Public Sector Banks have opened hundreds and thousands of branches during last few months and years without adding equivalent number of employees in their bank. This has resulted not only in deterioration of quality of service but has also adversely affected the quality of assets, quality of lending and quality of monitoring and control over the assets.
It may be noticed from below given chart that total number of employees in public sector banks has come down from 8.83 lacs in the year 1998-99 to 7.71 lac in the year 2011-12 . In a span of 13 years of reformation , number of branches has increased at least two fold and the volume of business has gone up by at least ten times.
Though per employee business of state run bank has increased compared to that in private banks only due to labour exploitation policy adopted by these banks, the quality of assets is much better in private banks than in public sector banks.Customers get better service in private banks and investors give better value to shares of private banks.
Public Sector Banks may achieve the target of number of branches under Financial Inclusion to please their mentor ministers but may not stop escalation in resultant risk banks likely to face in future. They may not stop increase in bad assets and rise in quick mortality of assets. These banks may show little rise in profit by manipulation, they may fraudulently show bad assets as good assets by using the tools of restructuring bad assets , they may reduce provision on bad assets to book more profit and so on but such clever but suicidal fraudulent methods not for a longer period.
But no power on earth can save these banks from going from bad to worse as long as corrupt bankers are allowed to function as per their whims and fancies at the cost of quality of their assets and at the cost of joy and pleasure of human resources working at grass root level.
In brief one may say, Bank management is 'penny wise and pound foolish' ( due to self interest or under pressure from Ministry of Finance)
Bank Employees may not expect respectable wage hike if politicians continue to force banks to sacrifice profit in the name of financial inclusion or loan waiver or so called reformation.
Clerks and Junior and middle management officers are real performers but they may not perform as per their potential if they do not get recognition from their bosses who are more often than not self centered and who least bother for the safety and security of the organisation they serve.
In public sector banks, clerks are not given promotion in two to three decades. If clerks are promoted to officer cadre, the promotee officers continue to perform the duty of clerk or that of cashier as he or she used to do before becoming officers. Not only this, there are many scale II, scale III or scale IV officers who are constrained to perform the duty of cashier or a dispatch clerk or front line officer.
This again refers to a comparatively study published in newspaper and comments made by Dy Governor RBI Mr. K C Chakravorty who said that average pay of bank employee in public sector banks is 150% of that in private sector banks. Public sector banks are required to perform all types of non productive work such as payment of pension, old age pension, MANREGA payment, teacher salary payment, tax collection etc which private sector banks are not doing.
Two to three decades ago there was a practice to recruit a person in clerical cadre and then after three years and more the person used to get opportunity to appear in test for promotion to officer cadre.Due to this average pay per employee used to be on lower side.
In the reformation era, when full liberty was given to bank management , they almost stopped recruitment of clerks and cashiers .In the name of peaceful IR relation , management of banks chose to recruit officer directly from market. They did not hesitate to recruit officer in higher scale too by paying higher pay on joining itself.
Such unhealthy practices did not lead to corrupt practice only but also resulted in increase in average pay in public sector banks.
During pre-reformation era ,Pay package of clerks used to be almost half of that of officers recruited in scale I. Obviously bank had to pay more for doing same job which a clerk or cashier used to perform.To add fuel to fire bank recruited officers directly in scale II and III and onward which further added to wage burden.
Further bank management allotted work of clerk and cashier to senior officers and juniors and inexperienced officers directly recruited in higher scales were elevated to higher post and higher scale which not only further aggravated the illness of bank but also led to increase in bad assets and which annoyed seniors who served devoted banks for decades .
In public sector banks, clerks are not given promotion in two to three decades. If clerks are promoted to officer cadre, the promotee officers continue to perform the duty of clerk or that of cashier as he or she used to do before becoming officers. Not only this, there are many scale II, scale III or scale IV officers who are constrained to perform the duty of cashier or a dispatch clerk or front line officer.
There are thousands of senior level officers who are performing the duties which a clerk of golden era ( the period just preceding reformation era that begun in the year 1991 )could perform satisfactorily. Many senior officers at administrative officers are performing the duties which a low paid telephone operator or a call center guy could perform better.
To make it more clear in term of pay package , I may say that many officers drawing pay of Rs.25000/ to Rs.50000/ per month in public sector banks are performing the job which is being done in private sector banks normally by employees drawing less than Rs.10000/ per month.
Moreover during sixties and seventies , public sector banks used to have one officer over five to six clerical staff. It means clerk to officer ratio used to be 5 : 1 or 6 : 1. As of now the situation is just opposite to it. It means in public sector banks ratio of clerk to officer is now 1: 5 or 1 : 6 . It means a bank have employees drawing average pay of Rs.40000/ per months are five related to every clerk or cashier staff drawing an average to Rs.15000 per month.
It is pity or it is unfortunate that most of top executives who holds key posts in public sector banks can deliver good speech or can please officials of RBI or MOF by submitting false and concocted information but do not have brain , do not have knowledge and do not have vision on how to increase profitability of any branch or any bank.If branch of any bank run in loss , one cannot dream of bank earning targeted profit .
There are many officers who have been though promoted to higher scale say scale IV or scale V or scale VI under pressure from some God father , they are not found fit for posting at a place of equivalent scale. Thousands of officers though promoted to higher scale continue to perform the work of lower scale. All these have resulted in increase of average pay of public sector banks vis-à-vis private banks.
To make it more clear in term of pay package , I may say that many officers drawing pay of Rs.25000/ to Rs.50000/ per month in public sector banks are performing the job which is being done in private sector banks normally by employees drawing less than Rs.10000/ per month.
Moreover during sixties and seventies , public sector banks used to have one officer over five to six clerical staff. It means clerk to officer ratio used to be 5 : 1 or 6 : 1. As of now the situation is just opposite to it. It means in public sector banks ratio of clerk to officer is now 1: 5 or 1 : 6 . It means a bank have employees drawing average pay of Rs.40000/ per months are five related to every clerk or cashier staff drawing an average to Rs.15000 per month.
It is pity or it is unfortunate that most of top executives who holds key posts in public sector banks can deliver good speech or can please officials of RBI or MOF by submitting false and concocted information but do not have brain , do not have knowledge and do not have vision on how to increase profitability of any branch or any bank.If branch of any bank run in loss , one cannot dream of bank earning targeted profit .
There are many officers who have been though promoted to higher scale say scale IV or scale V or scale VI under pressure from some God father , they are not found fit for posting at a place of equivalent scale. Thousands of officers though promoted to higher scale continue to perform the work of lower scale. All these have resulted in increase of average pay of public sector banks vis-à-vis private banks.
In public sector banks a young officer with negligible experience (either promoted under recommendation of some God father or recruited directly from campus) is posted as Branch head and then he has to manage much more senior and talented officers who have either been rejected in promotion process or who willfully boycotted promotion process because they did not have backing of any top executive or ministers.
It is a hard nut to crack when a less experienced officer is entrusted the duties of managing senior old people. Similarly senior and old people finds humiliated when he or she to work under a boss who is a person to whom he or she taught principles of banking or to who was nourished under his guidance.
This is only in public sector banks where officers are allowed to exercise option for taking part in promotion processes. It means a man has the option to shoulder higher responsibility or not. It means if a good officer does not want to should higher responsibility he can be permitted to do so. Higher management has created terror in the minds of good officers that on promotion he or she may be transferred from one corner to other corner of the country if he or she did not flatter to boss or if he or she could not follow the wrongful orders as a disciplined soldier. This is also a cause why good officers particularly in old age when he or she to shoulder the responsibilities of family ignore promotion.
In private sector banks a person with ten to fifteen years of banking experience is given the responsibility of a branch and under him a team of at least 10 to 15 younger persons are posted who devoted work as per guidance of branch head. You will never find in private banks that the branch head or senior officers are counting cash and frontline newly recruited young boys and girls are sitting idle. A job which can be done by an inexperienced low paid employee is never entrusted to high wage paid senior officer and neither such circumstances ever arises when high paid officers is constrained to perform the duties of cashier.
On the contrary in public sector banks most of big or small branches have been provided with too little number of employees that senior officers are left with no alternative than to work as frontline clerks to maintain good customer service. New branches in PS banks are opened with one or two manpower whereas branches opened by private sector banks are manned by at least 10 to 15 energetic youth, either for marketing or for performing counter work.
In this way private sector banks attract more business with high number of low paid employees but PS bank branches fail to attract good business with the help of old and frustrated lot of frontline workers either as clerk or as officer. Such type of mismanagement, such type of bad execution of good HR policies and such type of ill treatment with old and senior people occurs only in PS banks.
Mismanagement of human resource has been without any control continuing in public sector banks for last two to three decades. Regulator of banks has remained more or less silent spectator of ismanagement of Human resources. This is why corrupt officers who spoilt the bank during their tenure as Branch head or Regional head or Bank head got safe exit from the bank even though he or she caused loss to the tune of hundred of crores of rupees to the bank.
It is only in public sector banks that officers are recruited as Marketing Officers are assigned the work of general banking and officers from general banking side are asked to go for market a product.Similarly officers recruited as Agriculture Officers or Field Officers or Rural Development Officer or Technical Officer are asked to work on counter and vice versa.This results in erosion in work both qualitatively and quantitatively.
It will not be an exaggeration to conclude that top executive of government banks has caused huge loss say in hundred of crores of rupees by assigning the work of clerks to officers only to fulfill their malicious intention. Because it is only officers who willingly or unwillingly say "Yes Sir " ;Sir' 'zee sir' on all orders of boss and act upon it whereas clerks seldom follow irreasonable and improper orders of the bosses.Clerical staff used to build pressure on top management and sometimes pose IR problems which put hindrance on the path of corrupt executives indulged in earning bribe and costly gifts. As such banks promoted almost all clerks to officers and stopped fresh recruitment in clerical cadre despite the fact that such action will in long run multiply staff wage bill and finally adversely affect the profitability of the bank.
Other Reasons which contributed in increase of Average pay per employee in public sector bank compared to that in private banks are as follows.
It is only in public sector banks that officers are recruited as Marketing Officers are assigned the work of general banking and officers from general banking side are asked to go for market a product.Similarly officers recruited as Agriculture Officers or Field Officers or Rural Development Officer or Technical Officer are asked to work on counter and vice versa.This results in erosion in work both qualitatively and quantitatively.
It will not be an exaggeration to conclude that top executive of government banks has caused huge loss say in hundred of crores of rupees by assigning the work of clerks to officers only to fulfill their malicious intention. Because it is only officers who willingly or unwillingly say "Yes Sir " ;Sir' 'zee sir' on all orders of boss and act upon it whereas clerks seldom follow irreasonable and improper orders of the bosses.Clerical staff used to build pressure on top management and sometimes pose IR problems which put hindrance on the path of corrupt executives indulged in earning bribe and costly gifts. As such banks promoted almost all clerks to officers and stopped fresh recruitment in clerical cadre despite the fact that such action will in long run multiply staff wage bill and finally adversely affect the profitability of the bank.
Other Reasons which contributed in increase of Average pay per employee in public sector bank compared to that in private banks are as follows.
This again refers to a comparatively study published in newspaper and comments made by Dy Governor RBI Mr. K C Chakravorty who said that average pay of bank employee in public sector banks is 150% of that in private sector banks. Public sector banks are required to perform all types of non productive work such as payment of pension, old age pension, MANREGA payment, teacher salary payment, tax collection etc which private sector banks are not doing.
It is PS banks which have to shoulder the responsibility of target for Financial Inclusion fixed by the government.
They have to open branches in remote villages where possibility of earning profit is very rare. Number of branches as such in public sector is far more than that in private sector. And the bitter truth is that majority of branches opened in rural areas are loss making and they spend their time mostly in unproductive work imposed by state or central government.
It is PS banks which have to oblige various politicians on sanction of loans and then on write off of loans. Banks have to lend under priority sector, under PMEGP programme, under SHG etc which private sector banks are not required to do.
Similarly PS banks have to lend for agriculture development, distribute UGC and taken part on all KVC projects recommended by District Industry centers. Such types of loan more often than not become bad in a year or two and then banks has to sacrifice huge money to keep their Balance sheet attractive.
On the contrary ,Private Banks do not perform and do not undertake such work which are economically not beneficial. Political loaning and political write off of loan takes place only in public sector banks, not in private banks.
On the contrary ,Private Banks do not perform and do not undertake such work which are economically not beneficial. Political loaning and political write off of loan takes place only in public sector banks, not in private banks.
As such there is no comparison between private and public sector banks. Hence effort of Dy governor Mr. Chakravorty to demoralize the employees of public sector banks and deprive them of wage hike is not justified.
Private Banks are employing 80% of their workforce at pay less than Rs10000.00 per months and only 20% of workforce get higher pay package. These banks cannot retain the employee for longer period and therefore attrition rate is much in private banks.
Public sector banks have to follow uniform wage structure as prevalent in government departments and other public sector undertakings.
To add fuel to fire public sector banks did not make any employment or made negligible recruitment since 1991 due to which average age of bank employee in PS banks is more than 45 whereas the average age in private banks is less than 30, Due to this private banks has very less load of terminal benefits payable to retiring employees ( because employees in private banks seldom retire, they resign much before ) whereas it is more in PS banks
Public sector banks have to follow uniform wage structure as prevalent in government departments and other public sector undertakings.
To add fuel to fire public sector banks did not make any employment or made negligible recruitment since 1991 due to which average age of bank employee in PS banks is more than 45 whereas the average age in private banks is less than 30, Due to this private banks has very less load of terminal benefits payable to retiring employees ( because employees in private banks seldom retire, they resign much before ) whereas it is more in PS banks
Why RBI Dy Governor does not compare the wage structure of pay package of central government employee with that of government banks?
Why he does not compare the pay package and productivity of PSUs with that of private corporate houses?
Why RBI Dy Governor does not compare the pay package of Indian railways, Indian airlines, BSNL where productivity and profitability is negligible with their counterpart in private sector (excl railways)?
Why BSNL, Railways, Airlines run in loss despite the fact that enjoy all privileges.
If MOF or RBI is still of the view that average pay of bank employees in PS banks should be reduced to some extent. I have a suggestion as given below to put before them for consideration.
It is true that due to almost non recruitment of fresh officers or fresh clerical staff during last two to three decades , average age of bank employees in many banks have gone upto 45 to 55 whereas in private banks the average age is still 20 to 25 in junior scale and 30 to 35 in higher scale.
If Public sector banks still wants that their average pay to become equal or less than their peer banks in private sector , they should come out with a Volutary Retirement Scheme (VRS) as they did in the year 2002 to kick out senior officers. By such action many incompetent officers whom bank management feel surplus and non effective for higher post may be shown the exit door and in their place fresh officers may be recruited paying much lesser salary. This will help in reducing average pay of bank employee in PS bank
In the reformation era, when full liberty was given to bank management , they almost stopped recruitment of clerks and cashiers .In the name of peaceful IR relation , management of banks chose to recruit officer directly from market. They did not hesitate to recruit officer in higher scale too by paying higher pay on joining itself.
Such unhealthy practices did not lead to corrupt practice only but also resulted in increase in average pay in public sector banks.
During pre-reformation era ,Pay package of clerks used to be almost half of that of officers recruited in scale I. Obviously bank had to pay more for doing same job which a clerk or cashier used to perform.To add fuel to fire bank recruited officers directly in scale II and III and onward which further added to wage burden.
Further bank management allotted work of clerk and cashier to senior officers and juniors and inexperienced officers directly recruited in higher scales were elevated to higher post and higher scale which not only further aggravated the illness of bank but also led to increase in bad assets and which annoyed seniors who served devoted banks for decades .
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