Future of Government Banks Depend of Quality of Human Resource

Futures of State Run Banks depend on their understanding of root causes of present crisis and their ability to take remedial measures. If they still say that bank is safe and future is bright they will never take corrective step. But their false ego may jeopardize the interest of investors and poor customers and also their employees:  

 Present Trend :---Bulk Deposit down, Asset Liability mismatch problems will arise, Long Term lending impossible on short term deposits  and so on .But  through Focus on Retail Deposit, Cost of Deposit will come down and Profitability will increase and finally core value of bank will go up.

 Credit Growth will be poorer: ---- Deposit growth lower, Liquidity will shrink; Credit growth will be low because focus will be more on Recovery than on Fresh credit. Recovery of Bad loans will increase and hence Quality of Asset will improve.

 Gross NPA: ---- Ratio will go up for a few coming quarters because of poor Credit growth. Banks could show less Gross NPA ratio in the past either by concealment of bad assets or due to bulk lending to big corporate which helped in reduction of Gross NPA to Gross Credit ratio. 

Now the position of these banks will turn pathetic because Ministry of Finance and RBI have advised them to refrain from indulging in mobilization of bulk deposit and sanction of short term lending. They will have to focus on real banking and discard window dressing .

 Due to various guidelines issued by Ministry of Finance and RBI in recent past , Overall quality Business will grow and the same will be visible after a few years just as bad policies of the past ten years are showing their consequences now. But after a year or two the real growth will start emerging out and real profit will precipitate and finally the real purpose of banks will be served.

 Root causes of downfall and strategy to ensure future bright:---

 Field officials are not well experienced and well trained. They will adopt defensive strategy to survive. Banks will have to remove ninety percent of Branch Managers and Regional Heads who are of poor quality. It is painful that during last four decades after nationalization of bank or during last two decades of reformation era , banks have not yet framed any policy for picking up officers to Head a Branch. This is why there are hundreds of such branches in each bank where ratio of bad asset is more than 50 percent of their total credit. There are many branches where Gross NPA is more than 10 percent.

 Officers who flatter bosses are picked for the post of Branch Head as also for promotion to higher scale whereas Officers who are really matured, skilled, experienced and talented enough to identify good customers and who have the potential  and who have grown capacity to read the credit worthiness of credit seekers are languishing in non-serious, non-critical and at less potential places and leading a life in frustration due to their non promotion and due to inefficient and ill management of their bosses .

 If banks have to improve their bottom line they have to revisit and replan their policy of promotion and posting. They have to encourage good Branch Manager and understand the family problems of officers and bank staff .They have to refrain from making policy only to please the leaders of majority trade unions of officers or bank employees. They have to learn how to punish bad officers and encourage good officers and prove their knowledge by their actions.

 Qualities of bank employees have to be judged not by their qualification or by achievement of targets or their closeness with executives but with the quality of business they mobilize.

Top Ranked Officials:----- It not enough to preach these sermons in business plan meeting only. Top executives have to exhibit by their actions that they are real lovers of good workers. They have to prove that they do what they say. They have to prove by their actions that they are real owners of the bank. They have not to be happy by red carpet welcome and costly gifts and set of flower bouquets offered by field functionaries during their visit to their locations .They have to stop awarding officers who give them grand red carpet welcome and speak all good words for visitors. They have to stop punishing officers who fail to extend red carpet welcome according to their wishes. They have to stop earning name and fame through unwarranted spending on inaugural functions in praise of and in flattery of some or the other dignitaries.

Policy of recruitment and Promotion:---- What I feel is that policy of recruitment and that of promotion and transfer was much better in seventies and to some extent in eighties i.e. before the introduction and piecemeal implementation of of Pillai Committee Report or Khandelwal Committee report. But unfortunately these policies have deteriorated a lot during last decade or two. Every year policies are changed to suit their whims and fancies. It is painful that bankers and regulators have not followed the recommendations of any committee in true spirit but followed only those lines which suited them and without any hesitation their successors deviated from the main theme of such committee reports. 

 It is astonishing that banks recruit officer directly in scale II, scale III or IV from education campus and post them as Credit Officer or Risk Officer or vigilance officer or Auditors or credit officers or branch heads. Banking is such a business which cannot be safe in the hands of those who are unable and incapable to read the character of person with whom they deal in money.

 How can a direct officer ascertain credit worthiness of a loan seeker or the inherent risk in a credit decision until he or she is aware of the intricacies of credit decisions and the credit worthiness, integrity, capacity and character of the loan seekers?

 Bank management have to learn the value of senior officers, the value of experience and the value of character of an officer .Banks have to learn how to recognize the good officers and save them from frustration. 

Top officials have to learn that whimsical promotion and arbitrary transfers kills the working spirit of the officers at least those who are sincere and devoted performer. When good officers are not respected, officers in general tend to ignore the quality and tempted to apply all easy tools to keep their bosses in good spirit mostly at the cost of their organization. 

This trend has to be reversed if state run banks desire to survive and prosper like private banks.

Political interference: ----Lastly Politicians have to stop exploitation of state run banks for political gain and indirectly help private banks in earning more and more profit and achieving more and more growth.Nationalisation of banks was done in 1969 to stop exploitation of poor by money lenders and then in 1991 absolute freedom was given to banks to get rid of exploitation by bank employees. 

But unfortunately politicians did not stop exploitation of these banks for their vested interest and hence the erosion of banks continued. Trade union leaders who were made to protect the interest of employees also started playing in the hands of officers sitting at top posts. As a result, government could neither stop exploitation by money lenders nor that by politicians or trade union leaders.

Banks were nationalised for welfare of common men but it is painful that banks has become a tool for welfare of politicians, top ranked officials and top ranked corporate houses. This trend has to be reversed in the interest of investors, customers and employees.

If you have time to read more please read the article  furnished below and published today in Economic Times (17th August 2012) link of which is given below.

17 AUG, 2012, 06.54AM IST, 

Human resource professionals have lost sight of the connect with their people

K RAMKUMAR

The last few weeks have been life defining for me. I have struggled to remain in touch with my normal life, while having taken up the job of trying to focus attention on a broken window - our employee relations. Awanish (the Maruti Suzuki HR executive) paid with his life for the follies of an entire profession and the working community.

In all the multitude of proposals and mails I saw from senior people who manage humans, I could not discover any humanness.

They missed the person, engaged with the title even in offering condolence and glibly believed that healing is rooted in skill building and fixing the law. It appears that, to many of us, the 'resource' reference to humans has assumed giant proportions.

I have in the last decade watched with horror the decadence of our thinking, from engaging and relating to people to managing human resources. We are obsessed with high-sounding concepts, processes, tool and metrics, but have lost sight of the human being.

Talk to any professional in this function, you will struggle to make sense of the jargon he speaks. Walk into their workplace and ask a 100 'people' about these 'human resource managers', you will discover the disconnect these professionals have with their people. So, to me, this resource management piece has to be substituted by people relationship focus. Even market-facing staff are called 'relationship managers'.

The argument here is not that name change will alter the central disconnect. But at least it will notify to all of us that we are essentially relationship managers and not only resource managers.

We believe in the absurdity that there is something called an 'engagement index' and by tracking it we will change the 'quality' of our relationships with people. When was the last engagement survey and index publication we did with our family and friends? Once again, do you see the mechanical metaphor?

Humans are endowed with the gift of judging the relationship quality and strength. It is contrived to reduce it to numbers and believe that a 0.5% or a 5% change in it indicates anything. You may ask me then how do we know the health of our workplace relationships? Certainly not by these indices

It is by staying connected with people. Conversing and debating with people at their workplace regularly. This is what we do with our family and friends. This, though time consuming, helps us deal with the emerging areas of strains early and not wait for this impersonal index. The relationship-mending process, when we stay connected, is like the way our tissues heal.

Intervention through medicines and surgery is when illness has gone beyond self-healing. Human body may respond to this but people at workplace respond better to ongoing self-healing, because unlike humans, a workplace illness is an epidemic due to the numbers.

To further this argument, let me place before you another evidence: our obsession with performance management. We have progressed from the absurd to the insane.

We believe that the system and process of budgeting, goal and metrics, will replace the trust and engagement-intensive process between the performer and the boss who enables it.

The argument again is not that goals and metrics are unimportant, but they cannot replace the human process of working with and showing people the way to achieve them. Here again, the clinical mindset overemphasises the impersonal aspect of Conengagement viz tools, MIS and numbers.

We try to make up for this by eulogising the term 'feedback'.

But do we realise the way this sits in our minds is also in 'mechanical system metaphor'. That it will be periodic, goal-focused, result-centric, direct and action-focused.

Brilliant! We could have had this statement for any mechanical or electrical system. But where is the human here? Where is the place for joining in and assisting? Where is the place for handling emotions - fear of failure, anxiety of not knowing the how, disappointment of repeated efforts not yielding results, angst that a peer is speeding along and I am stuck, the shame induced by target-review meetings, the tight stomach at the end of a day of things going wrong and above all, the burden of having to carry the pressure of the bosses' performance.

Add to all this the 'resource' centered concept of 'productivity' and 'pay for performance', the damage is complete. Once again, no one is complaining about having to be productive and delivering performance, it is the approach to it which is being questioned.

Finally, it is only where care is, discipline and toughness can be. One without the other creates excesses and abuses. Unfortunately, our definition for care is also mechanical. Automated calendar-generated birthday and anniversary wishes, concierge-delivered flowers, company-budgetfunded mementos and rewards. There is nothing personal about it.

An IIT admission, a 10th class result or daughter's wedding are all cherished memories for all of us but how do we show our care for people who matter to us? How about sending an sms to the father or mother. Isn't this caring?

We fail to visit the colleague who is unwell but simply send a 'get-well-soon' card or email. We do not lend a shoulder by being with the family which has suffered the bereavement by being with them. We send the CEOs letter and a compensation cheque, as governments do after a rail accident. Who will stay with the family and help them heal and move on?

You can 'fix' anything but not the personal touch. Care is not in words, it is in deeds. It is deeds that humanises care and lends it a personal touch.

In conclusion, if we fail to discover the people at our workplaces and dignify their humanness, we are in for a strife-filled period of resource management, irrespective of what the engagement indices will tell us and the cover pages of 'Best employers study' may brag.

(The author is the Executive Director at ICICI Bank)

http://economictimes.indiatimes.com/news/news-by-company/corporate-trends/human-resource-professionals-have-lost-sight-of-the-connect-with-their-people/articleshow/15525111.cms

  http://dkjain497091112006.blogspot.in/2012/08/restructured-loan-growth-is-more-than.html

SATURDAY, AUGUST 11, 2012

Lion's Share of Fresh Loans Goes to Rich AND BIG Corporate Houses

The main purpose of nationalisation of banks by late Indira Gandhi was to help poor and middle class who were exploited by local moneylenders.For last four  decades and more  Ministry of Finance and Reserve bank of India have been harping  on lending to Priority Sector  and impressing  upon bankers to help weaker section.More and more thrust is always given  on lending to Farm sector to boost agricultural production and in turn help common men who are suffering from abnormal price rise due to scarcity of food items in the market and due to resultant heavy black marketing of products and exorbitant higher prices.

http://dkjain4970901092007.blogspot.in/2012/08/lions-share-of-fresh-loans-goes-to-rich.html