So finally Vijay Mallya has fled the country by making banks pauper by more than Rs. 9,000 Crores. It is a totally different matter that the other companies owned by the Vijay Mallya-backed UB group including Mangalore Chemicals and Fertilizers Limited has posted a profit of more than Rs. 300 Crores in the quarter ending December 2015 (a fact that our paid media presstitutes will never highlight and there are no loophole-free laws to attach the profits of a profit-making sister concern to that of a loss-making concern). More on the "untold" aspects of the Vijay Mallya story afterwards.
Today we are going to discuss a much deeper rot that has set into the banking system, which threatens not only the base of the banking but also that of the entire economy because a major portion of the common man's hard-earned money is lying with these banks and a loss of these banks means the loss of our money to be precise. In 2015, the RBI Deputy Governor had made a statement that the high NPAs are due to the poor credit appraisal skills of the bankers. We had published an article regarding the same.
We also agree, in part, to the statement made by the Dy. Governor, although we would like to analyze the problem to its root rather than mere name calling. So, what is the reason behind the poor credit appraisal skills of the bankers? Simply put it, the human resource quality of our banks have deteriorated to an all-time low due to various flawed HR policies adopted by our Bharatiya banks.
Primary Reason: - Blatantly unscientific promotion policies of the banks wherein a person who joins as a peon or a sweeper can rise up to become a clerk or even a manager without much resistance provided he can read or write properly. And for that matter, a person joining as a mere clerk can get promoted to the managerial level in as low as 3 years.
Why we think it is unscientific? Because for the simple reason that such liberal and lenient policies are not followed in any other departments other than the banking industry. For example, a person joining as a peon or a class III or even class II official cannot dream of jumping into class I unless he is having at least 15 to 20 years of quality experience. Further the ratio of such promotions is kept at a bare minimum of 10% (at the maximum) and the government relies primarily on the UPSC civil services exam or the SSC recruitment tests for taking quality talent as direct recruits from the open stream rather than playing "promotion-promotion" within the population of class III/IV employees. But the exact opposite goes on in the banking sector. Nowadays it has become very much easier for any person to join the bank as a clerk since the vacancies are too many, thanks again to the flawed HR policies wherein they never calculated the optimal HR requirement for more than 30 years (the banks did not do any meaningful recruitment starting from the 1970s and woke up only in the late 2010s to find that a majority of its work force will retire down by the end of 2020). In the huddle and hurry of things, the banking boards tweaked their promotion policies in order to promote more clerical staff to the officer cadre in order to augment the supervisory capacity of the bank. They thought it easier to promote the existing clerical staff (since they believed that the attrition level will be lesser in case of clerical promotees) rather than taking fresh "probationer" talent from the open market. Although the recruitment of probationers was done but the same was much less as compared to the requirement and the banks depended more on their promotions rather than fresh recruitment.
So what is wrong with it?? To answer this question, you have to first question the government policy of recruiting fresh Civil Service Officers in the IAS, IPS, and other All India Services wherein the government recruits hardly 30-year-olds into senior government positions wherein they will be taking policy decisions and supervise their class II/III juniors who will have more experience than the age of the class I probationer. The reason for conducting a highly competitive exam and recruiting from a much bigger pool is that you get the best of the best talent at the national level. The problem with promoting from clerical or sub-staff category is that the "competing talent" is itself not of the optimum quality. For example, most of the clerical staff have joined services by competing for vacancies at the "state level" rather than national level and even worse goes for the class IV or the sub-staff categories which are recruited directly through the employment exchanges without much of a written exam. Now when these people complete say 3 to 4 years of experience, the banks make them eligible for managerial position. Hence, the competing pool for the managerial position consists of sub-optimal talent recruited at the state level rather than the best talent recruited after conducting a national level competitive exam of a very high difficulty level. And furthermore, if the person who joined as clerk was so talented to become a manager, why didn't s/he clear the Probationary Officers exam directly and joined as a PO?? We hope you got our point.
Now the relation with this policy to the NPAs in the banking sector is that when a person with a talent level lesser than the person who is trying to cheat the bank by forging documents or showing inflated figures in order to avail higher credit than s/he can repay, can this "promotee" officer be in a fit state of mind to analyze these tricks and tactics and save our public money from going into the wrong hands??? Are the present lot of new bankers competent enough to protect our money?? That's the big question.
Of course, another problem is also there wherein the banks are blatantly promoting the sub-staff into clerks and clerks into officers thereby creating huge gaps in the multitasking work like filing of documents, dispatching mails, cleaning of desks/cupboards, etc. which will not be done by the "newly promoted" sub-staff; and which in turn lead to mismanagement of resources as well as time. No wonder we are seeing branch managers in various banks writing dispatch books themselves and many a times going to dispatch the letters also themselves? He he he...what a manager....Are you listening PM and FM Sir??
Today we are going to discuss a much deeper rot that has set into the banking system, which threatens not only the base of the banking but also that of the entire economy because a major portion of the common man's hard-earned money is lying with these banks and a loss of these banks means the loss of our money to be precise. In 2015, the RBI Deputy Governor had made a statement that the high NPAs are due to the poor credit appraisal skills of the bankers. We had published an article regarding the same.
We also agree, in part, to the statement made by the Dy. Governor, although we would like to analyze the problem to its root rather than mere name calling. So, what is the reason behind the poor credit appraisal skills of the bankers? Simply put it, the human resource quality of our banks have deteriorated to an all-time low due to various flawed HR policies adopted by our Bharatiya banks.
Primary Reason: - Blatantly unscientific promotion policies of the banks wherein a person who joins as a peon or a sweeper can rise up to become a clerk or even a manager without much resistance provided he can read or write properly. And for that matter, a person joining as a mere clerk can get promoted to the managerial level in as low as 3 years.
Why we think it is unscientific? Because for the simple reason that such liberal and lenient policies are not followed in any other departments other than the banking industry. For example, a person joining as a peon or a class III or even class II official cannot dream of jumping into class I unless he is having at least 15 to 20 years of quality experience. Further the ratio of such promotions is kept at a bare minimum of 10% (at the maximum) and the government relies primarily on the UPSC civil services exam or the SSC recruitment tests for taking quality talent as direct recruits from the open stream rather than playing "promotion-promotion" within the population of class III/IV employees. But the exact opposite goes on in the banking sector. Nowadays it has become very much easier for any person to join the bank as a clerk since the vacancies are too many, thanks again to the flawed HR policies wherein they never calculated the optimal HR requirement for more than 30 years (the banks did not do any meaningful recruitment starting from the 1970s and woke up only in the late 2010s to find that a majority of its work force will retire down by the end of 2020). In the huddle and hurry of things, the banking boards tweaked their promotion policies in order to promote more clerical staff to the officer cadre in order to augment the supervisory capacity of the bank. They thought it easier to promote the existing clerical staff (since they believed that the attrition level will be lesser in case of clerical promotees) rather than taking fresh "probationer" talent from the open market. Although the recruitment of probationers was done but the same was much less as compared to the requirement and the banks depended more on their promotions rather than fresh recruitment.
So what is wrong with it?? To answer this question, you have to first question the government policy of recruiting fresh Civil Service Officers in the IAS, IPS, and other All India Services wherein the government recruits hardly 30-year-olds into senior government positions wherein they will be taking policy decisions and supervise their class II/III juniors who will have more experience than the age of the class I probationer. The reason for conducting a highly competitive exam and recruiting from a much bigger pool is that you get the best of the best talent at the national level. The problem with promoting from clerical or sub-staff category is that the "competing talent" is itself not of the optimum quality. For example, most of the clerical staff have joined services by competing for vacancies at the "state level" rather than national level and even worse goes for the class IV or the sub-staff categories which are recruited directly through the employment exchanges without much of a written exam. Now when these people complete say 3 to 4 years of experience, the banks make them eligible for managerial position. Hence, the competing pool for the managerial position consists of sub-optimal talent recruited at the state level rather than the best talent recruited after conducting a national level competitive exam of a very high difficulty level. And furthermore, if the person who joined as clerk was so talented to become a manager, why didn't s/he clear the Probationary Officers exam directly and joined as a PO?? We hope you got our point.
Now the relation with this policy to the NPAs in the banking sector is that when a person with a talent level lesser than the person who is trying to cheat the bank by forging documents or showing inflated figures in order to avail higher credit than s/he can repay, can this "promotee" officer be in a fit state of mind to analyze these tricks and tactics and save our public money from going into the wrong hands??? Are the present lot of new bankers competent enough to protect our money?? That's the big question.
Of course, another problem is also there wherein the banks are blatantly promoting the sub-staff into clerks and clerks into officers thereby creating huge gaps in the multitasking work like filing of documents, dispatching mails, cleaning of desks/cupboards, etc. which will not be done by the "newly promoted" sub-staff; and which in turn lead to mismanagement of resources as well as time. No wonder we are seeing branch managers in various banks writing dispatch books themselves and many a times going to dispatch the letters also themselves? He he he...what a manager....Are you listening PM and FM Sir??
its not because of the promotion policies but coz of government policies.If you take a closer look while on recovery the farmer says wait for some package will we be getting some relief in the budget.In case of "x" government it was openly advertise that we got 100% relief from x government and so on.Even the recovery laws are not with the banks thats why now a days no one fears bank.And yes the flaw with the bank is that there is no uniformity while appraising Loans I have seen it differing from branch to branch of the same bank.Moreover in public sector bank you cannot be specialized every three years you do a different job so its but obvious that you can never have mastery in any department in a span of three years...Anyways thank you for raising the topic...
ReplyDeleteWhen some of the banks have as many as 40% of branches as single officer branches, what else is expected. Mindless expansion by the banks will not yield any other benefit apart from becoming rotten
ReplyDeleteWhen some of the banks have as many as 40% of branches as single officer branches, what else is expected. Mindless expansion by the banks will not yield any other benefit apart from becoming rotten
ReplyDelete