(My comments given below)
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Government jobs, generally associated with employment security, are often less rewarding in terms of monetary benefits as compared to private sector jobs.
The widely held notion is true for most state-run jobs until one stumbles across State Bank of India's latest job advertisement. The country's biggest lender is accepting applications for over 2,000 posts of probationary officers, an entry-level job, at an eye-popping salary (cost to company) of Rs 8.55 lakh per year.
Compare that to ICICI Bank, India's biggest private sector lender, which will pay its probationary officers a CTC of just Rs 4 lakh this year.
SBI's generous entry-level compensation makes the lender a big draw among Indian graduates; its previous attempt to fill 1,500 vacancies in 2013 attracted more than 17 lakh applications.
While SBI is a better paymaster when it comes to freshers, employees up the value chain get a pittance as compared to their private sector counterparts. ICICI Bank's CEO and MD Chanda Kochhar received a total compensation of Rs 5.23 crore in 2013-14, more than 40 times what SBI's Chairman and MD Arundhati Bhattacharya made that year.
Ms Bhattacharya became SBI's chairman and MD in October 2013, so full year compensation details are not comparable. But, her predecessor Pratip Chaudhuri earned Rs 23 lakh (excluding lease rental and other benefits) as SBI's chairman and MD the previous fiscal year, which is just 5 per cent of what his counterpart at ICICI Bank made a year later.
None of India's nearly two dozen state-run lenders come close to private lenders in terms of CEO compensation. According to a Reserve Bank report, the average CEO monetary compensation for new private sector banks in 2012-13 was Rs 3.21 crore as compared to public sector banks' average CEO compensation of Rs 18.66 lakh. Private sector CEOs also get stock options, whose monetary value is dependent on the bank's stock price.
"It is unsustainable for such differentials to continue without a major adverse impact on the recruitment and retention of talented managers in public sector banks," said former Axis Bank CEO PJ Nayak, who headed an RBI committee to review governance of boards of banks in India.
Low salaries, especially for top management, has also been linked to weak performance of state-run lenders that dominate India's banking sector with more than 70 per cent share of loan assets, but account for only a third of profits. Bad loan ratios are on average more than double those at private sector counterparts.
PSU lenders will be able to pay attractive salaries to their CEOs if the government accepts Mr Nayak's recommendations calling for higher compensation for PSU bank chiefs.
http://profit.ndtv.com/news/corporates/article-it-pays-to-be-a-fresher-at-this-government-bank-but-not-a-ceo-754936
Editorial: Reimagining PSU banks-Financial Express 17.04.2015
At a time when the government is trying a complete makeover of PSU banks by trying to attract private sector talent for the top slots in at least 5 banks—Bank of Baroda, Canara Bank, Punjab National Bank, IDBI and Bank of India—it has a great opportunity to take this even further. As FE reported yesterday, nearly 4 lakh mid- to senior-level personnel in PSU banks will be retiring in the next four years.
None of this comes as a surprise since, way back in 2010, the Khandelwal Committee on HR issues in PSU banks had estimated that 80% of general managers, 65% of deputy general managers and 58% of assistant general managers would retire by 2015. In other words, if the selection process is right, the government can completely transform the PSU culture of banks. In any case, there is no option but to do this since, with not enough recruitment of staff through the probationary-officer route for decades, PSU banks do not have enough staff to man these posts anyway.
So far, PSU banks have not been able to attract top private sector talent for a variety of reasons, from the level of compensation to the time it takes to advance to the top. While raising salary levels, including the variable pay linked to performance goals, is critical, there are other ways to attract private talent. Around 40 applications have been received for the top jobs in 5 PSU banks because, with just so many top jobs available in the private sector, several senior private sector bank executives find it more attractive to head a mid-sized PSU—their loan books are generally much larger than those of private sector banks and imagine what it does for your CV to have turned around a bank. In the same way, mid-level private sector employees can be lured with the prospect of working in larger cities/branches and with the potential to move up a few notches in the bank’s hierarchy as well. This is a golden opportunity for PSU banks.
http://www.financialexpress.com/article/fe-columnist/editorial-reimagining-psu-banks/64043/
My Opinion on above news items is submitted below :
NDTV profit has published a news which says that SBI has come out with a advertisement in newspapers seeking applications for the post of Probationary Officers at initial pay package of Rs.8.55 lac per year. This news is false or correct or misleading may be known only by seeking information under RTI . But a bank staff who has worked for decades in any public sector bank cannot believe that any public sector banks offers a pay package of Rs.8.55 lac per year to freshers i.e. Probationary Officers.
As a matter of fact , bank staff who has completed three decades of service in bank is not drawing Rs.8.55 lac per year provided he is not given jumping promotion on the basis of flattery or due to recommendations of some VIPs. Actually advertisements always contains some * mark in small printing which warns applicants to go through various terms and conditions to be eligible for the package they offer. Here it is important to mention that average cost per employee in public sector banks was Rs.5.63 lac in the year 2010-11 as per RBI statistics. Then how one can digest the news that initial cost per officer will be Rs.8.55 lac in SBI .
Bitter truth is that 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.
However this is true that during last ten years , many banks have recruited officers directly from campus in the name of merit in higher scales and thus offered double or treble of the normal pay and even more to freshers . In olden days 75 % of staff used to be recruited in clerical cadre and after sufficient experience they used to be promoted and in this way bank could save a lot of expenses. Only 25 percent of officers used to be recruited directly from market but through All India competitive examination.
Now in the age of reformation , banks are at liberty to recruit staff directly in scale III and offer a monthly salary of Rs.60000 even though he is assigned the work of a clerk who is recruited at initial pay of hardly Rs.20000. This is such type of scam which even CBI cannot unearth and cannot detect. Because it is a matter of perception. An officer is good or bad, it depends not on his or her performance, not on his ability and capability, not on his potential to grow but on how he or she is perceived by his boss who assess him and who carry out interview for promotion to higher scale. Normally corrupt officers are first preference of top officials for cream posting and for promoting an officer to higher scale.
This bad culture of recruitment in higher scale and not promoting senior clerks and senior officers to higher scale has not only created a mismatch of seniors and juniors , not only caused dissatisfaction among existing senior staff but has also caused much loss to each bank and has increased the average pay per employee of public sector banks compared to private banks. There is large scale frustration and disappointment among officers who are serving bank devotedly for years and decades and a directly recruited officer from market is give higher pay and higher posting.
In seventies and eighties , there used to be on an average ,one officer for four to five clerks in any branch . Now that ratio has changed to one officer for one clerk . In past there used to be hardly three or four General Manages , 10 to 20 DGMs and 100 to 200 AGMS in any banks. Now this strength has gone up by ten times. This has also resulted in escalation in establishment cost of each bank. In the era of freedom to bank management, officers are promoted to the rank of AGM or DGM not because there is need of such officer , not because they are asset for growth f bank , but because they create wealth of bosses and because they are perfect Yesman. This also has resulted in increase in number of AGM and DGMs in PS banks and thus increase in cost.
But it is painful that inspite of such unbridled and unregulated overspending , management of public sector banks has miserably failed to provide best services to customers, best quality of bank assets, best employees satisfaction and best profitability to banks. It is purely because top ranked officials have failed to inculcate a work culture but undoubtedly inculcated a culture of only flattery and bribery and thus contributed in rise in bad asses only.
Unfortunately regulating officials sitting in the Ministry or RBI are silent spectators of all unethical recruitments and promotions taking place in banks. Because they are also victim and propagators of same Yesman culture which PS bank management follow in true spirit.They however become satisfied after obtaining a Certificate of Good health and a Certificate of Compliance of rules from each bank.
Here it is important to say that even private banks are not offering higher pay to all freshers . They offer higher pay packages to hardly five percent of employees and residual 95 percent of staff working in private banks are exploited to the maximum extent and they are paid hardly Rs.10000 to Rs.15000 per month even after working 12 hours a day . This is why average pay of private banks is lower or almost equal to that of public banks.
In conclusion one cay say without any doubt and without any hesitation that management of public banks have to suffer loss or they earn lesser profit primarily due to corrupt culture , corruption based HR policies and then due to political exploitation and legal bottlenecks in recovery of bad debts.
Why banks now have more officers and fewer clerks-Business Standard 17.04.2015
It is to keep labour unions away and make the employees feel important
Want to become an "officer"? Try to get a job in Axis Bank. All the 42,420 people who worked for the third-largest private sector bank in the country in 2013-14 were designated as officers. Kotak Mahindra Bank and Yes Bank are some of the other leading banks that had a similar employee profile.
In private banks, only 21 per cent of the nearly 300,000 employees fall in the category of clerks. Foreign banks, with only 6 per cent clerks among their ranks, have always preferred to hire more officers. This skew means that the entire banking system in India is now biased towards officers. An exception is ICICI Bank, the largest private bank, where nearly 55 per cent of employees were clerks in 2013-14.
Of the 1.15 million employed by the scheduled commercial banks in 2013-14, more than 600,000 were officers. However, the country's largest bank, State Bank of India (SBI), still has more clerks than officers on its rolls. Nearly half of the bank's approximately 200,000 employees are categorised as clerks, according to the latest data with the Reserve Bank of India, or RBI. But even that represents a big change.
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"In 1975 when I joined the banking system, a branch with 20 employees used to have not more than three officers, the rest being clerks," says SS Shishodia, president of All India Bank Officers' Association. "The entire banking system used to have the same officer-clerk ratio. Now the ratio is close to 1 in PSU banks."
On the face of it, the private banks' preference for officers may seem cosmetic. "It is just a question of how you designate your employee," observes a senior executive of a leading private bank who does not want to be named. "Some private banks prefer to describe sales executives and others doing similar tasks as officers, when others would put them in the category of clerks. It depends on the human resource policy of a particular bank."
But there are others familiar with the banking system who say that the bias for officers is easily explained. The change in the employee profile has been necessitated by computerisation of the banking system, which has rendered clerical functions almost redundant. "Earlier, clerks would make an entry and officers would check and authorise transactions. It was known as the maker-checker model," explains a PSU bank official. "Now that most of the banking system is computerised, there is no need to check transactions manually."
Keeping unions at bay
The preference for boosting the officer rank also arises out of the fear of active unionism. Shishodia points out, "The policy of recruiting more officers means the private banks do not want unions in their establishments." This perhaps explains why none of the large private sector banks has an employees' union. In the case of nationalised banks, higher-ranked officers are not allowed to go on strikes, say union leaders, that prerogative being reserved for clerks and officers falling in Scale 3 or below.
The public sector banks are now starting to hire fewer subordinate staff, but this has its costs. It has pushed the average cost of employee in PSU banks to a level even higher than in private banks. According to a Boston Consulting-Indian Banking Association report, the average employee cost of public sector banks has been rising steadily since 2008. In 2010, it stood at Rs 5.6 lakh, slightly higher than the average cost of employee in private banks, which was Rs 5.3 lakh. The report adds that "about 62 per cent of the costs of the public sector banks comprise employee costs, as against 37 per cent in the private sector".
The other side
A banker points out an additional benefit of hiring more officers: "It gives new employees a sense of responsibility. Once that happens, they do not insist on fixed working hours in pursuit of achieving targets." Unfortunately, this aspect has not reflected on an increased efficiency in PSU banks. RBI's "Report on Trend and Progress of Banking in India 2012-13" noted that "for public sector banks, which account for the largest share in the Indian banking sector, the average efficiency scores were above that of private sector banks over a major part of the period under consideration (2000 to 2013). However, they lagged slightly behind the scores of private sector banks after 2010."
Bankers working with nationalised banks are of the view that the twin factors of achieving operational efficiency and better labour relations may have led banks to hire more officers than clerks. "Officers are required to work 24/7. There is no provision for additional work incentive for them." However, in the case of clerks, you are required to pay overtime and conveyance allowances if you keep them at work even for 10 extra minutes. "We work on Sundays and many times on holidays, and we are not paid overtime," says an officer of a public sector bank.
While the probability of strikes by disgruntled staff may come down in PSU banks, operational efficiency is possible only after thorough restructuring of existing processes. This is what an official committee looking at human resource issues in public sector banks in 2010 had alerted the government to. Its report said, "Nearly 90 per cent of the staff in PSBs is deployed in branches and the rest in administrative offices. Over 60 per cent of the time of branch staff is spent on non-customer facing roles and less than 10 per cent of the staff is devoted to proactive sales. There is thus perpetuation of routine clerical content in branches even after the introduction of technology. In view of impending nature of new sales and service roles, such disproportionate allocation of roles on routine activities is dysfunctional to productivity enhancement and customer focus."
http://www.business-standard.com/article/finance/why-banks-now-have-more-officers-and-fewer-clerks-115041601219_1.html
My Opinion on news item published in Financial Express is reiterated below
Keeping unions at bay
The preference for boosting the officer rank also arises out of the fear of active unionism. Shishodia points out, "The policy of recruiting more officers means the private banks do not want unions in their establishments." This perhaps explains why none of the large private sector banks has an employees' union. In the case of nationalised banks, higher-ranked officers are not allowed to go on strikes, say union leaders, that prerogative being reserved for clerks and officers falling in Scale 3 or below.
The public sector banks are now starting to hire fewer subordinate staff, but this has its costs. It has pushed the average cost of employee in PSU banks to a level even higher than in private banks. According to a Boston Consulting-Indian Banking Association report, the average employee cost of public sector banks has been rising steadily since 2008. In 2010, it stood at Rs 5.6 lakh, slightly higher than the average cost of employee in private banks, which was Rs 5.3 lakh. The report adds that "about 62 per cent of the costs of the public sector banks comprise employee costs, as against 37 per cent in the private sector".
The other side
A banker points out an additional benefit of hiring more officers: "It gives new employees a sense of responsibility. Once that happens, they do not insist on fixed working hours in pursuit of achieving targets." Unfortunately, this aspect has not reflected on an increased efficiency in PSU banks. RBI's "Report on Trend and Progress of Banking in India 2012-13" noted that "for public sector banks, which account for the largest share in the Indian banking sector, the average efficiency scores were above that of private sector banks over a major part of the period under consideration (2000 to 2013). However, they lagged slightly behind the scores of private sector banks after 2010."
Bankers working with nationalised banks are of the view that the twin factors of achieving operational efficiency and better labour relations may have led banks to hire more officers than clerks. "Officers are required to work 24/7. There is no provision for additional work incentive for them." However, in the case of clerks, you are required to pay overtime and conveyance allowances if you keep them at work even for 10 extra minutes. "We work on Sundays and many times on holidays, and we are not paid overtime," says an officer of a public sector bank.
While the probability of strikes by disgruntled staff may come down in PSU banks, operational efficiency is possible only after thorough restructuring of existing processes. This is what an official committee looking at human resource issues in public sector banks in 2010 had alerted the government to. Its report said, "Nearly 90 per cent of the staff in PSBs is deployed in branches and the rest in administrative offices. Over 60 per cent of the time of branch staff is spent on non-customer facing roles and less than 10 per cent of the staff is devoted to proactive sales. There is thus perpetuation of routine clerical content in branches even after the introduction of technology. In view of impending nature of new sales and service roles, such disproportionate allocation of roles on routine activities is dysfunctional to productivity enhancement and customer focus."
http://www.business-standard.com/article/finance/why-banks-now-have-more-officers-and-fewer-clerks-115041601219_1.html
My Opinion on news item published in Financial Express is reiterated below
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 ?
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.
India has nearly 20 crore "dormant" bank accounts: World Bank
Bank account penetration in India increased from 35% to 53% between 2011 and 2014, but the country also suffers from high dormancy rates, says a World Bank report.
Translated into absolute numbers, this growth in number of bank accounts means that 175 million in India became account holders between 2011 and 2014.
According to the World Bank, the rise in number of bank accounts was to a large extent due to government's push for financial inclusion.
In August 2014 the Indian government launched Pradhan Mantri Jan Dhan Yojana scheme for comprehensive financial inclusion with the goal of opening a bank account for every household.
"By the end of January 2015 it had led to the opening of 125 million new bank accounts; as a point of comparison, a 2013 survey had found that fewer than 400 million people in the country had an account," the report said.
Under the scheme more than 97% of the accounts were opened with the public banks, but around 72% of these accounts show 'zero balances'.
The World Bank report also noted that dormancy rate in India is quite high at 43% and accounts for about 195 million of the 460 million adults with a dormant account around the world.
In sharp contrast, in high income OECD economies the dormancy rate is as low as 5%.
Moreover, only 39% of all account holders in India own a debit or ATM card, and using an account might be inconvenient and time-consuming if every transaction requires using a bank teller.
In India not only account penetration is comparatively low, at 53%, but so is the use of accounts for payments - mere 15% of adults reported using an account to make or receive payments.
In Brazil and China about 40% of adults reported using an account to make of receive payments.
Meanwhile, most of the world's unbanked are in China, India and Indonesia.
The country is home to 21% of the world's unbanked adults and about two-thirds of South Asia's. China accounts for 12% and Indonesia 6%.
According to the report, globally, from 2011 and 2014, 700 million people became account holders at banks, other financial institutions, or mobile money service providers, and the number of 'unbanked' individuals dropped 20% to 2 billion adults.
Studies show that broader access to, and participation in, the financial system can boost job creation, increase investments in education, and directly help poor people manage risk and absorb financial shocks.
My Observation:
This refers to news item published today that number of dormant or zero balance accounts is highest in India .Similarly there is news that volume of bad assets is greater in public bank than private banks.
In India , employees work under pressure and work to please boss and hence they achieve the allotted target by hook or by crook sacrificing quality at every level. When bank officers are asked to achieve the target of opening of accounts to follow guidelines framed by Government of India for Financial Inclusion, they open the account rightly or wrongly to keep bosses in happy mood and to avoid transfers to critical places and to ensure promotion .
Bankers least bother of quality of work they perform, they are bothered of pleasure of their bosses. In private banks, staff work for the growth of organisation they are employed in, whereas in public banks staff work for growth of bosses , for pleasure of bosses and to grow relation with bosses so that their future brightens .
This is why more than 50 % of accounts are either zero balance accounts or dormant accounts. Target of opening of accounts is achieved but service quality extended by banks to customers do not improve. It is easy to bring new customers by marketing but it is difficult to sustain them without extending cheap, quick , humble and best services. This is why customers open account in public bank and after some time they switch over to private banks even if service charges in private banks are normally higher than that of public banks.
It is important to mention here that minimum cost of opening and handling a bank account comes to Rs.10 per year and hence if there are twenty crore dormant or zero balance accounts in public bank, it translates into a loss of Rs.200 crore per year. Similarly 30 to 40 percent of branches are economicallu unviable and causing huge erosion in bank,s profit.
Similarly bank officers sanction loans just to achieve the credit targets allotted to them by higher authorities. They sacrifice the quality to achieve the target and to ensure quick promotion . They indulge in corrupt practices just to keep bosses in happy mood. They sanction loan or recommend for sanction of loan facilities without caring for future of such credits if the same is advised by higher bosses on phone. Bank officers hide bad assets as long as they are not transferred or retired. No punitive action is taken against erring officials as long as guilty and corrupt officers have good relation with top officials and VIPs. This is why volume of stress assets is approaching 20 to 25 percent of total assets despite all claims made by top management that there is transparent and perfect process of lending .
I therefore feel that until there is blind and improper thrust on target, no on can dream of quality in public banks. Volume of dormant accounts and stressed assets will continue to rise and corrupt officers will continue to get quicker and quicker promotion. To add fuel to fire MOF have now advised to promote scale II or III officers on merit. But only God knows what merit means in the eyes of top bankers. Government of India is contemplating to give posting of ED and CMD to officer of 15 years experience only even if it comes from private banks. On the contrary , bank officer in scale I could not dream of becoming scale II officer even after serving 10 to 15 years before 1991 and during seventies and eighties.
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