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Wednesday, April 15, 2015

Are Banks Facing Crisis Of Senior Officers?

This refers to news items published today that 4 to 5 lac officers in the rank of AGM and DGM  are likely to retire in coming three years to create vacuum in top management. Such lame excuses are furnished before government by clever management whenever there is talk of deteriorating quality of assets in banks compared to private banks.
In the year 2000 they were talking of surplus manpower affecting profitability of banks and this is why , public sector banks offered voluntary retirement scheme to bank officers in the year 2001 to curtail manpower and to boost up profitability of banks. Now when they talk of shortage of  experienced seniors I simply laugh at cleverness of Chiefs of Banks. Clever CMDs of Bank now say that due to recruitment ban or restriction from 1980 to 1990 there is shortage of seniors.Then why did they advocated VRS in the year 2001 and why did they allowed seniors to opt for VRS . Did they not have enough vision for future?

Again during the period 2005 to 2010 each of PS bank was busy in reducing manual work culture by adopting Core Banking Solution . Majority of bank works were automated during this period and some banks are still bus in reducing manual work and focusing only on online and technology oriented banking transactions .This has resulted in making manpower surplus in banks. Management of each PS banks during last years has added many non banking works such as insurance, demat services, share trading , portfolio management etc  in their work profile to use surplus manpower available in their banks. Now when they talk of shortage of manpower at senior level, it is unbelievable and nothing but lame excuse to hide their inefficiency, dishonesty , lack of vision , lack of capability to use manpower in more effective way etc. If there is real shortage of seniors, why banks opt for  doing business in non-banking activities keeping banks assets unguarded , monitored and putting them in risk?  Further why SBI is bent upon framing fresh and new policy to weed out seniors ?

Even Finance Minister  has many times suggested bank management during last few months to promote officers to scale II and III on merit to cope with shortage of senior officers in banks. It is nothing but ridiculous and dangerous advice given to corrupt bank management. Even before 1991 (reformation era beginning), management of banks used to talk of shortage of good officers and they used to give a plea that they were bound to give promotions based on seniority .In fact the culture of promotion based on seniority during seventies and eighties was much better, much judicious and efficiency booster.

Banks have been recruiting staff on the basis of merit and promoting officers to higher scale through so called merit oriented promotion policies only for last two decades and more. Still they talk of shortage of meritorious officers .It means there is large scale corruption even in process of recruitment. And if meritorious persons are recruited, how they become inefficient and unskilled after passage of time . It means meritorious officers are usually rejected in all promotion processes and only blind Yes-man of bosses and perfect flatterers and bribe earners could be elevated to top posts during last two decades of freedom enjoyed by management of each Public sector bank.

In fact merit was never respected during last two decades of freedom given to bank management .Bank management have failed to create motivation in workforce. Now they make false excuses of shortage of good officers. And to add fuel to fire , bank management has started promoting even unskilled and inexperienced officers to higher scales in two to three years which will cause further  loss to bank in coming days.

Media men blindly publish the news without verifying its correctness. There are hardly nine lac employees in public sector banks which comprises of not only executive level officers from AGM to GM but also includes class IV employees like peon, clerical staff, offices in scale I , II and III and scale IV. It is beyond imagination that there are 4 lac officers in AGMs and DGMs in Public sector banks. There are hardly four thousand such officers who are in the rank of AGM and above. And if it is true that there are 4 to 5 lac officers in the rank of AGM and DGM, it is the greatest scam of the country because it cause monetary loss in many ways.

 Management of banks are indulged in large scale scam in recruitment and it is they who are causing loss to banks by recruiting officers  directly in scale II and III or IV to oblige sons and daughters and kith and kin of top officials of banks and other VIP politicians, always in the name of merit only. It is these directly recruited officers who in lack of adequate experience and sufficient exposure in various activities related to banks are causing much  losses to banks.

Banking is a service oriented industry and Banks need experienced officers who are well versed in banking and who understand the risk factors of lending and various types of operational works. Such offices may not be found in IIM or other campuses. Bank management like campus recruitment only to give higher pay packages to fresher as per their sweet will , not to improve banking service. It is proved during last ten to twenty years of freedom they enjoyed in recruitment and in promotions.

There are lacs of senior officers who have not been promoted only because there are not perfect Yesman of top officials. Even now there is no scarcity of good and experienced officers in scale I , II or III in any of PS banks. There are many clerical staff who are undoubtedly better than even officers , but they do not like to accept promotion due to bad management or they are not promoted to officer grade because they are not perfect flatterer to their immediate bosses. This is why many scale III or IV officers are performing the work of clerks and many clerical staff and junior officers are performing work of executives. More often than not , executives are unskilled but good speakers only.

In last month only SBI chief told that they will come out with a policy to weed out seniors  and the same CMD of SBI is now talking  of shortage of seniors .

 In the year 2000- 2001 thousands of meritorious officers in senior rank opted for voluntary retirement scheme only because they were  totally unhappy with treatment given to them by their bosses.

And it is important to point out here that the same officers who joined private banks after resigning from  PS banks in the era of 1991  banking reform are now earning huge profits for private banks. Officers become meritorious as soon as they join private banks after resigning from PS Bank. Why?

There is no respect to merit or experience in banking and hence health of banks in general is moving from good to bad and bad to worse. Media men either do not understand the bitter truth of bank management or they are publishing news in lieu of money they get. They should try to get correct data of manpower In each grade and each scale before publishing such news . CMD of bigger banks are greater master in telling lie and in befooling government compared to smaller banks. This is why banks like SBI, PNB, BOB, IOB which were considered as top banks two decades ago are now considered as worst banks so far as asset quality of bank is concerned. It is they who did not make even sufficient provision for bad assets and for terminal benefits payable to retiring staff. just to give a artificial boost to profit and earn incentive.  "Gau markar Juta Dan". Everyone remember , how few years ago , RBI allowed banks to amortize accumulated provision for five years to avoid loss in a particular Financial year.

Profitability of PS bank , Return on assets and  Return on equity of each bank has sharply come down during last two decades . But clever Chiefs of bank talk about per employee business which has gone up to some extent only because these banks have curtailed manpower to a great extent when bank became automated and started functioning without use of manpower. These banks doubled their branch network but kept their total manpower almost same or less than what it was a few years ago. Only due to exploitation of staff , these banks are able to increase profit .

Still profit is not as it should be and as private banks are earning with same level of business. Average pay per employee in public sector bank is more than that of private banks. Because in private banks , pay package is fixed as per quality of work a staff perform. Whereas in PS banks, same type of work is done by clerk, officers in scale I or II or III or IV. In PS banks a staff become scale III  after completing  three decade long service whereas top officials directly recruit officer in scale III and make him scale IV or V . In this way they punish experienced officer and inculcate culture of bribery  and flattery .

Even RBI and Ministry of finance do not understand or do not like to understand the real reason behind worsening asset quality  of PS bank . They are misguided by gang of corrupt top officials and this is why instead of striking at root cause of sickness of banks, RBI officials or Ministers are suggesting recruiting ED and CMD from other bank or contemplating increasing incentive and pay packages of ED and CMD. MOF is suggesting various frameworks for recruitment of ED and CMDs of banks but not ready to peep into lower level recruitment and promotions.

I can say without any doubt and without any hesitation that health of PS banks cannot improve by changing only Chief of banks or by increase in pay package of Chief of banks. Need of the hour is to punish corrupt officials who in the name of merit promoting flattery and bribery and who are humiliating experienced and seniors by promoting extremely juniors to top posts.

I submit bellows the copy of news published today in Financial express:

Nearly 4 lakh public sector bank AGMs, DGMs to retire in 4 years-Financial Express 15th April 2015
In three to four years, most AGMs and DGMs in the country’s public sector banks will retire and there will be a vacuum at the senior level. The banks are still not able to make room for specialists and lateral entry for talent is a problem, says Achintan Bhattacharya, director, National Institute of Bank Management (NIBM). Recruitment of probationary offices is restricting banks from taking specialists directly and this needs to change, he says.

If the banks depend on PO level recruitment, there will be a vacuum for 20 years as there has been no recruitment since the 1980s and there won’t be enough talent available as it takes around 20 years to bring up people up to that level, says the NIBM director. Around 4,00,000 officer-level retirements are expected in three to four years with all of them in the 55-plus age group. GM levels posts are lying vacant in banks, says Bhattacharya.

Banks have failed to get talent from the market as these professionals are used to working in an environment where they are not chained by corporate governance norms which public sector institutions demand, there are no incentives for performance and the salary levels at the senior level at PSU banks are much lower compared to private sector bank, points out  Bhattacharya. Banks also do not have the option of  going down the ladder, he adds.

It was the human resource crunch in the PSU banks that led to the NIBM starting its post graduate programme in banking and finance in 2003-04 later rechristened as Post Graduate Diploma in Management Banking and Financial Services.  But they too are not getting the compensation they deserve and it takes 10 years to move to levels up. After graduating from NIBM, students enter at Grade II levels of PSU banks but they should get much better rewards, says Bhattacharya. This year 54 students graduated and there has been 100% placement record with some opting for the private sector. NIBM is doing its bit to expand the talent poll for banks. Bhattacharya said NIBM is planning to increase the intake of students. It is a building a 240-room hostel for the PGDM course as it is run as a residential programme and needs room to accommodate additional students.The institute has started work on creating additional infrastructure at the NIBM campus with investments of around Rs 60 crore to Rs 70 crore, Bhattacharya said.


SBI to introduce assessment system to identify non-performers among its senior age group 

KOLKATA: State Bank of India is set to introduce an assessment system that will identify chronic non-performers among its senior age group employees and stop offering them the now-guaranteed two-year extension, which allows every staff to work until 60 years of age. The new human resources policy also seeks to reward high performance with cash incentives, three people familiar with the matter said. The new system will be IT-based and evaluate employees based on how they conduct everyday tasks, such as account opening. Boston Consulting Group has advised SBI on this. SBI, the country's largest lender, employs about 2.30 lakh people at present and a good chunk of them are on the verge of retirement. In a note to all regional offices, the SBI management said the project is to identify efficient people and build competitive environment among employees, and not meant to identify low performers.

SBI may also link transfers to productivity, another first in the lender's history. Currently transfers and placements are mutually decided between the management and the employee federation. Employees up to general manager may be assessed under the new system. "The project has not been rolled out as yet. Discussions are going on at various levels. We have also given our suggestions. So, at this stage, we don't like to comment," said Y Sudarshan, general secretary of the All India State Bank Officers' Federation. The policy will be effective from this fiscal year but some nuances are still still being worked out, a senior official said. BCG suggested that SBI measure performances or productivity based on how much time one takes to conduct a particular transaction. For example, it suggested that account opening should not take more than 2.9 minutes. A monthly view will be taken on all budgetary and measurable roles. 

VRS in banks: many imponderables-The Hindu-- An article published in the year 2001

VOLUNTARY RETIREMENT schemes (VRS) are becoming fairly common in India too, as a strategy for cost-cutting and improvement of operational efficiency, in the context of the ongoing revolution in information technology and globalisation. From the manufacturing sector VRS is moving rapidly now to the financial sector, especially banking.
A few months ago, members of the Indian Banks Association, especially the nationalised banks, worked out a uniform voluntary retirement scheme and put it into effect. The scheme was considered somewhat generous in relation to the pattern prevailing in public sector enterprises. Apparently, as an afterthought, at the final stage of intimation of acceptance of VRS applications and relief from service, banks have used the device of `clarification' to deny a large number of employees the full benefit of the scheme. Leaving aside the question of business ethics, this is legally wrong. The full story of this is the subject matter of this article.
It should be mentioned at the outset that this is based on the facts of a particular nationalised bank but since there is uniform policy in this regard, it may be considered to be true of Indian banks in general, especially the nationalised banks.
The principal features of the voluntary retirement scheme are as under:
(1) All permanent employees who have completed 15 years of service in a bank or 40 years of age are eligible for the scheme.
(2) The bank will make ex-gratia payment at the rate of 60 days' salary for each completed year of service or salary for the number of months service left, whichever is less.
(3) Besides gratuity and provident fund, those who had earlier opted for pension will get pension (including commuted value of pension) as per the Banks Pension Regulations, 1995.
For purposes of this article, the matter of pension is most important, as it is now the source of trouble, for employees who have put in 20 or more years of service. Section 29 of the Pension Regulations permitted such employees to seek voluntary retirement and further, this is the crux of the matter, under clause 5 of this Regulation, the qualifying service of such employees ``shall be increased by a period not exceeding five years, subject to the condition that the total qualifying service rendered shall not in any case exceed 33 years and it does not take him beyond the date of superannuation''.

From the above it is clear that those who retired under the VRS are eligible for additional service exactly like employees seeking voluntary retirement on their own. What the bank has done is to deny this at a stage where when there was really no scope for denial. In its communication to the employees, after advising them that their application for retirement is approved and that they would be relieved by the end of the month, the bank has `clarified' that under VRS they are ineligible for the benefit of additional service for pension and commutation of pension.

Arbitrary decision

There was no doubt of any sort in the scheme which needed `clarification'. The scheme was clear and was obviously framed after much thought and discussion among the banks, the Indian Banks Association, the Central Government and the Reserve Bank of India. The bank has now taken an arbitrary decision, which is a clearly ultra vires of the scheme, and which involves financial loss to the employees, whatever may be its magnitude, through lower pension and commutation amount.

Employees who applied for VRS had clearly in mind not only the ex-gratia payment but also the benefit of additional service provided for in Regulation 29. This is the right of the employees who applied for VRS and whose application has been accepted by the competent authority. To take away that right now would be breach of contract and would be bad in law. Ex-gratia and pension according to Regulation 29 constitute integral elements of the scheme. To give ex-gratia but deny pension benefit under Regulation 29 (5) would be like the left hand taking away what the right hand gave. The right of the employee under Pension Regulation 29 (5) cannot be taken away by anyone now.

It is well to note that the retirement under VRS is in pursuance of a scheme formulated by the bank for its benefit of trimming the staff smoothly. This is mentioned in management jargon in paragraph 3.0.0 of the scheme, under the heading `Object'. For this purpose, the scheme had to be made reasonably attractive. This is the principle of golden handshake all over the world and for all sectors - government, corporate sector, financial sector, and the like. Therefore, an employee retiring under VRS has even greater claim to additional qualifying service for pension under Regulation 29 than he or she who seeks retirement entirely on his or her initiative.

The whole object of all golden handshakes is to tempt the employee to leave. The primary motive is not to benefit him. In fact, many people who had not thought of retirement may be induced by the employer's offer for retirement and this is precisely what the employer wants. Strictly speaking, in the VRS application form, the employer should not even ask the reasons for opting for the VRS and should not attach any importance to it. Any reason is good enough for the management, which is anxious that people should leave!
If the bank had felt seriously about restricting pension rights in the manner it has tried to do now, it should have mentioned it in the scheme. Even if the bank thought about it after employees had sent in their applications, it should have mentioned it to the employees and given them a chance to reconsider their wish to retire. Of course, the scheme would not have been very attractive to many! To stipulate the ineligibility now, after advising them about acceptance of the application, would constitute breach of contract and ultra vires of the scheme.

It is interesting that the bank has been so good as to approve pension to those having a minimum qualified service of 15 years, whereas under the Pension Regulation, for voluntary retirement (on the employee's initiative) it was 20 years. What sin have employees serving for 20 years or more committed that the bank should now try, contrary to the scheme, to deny their right?

Undue haste

The haste with which the bank has acted in the matter of VRS is also surprising. Whereas the whole process was supposed to take 2-3 months, it has been completed within a month; this may cause employees some inconvenience and even a little financial loss, in reckoning the period of service.

Some may take the view that even with the ineligibility now announced of VRS employees for the benefit of additional service for pension purposes, the scheme is good. But that is not the point of this article.

After announcing a scheme, which was crystal clear, some banks are going back on their word. This is breach of contract. We do not know, many employees may have been drawn into accepting the scheme because of the benefit of additional service feature, for pension purposes, besides the ex-gratia.

Undoubtedly, many aggrieved employees will now go to court, though they are in a much weaker position to do this as compared to banks, which have become financial giants. The case of employees is quite strong; still, should they be put to needless trouble and expense?
It is good to avoid all this and ensure that taking leave of the employees, who have put in long service, is smooth and pleasant.

All these years, employer-employee relations in banks have been on the whole good. It is best that banks reverse their decisions and restore the benefit of additional service for pension purposes.

The additional financial burden to the banks may not also be much. This is a matter in which the RBI and the Government must also render help.
S. L. N. Simha

Now, VRS is a must have for bank employees

-Times of India-29 March 2002 ( thirteen  Years ago)

SRIKALA BHASHYAM, TNN | Mar 29, 2002, 01.33AM IST




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