Thursday, January 26, 2012

Khandelwal Committee Report for Bankers

http://finmin.nic.in/the_ministry/dept_fin_services/banking/kahndelwal_committee_report.pdf



Performance linked wage structure or incentive linked launch of products in private banks may be beneficial and may  prove moral booster for bank employees but in public sector banks where top ranked official has no inherent love for their organization and no desire for real growth of bank but where top ranked officers are mostly interested in growth of personal wealth and power ,there is all possibilities that the scheme of incentive or performance linked wage structure may also be misused by corrupt officials and eventually such policies may prove counterproductive and detrimental to health of bank.

As such in government sector, all policies should be framed as far as possible transparent and crystal clear and any policy related with staff should at least give no scope for discretion.

It is bitter but undeniable truth that all types of discretional powers in PSBs or in government departments prove harmful in the long run because the powerful person more often than not misuse the powers vested in them. In government sector 10 percent of employees are honest whereas in private sector 10 percent employees are corrupt. Employees in private sector invariably think for employer whereas in government sector staff thinks for self enrichment. Discretion is private sector is used to promote productive culture and for creation of wealth for promoter whereas in public sector discretion is used for self interest, self ego and creation of wealth for self.

In government offices even pilot officers are recruited on fake certificates, fake medical degrees are awarded, questions of IAS and IPS officer’s examination are leaked, where members of interview panels are set by bribe and gifts, promotions and transfers take place on the value of bribe, candidate for state assembly and Parliament elections are sold by party high command, where questions are asked in Parliament in lieu of money, where even MPs and MLAs are bribed to gain majority, laws are made to give benefit to some corporate who bribe law making agency and so on…….  In brief bribe can make impossible to become possible .
“Sabse Bara Rupaiya” is the mantra for all success in government sector.

In bank, nothing is as such measurable by a uniform and judicious yardstick. Each branch has different environment and different business profile to be handled by completely different set of employees. Inadequate staff and sometimes incapable and unwilled staff jeopardize the growth of business and force customers to leave bank.

Controlling offices may give one Branch good, willed, skilled and talented staff and to another branch militant, unskilled and unwilled staff. Some branches are suffering from techno deficiencies or workload of unproductive businesses like pension payment, MANREGA payment, old age pension, salary payment to employees of different departments. Some branches have a lot of high profile and rich traders and some are blessed with several government offices and some are cursed with useless works.

Some branches have to devote most of their time in dealing with misdeed of the past, recovering bad loans disbursed in past by corrupt officials, wasting time in oral quarrel with local militants and some branches are constrained to spend most of their time to move one court to other and one Thana or police station to other to mitigate the loss caused by fraud committed by some of his colleagues in the past. ,

This is why some branches always achieve the target and some other branches more often than not fail .Some branches have inherited artificially inflated deposit and advance which year after year fall and due to which current officials have to face the music of big bosses. Some branches get huge deposit from a certain department say one hundred crore and based on which higher target is set at higher but unachievable level for next year. But when the same department starts withdrawing money to spend as per scheme, the  terminal deposit of the same branch start coming down inspite of addition of many retail small amount deposits.

Similarly if one branch lend ten crore to a few available big industries in a particular year and then do not get opportunity to add new high value advances which results in non-achievement of target. There are some areas which are naxal inflicted and some branches are situated in almost forest area where opportunity to grow business is dismal and negligible.

In the same way bank has to depend for non banking products like life insurance, non -life insurance, opening of demat accounts, issue of credit card etc on the existing customers of the branch. When the business does not grow on former front it is but natural the later will also be adversely affected.

Moreover every area and every branch has a growth story for few years, stagnation for another few years and then downfall for another few years. This is the natural way of journey of business. Even great economist and great planner cannot dream of uniform growth for all the years to come. Even Finance minister fail to achieve this targeted growth, CMD and ED fail to achieve the targeted growth and government as a whole fail to execute the plan as formulated and as targeted for execution.

In such way any incentive scheme for any type of product will give comfort to some guys but will produce more discomfort for more number of guys. Winner in most of the cases get the incentive by dint of luck and only in some cases real effort of the individual produces real gain and which really deserve to be awarded. In my view product wise incentive prevalent in the bank has failed to produce desired result. Some guys mostly by luck get the incentive and some other miss the bus by luck. There are only rare examples of individuals who have consistently performed well all the year, at all the branches and under all the circumstances, There are very few who perform even when there is earthquake and there is flood or complete recession. There are exceptionally few individuals who are not affected by global recession, bad weather, natural calamities and un-natural events.

Therefore bank should assess the performance based on potential of business in the area , infrastructure available in the branch, environment, past deed of the branch etc and then a team of five to seven senior officers should judge whether the incentive should be given to any one or not. There may not be any fixed criteria for awarding incentive for any product. Or any model of growth in business defined by any team of officers. It is pity that those who talk of incentive to grow the business are miser in even telling a few words of appreciation when an individual performs well , or recover money from bad borrowers or do something unique in the area where he or she is posted.

It is better to give all staff motivating gift from time to time and try to keep manpower happy all the time , The more staff are happy the more will be their output and the more bank will grow. Honesty and hard labour must be awarded and on the contrary, staff who are dishonest and whose track record is not praise worthy must be punished without any biased attitude.

 Team of top ranked officers should by dint of their action should demonstrate that they favour good work and they do not hesitate to penalize the bad performers or non performers. Top executives should exhibit by their actions that they do not believe in flattery and bribery but they only like work and like work only. Their good intention should be reflected in promotions and transfers and annual appraisals of the officer without any biased towards caste, region, religion and closeness with friend circle. If they are unable to ensure their honesty and integrity in promotion , transfers and treatments they should adopt totally transparent seniority based decisions instead of misusing the word ‘Merit”, ‘Merit Channel’ or ‘Fast Chennel’.

Unfortunately the reverse is the tradition prevalent in all offices and in all departments and due to indifferent, flattery  and bribery based approach of top officials , work culture down the level has faced unprecedented erosion during last one decade in public sector banks and the consequence is that health of the bank is moving from bad to worse. Even promotion policy and transfer policy is misused by top ranked officers to carry out whimsical rejection ad arbitrary isolation of good officers from mainstream and deprived of their right of timely and due elevation and good posting in their career.

In no case the bank should adopt the recommendation of Khandelwal Committee on making wage structure incentive oriented linked with performance

1 comment:

Nagesh said...

excellently portrayed the situation in PSB s