching superannuation in the next two-and-a-half years.
( My Comment :Who are responsible for creating such critical vaccum ---
Is it not faulty policy of Government of India which is in force for last two decades?
Is it not faulty management of individual public sector banks?
Instead of frequent changes in HR policies or recruitment policy or promotion policy , should we not introspect to find out who are the persons primarily responsible for current HR issues and why they should not be punished for their ill-motivated actions?
Is retirement a new phenomenon which is visible now to MOF or management of banks and which has become a matter of concern for MOF?
Is there shortage of efficient , honest and sincere performer in junior and middle management level?)
True, as and when these retirements happen, there will be people to fill the vacuum, technically speaking. But the replacements would be those who are now getting promotions much faster, and with possibly not sufficient experience in their existing positions to merit movement to the next ranks. To the extent this may lead to a dilution of quality of manpower at senior levels, it could emerge as a serious HR issue.
Attracting talent
With a workforce of over eight lakh currently, PSBs have been a major employer, starting with the mass recruitments that took place in the wake of bank nationalisation and branch expansion drives that followed. The ones leaving now belong, in a sense, to the “banking baby-boomer” generation of the seventies and after.
But with more than half of India’s population still out of the banking orbit and assuming its GDP growing at an average 7 per cent a year, the PSBs’ employment requirements would only increase in the coming years. The PSBs alone today have an aggregate credit and deposit business of Rs 90,00,000 crore.
A simple rule of the thumb to follow here is that banks’ balance-sheet size would typically increase 2.5 times the GDP growth. If, to this, the imperatives of financial inclusion — which, as the Reserve Bank Governor D. Subbarao has pointed out, is a prerequisite for growth — are added, the need for recruitment in greater numbers becomes obvious. This would include barefoot bankers, who would spread the banking habit and push for micro-banking even more strongly than what PSBs are doing at present.
The complexity of the above task, however, makes it essential that the industry has the potential to draw gifted youngsters, with an aptitude for service and with a passion to contribute to national development. At the same time, PSBs have, for quite some time now, been unable to attract talent, particularly at the probationary officers’ level, because of competition from more high-paying sectors like IT, consultancy and various other financial services.
Selection process
This is in contrast to the scenario up to the mid-eighties or so, when a bank officer’s job was seen as among the coveted choices for bright graduates/post-graduates. Public sector banking became less of a ‘hot’ option with the economic reforms of the nineties that threw open new windows of opportunities for the youth of the country.
With some of the shine wearing off from these sectors, this is the opportune time, perhaps, to look at ways and means for making PSB banking a compelling career choice once again.
While higher remuneration is a no-brainer here, creation of a specialist cadre of officers and branding of the public sector banking career as the Indian Banking Service (IBS), a la IAS, could be an imaginative way of going about it. Joining in an elite service, which would form a common industry pool with career progression from junior officers to the top-most echelons, would probably succeed in wooing the youth back to banking again.
The selection to the IBS could be made as rigorous as the process for the Civil Services, with the successful candidates being allotted to different banks similar to the State-cadre allocation for the civil services officers. This is as opposed to the existing recruitments based on examinations conducted by individual banks themselves.
Leadership development
Once the IBS officers reach the level of say, Assistant GM (Scale V), they could be deputed across PSBs. Currently, there is not even a system of cross-deputation among PSBs, with the result that no active exchange of talent and experience takes place among state-owned banks themselves.
Linked to this is also the need for proper leadership development. The Khandelwal panel has quoted a McKinsey study, which had assessed that PSBs together should aim towards grooming about 10,000 leaders over the next 5 years.
This includes 500-600 at GM level providing “business and functional leadership”, 1,500-2,000 Regional Managers for “geographic business leadership” and 6,000-7,000 of Branch Manager providing “branch leadership”. The report further proposed the setting up of a dedicated Banking Leadership Development Institute (BLDI).
But why go in for new institutions for management development in banking may be a valid question to ask, especially when there are already the likes of the National Institute of Bank Management (NIBM), which the Reserve Bank itself set up in 1969.
The answer is that these institutions have not exactly covered themselves with glory in terms of meaningful interventions in commercial banking or contributing as think-tanks and engaging in leadership development.
Just take what the Khandelwal Committee has had to say about the NIBM: “The NIBM, which was originally conceived as an institution for training higher level banking personnel, will not be in a position to undertake the humongous task of training a large number of leaders for the banking system. Its academic infrastructure to undertake this task is far from adequate. Its faculty resources and academic preparation do not match the higher order needs of the senior and top managements of the banking sector”.
To be focused and effective, the proposed BLDI should be modelled on the lines of the Lal Bahadur Shastri National Academy of Administration at Mussoorie, with facilities for pre-induction training, post-entry professional training and mid-career development courses for the IBS officers.
Akin to the National Academy of Administration, the faculty for this institution must be drawn primarily from the top echelons of serving as well as superannuating commercial bankers. In short, as distinct from the existing institutions, it has to be “of, by and for commercial bankers.”
The creation of a specialist IBS cadre and the setting up of a BLDI on the lines of the Khandelwal Committee’s recommendations would go a long way for getting real talent back in public sector banking.
Of late, the Finance Ministry has been playing an activist role as promoter-owners of PSBs. A major HR initiative by it, leading to the creation of an elite IBS cadre and the establishment of a BLDI, would make for a new dynamism in the banking sector.
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