Relaxation In Promotion Policy Permitted By Minstry of Finance

Here is given full text of imaginary conversation held between a powerful CMD of a bank and powerful minister / officer looking after banking affairs? This will however make it clear how bad affairs are managed by bad officials in an attractive way which enhances the image of both at the cost of taxpayer, staff and investors. This is enough to say that how conflicting and confusing logic is used to manage the affairs in the mutual interest of both.( news on policy relaxation is given below)

I expect you will continue to read until you are fully bored, exhausted,confused , irritated and tempted to respond

·       Minister:  Why banks like to opt for campus hiring?

·       Bank CMD:  Because the management of banks like to pick up talented youth from campus.

·       Why Banks like to promote officers who have got 60 percent marks in annual appraisal reports?

·       Because there is shortage of talented officers and hence they want to promote officers even if they have been rated poorest by appraiser in last three to five years.

·       Why do they not promote those officers who have been rated with 80 to 95 percent marks in their annual appraisal reports?

·       These officers do not have enough skill to manage bank's branches?

·       Why do you not take against officers who rated them so excellent?

·       Sir they most of appraisers have got retired or promoted to higher level.

·       How do they expect newly recruited officer in higher scale II or III from campus will perform better?

·       Directly recruited officers perform better because their IQ is better.

·       How bank management does expect that newly recruited officer from campus will understand the intricacies of banking to safeguard banks and to enforce KYC and Anti money laundering rules?      How these fresher will learn accounting and how will they be able to judge the creditworthiness of a loan seeker?

·       Sir bank management have developed robust training system where all newly recruited officers are imparted perfect training and made capable to cope with critical problems of banking and specially lending and monitoring of loan accounts.

·       Why  officers recruited as direct officer or promoted from clerks to officers in last one to three decades  are still not fit for taking the responsibility of higher post and higher scale. 

Why training system failed to make them capable .efficient and good performer.

·       Why not officers are promoted as per their seniority as IAS and IPS officers are promoted and as other gazette officers in central services are promoted? And why not banks take punitive action against those who do not perform as per need?

·       Old batch officers through recruited as direct officers or promoted from lower cadre and though they are getting 90 percent marks in APAR they have not developed enough skill to manage a bank's branch.

·       Why robust training system failed to develop skill in officers even in a span of two to three decades?

·       Sir they are intelligent but not willed to get promotion.

·       Why do you not promote them and ask them to serve the bank shouldering higher responsibility or stagnate them or ask them to leave the bank?

·       Why you are bent upon giving promotion to officers who are not well experienced and who are much junior?

·       Sir we have robust promotion policy to take care of meritorious candidate. According to promotion policy bank can promote one officer out of four applied for. In such case these old officers are rejected by Interview panel. Youth with attractive personality and those who answer questions of interview panel members are given priority.

·       How interview panel judge the ability of an officer in 2 to 3 minutes of interview when the same team of senior officers could not judge in two to three decades of service of such directly recruited officers.

·       We are bound by promotion policy and we depend on the whims of members of interview panel.

·       Why do you say then enough experienced and skilled officers are not available and why do you like to reduce minimum length of service for promotion from 7 years to five years then from five to four years and then four to three years and so on.

·       Sir in banks skill in not significant , it depends on will of the officer to perform

·       How do you judge the will of officer  through interview and why not assessing his performance at field level in a span of five to 7 years of his service.,

·       Sir bank needs powers to reject three officers out of four applied so that junior officers listen to orders of seniors and top management.

·       Why only good officers are always rejected and inefficient and corrupt officers are mostly promoted.

·       Because officers who abide by orders of seniors are given more preference

·       Why do you not initiate disciplinary proceedings against non performing officers and remove them from banks?

·       Sir due to IR problems they manage bad officers 

·       When you have robust promotion policy, robust training system, robust team of excellent officers, robust managerial skills and robust recruitment policy and when you recruit talented boys as per your choice directly from campus, why do you fail to maintain quality of assets , why bad debts are increasing at such a higher rate? Why do you need capital infusion every year?

·       Sir there is global recession, market is not favourable , interest rate is higher and so on

·       Why private banks are growing and why quantum of bad debts is lower in private banks?

·       Sir they pay higher pay package.

·       Why average pay in public sector banks is higher than that of private banks?

·       Sir we have more senior officers and we have to pay more to them as per pay scale

·       Why do you say then that there is scarcity of seniors in bank to shoulder higher responsibility and why do you want to dilute importance of experience, length of service, marks in APAR every year?

·       Sir we always want a devoted team of officers as per our promotion policy.

·       Why attrition rate is more in banks?

·       Sir pay package of employees public sector banks is very low?

·       Why private banks can manage counter level works by staff drawing salary less than Rs.10000 per month and employees in public sector banks drawing salary of 5000 to 60000 are allowed to perform counter level work.

·       We have scarcity of staff and we have opened good number of branches to comply with guidelines issued for financial inclusion.

·       Why bad debts are increasing? Why ratio of bad assets is more than 25% of total advances in many branches?

·       Bank officials are busy in recovery of dues from bad borrowers.

·       Why there is no credit growth?

·       There is recession in market and global scene is not favourable. Interest rate is high .Officers are afraid of actions if loans sanctioned by them turn bad.

·       Have you taken action against any erring officer? Why credit is growing in private banks even though they charge higher rate?

·       There may be IR problems if we take action against erring officials? 

·       Why there is no credit growth in agricultural sector? Why officers are not necessarily posted in rural areas.

·       We have additional marks in promotion process to those officers who are posted in rural areas.

·       Why do you want then reduction and removal of necessity of posting in rural areas for promotion? Why do you not promote those officers have worked in rural areas for a decade or two and even more?

·       There is acute scarcity of good officers, sir, Officers posted in Mumbai , Kolkata, Chennai,Delhi , Bangalore etc do not like to serve in villages.

·       Why officers posted in rural areas for more than a decade are not promoted?

·       There are not found suitable for promotion by promotion committee.

·       Why credit in not increasing in manufacturing sector

·       There is recession in iron, cement and mining sector.

·       How only in the month of March, banks have disbursed more than 250000 crore of rupees and how they have mobilized deposit of Rs. 350000 crore only in the month of March?

·       Sir it was necessary to achieve the target and it is also true that in the month of March entire government machinery come into action and in this month effect of global recession become ineffective.

·       Why volume of deposit in CASA (savings and current deposit) in not increasing?

·       People park their savings in Gold or in mutual funds.

·       Why CASA of private banks is increasing and far more than that of average public sector banks?

·       Private Banks have strong force of marketing officers.They pay higher rate of interest on even saving s deposits.

·       Why do you not recruit marketing officers? Why do you not pay higher rate of interest on savings deposits?

·       Sir we have recruited, but they are busy in mobilizing insurance business or due to scarcity of manpower in branches they have to perform on bank counters.We mobilise deposits from corporate by paying higher rate of interest even for short period of 7 or 15 days.

·       Why not you recruit clerks for counter work?

·       We do not earn enough profit to bear the loan of additional bank staff and hence we force existing officers to work late and on Sundays and holidays.

·       Why do you like to recruit officers in higher scale paying higher pay?

·       Because attrition rate in banks is growing.

·       When you recruit Credit processing officers in higher scale and you have robust training system to impart credit skill to your officers, why do they not help in increasing credit to agriculture and manufacturing or in service sector?

·       They are sir busy in disbursement of loan under retail sector, say for home loans, for personal loans, for vehicle loans etc.

·       In private banks such type of retail loans, even low paid marketing officers are attractive volumes of business share in the market.Why not public sector banks can do so?

·       Their decision taking mechanism is stronger and they can appoint recovery agent to recover the money from defaulters.

·       Why do you not increase interest rate on savings deposits to increase CASA as private banks are doing?

·       We offer higher rate for even short period deposit to attract corporate deposit, government fund and to attract fund from public sector undertakings.

·       How do you afford using these short term deposits for sanctioning long term loans under infrastructure sector?

·       This is national priority to lend money to infrastructure sector. When we face liquidity crisis we borrow money from RBI under repo rate or from market.

·       Why do state run banks frequently face liquidity crisis?

·       Because we lend more, our credit deposit ratio is more and we do not care even for recovery of loans

·       How do you propose to increase business , increase profitability and increase branch network.

·       We have opened hundreds of new branches without recruiting additional manpower and opened lacs of ‘No Frill’ accounts to comply government guidelines on financial inclusion. Our per employee business is more than that of private banks.

·       How per employee profit of private bank is more than that of state run banks.

·       Pay package of private bank is less.

·       Why do you then propose for wage hike of public sector employees?

·       If wage hike is not at par with market trend, bank will not be in a position to recruit new staff and attrition rate will be more.

·       How you will afford additional wage load when profit is low.

·       We will not allow any officer to tread any bad asset as bad; We treat all asset as standard and performing. In case of need we restructure the loan accounts so that the account remains in standard category?  We use ever greening techniques to keep all states standard all the time. In this ever greening process , if an account of loan having exposure of one lac turns irregular , we sanction additional two lac rupees so that old account of one lac is liquidated.In this way we save huge amount of provisions. Similarly we manage to save provisions on pension , provident funds, terminal benefits , leaves etc to increase profit.

·       Ok you are great ………………..

·       Private Banks are growing, healthy and profit making.

·       They are not doing work under financial inclusion; they are not opening branches in unbanked areas.

·       For opening of new banks, guidelines have been issued to make it necessary for even private and foreign banks to open branches in rural areas and to involve in priority sector lending.

·       If so happens, these private banks will capture our business even in rural areas. They offer higher rate of Interest even in savings deposits. Our survival will be at stake.Sir please allow us to pay higher rate of interest on deposits mobilised by us.

·       What do you want then? You want increase in interest rate for deposits and decrease in interest rate on advances.

·       Sir do not allow private banks to pay higher rate of interest and do not allow mutual funds to give more returns than what state run banks can afford.
How will you then pay 20% as dividend on capital contributed by us?
Sir You don't worry, we know the art of inflating profit and we know how to manage auditors. Please leave it to us , we will manage , We bankers know how to make politics for survival as you politicians talk of economic for your survival.

·       Yes we will look into it, I have understood your caliber. We have set a committee to suggest ways and means for real reformation in financial sector. We are not in a position to provide you capital to comply Basle III norms. We are trying for consolidation of banks, merger of banks and reducing the number of banks to compete with foreign banks.

·       Sir merger of banks will create Industrial unrest.

·       Then what to do?

·       Banks say: Status quo should be maintained, let the corrupt officers and corrupt minister enjoy as they like. Let the country go to hell. Why do you bother for Fiscal deficit or current account deficit? Let the new government come to power; they will manage their affairs in their way for next five years.

·       You are right bankers, we will not press you for action against erring officials, we will continue to ask you for lending to farmers and industrialists, we will ask you not to take stringent and hard action against defaulters to safeguard our vote bank, we will ask you for waiver of loan to increase our vote bank and lastly we will not permit you to accept higher wage hike for bank employees.

·       Ok sir we will manage the affairs in our mutual interest, we will manage trade union leaders and maintain industrial peace and we will finally sacrifice taxpayers’ money. Because they will not raise any voice and we both will live peacefully. Whenever media men will ask for reasons for lesser growth , we will jointly blame international situation

We will in this way save each other and spend time peacefully and retire from public life. Ministers will now also think for campus hiring for the post of IAS officer, IPS offices etc If needed they will recruit their kith and kin as Chief Secretary directly from campus

Vrishti Beniwal  |  New Delhi  April 8, 2013 Last Updated at 00:50 IST

Finance Ministry relaxes govt banks' staff promotion norms ( News of April 2013 )

Finance ministry gives bank boards the flexibility to decide whether the stipulated tenure of rural/semi-urban experience should be continuous or in parts

With public sector banks staring at huge staff retirement over the next few years, the government has decided to relax the norms for promotions for the current financial year. The finance ministry has allowed the banks to deviate from the prescribed promotion norms, with the approval of their board, so that more employees can become eligible for promotions.

However, banks will still need prior approval of the government for a change in guidelines on five critical aspects such as minimum experience requirement for promotion to next scale, marks in annual appraisal, rural/semi-urban experience, length of service in specialised cadre, and zone of consideration

Notably, even in these, some degree of freedom would be given to banks. For instance, board of banks can provide further relaxation of three months in minimum experience requirement. This relaxation has been provided recognising that if a person was last promoted in June, he would not be eligible for promotion at the beginning of the next financial year for not having completed a year.

“On some operational issues regarding promotions, we have given them more freedom. But on core issues, there will be uniformity in guidelines across the banks. On core elements of the promotion policy, 80-85 per cent of the norms stipulated last year would continue,” said a finance ministry official.

The Reserve Bank of India (RBI) has termed the present decade as retirement decade. In the next 10 years, government-run banks have to hire in lakhs to fill up retirements and natural attrition, to keep their branches and other operations running. Also, with RBI set to allow new banks in the country, the public sector banks is likely to be a favourite hunting ground for talent for private sector players.

The ministry has decided to give bank boards some flexibility to decide whether the stipulated tenure of rural/semi-urban experience is required to be continuous or in parts. While the condition for rural posting will remain unchanged, banks can relax condition in cases where, for instance, a person was transferred from the rural office barely months before completing his tenure, but had two stints in the area, thereby meeting the tenure requirement.

The bank board can relax the requirement of marks in the annual performance appraisal ratings to an average of 75 per cent marks with minimum 60 per cent in the preceding five years. They can also relax the zone of consideration to include all officers promoted on the same date or batch.

“The moment you have too many conditions, that would mean exclusion. The new guidelines will not exclude people and more employees can be considered for promotions,” said the official. In the circular issued to the banks on April 4, the ministry has said that the reasons for deviations from the guidelines would have to be properly recorded in the minutes of board meetings.

The government, through its circulars in 1986 and 1987, had laid down guidelines for promotion in public sector banks. However, banks gradually started deviating from these norms in the pretext of fine-tuning them. This forced the government to issue revised guidelines in December 2011. Since then, several relaxations have been made in the norms to meet HR requirements of banks.

http://www.business-standard.com/article/economy-policy/finance-ministry-relaxes-govt-banks-staff-promotion-norms-113040700066_1.html

Govt eases promotion rules for PSB officers ( News of April 2012)

Govt eases promotion rules for PSB officers

Dinesh Unnikrishnan

Updated: Sun, Apr 08 2012. 09 53 PM IST

Mumbai: The government has relaxed the rules on compulsory rural service for officers of public sector banks to be eligible for promotions by saying the stricture can be applied prospectively.

File Photo

This will enable state-run banks to promote hundreds of officers at the middle and junior management levels, even if they have not served at a rural branch.

Such officers are now eligible for promotions and can complete their rural stint after the promotion.

Recently, the finance ministry issued a note to all public sector banks saying that the requirement for compulsory rural service can be applied prospectively. Mint has reviewed a copy of the letter.

Till now, officers were required to have two to three years of experience in rural and semi-urban areas for promotion up to the level of manager, and minimum three years experience as a branch head to become eligible for promotions to higher posts such as chief and assistant general managers.

The finance ministry relaxed this requirement after some state-run banks made a representation to the government that their officers, despite being highly qualified, are being deprived of promotions as they lacked adequate rural experience.

The current relaxation, according to bankers, will benefit hundreds of middle-management officers, who are awaiting promotions.

The government wants a specified period of rural service as a precondition for promotions to ensure that those who take up bigger roles possess necessary ground-level experience in those segments.

“No bank is in a position to give rural posting for all staff. Many officers, who are otherwise eligible for higher posts, have not been getting the opportunities for promotion due to this issue till now,” the chairman and managing director of a large state-run bank said on condition of anonymity. The ministry has also exempted officers of specialist cadres such as foreign exchange, credit, technology and human resources from rural posting. Such officers will have to work in specialist cadres for at least five years before joining mainstream services. Banks have to complete the process of posting officers by June 2012.

“If you insist on rural posting as a precondition for any promotion, then banks will not be able to carry out any promotions at all. This will result in huge manpower issues in government banks. Since they have made it easier now, this will be a major positive to make the promotions faster,” said another chief of a state-run bank. He too declined to be named.

Human resource reforms in the state-run banks have been a major concern for the government and policymakers in the face of a high attrition. Besides lower compensation, slow promotion is also seen as a reason for high attrition. Reserve Bank of India governor D. Subbarao had said in late 2010 that there was a “good reason” to revisit the salary structure in government-owned banks to check losing talent to competitors in the private sector.

Appointments in state-run banks should be compulsorily made on the basis of pure merit and the rules should be flexible, according to Naresh Makhijani, partner, financial services at consulting firm KPMG.

“While public sector banks have a larger public interest in mind, the rules for promotion for an individual should be flexible and based on pure merit rather than on parameters which are not necessarily critical to growth,” Makhijani said.

To speed up personnel reforms in public sector banks, the government in 2010 appointed an expert committee under former Bank of Baroda chief Anil Khandelwal.

Later, the government set up another advisory group under Khandelwal to prepare a 10-year road map for individual state-run banks.

This committee is also looking at the technology and business process re-engineering reforms required for different state-run banks. The Khandelwal panel, which submitted its report in the middle of 2010, proposed that stock options be given to the best-performing 15% of staff, apart from better remuneration for the chairman and managing director.

Other recommendations included the induction of human resource specialists, the appointment of an executive director for the department, 50% direct recruitment of officers against 25% now, and compulsory three-year rural service for new recruits. Also, senior officers should be subject to appraisals on the basis of feedback from colleagues, subordinates and customers, the committee had suggested

http://www.livemint.com/Companies/R5hk33H5ezKvTFhJMozUFP/Govt-eases-promotion-rules-for-PSB-officers.html