REPORT OF THE COMMITTEE
ON HR ISSUES OF
PUBLIC SECTOR BANKS
June, 2010CONTENTS
Acknowledgements
Summary
Chapter 1 CONSTITUTION OF THE COMMITTEE 1
1.1. Constitution of the Committee
1.2. Terms of Reference
1.3. Methodology
Chapter 2 CONTEXT AND ISSUES 3
2.1. Context
2.2. Challenges
2.3. Issues
Chapter 3 CURRENT STATUS OF HR IN PSBs 7
3.1. Current Status of HR in PSBs
3.2. Key HR Challenges before PSBs
Chapter 4 MANPOWER AND RECRUITMENT PLANNING 13
4.1. Manpower Planning
4.2. Imperatives for Manpower Planning
4.2.1. Staff Costs and Technology Costs
4.2.2. Outsourcing
4.2.3. Organisation Structure
4.2.4.  Branch Transformation
   post-Core Banking
4.2.5. Business Process Re-Engineering
   and Change Management
4.2.6. Requirement of Clerical Staff
REPORT OF THE COMMITTEE ON HR ISSUES OF PBs iiiiv REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
4.2.7. Need for Redesignation
4.2.8. Requirement of Sub-Staff
4.3. Recruitment
Chapter 5 TRAINING AND SKILL DEVELOPMENT OF STAFF 27
5.1. Training of Staff
5.2. Induction Training
5.3. Skill Gaps
5.4. Alternate Training Methodology – e-learning
5.5. Continuing Education
Chapter 6 CAREER PLANNING 35
6.1.  Promotion
6.2. Career Planning
6.3. Specialization
6.4. Diversity Management
6.4.1. Women Employees
6.4.2. Employees belonging to SC / ST Category
Chapter 7 PERFORMANCE MANAGEMENT 45
7.1. Performance Management System
7.2. 360º Feedback
Chapter 8 REWARD MANAGEMENT 49
8.1. Reward Management
8.2. Statement of Intent for CMDs and EDs
Chapter 9 SUCCESSION PLANNING AND
LEADERSHIP DEVELOPMENT 55
9.1. Succession Planning
9.2. Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs v
9.3. Leadership Pipeline for the Top
9.4. Assessment and Development Centre
9.5. Bankers’ Leadership Development Institute
9.6. Appointment of CMDs and EDs
Chapter 10 EMPLOYEE ENGAGEMENT AND MOTIVATION 67
10.1. Employee Engagement
10.2. Motivational Strategy
Chapter 11 PROFESSIONALISATION OF HR 71
11.1. Professionalisation of HR
11.2. Automation of HR Administration
11.3. HRD Audit
11.4. Role of Indian Banks’ Association
11.5. Role of Government
Chapter 12 WAGES, SERVICE CONDITIONS AND WELFARE 81
12.1. Current Institutional Mechanism
12.2. Introduction of Bank Level Wage Negotiation
12.3. Staff Welfare
Chapter 13  CORPORATE GOVERNANCE 89
13.1. Restructuring of the Board
Chapter 14 “NAVRATNA” STATUS TO SOME PSBs 93
14.1. ‘Navratna’ Status to some PSBs
14.2. ‘Maharatna’ Status to State Bank of India
Chapter 15 CREATING RISK CULTURE 97
Chapter 16 INDUSTRIAL RELATIONS 101
Tables and Annexures   105REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs vii
Acknowledgments
As Chairperson of the Committee, I would like to take the opportunity of
expressing my personal appreciation to each and every member of the
Committee who brought to its deliberation his experience and expertise.
The Committee is greatly benefited from the discussion it held with Shri R
Gopalan, Secretary (Financial Services) and other officials of the Ministry.
The Committee would also place on record the insightful discussions it had
with Shri G C Chaturvedi, Former Additional Secretary (Financial Services)
which set the stage for Committee’s work.
The Committee also appreciates the excellent cooperation extended by Shri
K V Eapen Joint Secretary and Shri Samir Sinha of Ministry of Finance,
Government of India.
The Committee is also thankful to CMDs of Public Sector Banks for their
valuable time and useful discussions.
The Committee would like to acknowledge and place on record its thanks to
Dr. K Ramakrishnan, Chief Executive, Indian Banks’ Association and its
officials Shri V Ramchandran, Senior Vice-President and Shri K Ganesan,
Vice-President, for providing us the required infrastructural facilities and back
up support. The Committee would also like to thank Union Bank of India and
its Staff Training Centre, Powai, Mumbai, in particular, for providing us the
office infrastructure.
The Committee places on record its appreciation for the inputs provided by
various Organisations, Institutions and individuals, during the course of the
Committee’s work.
The Committee would further like to thank Bank of Baroda, Union Bank of
India and Indian Banks’ Association for making the services of their officials
available during the course of Committee’s work.
The Committee would also like to place on record its appreciation for the
professional support and services rendered by Shri V G Subramanian, former
General Manager, Bank of Baroda, Shri C V Chandrashekhar, Deputy General
Manager (HRM), Bank of Baroda, Shri Chetan Jajoria, Senior Manager, Union
Bank of India and Ms. Swati Datta, Manager, Indian Banks’ Association.
A K Khandelwal
Chairperson
Committee on HR Issues of PSBs
Place : Mumbai
Date : June 24, 2010REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs ix
Summary
In the interconnected world of today, forces of competition, consolidation
and convergence are exerting continual pressures on organizations and
individuals alike to deliver best value. Today, the confluence of market forces
and technology has made business highly competitive. Integration of global
markets, thinning profit margins and fast changing consumer preferences
are forcing organizations to redefine their businesses and adopt different
strategies. These trends have a more dominant impact on service industry
like banking where money market dynamics further compound the nature
of competition.
Many progressive corporations around the world have begun to internalize
this new reality and are reorchestrating the role of HR, in order to get best
value out of their intellectual capital. In India too, HR function has moved
ahead in the recent years to don the new transformational role particularly
in service sectors like IT, financial services, travel and tourism, entertainment.
Some PSBs in India are legitimately aspiring to become world-class in their
quality of products and service delivery. For them to emerge as globally
competitive financial entities, they have to deliver greater value to the
customer at lower costs and have to continually innovate and achieve global
benchmarks. To gain competitive advantage, knowledge and skills in their
people would have to be leveraged by them.
Public Sector Banks, accounting for well over 70 per cent of the assets of
the Indian banking system, have been contributing significantly over the
years to the country’s economic development and in particular, to rural and
agricultural development, small scale industries and small businesses,
besides to large and medium industries and export sector. With economy
growing at around 8% and expected to touch 10%, Indian banking sector is
poised to witness threefold increase in the business mix from the present
about Rs.70,00,000 crores (as at March 2009), in the next decade. Going
forward, PSBs are expected to play a major role in the financing of
infrastructure and new economy sectors, besides traditional sectors. Another x REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
emerging imperative for PSBs is to aggressively participate in financial
inclusion.
Post liberalization, PSBs have caught up with retail revolution and many
other customer-centric innovations. In the matter of technology, almost all
PSBs have networked their branches, rolled out core banking, set up a vast
network of ATMs and enlarged the basket of offerings to the customer. They
have also adjusted to the new prudential norms, improved their financials
as also productivity and efficiency. Many PSBs have changed their business
models and are repositioning their key branches as sales and service outlets.
Integration of PSBs with other major segments of finance, notably the security
markets and international markets, has been a hallmark. PSBs have also
grown in terms of market capitalization even during the times of global
meltdown.
With the advantage of effective regulatory systems, Indian banks today have
the opportunity to improve their capability to become global leaders on their
own strengths. In order to acquire global size, scale and pursue global
banking, the system is likely to witness internal consolidation. All this will
call for leadership of a very high order for managing large system besides
higher level of skills and risk taking initiatives.
In spite of very many positives, PSBs today are seriously handicapped vis-
à-vis their competitors in the market place, on account of huge human capital
deficit. Their employee compensation package, skill sets, skewed age profile,
restrictive deployment, performance management system are the major
issues placing PSBs somewhat at a disadvantage. Some of the major HR
challenges before PSBs include building capabilities for the future; improving
productivity and performance culture; building talent management practices;
building succession for key critical and leadership positions; developing
ownership, accountability, professionalization and institutional mechanism
for sustained human capital management; transforming HR function from
legacy driven HR to developmental HR, etc.
The Committee feels that HR has indeed become a new risk – possibly the
biggest risk in the system, considering the new challenges and opportunities
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xi
of new age banking. The Committee is more than convinced that human
resource transformation has now become most critical for PSBs and the
present HR dispensation needs a thorough overhaul and a 360º change.
Without proactive measures in the realm of HR and significantly changing
the methodology and content of various HR systems, PSBs are likely to lose
the present stature and be a drag on the efficiency of the financial system.
This report seeks to address the foregoing issues and recommend measures
for comprehensive reforms in HR such that India’s PSBs can emerge as
globally competitive financial entities, leveraging their human capital.
Recommendations:
Manpower and Recruitment Planning (Chapter 4)
Effective manpower planning (MPP) in any organisation sets the stage for
good human resource system. The Committee is rather concerned that such
a vital area like ‘Resources Forecasting’ and ‘Manpower Planning’ has not
received wholesome and quality attention. The exercise carried out today in
many PSBs also does not reckon skill and competency requirements. In the
Committee’s understanding, large scale CBS implementation across branches
has made no significant difference in the realignment of manpower at the
branches in PSBs. Lack of proper manpower planning has also resulted in
wide variance in staff ratios across PSBs. The Committee is of the considered
view that MPP exercise by each PSB should be a rigorous exercise factoring
all possible contingencies in HR area – both quantitative and qualitative.
Further, the banks will have to carefully plan their recruitment in terms of
entry qualification, methodology of recruitment, etc.
Clerical staff today constitute single largest cadre in the total workforce (42%)
of PSBs. In the post-CBS environment in banks, the border line between the
job of an officer and a clerk is rapidly disappearing. Having regard to this
major change, continued requirement of clerical jobs is an issue that needs
closer examination and in this context, banks need to seriously deliberate
on the future requirement of clerical staff. Future clerical strength cannot
be determined on the basis of head to head replacement.
Summaryxii REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
The Committee, therefore, recommends that:
l MPP exercise to be carried out by the PSBs to be a rigorous exercise and
to factor all possible contingencies in HR area – both quantitative and
qualitative, considering the impact of technology, staff cost and expansion
programmes, etc. Each bank’s MPP to have both short term and long
term projections.
l Each PSB to carry out detailed and structured manpower planning exercise
every year for a time spectrum of 5 years, linking it with strategic and
business plans. Banks to take steps to institutionalize manpower planning,
with the help of outside expert advice, if required, and subject it to review
every year by the proposed Steering Committee of the Board on HR
l Each PSB to lay a roadmap for reaching officer-clerk ratio of 1:0.50 for
metro and urban branches and 1:0.75 for rural and semi-urban branches
in the next 3 years
l The industry body IBA to undertake some benchmarking studies with
the help of outside experts, if necessary and come out with some models
for reference
l Boards of the banks to monitor staff costs and endeavour to achieve staff
cost ratio of 50% in the next 5 years
l Banks to outsource more and more non-core activities in a time bound
manner and its impact to be factored in MPP
l Banks to draw a time frame for implementing BPR and Change Management
and Boards to monitor its progress every 6 months
l Clerical and sub staff to be redesignated
l The standard of recruitment including methodology and content of testing
has to be raised. For this purpose, a Committee of experts including
bankers can design the content of testing, methodology for conducting
such test and also review the existing arrangements.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xiii
l Testing of computer skills to be mandatory for both officer and clerical
cadres.
l Diploma in Banking by IIBF to be a mandatory qualification for officer
recruitment. Such diplomas by NIBM or any recognized universities may
also be recognized by IBA.
• Recruitment of direct officers to be 50% of total officer vacancies.
• Minimum qualification for clerical recruitment to be graduation and for
sub-staff, X standard pass.
• Minimum qualification for promotion from sub-staff to clerical cadre to
be graduation.
• Fresh recruitment of clerks to be restricted to rural and semi-urban
branches. Further, rural / Semi-urabn service for a minimum period of
years shoud be made mandatory for the new clerks joining the PSBs.
• Banks to endeavour to incentivise mobility of clerical staff to rural areas
through special house rent, fast track promotion, etc.
• Lateral recruitment on term appointment (say, 5 years) to be made largely
for specialized positions.
Training and Skill Development of Staff (Chapter 5)
Modern banking is getting increasingly complex and skill intensive, in the
face of competition. The Committee recognizes that PSBs still have a large
pool of talented bankers with requisite traditional banking skills. While many
of these traditional skills will continue to be relevant, they would have to be
reinforced at different operating levels from time to time. There is also an
evolving need for acquiring and honing new skills and developing new
competencies.
With Indian banking shifting gear from vanilla banking to multi-specialist
banking, in tune with the trends of differentiation and specialization, the
Summaryxiv REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Committee feels that the gaps in many of the skills would need focused
attention on the part of bank managements. Developing talent pool for
different areas of skills will thus be the main agenda for the training systems
of banks. Besides training and skill development, banks would now have to
pay attention to continuing education of their employees, in the context of
new developments.
The Committee, therefore, recommends that:
l Training systems of banks to focus on creation of talent pool of officers
in critical areas like Treasury, Corporate Credit, International Banking,
Retail Banking, Social Banking, Technology, Risk Management, Marketing,
Infrastructure Financing, Financial Inclusion, etc. Internal certification
of training programmes to be introduced to build talent pool.
l Training colleges of individual banks to be upgraded as centres of
excellence with mandate to carry out in-house research, provide learning
support to the management and be responsible for continuing education
efforts.
l Training strategy to focus on staff working in rural areas and women
employees and priority to be accorded for regular in-house training to
rural staff.
l E-learning and other alternate delivery channels for learning to be
extensively used for training and learning.
l Linkage between training and operations to be improved by proper training
need analysis and evaluation of effectiveness of training. Focus to be to
understand world class practices and changing requirements of customers.
l Functional heads / business leaders to be accountable for training and
development of cadre of officers in their area.
l Internal processes in training such as faculty selection process, training
of faculty, introduction of core faculty in some key areas of management,
top management support, etc. to be improved.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xv
l Training of newly recruited officers to be strengthened and re-vitalized.
Two years’ training to be made mandatory for these officers to provide
systematic exposure to all aspects of banking. During training period,
they should not be posted in regular jobs. Mentoring of newly recruited
officers can be entrusted to recently retired executives, say in the last 5
years.
l Role related training to be made compulsory for all executives in Scale
IV and above. Objective is to develop leadership, decision making, risk
management skills, etc. Leadership training to precede posting to senior
levels, after the promotion decision is taken. This is meant for
understanding the role, developing the skills and competencies required
to perform the role.
l All banks to have Governing Board on training / Advisory Committee on
training (many banks already have) and they should invariably meet once
in three months to address the issues of skill building and engagement
of staff.
l External and overseas training to be aligned to a clearly laid down talent
management strategy.
l Every bank to develop a training policy. Policy to include mechanisms for
ensuring that training inputs are properly used.
Career Planning (Chapter 6)
The Committee feels that one of the weakest links in the HR policies of PSBs
today is career planning. This is attributed to lack of focused attention to
groom people as part of a planned strategy to build careers. That promotion
is the ‘be all and end all’ of the development process is the general notion
that seems to prevail.
The Committee is of the view that there is need to prioritise systematic career
planning for officers to build talent pipeline. While doing so, issues of
specialization and diversity management should also be considered.
Summaryxvi REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
The Committee, therefore, recommends that:
l Systematic job rotation in the formative stages of an officer to be ensured
for providing rounded exposure in operational areas of banking. Career
plan for officers to aim at providing functional expertise in one or two
areas before he enters the executive cadre.
l The present mandatory rural / Semi-urban service for a minimum period
of three years for generalist officers to be continued.
l PSBs to bring about rigour in promotion process in all cadre.
l Eligibility criteria in the matter of minimum length of service in a particular
Scale to be suitably reduced for fast track promotions to talented
employees – as a motivational and retention tool besides for creating
leadership pipeline.
l Promotions in executive cadre to be preceded by thorough testing of
competencies and potential measurement through Assessment Centre for
holding the position to which the employee is being promoted. External
experts to be associated in all promotions in executive cadre.
l HR to develop mechanisms for identifying star performers and to track
their performance for fast track growth.
l Each PSB to come out with a HRD plan for development of women and
SC/ ST employees. Special HRD efforts to be put in place for developing
these groups in key skills of banking.
l Sabbatical leave of 2 years to be allowed at request to women employees
to meet their special problems during their career.
Performance Management (Chapter 7)
The Committee feels that the current PMS in PSBs is an area of serious
concern. With the exception of few, most banks are using the standard
appraisal format circulated by the Government. Even the appraisal format
used for senior executives including CMD and ED is trait based and is totally
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xvii
out of tune with the strategic role these executives are expected to perform.
The appraisal system is routinely administered and generally not used for
developmental interventions. Further, much of the appraisals and ratings
have upward bias, with 80 - 90% of the appraisees getting ‘excellent’ rating.
This does not lend to distinguishing performers from non-performers. This
in turn has dampening effect on performers. Further, it has in many cases
cascading effect leading to mediocrity.
The Committee suggests executive attention, monitoring and accountability
for PMS and recommends that:
• PSBs to introduce and implement PMS for promoting high performance
culture.
• All categories of staff including workmen staff to be covered by PMS. PMS
to be a credible, transparent and interactive system. Online PMS to be
introduced.
• Discipline of PMS to be enforced by the management. Appraising
authorities to be accountable for proper and timely assessment.
• PMS to include some form of performance planning. All performance plans
to include statement of key activities under each KPA / KRA and linkage
to Branch/ Regional/ Functional/ Business Unit/ Organisational goals.
• PSBs to introduce 360º feedback as a leadership development, succession
management and grooming tool for executives in Scale IV and above.
Reward Management (Chapter 8)
The Committee recognizes the need for rewards to outstanding performers
to sustain a high performance culture. The Committee also appreciates
introduction of incentive scheme (Statement of Intent) for CMDs and EDs
and observes that the scheme requires changes.
The Committee, therefore, recommends the following broad contours of the
principles that may govern the performance-linked incentive schemes of
PSBs:
Summaryxviii REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
l The incentive scheme should aim at performance differentiation and
reward the pivotal employees. This is with a view to retain employees in
critical areas and build future leadership pipeline.
l The scheme should also positively incentivize potential business growth
and as such, it cannot be a general incentive for distribution across the
board. It should be linked to performance which presupposes that
objective and measurable performance parameters for each and every
role are clearly spelt out.
l Total amount of incentive to be paid by a PSB in a year not to exceed 2%
of its average net profit earned over the previous two years.
l 50% of the amount to be earmarked for:
™ Business Leaders of Urban and Metro Branch Managers
™ Regional Managers
™ Zonal Managers
™ Executives of Business Verticals
™ Executives in Support Functions and
™ Executives in Control Functions
l 25 % to be earmarked for Branch Heads of Rural and Semi Urban
branches and employees connected with priority sectors and financial
inclusion.
l 25% to be earmarked for Boards of PSBs to identify individuals and
groups who have made outstanding contributions for business growth,
in Credit, Forex, Recovery, innovations in banking operations, systems
and processes, etc. Suitable incentive scheme to be formulated to retain
talent in critical areas such as Treasury and IT. Other non-monetary
incentives should also be encouraged by the banks. These may include
celebrations, CMD Club, etc.
l Incentive to be limited to 25% top performers who are covered under PMS.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xix
l Amount of incentive payable to be as under:
Grade / Scale Incentive amount not to exceed
 Officers in JMG / Scale I 30%
 Officers in MMG / Scale II & III 40%
 Officers in SMG / Scale IV & V 50%   of annual basic pay
 Officers in TEG / Scale VI 60%
 Officers in TEG / Scale VII 70%
l Existing incentive schemes for deposit mobilization, recovery, suggestions,
etc. to be dovetailed into the new incentive scheme.
l Proposed Steering Committee of the Board on HR to monitor formulation
and implementation of the scheme.
l The Committee further recommends that in tune with market trends,
PSBs may consider offering Employee Stock Option Plan (ESOP), in the
future, as a measure of promoting ownership in the employees as also
retaining talented workforce. This is to be limited to 15% top performers
in the executive cadre including CMDs and EDs.
SoI for CMDs / EDs
l Qualitative issues to be given 40% weightage for CMDs and 25% for EDs
while finalizing SoI. Qualitative issues to be well articulated in terms of
laying clear benchmarks for achievement.  HR reforms to form a major
component of qualitative agenda.  Monitoring Group on HR in the Ministry
of Finance to overview.
l Quantitative parameters to be reviewed to include various efficiency ratios
as there are wide variations in these ratios among banks.
l Different SoI formats to be designed for CMDs and EDs, in the context
of specific job roles.
l SoI to be an elaborate exercise between CMD and Secretary (Financial
Services), Ministry of Finance, Government of India at the beginning of the
year and evaluation to be done by the remuneration committee of the Board.
Summaryxx REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
l A minimum level of performance to be set below which no incentive is to
be paid.
l The performance linked incentive should be admissible to CMDs / EDs
of PSBs on the basis of scores obtained as per performance evaluation
matrix   to be developed by the Ministry of Finance.
l The revised incentive  to CMDs and EDs be as under :
PSBs with
business mix
(deposits +
advances) upto
Rs. 150,000
crores
PSBs with
business mix
(deposits +
advances) of
over Rs. 150,000
crores but upto
300,000 crores
PSBs with
business mix
(deposits +
advances) of
over Rs. 300,000
crores
• Chairman of SBI --- --- Rs.35,00,000
• CMDs of PSBs Rs. 18,00,000 Rs. 20,00,000 Rs. 25,00,000
• EDs of PSBs  Rs. 10,00,000 Rs. 12,00,000 Rs. 15,00,000
l ESOP to be considered, in the future, to 15% top performers in the executive
cadre including CMD and ED.
Succession Planning and Leadership Development (Chapter 9)
The purpose of succession planning is to ensure that there are qualified and
capable people in all key and critical positions not just for the present but
at least for the next five years and such an assessment should be made every
year. PSBs have no credible management succession plans to ensure
continuity and progress of the organisation. The leadership gaps in PSBs
are palpable in as much as that in the next 5 years, 80% of GMs, 65% of
DGMs, 58% of AGMs and 44% of CMs would be retiring. The pool of these
experienced executives cannot be replaced only through promotions. Mere
promotion on accelerated basis without grooming and advance planning
would not solve the problem.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xxi
Most banks consider ‘Leadership’ as key to long term success of their
organisations. They also consider this as a major area of concern in the
current context. Weaknesses in developing leaders lie in the existing
processes of appraisal, nebulous training and grooming and skewed
exposures. The methodology used by most of the banks in developing senior
and top management is through sporadic and adhoc exposure to different
kinds of management development programmes in India and abroad.
Multiple exposures to similar kind of programmes do not necessarily add
value. There is absence of a well knit and comprehensive strategy to develop
people to take up strategic positions in senior and top management. Further,
in most of the banks there is no strategic frame work for identifying and
grooming leaders. In the context of criticality of these issues, the Committee
recommends that:
l PSB to introduce system of succession planning for key critical and
leadership positions. Each critical position should be backed up by three
potential successors in the reserve. Review of critical positions to engage
the attention of the proposed Steering Committee of the Board on HR.
l The identified potential successors should be groomed through variety
of mechanisms to prepare them for the identified positions. The proposed
Steering Committee of the Board on HR to monitor this process.
l A comprehensive leadership development strategy, based on leadership
competency model for each role, must be developed by each bank for
executives in Scale IV and above.
l Leadership competency should be developed through a planned exposure
to different jobs, tracking performance, training and development at
different stages of career and grooming through management and
leadership courses and through project work. Focus should be on
developing high potential individuals.
l Potential identification should be done through modern HRD tools like
Assessment Centre and 360º feedback to identify talent for various roles.
Eventually this should become part of leadership development process
Summaryxxii REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
and managed by BLDI. BLDI or any other institution which facilities this
for PSBs should also help them develop mentors to guide, coach and
promote internal talent.
l A common pool of GMs to be created for the entire banking industry.
Only identified potential candidates through Assessment Centre to become
eligible for ED / CMD positions.
l On appointment, EDs and CMDs should be inducted into the role through
a carefully designed program of approximately a week’s duration. This
should socialize the person into the role and prepare them to plan their
work. They should seek 360º feedback at intervals of the initial six months,
end of the first year and thereafter, annually. Each ED and CMD should
have a mentor from the industry leaders, to work with him.
l Bankers’ Leadership Development Institute to be set up for creating future
leaders, research, bench marking and best practices.
l In order to promote meritocracy and high degree of professionalism,
banks need to have best in class leadership at the top. The main criteria
for selection has to be strategic thinking and turnaround ability. CMDs
in proposed ‘Navratna’ banks to have a clear tenure of 4 to 5 years.
l For proposed ‘Navratna’ banks or banks with business mix of over Rs.
300,000 crores, a ED (HRD) – to be appointed.
l For promotion from GM to ED, remaining 2 years of service to be
considered adequate. Minimum experience of 2 years as ED to be
prescribed for appointment as CMD of banks.
l Candidates for ED / CMD to be put through Assessment Centre before
they become eligible for these positions. Well defined 360º appraisal to
be introduced for CMD and ED.
l Government to consider pensionary benefits to CMDs and EDs based on
their last the last pay drawn by them as whole time Directors.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xxiii
Employee Engagement and Motivation (Chapter 10)
PSBs of today present an altogether different picture as compared to the
past. Many have turned tech-savvy. Some are getting aggressive by the day
in marketing and sales. These developments have profound impact on the
employees of the banks. The challenge before the banks is how best to inform,
engage, marshall and channelize the employees’ energies towards these
developments with a view to transform them into active and willing partners
in the change process. The Committee, therefore, recommends that:
l PSBs to introduce online resolution of grievances.
l Banks to install a credible system to encourage free flow of ideas and
suggestions from their staff – technology tools like Intranet, interactive
portals, on line quizzes, etc. to be used.
l Each bank to evolve employee involvement programmes covering all
sections of employees.
l Banks to encourage learning initiatives among employees through
appropriate recognition and reward schemes.
Professionalisation of HR (Chapter 11)
Unlike in the private and foreign banks, HR function has still not attained
specialized professional status in PSBs. This in turn has not been conducive
to promoting professionalization of HR function in line with the changing
market realities. Professionalization would involve installation of scientific
systems in HR backed by professional expertise and long term policy
formulation. The Committee feels that PSBs would need to develop a vibrant
HR architecture supported by a strong HR infrastructure and Board level
focus and attention. The main role of HR in PSBs will have to be to
continuously prepare the people to drive their organisation to meet the
aspirations of customers and help achieve the expectations of various
stakeholders.
Summaryxxiv REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
With a view to ensure that HRD is woven into the system, the Committee
recommends that:
l Large banks with business mix of over Rs.300,000 crores and staff
strength of over 30,000, to be provided ED (HR) to drive HR agenda from
the top.
l Every CMD should take HRD on his agenda. A Steering Committee of the
Board on HR to be constituted in each bank, with Government Director
and two outstanding HR professionals (having knowledge of 360º,
Assessment and Development Centre, etc.) apart from CMD and ED, as
members, to discuss critical issues in HR every quarter.
l Banks to recruit HR professionals at both senior and junior levels to
undertake HR activities. Lateral recruitment should be encouraged for
getting top talent in HR. All HRD staff should be trained before they are
posted to HR roles.
l All PSBs to automate HR administration through web-based system, for
efficiency, cost reduction and transparency in HR management.
l Banks to introduce and carry out HR audit once in two years.
l A Monitoring Group comprising of Secretary (Financial Services), Joint
Secretary and two HR professionals preferably with exposure to banking
industry, to be constituted in the Ministry of Finance to monitor
introduction of HRD, best practices and the transformation agenda of
different banks.
l An award to be instituted for best HR practices.
Wages,  Service Conditions and Welfare (Chapter 12)
At present, issues relating to wages and service conditions for all PSBs are
negotiated and decided at industry level between IBA and all India bank
employees’ organisations. The Committee strongly feels that the present
arrangement of industry level wage negotiations needs immediate review as
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xxv
wage payment in banking industry today has no relation to ‘capacity to pay’
of individual banks and further, individual banks do not have an opportunity
to negotiate on such crucial issues as productivity, redeployment of staff,
quality of discipline, trade union practices, some unique problems of
individual banks, etc. under the present arrangement.
The present arrangement has promoted high level of standardization and
rule orientation. It has perpetuated rigidities in job roles, restrictive practices,
restricted mobility, culture of entitlement, placing the performers and nonperformers on equal footing, etc. Standardization has created a culture of
lack of initiative, innovation and professionalization in HR area. Overall, all
these have not been conducive to rendering effective customer service.
Considering the uniqueness of each PSB there is need to move from standard
HR practices to diverse HR practices.  The Committee feels that this process
should begin with wages and service conditions.
Staff Welfare: The Committee recognizes that staff welfare is an important
facility provided by PSBs to their employees to keep their motivation levels
high. While the service conditions of PSBs provide for schemes governing
employees’ health, etc. the need to extend non-statutory welfare measures
in different forms in PSBs has assumed significance in the last decade, to
partly compensate the employees in the context of high cost of health and
education as also to meet certain contingencies of life. Presently, Government
of India has laid down uniform criteria for nationalised banks in the matter
of allocation of amount out of net profit for staff welfare - staff welfare amount
in a year not to exceed 3% of the net profit of the bank, subject to a ceiling
of Rs. 15 crores. The Committee also feels that one-size-fit-for-all approach
to these norms is neither realistic nor fair.
Besides, with the number of retired and retiring employees increasing year
after year (it is to be noted that large portion of current work force had joined
the PSBs in 1970s), it is only fair that a part of welfare allocation goes to the
retired employees considering their long service and contribution in the
respective banks.
Summaryxxvi REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
The Committee, therefore, recommends that:
l PSBs to have freedom to negotiate wages and service conditions to create
a better fit between compensation and performance; PSB Boards to decide
on bank-specific wage and compensation structure, in relation to capacity
to pay, profitability, productivity, etc. and strictly within the overall
guidelines of the Government in this regard.
l Banks to consider variable pay as a major component of wages. In such
an arrangement, banks to have the discretion to go in for Cost-to-Company
(CTC) concept.
l The ceiling for staff welfare may be revised having regard to the business
size of the banks and the employee strength, within the existing cap of
3% of net profit of each bank:
Category Suggested Limit
State Bank of India 3% of net profit subject to a maximum
of Rs. 150 crores*
Other PSBs
- Large size banks with business
mix of over Rs. 300,000
crores and employee strength
of 30,000 and above
3% of net profit subject to a maximum
of Rs. 40 crores
- Medium size banks with
business mix of over Rs.
150,000 crore to Rs. 300,000
crores and employee strength
of 20,000 and above
3% of net profit subject to a maximum
of Rs. 20 crores
- Other banks 3% of net profit subject to a maximum
of Rs. 15 crores
* Higher allocation on account of 2.2 lakh employees.
Note: Average of business figures for the previous two years to be reckoned
for this purpose.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xxvii
Broad pattern for allocation of the amount for Staff Welfare
The Committee recommends apportioning the amount towards welfare
scheme as under:
For education of children of the employees 25%
For medical and health care facilities for the employees, spouse and
dependents
25%
For medical and health care facilities for the retired employees and
their spouses
25%
Boards of the banks to decide on the schemes for the balance 25%
Note: Amount to be spent per employee under welfare not to exceed Rs. 10,000/-
in a year.
The Committee feels that paying out cash to the employees towards ‘canteen
subsidy’ for whatsoever reason works against the very spirit of ‘staff welfare’.
As a matter of policy, no cash should be paid to the staff from out of staff
welfare fund, except in case of payments for medical and educational facilities.
Wherever this practice is in vogue, the Committee recommends that it should
be stopped.
To take care of the interest of the retired employees, the Committee
recommends that two retired senior executives should be nominated by each
bank on its Staff Welfare Committee.
Corporate Governance (Chapter 13)
The Committee is of the view that lessons from the recent global crisis should
guide corporate governance practices in the Indian banking industry too.
For the Indian PSBs, corporate governance issues are, in fact, quite basic.
Reforms in this area will help the PSBs to move into the next orbit of banking.
It will also send out positive signals to the markets in India and abroad
besides inviting favourable comments from the banking analysts and
observers. Going forward, superior governance practices will be needed to
handle new business opportunities and tie-ups with global players. For PSBs
to become globally competitive, they would have to be Board driven. Towards
Summaryxxviii REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
this, Government will have to speed up reforms in corporate governance and
review the entire scheme of Board constitution including its composition
and selection methodology and bring in legislative changes, if necessary.
Accordingly, the Committee recommends that:
l To meet the challenges of new age banking, Government to speed up
reforms in corporate governance in PSBs.
l Government to review the scheme of Board constitution including its
composition and selection methodology and bring in legislative changes,
if necessary.
l Government to consider separating Chairman’s position from the position
of Managing Director, in line with Corporate Governance voluntary
guidelines 2009 issued by the Ministry of Corporate Affairs, Government
of India.
‘Navratna’ Status to some PSBs (Chapter 14)
The most notable aspect of the performance of PSBs in India has been that
they have shown remarkable qualitative improvement even during the recent
global melt down. However, within the family of PSBs, there are varying
degrees of size, performance, productivity and efficiency. With India set to
emerge as an economic superpower in the next decade, it is only natural that
some Indian banks are aspiring to acquire size and scale that can catapult
them into the global league of the top 100 banks. Besides size and scale,
they are also aspiring to catch up with global standards in productivity and
operational efficiency. With a view to encourage, promote, recognize and
reward superior performance and excellence among the PSBs, the Committee
recommends that:
l Some large well performing banks to be considered for ‘Navratna’ status
– smaller banks for ‘Mini-Navratna’ status and State Bank of India for
‘Maharatna’ status. Size, performance and quality during the previous
three years could be the benchmark.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs xxix
l An expert group to go into setting criteria and modalities for granting
‘Navratna’ and ‘Miniratna’ status to banks.
Creating Risk Culture (Chapter 15)
The Committee learns that there is general concern among bank managements
about risk aversion across cadres. This has its roots in the concept of
accountability. Bankers are unanimous about the need for certain changes
in vigilance management in PSBs to create benign atmosphere for risk taking.
In this context, although a number of initiatives have been taken in the past
to allay the ‘fear of vigilance’, the Committee recommends that:
l Government to initiate suitable measures for introducing committee
approach in PSBs for sanction of large credit, on the lines prevalent in
SBI.
l Accountability for non-performance to be dealt with through pre-mature
retirement provisions. Review for pre-mature retirement to be carried
out when the officer reaches the age of 50 years and thereafter, when he
reaches the age of 55. Sub-Committee of the Board to monitor such cases.
l CVC may be approached to review its jurisdiction to cover General
Manager and above only (one level below Board positions) under its
purview.
l Executives in the substantive rank of General Manager to be appointed
as CVOs in large banks.
l All PSBs to put in place a staff accountability policy for Non-Performing
Assets.
l PSBs to fix accountability for delays in concluding disciplinary cases.
l PSBs to strengthen their risk management systems across the board.
Summaryxxx REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Industrial Relations (Chapter 16)
With overall changes taking place in the financial environment, demand for
efficient customer service has increased manifold. Efficiency in rendering
customer service without any let or hindrance has become the single most
important point of differentiation among the competing banks. These new
realities of competition demand that employees’ organisations of PSBs
appreciate that change is the order of the day and status-quoism will not be
conducive for long term sustenance of the banking sector. It is time that
issues of productivity and performance acceleration are brought to the main
stream discussion with Unions as for too long these issues have remained
in the backstage. This is necessitated by the new compulsion to remain
competitive, vibrant and sustainable.
The Committee, therefore, recommends that:
l PSBs to revisit and review all internal settlements that affect mobility,
flexible utilization of staff, productivity, performance and customer service.
l Bank managements to accord priority treatment to the issues of
productivity and performance acceleration while dealing with IR issues.
The Committee believes that the above recommendations, on implementation,
should help the PSBs to produce world class bankers and leaders to meet
the competitive challenges of 21
st
 century banking and emerge as globally
competitive financial entities.
SummaryREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 1
CHAPTER 1
CONSTITUTION OF THE COMMITTEE
1.1. Constitution of the Committee
Vide Ministry of Finance, Department of Financial Services order no.
F No./ 9/18/2009-IR dated October 22, 2009, (Annexure I) Government
of India constituted a Committee comprising of the following members
for conducting a study of HR issues of Public Sector Banks (PSBs)
and making appropriate recommendations thereon. The Committee
was advised to submit the report by March 31, 2010 which was
subsequently extended upto June 30, 2010.
l Dr. A K Khandelwal, former Chairman & Managing Director, Bank
of Baroda – Chairperson
l Dr. T V Rao, Adjunct Professor, IIM, Ahmedabad
l Dr. Deepak Phatak, Professor of Information Technology, IIT
Mumbai
l Shri M V Nair, Chairman, Indian Banks’ Association and Chairman
& Managing Director, Union Bank of India
Shri H N Sinor, former Chief Executive of Indian Banks’ Association was
co-opted as a member.
1.2. Terms of Reference
i) Present status of HR in PSBs
ii) How to professionalize HR in PSBs – Issues and action plan:
   l Recruitment planning
l In-service development including career planning and training
l Motivation and engagement of employees
l Performance assessment and linked incentives2 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 1: Constitution of the Committee
   l Succession planning and grooming of leaders for PSBs
iii) To examine the desirability of uniform versus diverse HR practices
in PSBs.
1.3.   Methodology
l The Committee developed a comprehensive questionnaire covering
various issues germane to the terms of reference – enclosed as
Annexure II and received responses from State Bank of India (SBI)
and the 19 Nationalised Banks. Data and information received
was collated and appropriate inferences were drawn.
l The Committee met and had interactive sessions with the CMDs,
EDs and other members of the top management teams of 20
banks, during February-March 2010.
l  The Committee had interactions with the Employees’ Unions and
Officers’ Associations of PSBs.
l A few global management and HR consultancy firms made
presentations to the Committee on the possible new direction for
HR in the PSBs.
l The Committee visited and held discussions with the Indian School
of Business, Hyderabad, National Insurance Academy, Pune,
National Institute of Bank Management, Pune, and Indian Institute
of Management, Ahmedabad for gaining insight into the new
training direction and leadership development.
l The Committee had interaction with the Indian Institute of Banking
& Finance (IIBF) to understand their activities and more
particularly, their continuing education programmes for bankers.
l The Committee also collected secondary data by review of various
documents, reports as well as records provided by PSBs.
l Analysis, interpretation of both quantitative data and qualitative
information provided in the reply to questionnaire and their
integration in the report.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 3
CHAPTER 2
CONTEXT AND ISSUES
2.1. Context
PSBs, accounting for well over 70 per cent of the assets of the Indian
banking system, have been contributing significantly over the years to
the country’s economic development and in particular, to rural and
agricultural development, small scale industries and small businesses,
besides to large and medium industries and export sector.
2.1.1. PSBs have several positives to their credit. Because of
Government ownership and sovereign backing, PSBs score
relatively high on safety and public confidence issues vis-à-vis
private banks and have a strong brand as trusted financial
entities. They have set up a huge infrastructure across the
country, with good local relationships built up over decades.
Their customer base is large and their books contain a
veritable mine of customer data that can be profitably
harnessed in future.
2.1.2. Some PSBs have ventured overseas and set up enviable global
footprints. They have honed their skills in international
banking and have contributed in large measure to channelizing
remittances to India, thereby helping the country’s foreign
exchange reserves to swell. Many of them are making forays
into other financial services like credit cards, mutual funds,
insurance, capital markets, etc.
2.1.3. As a group, PSBs had for long suffered from image and
perception problems. They were perceived as slow in response
to market dynamics, competition and customer, low in
technology, poor in innovation and unwieldy in organisation.
Their marketing organisation was poor and their new offerings
to the customer had been few.4 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 2: Context and Issues
2.1.4. Their image has, however, undergone perceptible change
in recent times. They have caught up with technology, retail
revolution and many other customer-centric innovations
during the last decade. Almost all PSBs have networked their
branches, rolled out core banking, set up a vast network of
ATMs and enlarged the basket of offerings to the customer.
Many PSBs have changed their business models and are
repositioning their key branches as sales and service outlets.
2.1.5. PSBs have also improved on their financials, adjusted to the
new prudential norms and improved their productivity and
efficiency. Integration of PSBs with other major segments of
finance, notably the security markets and international
markets, has been a hallmark. PSBs have also grown in terms
of market capitalization even during the times of global
meltdown.
2.2. Challenges
2.2.1. With economy growing at around 8% and expected to touch
10%, Indian banking sector is poised to change but in a
different way. The small size of the banking sector in relation
to the economy implies that growth will come from increasing
penetration into new customer segments. Greater penetration
will be facilitated by technology and other modes of delivery.
Growth will also come from demand for new products and
services (wealth management, mutual funds, insurance, etc.)
from existing as well as new customers, due to improving
standards of living and growing affluence. Incremental growth
for banks will increasingly be driven by non-fund based
businesses. Competition will become more intense with the
growing presence of private and foreign participants. With the
advantage of effective regulatory systems, Indian banks have
the opportunity to improve their capability to become global
leaders on their own strengths.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 5
Chapter 2: Context and Issues
2.2.2. The growing economy will also spur exponential growth in
the business mix and customer base of the banks, in the next
decade. One estimate is that the business mix of India’s
banking system may grow threefold from the present about
Rs.70,00,000 crores (as at March 2009). Besides, banks will
also be required to play a significant role in financing of
infrastructure and new economy sectors. To acquire global
size and scale and pursue global banking, the system is also
likely to witness internal consolidation. All this will call for
leadership of a higher order for managing large system besides
higher level of skills and risk taking initiatives.
2.2.3. Another massive business challenge before the banks in the
next few years will be in the area of financial inclusion. In
spite of massive vertical and horizontal expansion of PSBs,
India is still a grossly under-banked nation. As much as 60%
of the country’s population – about 600 million people – still
do not have access to formal banking system. Nearly 90% do
not have access to bank loans. With a view to promoting
growth with equity, Government of India and the Reserve Bank
of India (RBI) have mandated the banks to implement financial
inclusion (delivery of banking services at affordable cost to
vast sections of the disadvantaged and low income groups)
in habitations with population of over 2000 by March 2012.
India’s growing economy will thus need financial deepening
that is linked to financial inclusion. Promoting efficiency
without ignoring financial inclusion will be a major challenge
for PSBs in the years to come.
2.3. Issues
2.3.1. In spite of many positives, PSBs are today seriously
handicapped vis-à-vis their competitors in the market place,
on account of huge human capital deficit. Their employee 6 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 2: Context and Issues
compensation  package, skill sets, skewed age profile,
restrictive deployment, performance management system are
the major issues placing PSBs somewhat at a disadvantage.
Clearly, for too long, PSBs have carried on with routine,
standardi zed and admi ni strati ve ori entati on to HR.
Developmental interventions have been far and few in between.
Considering the new challenges before the banking sector, HR
has indeed become a new risk – possibly the biggest risk in
the system. Reforms in HR have become overdue in the context
of challenges and opportunities of new age banking.
2.3.2. PSBs currently employ nearly 800,000 people who are trained
in traditional banking skills. With competition intensifying
and huge retirement of trained and experienced staff, issues
of identifying talented staff and nurturing them for critical
roles have become more crucial than ever. Added to this,
people with new skill sets and new roles are required for new
business verticals. Cumulatively, the challenge to acquire,
develop and retain human resources of the right kind and
right skills was never as important as today.
2.3.3. The Committee is more than convinced that without proactive
measures in the realm of HR and significantly changing the
methodology and content of various HR systems like
recruitment, promotion, deployment and performance
management system, PSBs are likely to lose the present
stature and be a drag on the efficiency of the financial system.
2.3.4. This report seeks to address the foregoing issues and
recommend measures for comprehensive reforms in HR such
that India’s PSBs can emerge as globally competitive financial
entities, leveraging their human capital.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 7
CHAPTER 3
CURRENT STATUS OF HR IN PSBs
3.1. Considerable spade work had been done by Narasimham Committee
I and II on various HR related issues. The first report in 1991 had
adduced strong arguments in favour of far-reaching reforms in HR
along with reforms in the operational areas in order to bring about
competitive efficiency. The second report in 1998 had laid renewed
emphasis and highlighted the need for ushering in parallel reforms in
HR. While a good number of recommendations have been acted upon,
some crucial recommendations, which go to the very root of HR
reforms, remain to be implemented.
3.1.1. The data collected by the Committee from the PSBs suggest
the following trends on the current state of HR in the banks:
   l HR is heavily transactional, IR and administration oriented.
It is adhoc and inadequately professionalised. Barring a few,
in most banks, HR is managed by operational functionaries
whose tenures are often short. In some cases, HR is attached
with such diverse functions like credit and estate management.
The function is largely overloaded with routine administration
including transfers, promotions, union management relations,
etc.
   l In most of the PSBs, there is no scientific system of manpower
planning. Post-CBS, there has been no reassessment and
realignment of staff at branch level.
   l Most sub-systems of HRD like performance management
system (PMS) are routinely administered and are seldom used
for the development of employees. Apart from delay and poor
monitoring, the PMS does not bring out the talented people
to the fore. There is no system of potential appraisal. Talent
management on the whole is a critical issue but found to be
generally ignored.8 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 3: Current Status of HR in PSBs
   l There are huge skill shortages in the area of credit, IT, risk
management , i nt ernat i onal banki ng, t reas ury and
infrastructure finance. Attritions from these functions are
also quite high. Only few banks have systematic plan in
developing officers with such requisite skills. There is huge
turnover in those recruited from the market and through the
campus. Apparently, compensation is the problem.
   l HR innovations are far and few in between except in the areas
of education and training by some leading banks. Education
and training lacks both planning and implementation.
   l Most functional heads and vertical business heads do not
have any role in planning and designing HR for their function
including succession planning. They have no accountability
for building a cadre of trained people in their own functions.
   l Although training plays a good role in aligning people to new
tasks and responsibilities, it needs to focus on workmen
especially from rural areas and diverse groups like women as
they remain poorly covered by the training system today. There
are only few courses which are role based. Alternate delivery
channels like e-training, e-learning are sparingly used. Training
of senior executives is met in a very general manner through
external training programmes. It lacks a strategic focus.
   l The executive cadre in PSBs will see large superannuation in
the next 5 years and there are palpable gaps in the leadership
positions. Leadership development strategies in most banks
lack focus and strategic orientation. This is the most critical
issue for attention as the future of individual banks depends
upon leadership roles.
   l Compensation of senior and top executives and reward
systems are the key issues for retention of talent and building
leadership.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 9
Chapter 3: Current Status of HR in PSBs
   l Many banks have internal settlements that constrain
productivity and performance of employees. There are also
number of facilities and practices beyond industry level
settlements. There are also bank level practices in the area
of union management relations that need review.
   l Lastly, the HR function is very weakly monitored at the Board
level and in fact, strategic issues relating to talent management,
succession planning and leadership are rarely discussed.
Only 5 banks have Sub-Committee of the Board on HR and
in at least 3 banks, these are non-operational in spite of some
excellent work done by these committees in some banks. By
the admission of CEOs themselves, they are not able to
allocate time to HRD issues. In some cases, even the consultant
reports on HR have not been pursued further.
3.1.2. Clearly, HR has been a neglected area and has not found place
in corporate priority. ‘Routineness’ in the processes of
recruitment, promotion and appraisal and absence of
innovations in HR has led to a risk which would unfold in the
times to come. Therefore, HR demands attention and
accountability. HR requires fundamental transformation as
it will be a major factor for survival and success of PSBs.
3.1.3. The Committee is of the considered view that PSBs have to
create human abilities and organisational capabilities that
are substantially better than those of their competitors. HRD
should become a new competitive advantage for PSBs to
effectively play their multifaceted roles and align themselves
to be part of India growth story.
3.1.4. Changing any single HR practice alone does not result in
transformation. Transformation requires integrating various
HR practices and focusing them jointly on value added agenda
such as intangibles, customer connections, organisational
capabilities and individual abilities.10 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 3: Current Status of HR in PSBs
3.1.5. Having faced many challenges, including particularly
technology, human resource transformation has now become
most critical for PSBs and the present HR dispensation needs
a thorough overhaul and a 360º change.
3.2. Key HR Challenges before PSBs
There is widespread misconception that HR is all about commonsense.
HR indeed is a specialized function and has acquired over a period of
time the status of a professionalized function both in public and private
sector organisations. HRD is neither merely relationship management
nor management of industrial relations. The tool kit of HRD includes
measurement of performance, competency mapping, assessment centre
for potential appraisal, identification of talent pool, new methodology
of learning, etc. All these are in the domain of specialized function.
3.2.1. Internal competency in HRD is extremely limited and thus
there is need for development of HR staff. In large organisations
like banks, recruitment, promotion, pay and contract
management are essential but they are part of administration.
The HRD architecture involves scientific and developmental
approach to people management, coaching and mentoring of
individuals, creating culture and process that harness the
potential and motivate the people. There is thus need for
transformational shift from HR administration to HR
development.
3.2.2. The Committee has noted that in most progressive public
sector organisations, HR is professionalized and qualified HR
professionals from leading institutions are managing the
function and playing an important role in transforming their
organisations.
3.2.3. Key HR challenges before PSBs would therefore include:
   l Building capabilities for the future – improving the quality of
manpower, quality of managers and quality of leadershipREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 11
Chapter 3: Current Status of HR in PSBs
   l Improving productivity and performance culture
l Building talent management practices
l Retention strategy for key employees due to likely opportunities
in Private Sector Banks
   l Developing ownership, accountability, professionalization and
institutional mechanism for sustained human capital
management
   l Building succession for key critical and leadership positions
l Improving the quality of HR processes and HR sub-systems
like performance management, promotion process and
training
   l Transforming HR function from legacy driven HR to
developmental HR
3.2.4. If the above challenges are to be met successfully, the PSBs
will have to make considerable departure from the past and
will have to put HRD at their centre stage priority. This would
mean allocation of time by CMDs and EDs, set clear agenda
for change, bring about substantial changes in the policy frame
work and the processes and set in motion a dynamic reform
programme that is time bound and which is action oriented.
This should be top driven to ensure serious implementation.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 13
CHAPTER 4
MANPOWER AND RECRUITMENT PLANNING
4.1.  Effective manpower planning (MPP) in any organisation sets the stage
for good human resource system. In a service industry like a bank, it
is much more important as it has direct implications on the quality
of service. The MPP exercise done scientifically helps proper
deployment and utilization of manpower resources and identification
of skill needs and gaps. Absence of effective MPP will manifest itself
in the lopsided utilization of human resources as also will have impact
on cost and service.
4.1.1. The Committee is rather concerned that such a vital area like
‘Resources Forecasting’ and ‘Manpower Planning’ has not
received wholesome and quality attention except in one PSB,
where attempts have been made to come out with templates
for manpower pattern model for different types of branches
in the post-CBS scenario. The exercise carried out today in
many PSBs also does not reckon skill and competency
requirements. In the Committee’s understanding, large scale
CBS implementation across branches has made no significant
difference in the realignment of manpower at the branches
in PSBs. Use of manpower analytics for resource forecasting
in the post-CBS environment is almost absent. Banks are
recruiting clerical staff on a simplistic calculation of factors
like retirement, branch expansion and increase in existing
business. This creates long term financial burden on the one
hand and will affect productivity, on the other.
4.1.2. Lack of proper manpower planning has also resulted in wide
variance in staff ratios across PSBs. Data collected reveals
that officer-clerk ratio ranges from 0.24 to 1.58. PSBs also
fair poorly in the matter of ratio of officers to total staff when
compared with private banks. This stood at 0.37 for PSBs 14 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
against 0.85 for private banks. Similarly, the ratio of clerical
staff to total staff was at a high of 0.42 for PSBs against 0.10
for private banks.
4.1.3. Nearly 90% of the staff in PSBs is deployed in branches and
the rest in administrative offices. Over 60% of the time of
branch staff is spent on non-customer facing roles and less
than 10% of staff is devoted to proactive sales. There is thus
perpetuation of routine clerical content in branches even after
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. As large percentage of
employees is deployed in branches, the new branch
architecture post-CBS more particularly with reference to
metro and urban branches, will have greatest implications
on the MPP exercise of banks.
4.1.4. The Committee is of the considered view that MPP exercise
by each PSB should be a rigorous exercise factoring all
possible contingencies in HR area – both quantitative and
qualitative. This exercise should be carried out every year for
a time spectrum of 5 years, linking it with strategic business
plans. Banks should also take steps to institutionalize
manpower planning, with the help of outside expert advice,
if required, and subject it to review every year by the proposed
Steering Committee of the Board on HR.
4.2. Imperatives for Manpower Planning
While undertaking manpower planning exercise, banks also need to
factor the following:
4.2.1. Staff Costs and Technology Costs
    The issue of MPP becomes much more important as it has
direct relationship with costs. The Committee observes that REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 15
Chapter 4: Manpower and Recruitment Planning
there are varying patterns of staff costs among the PSBs. At
one end, the ratio of staff costs to operating expenses was at
47% and at the other, it was as high as 75%, average being
62%. As many as 12 banks had above average ratio.
4.2.1.1. With large scale use of technology - which will only increase
in the coming years - and with rising technology costs – now
and in the future - staff costs alone will not be a sufficient
indicator of the competitive efficiency level of the banks. A
more appropriate ratio - ratio of staff costs plus technology
costs to total income and total expenditure – would have to
be critically studied by each bank and suitably factored in the
MPP exercise.
4.2.2. Outsourcing
    Recent trends world over suggest that progressive corporations
increasingly focus on their ‘core businesses’ leveraging on
their ‘core competence’, with a view to achieve quantum jump
in their operational efficiency and profitability. Non-core
activities are outsourced by them to agencies which can
perform such activities more effectively with cost efficiency
on account of domain expertise and economy of scale they
may have. ‘Outsourcing’ can help organisations to move up
in the ‘economic value chain’.
4.2.2.1. Consequent to extensive use of technology, PSBs will be
required to change their business processes, as discussed
elsewhere. They are also coming out with new business models
for launching new business lines. All this will increasingly
call for high focus on their core businesses and outsourcing
of non-core activities.
    RBI guidelines have listed the core functions of a bank as:
   l All management functions16 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
   l Decision making functions such as
    ™ Determining and compliance of KYC norms for opening
accounts
    ™ Management of investment portfolio
™ Sanctioning of all types of loans / advances and other
facilities to clients
   l Compliance functions
l Internal audit
4.2.2.2. When more and more non-core activities are outsourced by
the banks, their impact on MPP exercise will be significant
and therefore, this will have to be suitably factored by each
bank while carrying out manpower planning.
4.2.3. Organisation Structure
    PSBs are today characterized by pyramidal and mechanistic
structures with rigid hierarchy, multiple levels, narrow span,
narrowly defined jobs and inflexible framework of rules. In
the context of integration of technology with banking
operations, there is imminent need for change in the
organisation structure to one which is organic with fewer
levels, flexible authority, broader span and broadly defined
jobs. This intervention is essential to bring the structure of
PSBs closer to their economic purpose.
4.2.3.1. Most PSBs today have a four tier organisation structure – Head
office / Central office at the top, Circle / Zonal offices, Regional
/ Divisional / Area offices and branches at the bottom of the
layer. Some have abolished one intermediate tier and moved
to a three tier structure. A few are experimenting with hybrid
structure – Zonal and Regional offices combined into one in
some locations.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 17
Chapter 4: Manpower and Recruitment Planning
4.2.3.2. With technology in place, it should be possible for the
individual executives at administrative offices of banks now
to monitor, supervise and control over much larger area of
operations. Banks may, therefore, like to review the present
span of control for higher level executives. This will also have
implications on MPP exercise.
4.2.3.3. In the opinion of the Committee, sanctioning of executive
positions based purely on quantitative business criteria has
led to over bloated structure and creation of additional layers,
in some cases. The intent of new organisation structures
should be to avoid duplication of work and remove the road
blocks in speedier decision making process. The Committee
emphasizes that PSBs should swiftly move towards a lean
and mean structure – preferably a three tier structure – in
order to get closer to the customer and reduce the distance
between the top and the field.
4.2.3.4. Post-CBS, as business models, branch models and staff roles
are changing, branches would have to be restructured. This
will call for scientific and systematic study of staffing for each
category of branches. According to one estimate, with Business
Process Re-engineering, banks may have about 25% excess
capacity in their front line. Having regard to this, each bank
may review the norms for branch level staffing pattern.
4.2.4. Branch Transformation Post-Core Banking
    Implementation of Core Banking Solution (CBS) across
branches of banks has brought in its wake fundamental
changes in the way customers are serviced, their transactions
are handl ed and banks’ i nternal book- keepi ng and
accounting tasks are carried out. Customers can now enjoy
Any time Any where banking, use very many e-channels,
transfer funds virtually in seconds - all of which a dramatic 18 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
improvement in customer service from what was obtaining
just a few years back.
4.2.4.1. Internally, it is no longer necessary to use the ‘balancing of
books’ method. Human errors are virtually eliminated at
branches. Errors, if any, are easily rectified and frauds are
minimized. All this means that stress levels of employees at
branch level are coming down considerably - they are getting
relieved of the mundane and repetitive activities; they are
getting freed from fatigue and monotony of doing the same
job day in and day out. It is now possible for the staff to
aspire for job enrichment and job enlargement. The new
paradigm in the bank branches post-CBS thus has the
potential to improve employee productivity by several
notches, like never before.
4.2.4.2. With war for customers intensifying by the day, the greatest
need of the hour for PSBs is an all pervading sales and service
culture, fully embedded into their DNA. “Branch of the Future”
would need to focus on sales and service and the new branch
architecture would have to enable this major transformation.
A typical model for the “Branch of the Future” is presented
at Annexure IV.
4.2.4.3. Such a branch transformation will rest on four pillars:
profiling the customer, analyzing the behavior, building
product portfolio based on this analysis and improving staff
and management competitiveness. All this will call for
changes in staff roles, staff skills, staff attitudes and reordering of organisational setting. This is both a huge
transformation agenda for the banks and a huge opportunity
to shape the future.
4.2.4.4. In the new branch architecture in the post-CBS environment,
the concept of One Stop Service, under which the customer
can avail all services under one umbrella, would have to be REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 19
Chapter 4: Manpower and Recruitment Planning
operationalised to facilitate the customer to have new
experience. Although provision of ‘one stop service’ to
customers is one of the major objectives of CBS, most banks
have yet to operationalise this. Some banks have, however,
made a beginning through new job titles like ‘Universal Teller’,
‘Single Window Operator’, etc. and empowering the frontline
staff, reviewing the processes, redefining the roles, etc. (State
Bank of India’s ‘Single Window Operator’ scheme is an
excellent example of bank level innovation in harnessing
technology for providing new customer experience besides
job enrichment and job enlargement) . This will call for
integrated banking skills and multi-tasking on the part of
clerks manning the customer facing counters in the branches.
4.2.5. Business Process Re-Engineering (BPR) and Change
Management
    In spite of large scale infusion of technology into banking
operations, intermediation cost is still high in India. Cost of
banking transactions is also high for both banks and
customers. RBI has time and again emphasized that one of
the principal objectives of technology infusion should be to
bring about significant reduction in the cost of banking
transactions.
4.2.5.1. The Committee feels that CBS is only the beginning of the
journey and the next most critical challenges for the PSBs is
to usher in ‘Business Process Re-engineering’ and ‘Change
Management’ in a comprehensive manner in order for them
to be able to reap optimum benefits out of CBS. Trends world
over suggest that a good blend of technology, processes and
people would have greater chances of adding value and
competitive advantage to a business organisation. This is all
the more true for organisations like banks, which are people
intensive and where transactions are highly process driven. 20 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
Large scale use of technology without the required process
changes and re-skilling of employees has the potential danger
of increasing the cost of operations rather than reducing it.
For branch transformation to take place in the true sense,
banks would, therefore, have to undertake a holistic review
of their business processes and work flows, which have been
in vogue for nearly a century. This will inevitably involve some
labour practice issues.
4.2.5.2. Committee has noted in this context that some banks are
already into the job, with the help of some outside experts.
The Committee recommends that other PSBs too should go
in for BPR and Change Management, with a sense of urgency.
The Committee would further like to urge the banks to speed
up the process of shifting the non-customer facing activities
from branches to back offices (Regional or Central Hubs)
in order that branches are enabled to transform themselves
into sales and service outfits. The industry forum of IBA
can be used for exchange of experiences and ideas on the
issues involved.
4.2.6. Requirement of Clerical Staff
    Clerical staff today constitute single largest cadre in the total
workforce (42%) of PSBs. In the post-CBS environment in
banks, the border line between the job of an officer and a
clerk is rapidly disappearing. On the one hand, many clerical
jobs are becoming increasingly redundant and on the other,
some jobs in the front office require officer level interface with
the customers. Having regard to this major change, continued
requirement of clerical jobs is an issue that needs closer
examination and in this context, banks need to seriously
deliberate on the future requirement of clerical staff. Future
clerical strength cannot be determined on the basis of head
to head replacement.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 21
Chapter 4: Manpower and Recruitment Planning
4.2.6.1. Most PSBs today have surplus clerical staff in their metro/
urban branches while facing severe shortage in their rural
and semi-urban branches. Many PSB chiefs have mentioned
that their effort to redeploy staff from surplus pockets to
deficit pockets especially in rural areas are severely
constrained by the current stipulation in the industry level
settlement concerning mobility of workmen staff within 100
kms. The Committee has also noted with some concern that
even this limited discretion to redeploy the staff has been
seldom used by most banks. The Committee feels that PSBs
will need to revisit this issue. They should also endeavour to
incentivise mobility of clerical staff to rural areas through
special house rent, fast track promotion, etc.
4.2.6.2. In the current context of higher focus on rural banking and
financial inclusion mandated by the Government and the RBI,
any fresh recruitment by PSBs should be restricted to rural
business / areas only.
4.2.7. Need for Re-designation
    In view of paradigm change in the nature of roles at branch
level, there is need to redesignate the clerical staff as
‘Banking Associate’ (or some such contemporary job title).
This can also help enhance job satisfaction and pride in
one’s own job, besides reflecting the core element of
responsibility assigned.
4.2.8. Requirement of Sub-Staff
    Sub-staff today constitute 21% of the total workforce in PSBs,
as against only 4% in the Private Sector Banks. Obviously,
this percentage in relation to total staff needs review. Further,
there are as many as ten special pay carrying posts in sub
staff category, as of now. This is inherently constraining 22 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
optimal utilization of sub- staff and contributing to its
disproportionate percentage to total staff. This has obvious
implications on productivity.
4.2.8.1. Having regard to the new work culture emerging in the bank
branches and many activities hitherto performed by the substaff becoming redundant, the Committee feels that PSBs
would need to redesign their jobs and if necessary, impart
them additional skills to enable them perform new jobs. The
Committee understands that some banks have initiated
measures like utilization of sub-staff for pass book printing,
etc. Nonetheless, fresh recruitment in sub-staff cadre should
be minimal. The Committee also recommends that they be
redesignated as ‘support staff ’. Similarly, sweepers can also
be redesignated as ‘Housekeeper’.
4.3. Recruitment
All PSBs, excepting State Bank of India and Syndicate Bank, are today
utilizing the services of Institute for Banking Personnel Selection (IBPS)
for recruitment of clerks and officers. While written tests are
administered by IBPS, interviews are conducted by the bank concerned
in most of the cases.
4.3.1. Over 100,000 experienced employees of PSBs would be
retiring on superannuation in the next 5 years. Many PSBs
are also facing the problem of employee turnover about which
they are quite alive and have initiated various measures to
contain it. These have necessitated huge recruitment at entry
level in both clerical and officer cadre. Data collected by the
Committee shows that about 100,000 persons have been
recruited between 2005 and 2009 and in the next 3 years,
they plan to recruit another 100,000, in addition to lateral
recruitment through open market and campus.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 23
Chapter 4: Manpower and Recruitment Planning
4.3.2. Banks have to factor the new banking environment, new
capabilities and specific attributes required in the new
entrants. Hence the new entrants will have to be qualitatively
superior compared to yesteryear recruitees. Banks will have
to carefully plan their recruitment in terms of entry
qualification, methodology of recruitment, etc. The present
entry level qualification for clerical cadre, fixed several
decades back, is totally out of tune with the current day
requirements. In the Committee’s view, this needs to be
changed from SSC to graduation, in view of many changes in
the environment. Similarly, the minimum qualification for
promotion from sub-staff to clerical cadre needs to be raised
to graduation. For sub-staff, the minimum qualification at
entry level should be X standard pass.
4.3.3. Banking would be increasingly relationship driven in order
to get best value out of the customers. Therefore, there will
be increasing requirement of officers to be brought into the
system to perform roles of Relationship Managers and also
create leadership pipeline for the future. All this will
necessitate higher proportion of induction of officers into the
system. Currently, ratio of direct recruitment to internal
promotion is 25:75 in most banks. The Committee is of the
view that banks will have to review their internal settlements
with their employee organisations and work out induction of
50% of officers by direct recruitment, as recommended by D
R Mehta Committee (1996), which was subsequently reiterated
by S S Kohli Committee (2000).
4.3.4. Besides cognitive skills, each new recruitee, whether in clerical
or officer cadre, will have to be tested on his/her marketing
and relational skills. In addition, they have to be tested for
computer skills. In this context, the current methodology of
testing will have to undergo substantial change in both content
and rigour. Besides written test, group discussions and other 24 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
psychometric testing tools will have to be introduced to
measure marketing and relational skills. Similarly, the
interview process needs to be reviewed and the panel of
interviewers should necessarily include in- service line
functionaries, apart from outside experts, where necessary.
The interviewers should also be given exposure in the art of
interviewing. To sum up, the trend to standardize and
outsource recruitment needs to be reviewed as the quality of
people to be inducted can be a source of potential competitive
advantage for individual banks.
4.3.5. The current recruitment criteria and methodology for officer
cadre does not take into account any prior banking knowledge
with the result that banks have to spend lot of time and effort
to groom them in basic banking, after they join the banks.
Banks are also not certain whether the prospective candidates
are serious in pursuing banking as a career. The Committee
is of the view that prior banking qualification for officer
recruitment will not only bring to the system job ready
candidates but also professionally committed ones. Banks may,
therefore, revisit the entire recruitment process for officer cadre
in terms of rigour and requirement of the new environment.
4.3.6. In this context, the Committee noted that the Indian Institute
of Banking and Finance (IIBF), which is primarily an
examining and certifying body of bankers, has been offering
Diploma in Banking and Finance, for the last over three years,
as a pre-entry qualification to candidates aspiring to enter
banks and financial institutions. This diploma is offered
online across 300 centres in the country to prospective
candidates at much lower cost. Some banks are already
prescribing this diploma as a desirable qualification for officer
recruitment. The Committee recommends that this diploma
be mandated as a prior qualification for officer recruitment.
Such diplomas offered by NIBM or any recognized universities REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 25
Chapter 4: Manpower and Recruitment Planning
may also be recognized by IBA. In the similar way, IIBF can
design a diploma in banking to suit the requirement of clerical
recruitment and such a diploma can be introduced as a
desirable qualification.
4.3.7. The Committee suggest that banking studies can be introduced
at under graduation level and candidates passing such courses
could be preferred. IBA can work with the UGC and State
universities to introduce professional banking courses. Banks
can be asked to sponsor such studies. NIBM’s assistance could
also be sought. Specialized institutions can be encouraged to
offer courses on pre-entry skills on the lines of NIIT model.
Online education courses could also be introduced.
4.4. Recommendations
l MPP exercise to be carried out by the PSBs to be a rigorous exercise
and to factor all possible contingencies in HR area – both quantitative
and qualitative, considering the impact of technology, staff cost and
expansion programmes, etc. Each bank’s MPP to have both short term
and long term projections.
l Each PSB to carry out detailed and structured manpower planning
exercise every year for a time spectrum of 5 years, linking it with
strategic and business plans. Banks to take steps to institutionalize
manpower planning, with the help of outside expert advice, if required,
and subject it to review every year by the proposed Steering Committee
of the Board on HR
l Each PSB to lay a roadmap for reaching officer-clerk ratio of 1:0.50
for metro and urban branches and 1:0.75 for rural and semi-urban
branches in the next 3 years
l The industry body IBA to undertake some benchmarking studies with
the help of outside experts, if necessary and come out with some
models for reference26 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Chapter 4: Manpower and Recruitment Planning
l Boards of the banks to monitor staff costs and endeavour to achieve
staff cost ratio of 50% in the next 5 years
l Banks to outsource more and more non-core activities in a time bound
manner and its impact to be factored in MPP
l Banks to draw a time frame for implementing BPR and Change
Management and Boards to monitor its progress every 6 months
l Clerical and sub staff to be redesignated
l The standard of recruitment including methodology and content of
testing has to be raised. For this purpose, a Committee of experts
including bankers can design the content of testing, methodology for
conducting such test and also review the existing arrangements.
l Testing of computer skills to be mandatory for both officer and clerical
cadres.
l Diploma in Banking by IIBF to be a mandatory qualification for officer
recruitment. Such diplomas by NIBM or any recognized universities
may also be recognized by IBA.
l Recruitment of direct officers to be 50% of total officer vacancies.
l Minimum qualification for clerical recruitment to be graduation and
for sub-staff, X standard pass.
l Minimum qualification for promotion from sub-staff to clerical cadre
to be graduation.
l Fresh recruitment of clerks to be restricted to rural and semi-urban
branches. Further, Rural/Semi-urban service for a minimum period
of three years should be made mandatory for the new clerks joining
the PSBs.
l Banks to endeavour to incentivise mobility of clerical staff to rural
areas through special house rent, fast track promotion, etc.
l Lateral recruitment on term appointment (say, 5 years) to be made
largely for specialized positions.REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 27
CHAPTER 5
TRAINING AND SKILL
DEVELOPMENT OF STAFF
5.1. Modern banking is getting increasingly complex and skill intensive.
In the face of competition, many PSBs are coming out with a variety
of customized and sophisticated products. This trend is likely to
continue with greater pace and intensity in the years to come. Although
banks have made some good beginning in orienting their staff to sales
and service, they have still to go a long way.
5.1.1. The Committee recognizes that PSBs still have a large pool
of talented bankers with requisite traditional banking skills.
While many of these traditional skills will continue to be
relevant, they would have to be reinforced at different
operating levels from time to time. There is also an evolving
need for acquiring and honing new skills and developing new
competencies.
5.1.2. In this context, the Committee notes that some PSBs have
constituted Training Advisory Committee to provide strategic
direction to training. One major bank has in place management
audit to review the efficacy of its training system. Some banks
have also initiated steps to bring about attitudinal change in
their front line staff.
5.1.3. Almost all banks have set up large training infrastructure
around the country and have over the years focused on
functional training. The system is, however, not adequate to
meet the current day requirements. Although workmen staff
constitute 63% of the total workforce, only about 30% are today
benefited from the training system. The present training efforts
are also not adequately directed towards their training and
re-skilling needs. This is more true of staff working in rural
and semi-urban areas, who are deprived of receiving the benefit 28 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
of training mostly due to staffing considerations. Similarly,
women who constitute 26% of workmen cadre, have also not
been benefiting from the training system. Yet, paradoxically the
system also suffers from certain degree of wastages. There is
a clear imperative now for a comprehensive review of the total
system including training curriculum and methodology, the
process of identification of changing training needs, coverage
and criteria for nominations, etc. having regard to each
individual bank’s business environment and future business
plans. A new dispensation for training is thus called for.
5.1.4. The Committee noted with satisfaction that some good
initiatives have been taken by some banks to give a new
direction to their training system. Some vital measures have
been taken by these banks to groom their cadres in Technology,
Marketing and other functional areas. Some have set up
dedicated IT training institutes. One bank has made 60 hours
of computer training compulsory for its officers. Some banks
have also taken good initiatives in preparing their officers for
future roles through long duration management education
programmes. Overall, a number of attempts have been made
to cope with the new challenges through training strategies.
However, much more focused efforts are required to create
excellence on sustainable basis.
5.2. Induction Training
One other important area of concern is regarding adequacy of induction
training now provided to newly recruited officers. In most banks, this
is now restricted to 2 / 3 weeks only although in some banks its
duration is as long as 52 weeks or even longer. In the Committee’s
view, an appropriately designed and managed induction training with
a good mix of classroom training and job attachments will be a
worthwhile investment, yielding long term benefits both to the
organisation and the officer concerned. The Committee therefore urges
Chapter 5: Training and Skill Development of StaffREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 29
the banks to accord very high priority and attention to comprehensive
induction training of new officers, with a robust mentoring and
monitoring system in place.
5.3. Skill Gaps
With Indian banking shifting gear from vanilla banking to multispecialist banking, in tune with the trends of differentiation and
specialization, the Committee feels that the gaps in many of the skills
would need focused attention on the part of bank managements. Almost
all banks, more particularly medium and small banks, are facing skill
shortages in areas like Corporate Credit, Risk Management, Treasury,
IT, Marketing, etc. Skills in new areas like Infrastructure Financing,
Financial Inclusion are also required in the evolving context. These
gaps would need to be systematically bridged and strengthened.
Developing talent pool for different areas of skills will thus be the main
agenda for the training systems of banks. For developing skills in these
areas, the training system and the functional / business heads have to
work in collaboration to identify the officers, design and execute an
appropriate training strategy, which should include on the job training
and a testing and certification mechanism. The Committee strongly
feels that they own responsibility for developing a cadre of skilled
professionals in their respective area through training and development.
Grooming officers in one’s functional area should be part of
performance KRAs of senior functionaries and functional/business
heads. This alone will create a pool of officers in different skills. The
strategy has to be top directed and finely executed.
5.4. Alternate Training Methodology – e-learning
Notwithstanding the large training infrastructure in place, the ground
reality is that only a limited number of people can attend classroom
training at any particular point of time. In situations where training and
knowledge dissemination is required to be ensured to large sections of
employees – all at the same time – in view of the criticality of a particular
Chapter 5: Training and Skill Development of Staff30 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
field, e-learning could be the best solution, in terms of reach, time and
cost. Other alternate delivery channels for learning such as distance
learning, knowledge clubs and visiting faculty scheme especially for
rural branches could also be thought of. The Committee would like to
suggest in this context that large portion- say, 75% - of functional training
in future can be through e-learning and other alternate delivery channels,
for which, inter-bank collaboration could also be explored.
5.4.1. The challenge for the banks is how best they can transform
their training system into one that will be a good fit to prepare
the people for future banking. Corporate commitment to
training and HRD has to be clear, focused and driven by bankspecific business needs and priorities. Banks will have to
restructure their training strategies and methodology of
delivery. They will also be required to improve their internal
processes with regard to training decisions.
5.5.  Continuing Education
Besides training and skill development, banks would now have to pay
attention to continuing education of their employees, in the context of
new developments. In these days of complex and multi-specialist
banking, learning can no more be optional. Banks may, therefore,
encourage module based learning for their employees. The Committee
has noted in this context that IIBF has been doing a good job for the
last several years. PSBs can make effective use of the excellent
resources available in the Institute.
5.5.1. In the Committee’s view, CAIIB, as a qualification for bankers,
needs to be encouraged, while ensuring its continuous
upgradation and relevance to the changing trends in banking.
The syllabus and curriculum for JAIIB (first level) and CAIIB
(advanced level) have been revised from time to time keeping
in view the changing trends in Indian banking. (JAIIB and
CAIIB certificate examinations are the only recognized
Chapter 5: Training and Skill Development of StaffREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 31
professional courses available for the bank employees in
India). In this regard, the Committee has learnt that there are
many bankers who have obtained CAIIB qualification many
years back, for whom no recertification scheme is available
today. The Committee has learnt that IIBF is proposing to
introduce such a recertification scheme.
5.5.2. Today, CAIIB qualification is reckoned for granting financial
reward to the employees. It is not fully integrated with career
development of employees in many banks. With a view to
promote and encourage employees for passing CAIIB
examination, as part of their learning and education, the
Committee feels that it should be mandatory for Directly
Recruited Officers and promote officers (generalists) to
complete CAIIB before they enter Scale III. In place of
increment, one time lump sum payment of Rs.25,000/- could
be considered. Such a policy prescription would add stature
and value to this professional qualification.
5.5.3. The Institute also conducts examinations in a few specialized
areas like Treasury Management, Risk Management and
awards diplomas. For better reach and facilitating self-learning,
the Institute has launched e-learning platform besides coaching
centres. Banks can suitably compensate individual staff for
successfully qualifying in these examinations and recognize
and reckon such diplomas for placements, promotions, etc.
5.5.4. Considering the multiple needs of training at different levels
and the need for training the trainers, banks can make use
of the excellent infrastructure and resources available at the
National Institute of Bank Management (NIBM). NIBM has
good faculty resources in areas like Infrastructure Financing,
Risk Management and Treasury, where most banks face acute
skill shortages. PSBs can make effective use of NIBM for
developing talent pool of officers in these areas.
Chapter 5: Training and Skill Development of Staff32 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
5.5.5. Banks can also, through an effective process of identification,
select officers and depute them to one year post-graduate
programme on ‘Diploma in Banking Management’ conducted
by NIBM. The Committee is in agreement with the recent
report on NIBM by Shri K V Kamath that the capacity of this
programme needs to be scaled up substantially so as to have
this as a resource for recruitment of officers for PSBs.
5.5.6. As regards external training programmes conducted by other
reputed institutions in India and abroad, banks may
systematically analyse the internal training gaps via-a-vis the
total requirement. Use of external training resources may be
based on this gap study and may be linked with career
planning of officers and executives.
5.5.7. Banks may also explore, wherever appropriate, the feasibility
of entering into collaborative arrangements with universities
and other institutions of repute in India and abroad. Banks
may consider adopting the cardinal principle of ‘Back to
School’ under which everyone in the bank right from the CEO
to the clerk undertakes an unlearning and relearning journey
on a continuing basis.
5.6. Recommendations
l Training systems of banks to focus on creation of talent pool of officers
in critical areas like Treasury, Corporate Credit, International
Banki ng, Retai l Banki ng, Soci al Banki ng, Technol ogy, Ri sk
Management, Marketing, Infrastructure Financing, Financial Inclusion,
etc. Internal certification of training programmes to be introduced to
build talent pool.
l Training colleges of individual banks to be upgraded as centres of
excellence with mandate to carry out in-house research, provide
learning support to the management and be responsible for continuing
education efforts.
Chapter 5: Training and Skill Development of StaffREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 33
l Training strategy to focus on staff working in rural areas and women
employees and priority to be accorded for regular in-house training
to rural staff.
l E-learning and other alternate delivery channels for learning to be
extensively used for training and learning.
l Linkage between training and operations to be improved by proper
training need analysis and evaluation of effectiveness of training. Focus
to be to understand world class practices and changing requirements
of customers.
l Functional heads / business leaders to be accountable for training and
development of cadre of officers in their area.
l Internal processes in training such as faculty selection process, training
of faculty, introduction of core faculty in some key areas of management,
top management support, etc. to be improved.
l Training of newly recruited officers to be strengthened and re-vitalized.
Two years’ training to be made mandatory for these officers to provide
systematic exposure to all aspects of banking. During training period,
they should not be posted in regular jobs. Mentoring of newly recruited
officers can be entrusted to recently retired executives, say in the last
5 years.
l Role related training to be made compulsory for all executives in Scale
IV and above. Objective is to develop leadership, decision making, risk
management skills, etc. Leadership training to precede posting to
senior levels, after the promotion decision is taken. This is meant for
understanding the role, developing the skills and competencies
required to perform the role.
l All banks to have Governing Board on training / Advisory Committee
on training (many banks already have) and they should invariably
meet once in three months to address the issues of skill building and
engagement of staff.
Chapter 5: Training and Skill Development of Staff34 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
l External and overseas training to be aligned to a clearly laid down
talent management strategy.
l Every bank to develop a training policy. Policy to include mechanisms
for ensuring that training inputs are properly used.
Chapter 5: Training and Skill Development of StaffREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 35
CHAPTER 6
CAREER PLANNING
One of the weakest links in the HR policies of PSBs today is career planning.
This is attributed to lack of focused attention to groom people as part of a
planned strategy to build careers. That promotion is the ‘be all and end all’
of the development process is the general notion that seems to prevail.
Paradoxically, in spite of too many promotions too often, the problem of skill
shortage continues to be acute in many banks.
6.1. Promotion
Policy in force for several years had built in rigidity in the matter of
minimum length of service required to be put in by an officer in a
particular Scale for becoming eligible for promotion to the next higher
Scale. It took as many as 17 years for an officer in Scale I to become
Chief Manager (Scale IV) and another 8 years to become General
Manager (Scale VII). This has resulted in an extremely adverse age
profile of both executives and senior officers (See Table S-6).
Subsequently, in 2005, banks were given managerial autonomy by the
Government to relax the eligibility criteria for promotions from one
Scale to another and frame their own promotion policies including
for fast track promotions. Most banks have introduced fast track
promotions and also reduced the eligibility criteria in terms of length
of service for promotions within the officer cadres. Banks that have
made good use of this autonomy have benefited in terms of improving
their executive and officer age profile, though only marginally.
6.1.1. The Committee has further observed that there are varying
trends in different banks – some banks have introduced
written test / are continuing with written test so as to assess
the candidates’ knowledge in banking operations etc., and
use it as a mechanism for screening; some others do not use
written test. With the appraisal system being what it is, 36 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
coupled with the limitations of interview process and absence
of any structured mechanism such as Assessment Centre for
identifying potential, the system is not able to provide best of
the people with potential for higher level positions.
6.1.2. The Committee is of the view that there is need to provide
rigour to the promotion process in all cadres. The written
test should include testing of adequate computer literacy apart
from banking aspects. Promotions in all cadres should have
a mandatory probation period of 6 months to ensure that the
promoted candidate demonstrates seriousness in adjusting
to new role.
6.1.3. The Committee is further of the view that promotion should
follow a  definite plan with a strategy to create a cadre of
competent manpower. Promotion done periodically without
following much rigour in assessment can be counterproductive
and create a situation where high performers may feel demotivated. There has to be a clear differentiation between
performers and non-performers which can be assessed only
by a well administered appraisal and testing system.
6.1.4. The Committee would like to suggest that the overall intent
of promotion and placement policies should be to ensure that
good number of officers with well rounded banking experience
are available at any point of time. Assuming 10 - 12 years as
the average length of service an officer has to put in before
entering executive cadre in Scale IV, banks may like to ensure
that he puts in service as Branch Manager of a Metro / Urban
branch for 3 years, Branch Manager of Rural / Semi-Urban
branch for at least 2 years and the another 3 years in one of
the three areas – Inspection, Administration, Training.
6.1.5. Having regard to the preponderance being accorded to rural
development and financial inclusion by the Government and
Chapter 6: Career PlanningREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 37
RBI, the Committee is of the view that the present mandatory
requirement of rural / semi-urban service for a minimum
period of three years for a generalist officer may be continued.
6.1.6. The selection for executive cadre has to be quite rigorous.
Promotion from Middle Management Grade / Scale III to
Senior Management Grade / Scale IV is a cutting edge
promotion besides being entry to executive cadre. The position
demands strategic thinking, innovativeness and perspective
building, besides assertiveness and communication skills.
These skills, being specific to individual executives, are
required to be systematically developed in them. More than
the banking skills (which he has acquired), the candidate has
to be assessed on his leadership potential, decision making,
communication and assertiveness. Therefore, the selection
to executive cadre has to be through Assessment Centre, which
can provide useful data on the potential of the concerned
candidate. The candidates shortlisted by the Assessment
Centre should be put through the written test, group
discussions and interviews. It needs to be ensured that young
and competent officers enter the executive cadre faster. Only
such rigor in the promotion process can create leadership
pipeline for the new age banking.
6.1.7. The Committee is further of the view that in order to provide
competent candidates for selection of EDs /CMDs, there is
need to bring rigour in the promotions within the executive
cadre. Having regard to this, the Committee recommends that
cooling period of one year be introduced in respect of
candidates not found suitable for the next higher stage in the
cadre in two consecutive promotion exercises. Further, the
Committee would recommend that Sub-Committee of the
Board should review cases of executives who could not become
General Manager by 55 years of age.
Chapter 6: Career Planning38 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
6.2. Career Planning
As regards career planning, the Committee is of the view that an officer
must get rounded exposure to all facets of operational banking and
become a sound banker. For this, PSBs must plan systematic job
rotation of the officer in the formative stages of his career. Later part
of his career could be dedicated to his gaining functional expertise in
one or two areas of banking. Initiation into management, control
functions, decision making, etc. at this stage could be achieved by
placing the officer as a departmental head, branch head. Training in
Credit, Treasury, Forex, Marketing, Branch Management, etc. would
help the officer in honing his skills. In the Committee’s view, these
interventions are necessary before the officer enters the executive
cadre. Selecting a specific career path for the officer could be decided
based on his demonstrated capability and performance in a particular
functional area as well as his potential to shoulder higher responsibility.
Mid-career workshop at this stage can help both the management and
the officer to decide on the career path.
6.2.1. While it is necessary to provide career development
opportunities for every employee in the bank, it is also
fundamental to track star performers as well as high potential
employees whether in clerical cadre, officer cadre or executive
cadre. HR should develop mechanisms for tracking down
such employees and provide opportunities supported by right
training. A sound mechanism for monitoring of performance
of these star performers is also critical for career planning
to succeed.
6.2.2. Career planning for officers identified / recruited for critical
functions such as Treasury, Risk Management, etc. should
focus on development of general competencies for the first 3
/ 4 years before their placement in the functional area.
6.2.3. Executives in Scale IV and V in PSBs occupy strategic
positions as Regional Managers / Deputy Regional Managers,
Chapter 6: Career PlanningREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 39
Branch Heads of exceptionally and very large branches,
specialized branches, Departmental Heads in Corporate /
Zonal offices, etc. The multi-faceted activities associated with
these positions in the general vibrancy created by competitive
financial environment demand executives with multidisciplinary skills. It is for this specific reason that the
Committee has stated earlier that officers must be given well
rounded banking experience in the early part of their career.
Career growth stage for senior management cadre requires
initiation into policy making, policy implementation,
sensitizing them to internal and external environment, etc.
Conceptual skills and exposure to new approaches are the
training needs at this level. When the executives are ready
for entry into top management cadre, banks should decide
on their specific career path positions depending on their
specific competencies.
6.2.4. Requi rement of di f f erent ski l l s and experi ence i s a
continuously evolving concept and depends on the business
scenario, integration of technology, market dynamics, etc. It
is, therefore, essential to continuously position the career
management system to take care of aspirations of different
types of employees, in the context of orgnisational needs.
6.2.5. In sum, the Committee is convinced that banks will have to
significantly improve their promotion processes, appraisal
systems and assessment methodology to get quality people.
Further, banks will have to put in place a well planned strategy
for placement in different jobs and roles at different intervals
to create planned careers. Only such a process can help open
avenues for them to become EDs / CMDs at a relatively younger
age. This will also help to a large extent their active
participation in crafting the future of their bank.
Chapter 6: Career Planning40 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
6.3. Specialization
With banking products becoming increasingly complex and new
business models emerging, PSBs would be required to recruit and use
large number of specialists in a variety of areas like Risk Management,
IT, HR, Treasury, Forex, etc. Acquiring and retaining such specialist
resource will be a major challenge for the PSBs. The Committee
believes that the value that the specialists will bring to the organisation
will increasingly go up and hence there is need for special attention
and policy frame work for differentiated treatment to this category. In
order to be able to retain their motivational level and make best use
of this resource, banks will have to work out separate career path and
promotion policy for such specialist officers. Banks may also have to
design suitable policies to generalize the specialists at senior level to
help them further grow in their career and occupy higher positions.
Policy for cross functional movement should also be put in place.
6.4. Diversity Management
‘Diversity management’ is increasingly becoming an integral part of
the HR universe the world over. Recent trends in India also portend
in this direction. Many progressive organisations in India are coming
out with innovative polices focused on women employees, employees
belonging to SC/ST category, etc.
In the case of PSBs, though diversity management assumes all the
more significance considering that about 78,000 employees – 17% of
the work force – are women and another about 27% employees of the
work force – belong to SC/ST category (see Table S-9), no formal
diversity policy is in place in any bank. Banks are, however, following
the Government guidelines on issues concerning diversity.
6.4.1. Women Employees
    Women occupy very many strategic positions, including Board
level positions, in many private sector and foreign banks in
Chapter 6: Career PlanningREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 41
India and around the world. In nationalised banks, they
constitute about 17% of the total work force. Their
representation in executive cadre is 2.66%, officer cadre
10.87% and clerical cadre 26.5%. In spite of good percentage
in clerical cadre, their percentage in officer and executive
cadre is quite low. In spite of competence, many women
employees are not able to move up in the hierarchy due to a
variety of reasons. Main problem in making best use of women
resources by PSBs is the mobility factor. This is also a
principal reason for their inadequate representation in the
senior managements of the banks. Of 383 General Managers
in nationalised banks, only 17 (4.4%) are women. Of Executive
Directors, only 2 are women. Not a single woman is CMD of
any PSB as of now.
6.4.1.1. Stagnancy of any cadre on account of any reason has
dysfunctional consequences. In a competitive setting, it is
desirable to keep an energetic and motivated workforce. The
oft quoted reason advanced is that women are reluctant to
move and take higher responsibilities. While this may be true
in some cases, the Committee believes that banks have to
make efforts for counseling and taking special developmental
initiative for women to ensure that the right talent in them
gets opportunity for advancement.
6.4.1.2. While the Committee believes that women should move out to
build careers, it is fair to have a spirit of accommodation
during difficult times in their career. As women have twin
responsibilities to families and organisations, some special
dispensation is required to accommodate them in their most
crucial period of life. The Committee feels that with these small
adjustments, banks can benefit a lot by developing and utilizing
the talent of a growing workforce. The Committee recommends
that sabbatical leave of 2 years during the career should meet
special needs of women employees. Further, talent within
Chapter 6: Career Planning42 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
women must be i denti f i ed and speci al moti vati onal
programmes for women should be conducted to ensure that
they take up higher level positions. Special HRD effort should
be directed to groom them for higher level positions.
6.4.1.3. The entire focus ought to be on getting best value out of
their potential towards which the banks may consider
investing additional resources. Conscious effort would have
to be made to ensure adequate exposure to women executives
to enable them to rise in the hierarchy. The Committee feels
that PSBs as a group could take a leaf out of some of the
best practices in vogue in some private sector / foreign banks
in this regard.
6.4.2. Employees belonging to SC/ST Category
    Employee belonging to SC/ST category constitute 27% of the
total work force. Their representation in clerical cadre is
23.47%, officer cadre about 24% and executive cadre about
8% and the rest are in subordinate cadre. Banks have to take
special developmental measures to identify talent and groom
them in various critical jobs like Credit, Treasury, Risk
Management, International Banking, etc.
6.5. Recommendations
l Systematic job rotation in the formative stages of an officer to be
ensured for providing rounded exposure in operational areas of
banking. Career plan for officers to aim at providing functional
expertise in one or two areas before he enters the executive cadre.
l The present mandatory rural / semi-urban service for a minimum
period of three years for generalist officers to be continued.
l PSBs to bring about rigour in promotion process in all cadre.
Chapter 6: Career PlanningREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 43
l Eligibility criteria in the matter of minimum length of service in a
particular Scale to be suitably reduced for fast track promotions to
talented employees – as a motivational and retention tool besides for
creating leadership pipeline.
l Promotions in executive cadre to be preceded by thorough testing of
competencies and potential measurement through Assessment Centre
for holding the position to which the employee is being promoted.
External experts to be associated in all promotions in executive cadre.
l HR to develop mechanisms for identifying star performers and to track
their performance for fast track growth.
l Each PSB to come out with a HRD plan for development of women
and SC/ ST employees. Special HRD efforts to be put in place for
developing these groups in key skills of banking.
l Sabbatical leave of 2 years to be allowed at request to women employees
to meet their special problems during their career.
Chapter 6: Career PlanningREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 45
CHAPTER 7
PERFORMANCE MANAGEMENT
7.1. Performance Management System (PMS) is the backbone of any
organisation, as it is performance that helps it to grow, develop and
strive for excellence. It is the only system that ensures that human
capital is properly utilized and encouraged to achieve business results.
It is also the main tool to ensure that individual and organisational
goals are aligned. It is the only way to ensure that seniors understand
their juniors’ needs so as to guide them in their plans and enable them
to deliver results.
7.1.1. The current PMS in PSBs is an area of serious concern. With
the exception of few, most banks are using the standard
appraisal format circulated by the Government. Even the
appraisal format used for senior executives including CMD
and ED is trait based and is totally out of tune with the strategic
role these executives are expected to perform. Except in one
or two banks, PMS has remained opaque in other banks, with
no feedback given to officers about ratings. The appraisal
system is routinely administered and generally not used for
developmental interventions. Further, much of the appraisals
and ratings have upward bias, with 80 - 90% - of the appraisees
getting ‘excellent’ rating. This does not lend to distinguishing
performers from non-performers. This in turn has dampening
effect on performers. Further, it has in many cases cascading
effect leading to mediocrity. In the emerging competitive
scenario, promotion of meritocracy through performance
differentiation has to be the key objective of a good HRD
system. The Committee is, therefore, of the opinion that Bell
curve shape approach be followed in assessing performance.
7.1.2. Performance appraisal system, as obtaining today, is confined
to officers and executives in most banks. Workmen staff 46 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
constituting as much as 63% of the total work force are not
today covered by the system in most banks. In banks where
this covers the workmen staff, inputs from the appraisal are
not adequately reckoned for promotions and placements. In
the Committee’s view, every employee of the organisation,
irrespective of his cadre, will have to be brought under
performance review process in order to create high
performance culture across the organisation. The Committee,
therefore, recommends that a credible performance appraisal
system should be introduced for all categories of staff in the
PSBs, with proper linkages to promotions, placements,
rewards, etc. In case of managerial appraisal, the focus of the
new appraisal system should be on the key elements of the
process – performance planning, performance review and its
linkage with rewards.
7.1.3. The Committee would also like to emphasize the role of
appraisers in the entire process. PMS can no more be a
routine activity. Appraising authorities will have to devote
good amount of quality time and attention to make PMS
credible and effective.
7.1.4. Promoting performance culture being at the very heart of all
HR reforms, the discipline of PMS will have to be enforced in
order to be able to get best results from the system. Towards
this, it is essential that accountability is fixed on the appraising
authorities.
7.1.5. While visioning, strategic planning, annual business planning,
periodic performance review and other such systems do have
their impact on the performance, banks as vibrant business
entities would need to take some critical steps for building a
high performance culture on an ongoing basis. All Officers
should be trained on the PMS.  Every senior officer from
branch manager onwards to wear the hat of ‘performance
Chapter 7: Performance ManagementREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 47
Manager’ and analyse the performance inhibiting factors and
undertake development activities. Performance review
discussion have to be made compulsory once in six months.
Further, self appraisal and performance analysis indicating
the factors that have helped and hindered performance and
suggested actions to be undertaken by the individual and the
organisation to be indicated.
7.1.6. There should be adequate internal talent trained to train
others. PMS should aim at continuous performance
improvements and development besides performance
assessment. Performance ratings should be shared with the
concerned employees.
7.2. 360º Feedback
360º feedback, which is a Multi-Rater Feedback System, is used by
almost every Fortune 500 Company in some form or the other. In this
system, the candidate is assessed by a number of assessors including
his boss, direct reports (subordinates), colleagues, internal customers
and sometimes external customers. The assessment is made on
questionnaires specially designed to assess managerial and leadership
qualities. This system is now being increasingly used by both private
sector and public sector organisations in India.
7.2.1. The Committee feels that as an officer grows in the banking
sector, he or she is socialised highly into the bank and the
concerns and activities are almost all the time inward directed.
It is necessary to get an objective and outsider view of the
senior and top level managers. Further, today there is only
downward appraisal which promotes this inward looking
nature of employees. Performance appraisal ratings rarely
differentiate a good performer from a weak one as the
standards are always internal comparison and merely target
driven with little emphasis on the process.
Chapter 7: Performance Management48 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
7.2.2. To enhance the objectivity of appraisals and gain insight into
leadership behaviour and groom the managers for future
roles, the Committee recommends that 360º feedback be
introduced as a leadership development, succession
management and grooming tool for executives in Scale IV and
above.
7.3. Recommendations
l PSBs to introduce and implement PMS for promoting high performance
culture.
l All categories of staff including workmen staff to be covered by PMS.
PMS to be a credible, transparent and interactive system. Online PMS
to be introduced.
l Discipline of PMS to be enforced by the management. Appraising
authorities to be accountable for proper and timely assessment.
l PMS to include some form of performance planning. All performance
plans to include statement of key activities under each KPA / KRA and
linkage to Branch/ Regional/ Functional/ Business Unit/ Organisational
goals.
l PSBs to introduce 360º feedback as a leadership development,
succession management and grooming tool for executives in Scale IV
and above.
Chapter 7: Performance ManagementREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 49
CHAPTER 8
REWARD MANAGEMENT
8.1. The Committee is of the considered view that the overall objective of
any incentive scheme should be to promote a high performance culture
through continuously raising the bar of performance of the organisation,
not only in terms of quantifiable business parameters but equally, in
terms of improvement in qualitative aspects of productivity and
efficiency. Employees making outstanding contribution through their
performance towards these objectives should only be entitled to receive
performance linked incentive. In its very nature, incentive therefore
is not meant for distribution across all sections of employees but
should be directly related to performance. Banks would thus be
required to install and implement a strong and credible PMS for
effective implementation of the scheme and to avoid discontent in the
larger section of performers.
8.1.1. During the interactions with the CMDs of the banks, the
Committee had occasion to learn about the working and
implementation of the present incentive scheme introduced
by the Government for PSBs. Different practices are prevailing
in different banks. While in some banks, incentive has been
given to the staff working at their Head Office / Central Office,
in some others, it has been given to a very small number of
staff. Many performing employees including in particular
Branch Managers and Regional Managers are not getting the
benefit now.
8.1.2. Many banks expressed that on strict interpretation of the
Government guidelines, they have found it very difficult to
operationalise the scheme. Almost all banks desired a total
review of the scheme. The Committee after deliberations has
come to the conclusion that:50 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
   l Implementation of the scheme within the overall limits laid
down by the Government is a major constraint.
   l Bigger banks and smaller banks are today placed in the same
bracket. One-size-fit-for-all approach cannot work looking to
the ground realities.
   l To make the scheme broadbased and more meaningful,
separate scheme for operations, support functions and control
functions is needed.
   l For fair incentive scheme, credible performance appraisal
system is needed, which is lacking today.
   l Average business performance figures should be the criteria
rather than year end figures.
   Note: Besides the incentive scheme introduced by the Government,
some banks have in place financial as also non-financial incentive
schemes for recovery of NPAs, mobilization of CASA deposits, etc.
Recommendations
The Committee recommends the following broad contours of the
principles that may govern the performance-linked incentive schemes
of PSBs:
l The incentive scheme should aim at performance differentiation
and reward the pivotal employees. This is with a view to retain
employees in critical areas and build future leadership pipeline.
l The scheme should also positively incentivize potential business
growth and as such, it cannot be a general incentive for distribution
across the board. It should be linked to performance which
presupposes that objective and measurable performance
parameters for each and every role are clearly spelt out.
Chapter 8: Reward ManagementREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 51
l Total amount of incentive to be paid by a PSB in a year not to
exceed 2% of its average net profit earned over the previous two
years.
l 50% of the amount to be earmarked for:
   ™ Business Leaders of Urban and Metro Branch Managers
™ Regional Managers
™ Zonal Managers
™ Executives of Business Verticals
™ Executives in Support Functions and
™ Executives in Control Functions
l 25 % to be earmarked for Branch Heads of Rural and Semi Urban
branches and employees connected with priority sectors and
financial inclusion.
l 25% to be earmarked for Boards of PSBs to identify individuals
and groups who have made outstanding contributions for business
growth, in Credit, Forex, Recovery, innovations in banking
operations, systems and processes, etc. Suitable incentive scheme
to be formulated to retain talent in critical areas such as Treasury
and IT. Other non-monetary incentives should also be encouraged
by the banks. These may include celebrations, CMD Club, etc.
l Incentive to be limited to 25% top performers who are covered
under PMS.
l Amount of incentive payable to be as under:
Grade / Scale
Incentive amount not
to exceed
 Officers in JMG / Scale I 30%
 Officers in MMG / Scale II & III 40%
 Officers in SMG / Scale IV & V 50%    of annual basic pay
 Officers in TEG / Scale VI 60%
 Officers in TEG / Scale VII 70%
Chapter 8: Reward Management52 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
l Existing incentive schemes for deposit mobilization, recovery,
suggestions, etc. to be dovetailed into the new incentive scheme.
l Proposed Steering Committee of the Board on HR to monitor
formulation and implementation of the scheme.
l The Committee further recommends that in tune with market trends,
PSBs may consider offering Employee Stock Option Plan (ESOP), in
the future, as a measure of promoting ownership in the employees as
also retaining talented workforce. This is to be limited to 15% top
performers in the executive cadre including CMDs and EDs.
8.2. Statement of Intent (SoI) for CMDs and EDs
Statement of Intent was introduced by the Government of India in the
year 2006, principally with a view to raise the bar of performance of
the banks year after year and evaluate the contribution of CMDs and
EDs to their respective banks’ performance in a particular year. This
has been a forward looking step.
8.2.1. The scheme in its present form provides for uniform financial
incentive to CMDs and EDs of all banks. The Committee feels
that each bank has its own unique characteristics and
business profile. One-size-fit-for-all format, irrespective of
size of the banks and their intrinsic problems, qualitative
issues, etc., does not capture the challenges faced and unique
policy initiatives taken by them. The Committee also opines
that fixation of SoI based on business figures, year after year,
is not considered sufficient. It needs to be appreciated that
intangibles (qualitative issues) such as transformation agenda,
BPR implementation, change management, customer centric
innovations, HRD innovations, organisation restructuring,
etc. play a vital role in building long term value for an
organisation. Therefore, qualitative issues need to be given
higher weightage depending upon each bank’s unique
Chapter 8: Reward ManagementREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 53
challenges in a particular year. The format would have to be
broad based.
8.2.2. CMD’s main role is largely strategic and futuristic. As CEO,
he is required to take all those fundamental steps that would
strengthen the bank to compete in the market place and do
future business. Having regard to this, the Committee is of
the view 40% weightage should be given to qualitative issues
in the SoI for CMDs.
8.2.3. ED’s main role is largely operational. As Chief Operating
Officer, he is mainly responsible for business results under
the overall guidance of CEO. Having regard to this, the
Committee recommends 25% weightage to qualitative issues
in the SoI for EDs.
8.2.4. State Bank of India has brought to the notice of the Committee
that the posts of DMDs and CGMs are unique to their bank.
Under the incentive scheme, DMDs and CGMs of SBI are not
now included. SBI has mentioned that DMDs are business
heads with their span of control far exceeding that of EDs of
other PSBs and CGMs are implementing heads of policies of
the bank. As such, there needs to be a separate dispensation
for them. The Committee opines that they should be covered
by the new incentive scheme.
8.3. Having regard to the multifarious responsibilities and modest
compensation package, the Committee feels that the present limit for
performance incentive is grossly inadequate. The Government may
consider revising it upwards.
8.4. Recommendations
l Qualitative issues to be given 40% weightage for CMDs and 25% for
EDs while finalizing SoI. Qualitative issues to be well articulated in
Chapter 8: Reward Management54 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
terms of laying clear benchmarks for achievement.  HR reforms to
form a major component of qualitative agenda.  Monitoring Group on
HR in the Ministry of Finance to overview.
l Quantitative parameters to be reviewed to include various efficiency
ratios as there are wide variations in these ratios among banks.
l Different SoI formats to be designed for CMDs and EDs, in the context
of specific job roles.
l SoI to be an elaborate exercise between CMD and Secretary (Financial
Services), Ministry of Finance, Government of India at the beginning
of the year and evaluation to be done by the remuneration committee
of the Board.
l A minimum level of performance to be set below which no incentive
is to be paid.
l The performance linked incentive should be admissible to CMDs /
EDs of PSBs on the basis of scores obtained as per performance
evaluation matrix to be developed by the Ministry of Finance.
l The revised incentive to CMDs and EDs be as under :
PSBs with
business mix
(deposits +
advances)
upto Rs.
150,000
crores
PSBs with
business mix
(deposits +
advances)
of over Rs.
150,000 crores
but upto
300,000 crores
PSBs with
business mix
(deposits +
advances)
of over Rs.
300,000 crores
l Chairman of SBI --- Rs. 35,00,000
l CMDs of PSBs Rs. 18,00,000 Rs. 20,00,000 Rs. 25,00,000
l EDs of PSBs Rs. 10,00,000 Rs. 12,00,000 Rs. 15,00,000
l ESOP to be considered, in the future, to 15% top performers in the
executive cadre including CMD and ED.
Chapter 8: Reward ManagementREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 55
CHAPTER 9
SUCCESSION PLANNING AND
LEADERSHIP DEVELOPMENT
9.1. Succession Planning
The purpose of succession planning is to ensure that there are
qualified and capable people in all key and critical positions not just
for the present but at least for the next five years and such an
assessment should be made every year. The process involves
identification of all key positions and future potential candidates and
developing them through appropriate training, job rotation and
mentoring.
9.1.1. Although most PSBs identify succession as a major problem,
very few initiatives have been taken to tackle this problem.
Bank Boards’ engagement in succession planning is virtually
absent. The problem is all the more exacerbated in medium
and small banks, placing these banks at great risk.
9.1.2. This neglect has led to serious problems for finding successors
for even critical positions, when the incumbents either retire
or leave the bank. At the leadership levels too, PSBs have no
credible management succession plans to ensure continuity
and progress of the organisation. Even for the top positions
like CMD/ED, quite often the criteria is lowered apparently
because of non-availability of eligible candidates in the
selection basket. Such exigencies have arisen on some
occasions in the past on account of lack of succession
planning. The need for succession planning is far more urgent
in the immediate future, given the number of mass retirements
PSBs are going to face in the coming years.
9.1.3. From 2012 onwards, PSBs are likely to face top management
crisis. The leadership gaps in PSBs are palpable in as much 56 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
as that in the next 5 years, 80% of GMs, 65% of DGMs, 58%
of AGMs and 44% of CMs would be retiring. The pool of these
experienced executives cannot be replaced only through
promotions. Mere promotion on accelerated basis without
grooming and advance planning would not solve the problem.
Apart from this, there will be huge gaps arising in the middle
management levels too. PSBs would need to identify and
groom potential successors for the vacant positions. Planning
is needed with projections for the next 5 years at least.
9.1.4. In an ever changing and increasingly competitive and complex
business environment, development of competencies in the
traditional sense is giving way to development of integrated,
entrepreneurial global managers. Having a steady and reliable
pipeline of leaders is critical to business success and
continuity. Succession planning and leadership development
can help banks create a leadership pipeline to manage
business continuity risk and offer career growth to their
existing employees. Consensus among bankers is that
leadership gap is the key issue to be addressed.
9.1.5. The Committee feels that succession planning should be
thought of by the banks in two ways:
   l Identified critical positions.
l Leadership positions.
9.1.6. The critical positions would change from bank to bank and
even from time to time. Hence review of critical positions
would have to be highly dynamic and the review exercise
should engage the attention of the proposed Steering
Committee of the Board on HR. Ideally, each critical position
should be backed up by 3 potential successors in the reserve
and on whom the bank can fall back in the event of any
contingency. They should be groomed sufficiently in advance
to take up the vacant positions when they arise. In the
Committee’s view, this is the crux of succession planning.
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 57
9.2. Leadership Development
Most banks consider ‘Leadership’ as key to long term success of their
organisations. They also consider this as a major area of concern in
the current context. Weaknesses in developing leaders lie in the existing
processes of appraisal, nebulous training and grooming and skewed
exposures. The methodology used by most of the banks in developing
senior and top management is through sporadic and adhoc exposure
to different kinds of management development programmes in India
and abroad. Multiple exposures to similar kind of programmes do not
necessarily add value. There is absence of a well knit and comprehensive
strategy to develop people to take up strategic positions in senior and
top management. Further, in most of the banks there is no strategic
frame work for identifying and grooming leaders.
9.2.1. The quick promotion system adopted currently to tide over
the problem of finding successors to retiring top management
levels without exposure to leadership grooming is far from
adequate in meeting the new challenges. Quick promotions
without well rounded exposures do not produce leaders for
strategic roles. The tendency to ‘fill the position’ will not serve
the purpose. Class room training and attending a few seminars
on leadership would not be good enough to produce leaders.
Many other highly coordinated and focused efforts are
required to help the individual executive in his aspiration for
personal transformation, coupled with mentoring initiatives
on an ongoing basis and project responsibility in tune with
the individual bank’s business priorities and the like.
9.2.2. Though some of the major banks have initiated some steps
to identify executives and groom them for leadership position
through a comprehensive strategy with the help of outside
consultants, such efforts need to be sustained on an ongoing
basis.
Chapter 9: Succession Planning and Leadership Development58 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
9.3. Leadership Pipeline for the Top
In the final analysis, biggest risk to a company and its shareholders
is weak leadership pipeline and gap in the capability levels required
to build the organisation and deliver robust shareholder returns. HR
function can play a strong role in helping define the appropriate
leadership competencies for the organisation, designing selection and
assessment methods around these competencies and creating
frameworks or mechanisms whereby high potential talent can be
identified and nurtured and a healthy pipeline created. The Committee
strongly recommends that PSBs follow processes of both individual
and team development when focusing on succession planning. This
will help ensure that banks build not just one leader but key abilities
are developed in a number of people and teams simultaneously.
9.3.1. PSBs now require tech-savvy, customer savvy, execution driven
and bold decision makers who are strongly focused on people.
As per McKinsey’s study, PSBs, as a group, will need to groom
about 10,000 leaders over the next 5 years:
   l 500 – 600 Business and functional leadership –
General Managers
   l 1,500 – 2,000 Geographic business leadership –
Regional Managers
   l 6,000 – 7,000 Branch leadership –
Branch Managers
9.3.2. The Committee is of the considered view that leadership
development has to occupy a centre stage agenda for both the
Government and the individual banks. A comprehensive
leadership development strategy will have to be put in place
for the banking sector and appropriate steps will have to be
taken to introduce rigour into the entire process.
9.3.3. The position of General Manager is a cutting edge position
for being groomed as future ED / CMD. The Committee opines
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 59
that GMs of PSBs should be part of the industry level pool
for the purpose of identifying potential candidates for the top
positions. The pool of GMs should be put through Assessment
Centre for qualifying for the post of EDs / CMDs.
9.4. Assessment and Development Centre (ADC)
Assessment Centre is a comprehensive, standardised procedure in
which multiple assessment techniques such as situational exercises
and job simulation (business games, discussions, reports and
presentations) are used to evaluate individual employees for a variety
of higher level jobs and leadership positions. In India, it is used by
PSUs like NTPC, ONGC since the last 5 to 10 years.
9.4.1. As part of leadership development for Scale IV and above, the
Committee recommends use of Assessment Centre as a
reliable and valid method of assessing the extent to which a
given executive has the competence to perform the new tasks.
Promotions in executive cadre have to be preceded by a
thorough testing of competencies and potential for holding
the position to which the employee is being promoted.
9.4.2. Data from such assessments should be maintained for each
candidate and used for promotion decisions along with his
performance appraisal reports, experience profile and other
biographic information. Apart from these, 360º assessments
and evidence shown by the candidate that he takes results of
such exercises seriously and tries to learn and develop himself
should also be maintained and used. Utilisation of learning
opportunities and extent of learning and skills possessed
should be used as criteria for promotions and selection to
leadership positions. Consistence in performance combined
with leadership qualities like innovativeness, communication
skills, entrepreneurial thinking, decision making skills, talent
management skills, system orientation, technological attitude
Chapter 9: Succession Planning and Leadership Development60 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
and commercial acumen should be measured through
Assessment Centre and candidates nurtured to develop and
display such competencies.
9.5. Bankers’ Leadership Development Institute (BLDI)
In order to respond to the huge requirement for developing leaders
for the banking sector, there is need for a serious strategy which can
address the problem in totality. The strategy has to be a carefully
planned series of learning events, variety of exposures, assessment
exercises, mentoring and classroom training. Moreover, leadership
training must be buttressed by research and relevant case material.
Our current leadership training lacks in these aspects. The current
leadership programmes, which in some cases also include exposure
to training abroad, are at best an effort to guided exposure in the
emerging areas of banking and management but these are not adequate
for behaviourial modification so as to prepare the people to perform
strategic role.
9.5.1. It will be tautological to argue that development of leadership
skills is an inevitable reality which has to be accorded topmost
priority more so on account of a threatening vacuum being
created by mass exodus of senior and top management
personnel in the next five years. Before the issue achieves a
crisis proportion, it would be just right to create an industry
level infrastructure for providing comprehensive leadership
development.
9.5.2. Currently, National Institute of Bank Management (NIBM),
which was originally conceived as an institution for training
higher level banking personnel, will not be in a position to
undertake the humongous task of training a large number of
leaders for the banking system, in the opinion of the
Committee. Its academic infrastructure to undertake this task
is far from adequate. Over a period of time, considerable
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 61
proportion of NIBM’s activities is directed to train junior and
middle level officers and its faculty resources and academic
preparation do not match the higher order needs of the senior
and top managements of the banking sector.
9.5.3. For an industry which is growing at a rapid pace and which
aspires to become world class, learning and development
cannot be a matter of choice but a matter of sheer survival.
The Committee strongly believes that there is a lot of
leadership potential among the current bank employees but
it is stagnating. There is an urgent need to identify, spot,
assess, nurture and develop leadership competency at
operational as well as strategic levels. Such spotting, nurturing
and developing need full time attention of a group of people
who will undertake a variety of exercises and activities towards
the same. This could be very appropriately done in an
institutional framework.
9.5.4. There is thus need to establish a full-fledged institution as a
green field project to develop leaders, on the lines of
Leadership Academy for Defence Services, Civil Service, Police
Service, etc. The Committee, therefore, proposes setting up
of BLDI to develop world class leadership talent.
Objectives
9.5.5. The main objective of BLDI will be to develop leaders especially
at senior and top management level. It will develop case
studies and other such material for impactful learning. This
will be a knowledge warehouse which will continuously focus
on new knowledge generation in key strategic areas by
documenting worldwide best practices, conducting research,
undertaking surveys, organizing conferences and acting as
internal leadership consultants to the banks.
Chapter 9: Succession Planning and Leadership Development62 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
9.5.6. Eventually, this institute can also set up centres of excellence
in the areas of Technology, HR and Change Management,
Retail, Risk Management, etc. These centres of excellence can
provide research based advice, business models, global best
practices and survey results on an ongoing basis and can
promote a vibrant learning environment in the banking
industry.
9.5.7. State Bank of India and some large banks should take initiative
to create an initial corpus to fund the project. A Committee
of experts can go into the modalities of setting up this institute.
Prestigious institutions like IIM, Ahmedabad can also help
setting up this institute. While this institute could be set up
in 3 to 4 years time, IIM, Ahmedabad can be approached to
set up a Banking Centre of Excellence which can, in the
interregnum, undertake leadership development projects in
a holistic manner.
9.6. Appointment of CMDs and EDs
The role of the current day CEOs of PSBs has become vastly different
in both nature and scope from that in the earlier era. A CEO’s role
today is largely strategic, with responsibility to craft a desirable future
and see through its actualization. With new business verticals and
models emerging by the day, he has to steadfastly pursue the
transformation agenda to face the challenges of competition and new
age banking in the ever changing banking landscape. He has to set a
new direction for his bank and weave a future that will continuously
inspire confidence in various stakeholders. Further, many PSBs are
aspiring and preparing to become global banks, in terms of size, quality
and best practices. All this will call for a very high order of strategic
vision, risk taking and most of all, a global mindset on his part, much
beyond traditional banking and management skills. Hence, candidates
for the post of CMD should be chosen after detailed screening of EDs
using tools like Assessment Centre and 360ºfeedback.
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 63
9.6.1. The Committee would also like to suggest to the Government
to review the system of appointment of EDs in the banks.
There is need to prescribe some basic operational experience
as Zonal Manager / Regional Manager for at least two years
for being eligible for ED’s position. The Committee also feels
that persons with requisite experience and grounding should
only be posted in banks with sizable treasury and international
operations. Having regard to various relevant factors, the
Committee feels that at least one ED in the case of larger
banks should be drawn from the same bank. This will help
the concerned banks to provide continuity in pursuing their
long term business strategies.
9.6.2. On the tenure of Chief Executives of the banks, Narasimham
Committee Report II (1998) had, interalia, made the following
recommendations:
    “The Committee is of the view that in today’s increasingly
challenging business environment, a large institution can
only be led effectively by a Chief Executive who has a
reasonable length of tenure, which the Committee believes
should not be less than five years”.
9.6.3. Responsibilities and challenges of the whole time directors
of PSBs have been increasing manifold in the recent times.
Many CMDs feel that the present system of short tenure has
not been helping them to work on long term strategies and
prepare their organisation for the future. In many private
banks, long duration fixed tenure of CEOs has helped
implementation of their long term vision and appropriate
strategies, with least disruption. The Committee feels that in
the current and evolving setting of PSBs, the tenure of CMDs
needs to be fixed and long enough for them to come out with
their vision for the future and see through its actualization.
CMDs of proposed ‘Navratna’ banks at least should have a
clear tenure of 4 to 5 years.
Chapter 9: Succession Planning and Leadership Development64 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
9.6.4. The Committee also opines that appointment of CMDs and
EDs should be announced well in advance, on the lines of the
long established tradition in the private sector.
9.6.5. The Committee’s attention was also drawn to an important
aspect relating to pension payment to CMDs and EDs.
    At present, the whole time Directors appointed in banks viz.,
EDs and CMDs from career positions as General Managers
are paid pension (in case they opted for the same) based on
average pay drawn by them for the last 10 months in their
career positions as General Managers. At the time of
appointment as whole time Directors, in many cases, they are
of 50-55 years of age and the years of computation of pension
get curtailed. Such officers draw much lesser pension than
that of other General Managers, who superannuate without
being elevated to Board level position. Thus they are denied
of the benefit of wage revision taking place during their Board
level service in respect of pensionary benefits. In view of this,
there is a strong case to recognize service rendered as EDs/
CMDs for the purpose of computation of pension based on
the last pay drawn as EDs / CMDs.
9.6.6. The Committee fully endorses the logic and recommends
calculation of pension based on the last pay drawn by CMD
or ED as the case may be.
9.7. Recommendations
l PSB to introduce system of succession planning for key critical and
leadership positions. Each critical position should be backed up by
three potential successors in the reserve. Review of critical positions
to engage the attention of the proposed Steering Committee of the
Board on HR.
l The identified potential successors should be groomed through
variety of mechanisms to prepare them for the identified positions.
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 65
The proposed Steering Committee of the Board on HR to monitor
this process.
l A comprehensive leadership development strategy, based on leadership
competency model for each role, must be developed by each bank for
executives in Scale IV and above.
l Leadership competency should be developed through a planned
exposure to different jobs, tracking performance, training and
development at different stages of career and grooming through
management and leadership courses and through project work. Focus
should be on developing high potential individuals.
l Potential identification should be done through modern HRD tools
like Assessment Centre and 360º feedback to identify talent for various
roles. Eventually this should become part of leadership development
process and managed by BLDI. BLDI or any other institution which
facilities this for PSBs should also help them develop mentors to guide,
coach and promote internal talent.
l A common pool of GMs to be created for the entire banking industry.
Only identified potential candidates through Assessment Centre to
become eligible for ED / CMD positions.
l On appointment, EDs and CMDs should be inducted into the role
through a carefully designed program of approximately a week’s
duration. This should socialize the person into the role and prepare
them to plan their work. They should seek 360º feedback at intervals
of the initial six months, end of the first year and thereafter, annually.
Each ED and CMD should have a mentor from the industry leaders,
to work with him.
l Bankers’ Leadership Development Institute to be set up for creating
future leaders, research, bench marking and best practices.
l In order to promote meritocracy and high degree of professionalism,
banks need to have best in class leadership at the top. The main criteria
Chapter 9: Succession Planning and Leadership Development66 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
for selection has to be strategic thinking and turnaround ability. CMDs
in proposed ‘Navratna’ banks to have a clear tenure of 4 to 5 years.
l For proposed ‘Navratna’ banks or banks with business mix of over
Rs. 300,000 crores, a ED (HRD) – to be appointed.
l For elevation from GM to ED, the candidate should have 2 years of
experience in regular GMs cadre / grade. Further, the candidate should
have remaining 2 years of service. Minimum experience of 2 years as
ED to be prescribed for appointment as CMD of banks.
l Candidates for ED / CMD to be put through Assessment Centre before
they become eligible for these positions. Well defined 360º appraisal
to be introduced for CMD and ED.
l Government to consider pensionary benefits to CMDs and EDs based
on their last the last pay drawn by them as whole time Directors.
Chapter 9: Succession Planning and Leadership DevelopmentREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 67
CHAPTER 10
EMPLOYEE ENGAGEMENT AND MOTIVATION
10.1. PSBs of today present an altogether different picture as compared to
the past. Many have turned tech-savvy. Some are getting aggressive by
the day in marketing and sales. Some others are active participants
in the war for customers. A few are getting smarter, with a bevy of new
offerings to the customer. Some are coming out with new business
models and entering new businesses.
10.1.1. These developments have profound impact on the employees
of the banks. At times, they are overawed; sometimes they
are overtaken by the events. The challenge before the banks
is how best to inform, engage, marshall and channelize the
employees’ energies towards these developments with a view
to transform them into active and willing partners in the
change process.
10.1.2. To inform and engage the staff on a continuous basis, banks
will have to use many routes and channels. In these days of
fast moving developments, frontline staff are often at their
wit’s end about corporate thinking and plan about the future.
Authorities at different levels like Regional Managers, Zonal
Managers, besides CMD and ED may have to communicate
with the frontline staff on the bank’s plans and priorities on
an ongoing basis. Equally, staff need to be sensitized about
the problems faced in implementation of various schemes
and projects and possible solutions. Where the bank stands
on different parameters vis-à-vis its competitors would also
have to be spelt out in clear and unambiguous terms.
10.1.3. Employee engagement is greatly facilitated when employees
perceive a favourable set of circumstances for working – such
as openness in environment and above all, fairness in 68 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
dealings. Clarity of job expectations, constructive feedback
as also quality of relationship need to be improved to
effectively raise employee engagement. Communicating in
operational language that drives home various issues making
meaning to the frontline staff is the crux. Institutionalization
of the communication strategy for engaging the staff on a
continuous basis is thus a major challenge for banks in the
current times.
10.1.4. Another relevant issue is the direction of communication.
Much of the communication in the banks today is one way,
that is, top down. The present mechanism for bottom up
communication is rather weak and non-functional in many
cases. Banks stand to benefit a great deal by encouraging
free flow of ideas and suggestions from their staff for which,
a credible and well oiled mechanism would need to be
created. Technology tools like Intranet, interactive portals,
on line quizzes, etc. can be used with advantage. In short,
innovations in employee engagement and creative ways of
interacting with the frontline would greatly facilitate alignment
between the top and the field staff.
10.1.5. Steps also need to be taken to reduce the level of disengagement
of employees. One major area to be addressed in this regard
is resolution of grievances. For this, the Committee suggests
introduction of the system of online resolution under which
grievances unresolved at a particular level could be
automatically escalated to the next higher level.
10.1.6. The Committee has noted that some banks have introduced
some novel ways of engaging the staff – e.g; ‘Citizen SBI’ of
State Bank of India, ‘Spandan’ of Canara Bank, ‘Baroda
Manthan’ of Bank of Baroda and ‘Jagruti’ of Allahabad Bank.
Some other banks have introduced ‘Hotline’ for the staff to
directly communicate with CMD. A well- designed and
Chapter 10: Employee Engagement and MotivationREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 69
operationalized ‘Suggestions Scheme’ is also in vogue in some
banks. These programmes have to be conducted on a
continuous basis covering wider section of staff at different
locations to cover staff of rural and semi urban branches. In
these programmes, staff should be sensitized about the larger
vision of the bank and customer services issues.
10.2. Motivational Strategy
Motivation of employees is a key issue for implementation of a bank’s
programmes, policies and strategies. It cannot be assumed that
periodic promotions and benefit programmes alone can keep the
motivation level of the staff high. Periodic employee climate surveys
can provide useful understanding about the motivation level of
employees. Many progressive organisations effectively use such
survey results for devising employee motivational strategies. The
Committee has come across such methodology being used only by
a couple of PSBs. In the Committee’s opinion, use of such surveys
can provide useful diagnosis to banks about the gaps in their HRD
policies which will in turn be helpful for designing appropriate
interventions.
10.2.1. PSBs have also to take effective steps to energize the frontline
and encourage learning initiatives among employees. They
will have to work out liberal reward schemes to encourage
i nnovati ons and pursui t of hi gher educati on by the
employees.
10.3. Recommendations
l PSBs to introduce online resolution of grievances.
l Banks to install a credible system to encourage free flow of ideas and
suggestions from their staff – technology tools like Intranet, interactive
portals, on line quizzes, etc. to be used.
Chapter 10: Employee Engagement and Motivation70 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
l Each bank to evolve employee involvement programmes covering all
sections of employees.
l Banks to encourage learning initiatives among employees through
appropriate recognition and reward schemes.
Chapter 10: Employee Engagement and MotivationREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 71
CHAPTER 11
PROFESSIONALISATION OF HR
11.1. Unlike in the private and foreign banks, HR function has still not
attained specialized professional status in PSBs. This in turn has not
been conducive to promoting professionalization of HR function in
line with the changing market realities.
An overwhelming majority of PSBs feel that HR is at the backburner
now and has to move to centre stage. There is general appreciation
that the risk of not pursuing HRD is too high. For HR to assume and
perform the new transformational role effectively, banks would need
an appropriate HR organisation structure under which, developmental
functions of HR are clearly and distinctly distinguished from the
maintenance functions. PSBs are unanimous that they would need HR
specialists to drive the new HR agenda. While noting that some banks
have already begun to induct HR specialists, the Committee feels that
other banks too would need to recruit HR professionals at both senior
and junior levels to undertake multifarious HR activities.
11.1.1. In the Committee’s view, core elements of developmental HR
function would include:
   l Manpower resources forecasting and manpower planning;
right sizing of the manpower in the technology environment
   l Induction of new entrants, in-company training, job training,
external training, mentoring
   l Talent Management - acquisition, grooming and retention
l Career progression planning
l Performance management and measurement
l Rewards and incentives
l Succession planning for critical positions72 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
   l Leadership development
l Employee Productivity
l Employee surveys
l HR audit
l HR branding
11.1.2. The Committee is quite clear that professionalization does
not mean merely appointing HR specialists and leaving all
matters to them. Professionalization would involve installation
of scientific systems in HR backed by professional expertise
and long term policy formulation. The Committee feels that
PSBs would need to develop a vibrant HR architecture
supported by a strong HR infrastructure and Board level focus
and attention. The main role of HR in PSBs will have to be to
continuously prepare the people to drive their organisation
to meet the aspirations of customers and help achieve the
expectations of various stakeholders.
11.1.3. The task of building human resource architecture is rather
challenging as it will involve a whole lot of initiatives at various
levels and more particularly at the individual bank level. The
Committee is conscious of the fact that urgent business
exigencies are always able to get priority over important
agenda like HRD and sometimes even the good work initiated
in HRD is not institutionalized due to change in priorities of
successive managements. It is, therefore, of utmost importance
to institutionalize the mechanisms that should sustain on a
continuous basis. For this, the Committee recommends that
Government should direct each bank to constitute a Steering
Committee of the Board on HR, with Government Director
and two outstanding HR professionals, apart from CMD and
ED, as members. It should meet every quarter and discuss
following critical issues:
Chapter 11: Professionalisation of HRREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 73
   ™ Develop a HRD policy document which should cover a long
term strategy for talent management
   ™ Review talent management framework and ensure that
adequate number of people are available for critical positions
   ™ Review training arrangements for new competencies and for
the new business plans
   ™ Review employee engagement strategy
™ Review performance management system and the rating
behaviour
   ™ Review manpower planning and resourcing strategies
™ Review HRD policies in the context of best practices in the
industry
   ™ Review HRD audit and take corrective measures
™ Review learning infrastructure in the bank
   ™ Initiate effective measures for developing leadership pipeline
11.1.4. Moreover, banks being large organisations with huge
manpower, HRD requires focused attention and prioritized
treatment at the top level. Most large Central Public Sector
Undertakings (CPSUs) have Director level representation for
HR in their Board. Considering the importance and crucial
nature of HR’s contribution, the Committee is convinced that
there is need for Board level position in HR in PSBs too and
to begin with, large banks having business mix of over
Rs.300,000 crores and staff strength of over 30,000 can be
provided with ED level position in HR to drive HR agenda
from the top. The Committee believes that such a forward
looking move by the Government will help large banks to pay
focused attention to HRD. This is necessary to implement the
paradigm shift in the human resource function in banks to
make them competitive and sustainable.
Chapter 11: Professionalisation of HR74 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
11.1.5. The Committee suggests that the job role of ED (HRD) be to
manage staff costs, improve productivity, build leadership
pipeline, pursue good HR governance and most importantly,
to directly supervise talent management issues. A cell on talent
management should undertake the task of top management
talent identification, placement, development and utilization
using modern talent management tools like competency
management, Assessment and Development Centre, 360º
feedback, leadership development thro leadership projects
and other interventions. The cell should design and monitor
the methods to identify top leadership talent for the future
from Scale IV onwards to the general managers’ level. The
cell should be assisted by young and well trained professionals
who can be recruited from well known management schools
specializing in HR or a special cadre can be developed with
the help of specialized institutions in HRD. This cell should
be directly supervised by ED (HRD).
11.1.6. Only professionally qualified and experienced people should
be considered for this position and if necessary, lateral
recruitment could be made.
11.1.7. In other PSBs where ED (HRD) is not provided, this task to
be directly overseen by the CMD himself considering criticality
of the issues. A cell on Talent management and leadership
development in CMDs office should get right priority and
demonstrate management commitment.
11.1.8. Banks should provide appropriate budget for this purpose
on the lines of many PSUs who have allocated funds liberally
for such initiatives. The committee is hopeful that CMD and
ED level attention to the issues of leadership and talent
management in each bank will greatly facilitate building
leadership reservoir.
Chapter 11: Professionalisation of HRREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 75
11.2. Automation of HR Administration
In most PSBs, HR administration activities are today handled manually
at different levels like various administrative offices and branches.
Bank branches being geographically dispersed, many divergences and
aberrations in HR practices have crept up over a period of time. At
times, these divergent practices have been leading to some irritants
in the IR atmosphere in branches. The present system is also leading
to some amount of delays in processing and settling of employees’
claims, benefits etc. Further, the system does not provide a 360 degree
view of the employees and their competencies for taking important
management decisions like promotions, placements, training, reward
etc.
11.2.1. Modern technology like web-based system is today available
as an alternative. Merit of this system is that besides being
transparent and employee-friendly, it has provision for
employee self-service modules and interactive services.
Employees can also view their personal data and update/
modify it besides benefiting from speedier processing of
claims and benefits.
11.2.2. The system, being a centrally administered one, has other
benefits too. It will relieve many staff members at branches
and administrative offices dealing with staff matters today for
deployment in business areas. Branch level IR issues are
likely to be far less on account of uniform application of rules
across the organisation. Speedier HR process and decision
making can lead to greater employee satisfaction. The system
can also facilitate deployment of right man for the right job
and can help work out performance-based pay. Additionally,
banks can also introduce e-learning functionality. Transparency
in HR governance, better competency management and cost
effective human resource management would all add value to
the organisation.
Chapter 11: Professionalisation of HR76 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
11.2.3. Committee learns that some large PSBs have implemented
the web-based system for HR administration. In view of its
multifarious benefits, the Committee recommends that other
PSBs too may go in for this system. The industry forum of
IBA can be used by the banks for exchanging experiences and
benefits while implementing the system.
11.3. HRD Audit
The Committee has proposed a number of changes in strategies,
structure, systems and skills in HR functions. To get the best out of
HR, there has to be good connect and alignment between its strategies,
structure, systems and styles with business and its goals. It should
be aligned with short term goals and long term strategies. Besides this
alignment, the skills and styles of HR staff, line managers and the top
management should synergise with HR goals and strategy.
11.3.1. HRD audit is an attempt to assess these alignments. It helps
to find out skill shortages, talent gaps, gaps in performance
management systems, etc. It also attempts to find out the
future HRD needs of the organisation. There is also need to
develop HRD audit approach to assess the extent to which
current HRD function is contributing or not contributing to
business improvements. This is a systematic diagnostic
exercise to find out the strengths and weaknesses of HRD. It
is not a fault finding audit but a proactive and developmental
audit. Some banks have initiated HR audit in a limited way
but there is need to widen its scope.
11.3.2. Considering the positive outcomes of HRD audit based on its
diagnostic feedback, the Committee recommends introduction
of HRD audit in each bank. Such an exercise should be
undertaken once in two years and its outcome should help
the Steering Committee of the Board on HR to initiate policy
decisions.
Chapter 11: Professionalisation of HRREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 77
11.4. Role of Indian Banks’ Association (IBA)
During interaction with the banks, the Committee had the opportunity
to learn about quite a number of best practices in HR areas in vogue
in different banks. These best practices are, however, not known to
all the banks. There is no forum or mechanism presently available for
exchange of information on best practices among the banks. The
Committee is of the view that IBA should act as a forum for exchange
of best practices among the banks.
11.4.1. IBA should carve out an enlarged role for itself and emerge
as an ‘Idea Power House’ in the overall interest of raising the
bar of performance of the Indian banking sector. It should
come out with benchmarks for performance, productivity and
efficiency. An HRD cell, to be headed by a trained senior HR
professional, should be constituted in IBA to undertake
research, benchmarking studies, industry best practices,
arrange conferences on strategic HR issues and provide
guidance to banks’ HRD departments. Besides, the present
HR Committee of IBA should be reconstituted as HRD
Committee with specific mandate to promote inter-bank
collaboration in HRD and to share best practices and create
a learning network among the banks.
11.5. Role of Government
HR initiatives in banks today are largely at the discretion of the
individual CEOs. Mainly overriding business priorities take away much
of the CEO’s time. Further, no specific expectations are set out either
by the Board or by the Government in regard to HR processes and
transformation. Sometimes, some excellent initiatives taken are not
carried forward by the subsequent management. Due to the short
tenure of CMDs, many initiatives in HR are not institutionalized. Legacy
problems continue to remain unaddressed and agenda for change gets
accumulated.
Chapter 11: Professionalisation of HR78 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
11.5.1. For PSBs to continue to be strong and well performing, it is
imperative that HR is inextricably linked to business priorities.
Deficit HR capital in terms of leadership gaps, critical skills
gaps and adverse demographic profile, in many banks, has
reached serious proportion and it is time that banks become
accountable to deal with the issues on priority basis.
Considering the uniqueness of each bank and the special
problems faced, the Government has now to draw a HR
balance sheet in respect of each bank and set the process of
transformation in motion. As majority shareholder of PSBs,
human capital management should be a key concern of the
Government and it should also help institutionalization of
best HR practices. In this context, the Committee recommends
setting up of a Monitoring Group in the Ministry of Finance
comprising of Secretary (Financial Services), Joint Secretary
and two HR professionals preferably with exposure to banking
industry, to monitor implementation of prioritized agenda of
HR transformation including measures for performance
acceleration and development of leadership. This Group
s ho ul d a l s o mo ni t o r i mpl ement a t i o n o f v a r i o us
recommendations made by this Committee.
11.6. There is need to encourage PSBs to adopt modern HRD practices and
undertake HR transformation. The Committee suggests that an award
for best HRD practice should be introduced by Government. This will
certainly create a competitive environment for improving HRD practices.
11.7. Recommendations
With a view to ensure that HRD is woven into the system, the Committee
recommends the following:
l Large banks with business mix of over Rs.300,000 crores and staff
strength of over 30,000, to be provided ED (HR) to drive HR agenda
from the top.
Chapter 11: Professionalisation of HRREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 79
l Every CMD should take HRD on his agenda. A Steering Committee of
the Board on HR to be constituted in each bank, with Government
Director and two outstanding HR professionals (having knowledge of
360º, Assessment and Development Centre, etc.) apart from CMD and
ED, as members, to discuss critical issues in HR every quarter.
l Banks to recruit HR professionals at both senior and junior levels to
undertake HR activities. Lateral recruitment should be encouraged
for getting top talent in HR. All HRD staff should be trained before
they are posted to HR roles.
l All PSBs to automate HR administration through web-based system,
for efficiency, cost reduction and transparency in HR management.
l Banks to introduce and carry out HR audit once in two years.
l A Monitoring Group comprising of Secretary (Financial Services),
Joint Secretary and two HR professionals preferably with exposure
to banking industry, to be constituted in the Ministry of Finance to
monitor introduction of HRD, best practices and the transformation
agenda of different banks.
l An award to be instituted for best HR practices.
Chapter 11: Professionalisation of HRREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 81
CHAPTER 12
WAGES, SERVICE CONDITIONS
AND WELFARE
12.1. Current Institutional Mechanism
At present, issues relating to wages and service conditions for all PSBs
are negotiated and decided at industry level between IBA and all India
bank employees’ organisations. This bipartism between management
and employee organisations was initiated in the mid-1960s to overcome
the then prevailing litigatory culture in the employer – employee
relations in the banking industry. Although this arrangement has
spared the individual banks, over the last four decades, from the
arduous exercise of negotiating wages at their bank level, review of
this arrangement is long overdue.
12.1.1. Way back in 1991, Narasimham Committee-I had observed
that the prevailing industry level arrangements are not related
to productivity or profitability of either individual banks or
of the system. Subsequently in 1998, Narasimham CommitteeII had reiterated decentralization of industry level wage
settlements and proposed bank-wise negotiations for
settlement of wages.
    The Committee strongly feels that the present arrangement
of industry level wage negotiations needs immediate review
in view of the following:
   l Wage payment in banking industry today has no relation to
‘capacity to pay’ of individual banks.
   l Under the present arrangement, individual banks do not have
an opportunity to negotiate on such crucial issues as productivity,
redeployment of staff, quality of discipline, trade union
practices, some unique problems of individual banks, etc.82 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
   l Industry level wage negotiations and settlements have made
bank managements complacent about taking any initiative
and introducing innovations in the human resource
management areas and practices except to ensuring apparent
compliance to industry level agreement. It has thus reduced
HRM to mere maintenance job.
   l The present arrangement has promoted high level of
standardization and rule orientation. It has perpetuated
rigidities in job roles, restrictive practices, restricted mobility,
culture of entitlement, placing the performers and nonperformers on equal footing, etc. Standardization has created
a culture of lack of initiative, innovation and professionalization
in HR area. Overall, all these have not been conducive to
rendering effective customer service.
   l In the current context of the need to recruit people laterally,
present level of compensation acts as a barrier to attract
and retain talent. In the Committee’s view, PSBs are today
severely constrained by the provisions of these settlements
in effectively utilizing the staff and in some cases, these have
dented productivity and led to a culture of ‘average
performance’.
   l In a competitive scenario, bipartite settlements are not in
harmony with the requirement of new age banking. The onesize-fit-for-all culture has become a demotivator to performers
and has placed PSBs at a considerable disadvantage vis-à-vis
the new age Private Sector Banks.
   l The statusquoist culture promoted by the industry level
settlements is in complete variance with the transformation
agenda of the PSBs to become vibrant institutions of economic
change with particular reference to socio- economic
development.
Chapter 12: Wages, Service Conditions and WelfareREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 83
   l Each Bipartite Settlement is generally a clone of previous
settlements with very minor changes and does not take into
consideration the new challenges arising out of competition.
   l Finally, it is one single factor which has contributed to lack
of professionalization of HR in PSBs. In turn this has resulted
in lack of accountability for initiating modern and innovative
HR policies and HR function being routinely administered
and managed.
12.2. Introduction of Bank Level Wage Negotiation
If PSBs have to truly operate in a competitive environment, wage
payment system has to have some nexus with the performance of staff
and profitability of operations. High level of performance would
demand motivational strategies which may require arrangements for
sharing the gains of productivity. This would require banks to design
their own compensation system in relation to capacity to pay,
profitability, productivity etc. In a competitive setting, it is a prerequisite that individual banks have freedom to negotiate wages and
service conditions to create a better fit between compensation and
performance. Considering the uniqueness of each PSB there is need
to move from standard HR practices to diverse HR practices.  The
Committee feels that this process should begin with wages and service
conditions.
12.2.1. In a bank level arrangement, banks should consider variable
pay as a major component of wages. In such an arrangement,
banks can also have the discretion to go in for Cost-toCompany (CTC) concept which is a prevalent trend world over.
12.2.2. As Government of India is the majority shareholder of PSBs,
it would be necessary for the bank Boards to decide on bankspecific wage and compensation structure, strictly within the
overall guidelines of the Government in this regard.
Chapter 12: Wages, Service Conditions and Welfare84 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Benefits
l Each bank has its own unique problems. Each bank also has
unique vision for its future. These can be brought to the fore for
discussion at individual bank level.
l Performance management system, which is at the centre of all HR
processes, would get strengthened. It would help in promoting
high performance culture and productivity improvements at
individual bank level.
l It would also align employees to bank level problems and engage
them in the bank level transformation programme.
l Linkage of wages with productivity in individual banks will greatly
enhance their capacity for long term sustenance.
l It would also help in overall flexibility in utilization of human
resources, their mobility, etc.
l It would help to create greater sensitivity to customer related
issues.
12.3. Staff Welfare
The Committee recognizes that staff welfare is an important facility
provided by PSBs to their employees to keep their motivation levels
high. While the service conditions of PSBs provide for schemes
governing employees’ health, etc. the need to extend non-statutory
welfare measures in different forms in PSBs has assumed significance
in the last decade, to partly compensate the employees in the context
of high cost of health and education as also to meet certain
contingencies of life. Traditionally, staff welfare funds have been
earmarked for health and education expenses of the dependents of
the employees and in some circumstances, of the employees
themselves.
Chapter 12: Wages, Service Conditions and WelfareREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 85
12.3.1. Broadly, the following activities are pursued under the Staff
Welfare schemes of PSBs:
   l Holiday home facility for existing and retired employees
l Scholarship to bright students of employees
l Health check-up facility for employees
l Canteen subsidy for employees
l Financial assistance to employees on leave on loss of pay
on account of major ailments / surgical operations
   l Providing financial assistance to handicapped children of
the employees
   l Providing financial assistance for purchase of artificial limbs
and hearing aid
   l Providing financial assistance to the dependents of
employees who die in harness
   l Incentive for promotion of small family norms
l Contributory Medical assistance scheme for retired
employees
12.3.2. Presently, Government of India has laid down uniform criteria
for nationalised banks in the matter of allocation of amount
out of net profit for staff welfare - staff welfare amount in a
year not to exceed 3% of the net profit of the bank, subject to
a ceiling of Rs. 15 crores. In the case of State Bank of India,
the ceiling is fixed at Rs. 52 crores.
12.3.3. Many bankers have sought review of these norms, as in the
current dispensation, there is no consideration for staff
strength of a particular bank. The Committee also feels that
one-size-fit-for-all approach to these norms is neither realistic
nor fair.
Chapter 12: Wages, Service Conditions and Welfare86 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
12.3.4. The Committee believes that the core object of staff welfare
should not be allowed to be diluted or compounded. There
is need for greater clarity as to what constitutes staff welfare,
which itself could change from time to time. There is also
need for a generally agreed approach to the key constituents
of staff welfare and proportion to be allocated for each such
constituent. Besides, with the number of retired and retiring
employees increasing year after year (it is to be noted that
large portion of current work force had joined the PSBs in
1970s), it is only fair that a part of welfare allocation goes to
the retired employees considering their long service and
contribution in the respective banks.
12.3.5. The Committee has observed that there are varying practices
among the banks in regard to staff welfare. In some banks,
major portion is spent on ‘canteen subsidy’ to the staff. Some
others have created a trust / corpus exclusively for staff
welfare funding. Yet others have carried forward the unspent
amounts year after year. In a few cases, expenditure in
respect of staff welfare has been absorbed in the normal
profit and loss accounts of the banks. There is need to
streamline these practices.
12.4. Recommendations
• PSBs to have freedom to negotiate wages and service conditions to
create a better fit between compensation and performance; PSB Boards
to decide on bank-specific wage and compensation structure, in
relation to capacity to pay, profitability, productivity, etc. and strictly
within the overall guidelines of the Government in this regard.
• Banks to consider variable pay as a major component of wages. In
such an arrangement, banks to have the discretion to go in for Costto-Company (CTC) concept.
Chapter 12: Wages, Service Conditions and WelfareREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 87
• The Committee recommends that ceiling for staff welfare amount may
be revised having regard to the business size of the banks and the
employee strength, within the existing cap of 3% of net profit of each
bank:
Category Suggested Limit
State Bank of India 3% of net profit subject
to a maximum of Rs.150
crores*
Other PSBs
- Large size banks with business mix of
over Rs. 300,000 crores and employee
strength of 30,000 and above
3% of net profit subject
to a maximum of Rs.40
crores
- Medium size banks with business
mix of over Rs. 150,000 crore to Rs.
300,000 crores and employee strength
of 20,000 and above
3% of net profit subject
to a maximum of Rs. 20
crores
- Other banks 3% of net profit subject
to a maximum of Rs. 15
crores
* Higher allocation on account of 2.2 lakh employees.
Note: Average of business figures for the previous two years to be
reckoned for this purpose.
Broad pattern for allocation of the amount for Staff Welfare
The Committee recommends apportioning the amount towards welfare
scheme as under:
For education of children of the employees 25%
For medical and health care facilities for the employees, spouse
and dependents
25%
For medical and health care facilities for the retired employees
and their spouses
25%
Boards of the banks to decide on the schemes for the balance 25%
Note: Amount to be spent per employee under welfare not to exceed
Rs. 10,000/- in a year.
Chapter 12: Wages, Service Conditions and Welfare88 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
The Committee feels that paying out cash to the employees towards
‘canteen subsidy’ for whatsoever reason works against the very spirit
of ‘staff welfare’. As a matter of policy, no cash should be paid to the
staff from out of staff welfare fund, except in case of payments for
medical and educational facilities. Wherever this practice is in vogue,
the Committee recommends that it should be stopped.
To take care of the interest of the retired employees, the Committee
recommends that two retired senior executives should be nominated
by each bank on its Staff Welfare Committee.
Chapter 12: Wages, Service Conditions and WelfareREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 89
CHAPTER 13
CORPORATE GOVERNANCE
The Committee is of the view that lessons from the recent global crisis should
guide corporate governance practices in the Indian banking industry too. For
the Indian PSBs, corporate governance issues are, in fact, quite basic. Reforms
in this area will help the PSBs to move into the next orbit of banking. It will
also send out positive signals to the markets in India and abroad besides
inviting favourable comments from the banking analysts and observers.
13.1. Restructuring of the Board
Going forward, superior governance practices will be needed to handle
new business opportunities and tie-ups with global players, which
many PSBs are taking recourse to. Many PSBs are also moving to
multi-specialist banking facilitated by large scale use of technology
and increasing sophistication of banking products. New verticals and
new business models are also emerging. All this will call for new policy
initiatives requiring higher order of professional insight on the part
of Board members. Members of the Board would have to be highly
knowledgeable and experienced in areas like IT, HR, Risk Management,
Financial Services. They must be capable of bringing their experience
and expertise and making strategic contribution to the deliberations
at the Board.
13.1.1. For PSBs to become globally competitive, they would have to
be Board driven. Towards this, Government will have to speed
up reforms in corporate governance and review the entire
scheme of Board constitution including its composition and
selection methodology and bring in legislative changes, if
necessary. For updating the members of the Board on
corporate governance, modern banking and its future
direction, appropriate training would have to be made
mandatory.90 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
13.1.2. Effective leadership will be the key for PSBs to emerge as
strong institutions and develop a brand for service, innovations
and their human resources. Apart from this, PSB Boards will
have to constantly guide and monitor performance in key
strategic areas for long term sustenance and continuously
adapt to competitive requirements. This presupposes a highly
competent Board with domain knowledge experts and a Board
which is separated from management. In the present
arrangement, the CEO is also the Chairman of the Board and
in effect, his dual responsibility makes Board’s role diluted.
Further, the present arrangement deprives the management
of an independent oversight.
13.1.3. To empower the Board and enable it to perform its role of
overseeing the strategic management process more effectively,
there is need to separate the Chairman’s position from the
position of Managing Director. With the change in the nature
of banking and its future role, there is also need to bring
about changes in the structure of the Board and methodology
of selection of Board members. In PSBs, where the tenure of
CEOs is generally short, the role of Boards is much more
crucial in carrying forward the strategic agenda without
dilution in rigour. The Committee noted that in all the new
age Private Sector Banks in India, the positions of Chairman
and of Managing Director are segregated. This is in keeping
with the best corporate governance practices globally. The
Committee believes that sooner than later, PSBs should follow
this model of governance. This will also be in line with
Corporate Governance voluntary guidelines 2009 issued by
the Ministry of Corporate Affairs, Government of India.
13.2. Recommendations
• To meet the challenges of new age banking, Government to speed up
reforms in corporate governance in PSBs.
Chapter 13: Corporate GovernanceREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 91
• Government to review the scheme of Board constitution including its
composition and selection methodology and bring in legislative
changes, if necessary.
• Government to consider separating Chairman’s position from the
position of Managing Director, in line with Corporate Governance
voluntary guidelines 2009 issued by the Ministry of Corporate Affairs,
Government of India.
Chapter 13: Corporate GovernanceREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 93
CHAPTER 14
“NAVRATNA” STATUS TO SOME PSBs
14.1. The most notable aspect of the performance of PSBs in India has been
that they have shown remarkable qualitative improvement even during
the recent global melt down. However, within the family of PSBs, there
are varying degrees of size, performance, productivity and efficiency.
As at March 2009, 5 PSBs had a business mix (deposits + advances)
of over Rs. 300,000 crores (with advances over Rs.100,000 crores)
and 8 PSBs had posted a net profit of over Rs. 1,000 crores.
14.1.1. With India set to emerge as an economic superpower in the
next decade, it is only natural that some Indian banks are
aspiring to acquire size and scale that can catapult them into
the global league of the top 100 banks. Besides size and scale,
they are also aspiring to catch up with global standards in
productivity and operational efficiency.
14.1.2. In this age of differentiation and competitive efficiency,
recognition and celebration of excellence in different fields is
becoming the order of the day in India too, as in other parts
of the world. Government of India has granted ‘Navratna’
status to some well performing PSUs, on the basis of certain
defined efficiency parameters.
14.1.3. With a view to encourage, promote, recognize and reward
superior performance and excellence among the PSBs, the
Committee recommends that some large well performing
banks be considered for granting ‘Navratna’ status, on the
basis of well defined criteria. Smaller banks can be considered
for ‘Mini-Navratna’ status. An expert group may go into setting
criteria and modalities.
14.1.4. The Committee’s suggestion is that performance with regard
to the following productivity and efficiency ratios, during the 94 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
previous 3 years, could be considered as criteria, with
appropriate weightage assigned to each:
• Business Per Employee
• Profit Per Employee
• Gross NPA
• Net NPA
• Return on Average Assets (RoAA)
   • Return on Equity (RoE)
• Cost Income Ratio
• Net Profit Margin
• Net Profit to Working Funds
14.1.5. The Committee feels that PSBs with ‘Navratna’ status can
have their own succession plans and groom their leaders who
can eventually occupy CMD / ED position in their bank. State
Bank of India’s example of grooming and producing leaders
from within can be followed. These banks can also follow best
practices and be a role model for others.
14.2. ‘Maharatna’ Status to State Bank of India (SBI)
Among the PSBs, SBI occupies a unique position and stature, in terms
of size, spread, reach and balance sheet size. It remains a central
figure in the Indian banking sector that influences and drives the
Government policy and is a pillar of financial strength to the Indian
economy. Since inception, SBI has been a custodian of Government
business.
14.2.1. With the heritage of over 200 years of banking experience,
SBI today is the largest commercial bank in India, in terms
of deposits, assets, profits, customer base, branch network
and employee strength. Its international footprints extend to
Chapter 14: “Navratna” Status to some PSBsREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 95
32 countries, with 142 offices, covering all time zones. SBI
is the only Indian bank featuring in Fortune 500 list. Its
ranking among the top global brands stood at 186 in 2009.
14.2.2. On the technology front, SBI has rolled out CBS across its
entire vast network, installed over 21,000 ATMs and
introduced Internet banking and mobile banking. SBI’s
centralized database system is one of the largest banking
networks in the world.
14.2.3. SBI’s holistic training system and placement policy have
contributed to creating a vast reservoir of competent and
skilled bankers and leaders. For transforming every employee
in the context of changing banking trends, it has recently
launched major HR interventions like ‘Parivartan’ and ‘Citizen
SBI’.
14.2.4. The Committee feels that viewed from many perspectives, SBI
needs to be accorded different dispensation. The Committee
recommends that SBI be granted ‘Maharatna’ status, on the
lines granted recently by the Government of India to four
Public Sector Undertakings – SAIL, NTPC, IOC and ONGC.
14.2.5. To manage its large branch network in India and abroad and
steer its operations, SBI has set up its own organisation
structure, which is vastly different from that of other PSBs.
As part of this structure, SBI has positions like MDs, DMDs
and CGMs at the top management level, apart from Chairman.
The Committee is of the view that these positions in SBI are
not comparable to positions available in PSBs. Wage and
compensation structure as also performance-linked incentive
of SBI’s Chairman, MDs, DMDs and CGMs would, therefore,
need a different dispensation.
Chapter 14: “Navratna” Status to some PSBs96 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
14.3. Recommendations
• Some large well performing banks to be considered for ‘Navratna’
status – smaller banks for ‘Mini-Navratna’ status and State Bank of
India for ‘Maharatna’ status. Size, performance and quality during the
previous three years could be the benchmark.
• An expert group to go into setting criteria and modalities for granting
‘Navratna’ and ‘Miniratna’ status to banks.
Chapter 14: “Navratna” Status to some PSBsREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 97
CHAPTER 15
CREATING RISK CULTURE
15.1. As discussed in the earlier chapter, Indian banking sector has grown
many times in size and scope during the last few decades. With
economic growth expected to touch double digit in the next few years,
the banking sector is slated to witness exponential growth in business
mix. One estimate is that the additional lending requirements may be
in excess of Rs. 30,00,000 crores in the next 4 / 5 years – nearly
doubling the present credit portfolio of banks. All this will call for a
very high order of risk taking culture in PSBs that can successfully
harness the opportunities thrown up by the expanding economy.
15.1.1. In the above backdrop, the Committee learns that there is
general concern among bank managements about risk
aversion across cadres. This has its roots in the concept of
accountability. Bankers are unanimous about the need for
certain changes in vigilance management in PSBs to create
benign atmosphere for risk taking. In this context, although
a number of initiatives have been taken in the past to allay
the ‘fear of vigilance’ the Committee further observes the
following:
• In view of widely prevalent concern about the risk factors
especially in sanction of large credit, there is need for a
committee approach on the lines prevalent in SBI. This will
serve twin purposes of providing a balanced judgment about
sanction of large credit with the help of competent group of
people and save the system from risk aversion. Suitable
measures may be initiated by the Government in this regard.
• While business risk and error of judgment are met with
punishment, there is no accountability for non-performance.
This in turn could result into a culture of ‘average performance’. 98 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Many bankers voiced the need for deterrent punishment for
non-performance. The Committee broadly agrees with the
argument advanced by the bankers and is of the view that it
is for the individual banks to take cognizance of ‘risk averse
types’ and those who deliberately hide behind the system and
avoid risk taking and make them accountable. In this context,
the Committee has noted that the existing provisions relating
to premature retirement of officers on grounds of ineffective
/ inefficient performance, etc. have not been effectively used
by the banks to deal with cases of non-performance. The
Committee recommends that in order to achieve rigour of
performance, premature retirement review should be carried
out when an officer reaches the age of 50 years and thereafter,
when he reaches the age of 55. Sub- Committee of the Board
should monitor all such cases.
• Jurisdiction of Central Vigilance Commission (CVC) is now
restricted to officers in Scale V and above. The Committee,
having regard to the imperative for arresting risk aversion
and promoting risk culture, is in agreement with the views
expressed by many banks that the jurisdictional aspect may
be reviewed and vigilance cases pertaining to General Manager
and above only (one level below Board positions) may come
under the purview of CVC.
• The Committee’s attention was drawn to the current practice
of appointment of Chief Vigilance Officers (CVOs) by the
Government. Though the post is in the substantive rank of
General Manager, executives in the rank of Deputy General
Manager are eligible to apply for the post. The Committee
feels that executives in the substantive rank of General
Manager be appointed as CVOs in large banks considering
the criticality of the function.
Chapter 15: Creating Risk CultureREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 99
• It was further brought to the notice of the Committee that
only few banks have today a staff accountability policy in
place. The Committee would like to urge other banks to put
in place a staff accountability policy for Non-Performing
Assets, clearly delineating primary responsibility for each
stage like pre-sanction appraisal, sanction, disbursement,
post-sanction monitoring and follow-up, etc. The policy may
also define authorities for examination of staff accountability
for various decision making levels. Time frame and
responsibility of Competent Authority for reporting and
examining staff accountability should also find place in such
a policy.
• The Committee’s attention was also drawn to the fact that
more than anything else, delay in conclusion of disciplinary
cases – both vigilance and non-vigilance – as well as cases
where prosecution is launched by external agencies like CBI
and Police is the main reason for widespread anxiety among
the cadre. Bankers at all levels feel that this is a greater hazard
since their mental agony is stretched beyond tolerance, often
affecting not only their career prospects but even their family
and social life. The Committee recommends that there is need
for more rigour in monitoring and fixing accountability for
delays in concluding disciplinary cases.
15.1.2. Having regard to the enormous competitive challenges faced
by the PSBs and the imperative for arresting risk aversion
and promoting risk culture, the Committee is of the view that
there is need for a more balanced vigilance administration in
PSBs. It would also like to urge the banks to take steps to
continuously review and strengthen their risk management
systems across the board in order not only to mitigate the
risks but to prevent and contain frauds and operational
irregularities.
Chapter 15: Creating Risk Culture100 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
15.2. Recommendations
• Government to initiate suitable measures for introducing committee
approach in PSBs for sanction of large credit, on the lines prevalent
in SBI.
• Accountability for non-performance to be dealt with through premature retirement provisions. Review for pre-mature retirement to be
carried out when the officer reaches the age of 50 years and thereafter,
when he reaches the age of 55. Sub-Committee of the Board to monitor
such cases.
• CVC may be approached to review its jurisdiction to cover General
Manager and above only (one level below Board positions) under its
purview.
• Executives in the substantive rank of General Manager to be appointed
as CVOs in large banks.
• All PSBs to put in place a staff accountability policy for Non-Performing
Assets.
• PSBs to fix accountability for delays in concluding disciplinary cases.
• PSBs to strengthen their risk management systems across the board.
Chapter 15: Creating Risk CultureREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 101
CHAPTER 16
INDUSTRIAL RELATIONS
16.1. With overall changes taking place in the financial environment, demand
for efficient customer service has increased manifold. Efficiency in
rendering customer service without any let or hindrance has become
the single most important point of differentiation among the competing
banks. This can in fact make or mar the reputation and growth of a
bank. Further, enhanced technology adoption has reduced the number
of routine jobs and the new thrust is mainly on sales and marketing,
thereby substantially transforming the skill structure. These new
realities of competition demand that employees’ organisations of PSBs
appreciate that change is the order of the day and status-quoism will
not be conducive for long term sustenance of the banking sector. From
the discussions with the banks, it is evident that HR policies are largely
driven by external compulsions rather than by banks’ business
objectives, resulting in weak and unclear alignment between the two.
16.1.1. In this context, the Committee’s attention was drawn to a
number of IR issues. Most banks stated that they have major
problems in redeployment of clerical staff. Such redeployment
is constrained by banks’ own internal settlements signed in
the past regarding transfer / rotational transfer as well as
industry level settlement which provides for transfer of clerical
staff within 100 kms. A good number of banks stated that their
rural and semi-urban branches are understaffed whereas they
have pockets of excess clerical staff at metro and urban centres.
On account of constraints in redeployment of clerical staff, they
have to necessarily go in for recruitment of clerical staff.
16.1.2. The Committee, after considering various points of view
expressed by the banks and after due deliberations,
considers it essential to recommend that PSBs should
immediately revisit and review all internal settlements that 102 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
affect mobility, flexible utilization of staff, productivity,
performance and customer service. In the Committee’s
considered view, mobility of clerical staff within a State would
meet the requirements of PSBs. However, considering the
hardship that such mobility brings with it, the Committee
recommends that PSBs should extend adequate house rent
reimbursement facility to clerical staff on such transfer and
suitable schemes may be framed by the Steering Committee
of the Board on HR.
16.1.3. Further, a number of guidelines having bearing on UnionManagement relationship have been issued by the Government
and IBA. These include Union work during office hours,
discussion on policy matters and other bilateral issues with
serving employees, transferability of Union office bearers, etc.
Committee’s attention was also drawn to a number of facilities
extended over a period of time to employees, which are beyond
the provisions of industry level settlements having financial
implications. The Committee noted that over a period of time,
guidelines issued by the Government covering these issues
have not been followed by many banks giving rise to diverse
practices in different banks.
16.1.4. The Committee is of the view that the new agenda for UnionManagement relations must include issues like productivity
enhancement and performance acceleration in addition to
resolution of legitimate grievances of employees. This is
necessitated on account of new roles that employees are
expected to play in the CBS environment. Bank Managements
and Employee Organisations will have to come forward to
restructure the IR and bring place settlements providing for
greater flexibility in utilization and deployment of staff. The
Government should take a serious note of policy violations
by banks in this area to avoid ripple effect and create a
disciplined system.
Chapter 16: Industrial RelationsREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 103
16.1.5. It is time that issues of productivity and performance
acceleration are brought to the main stream discussion with
Unions as for too long these issues have remained in the
backstage. This is necessitated by the new compulsion to
remain competitive, vibrant and sustainable. In fact, the
Committee feels that these issues go to the very root of survival
of the PSBs and therefore, bank managements need to accord
priority treatment to these issues. Reasons of expediency
should not override the important agenda of change.
16.2. Recommendations
• PSBs to revisit and review all internal settlements that affect mobility,
flexible utilization of staff, productivity, performance and customer
service.
• Bank managements to accord priority treatment to the issues of
productivity and performance acceleration while dealing with IR issues.
_____
Chapter 16: Industrial Relations104 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
A K Khandelwal
Chairperson
Dr. T V Rao  M V Nair
Member Member
Dr. D B Phatak  H N Sinor
Member Member
Place: Mumbai
Dated: June 24, 2010REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 105
TABLES
S-1 Staff Strength - PSBs
S-2 Officer-Clerk Ratio - PSBs
S-3 Cadre-wise staff position in the Indian Banking Sector – March 2009
S-4 Business and Profit per Employee – PSBs – March 2009
S-5 Staff Cost Ratio – PSBs
S-6 Age Profile of Staff – March 2009
S-7 Recruitments in PSBs in Nationalised Banks and SBI
S-8 Retirements over next 5 years in Nationalised Banks and SBI
S-9 Women Employees and Employees belonging to SC/ST
Category in Nationalised Banks –March 2009
-------------------------------------------------------------------------------------------------------------
D-1 Indian Banking System – 1969 through 2009; 1991 through 2009
D-2 Business per Branch - PSBs – March 2009
D-3 Net Profit per Branch – PSBs – March 2009
D-4 Gross NPA and Net NPA – PSBs – March 2009
D-5 Efficiency Ratios - PSBs
D-6 Return on Average Assets (RoAA) - PSBs
D-7 Return on Equity (RoE) - PSBs
D-8 Cost Income Ratio - PSBs
D-9 Net Profit Margin – PSBsREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 107
Table S-1
STAFF STRENGTH – PSBs
March 2009 March 2008 March 2007
Total Number of Employees 7,34,661 7,15,408 7,28,878
- Officers 2,74,904 2,62,472 2,55,688
- Clerks 3,07,696 2,98,133 3,10,397
- Sub-Staff 1,52,061 1,54,803 1,62,793
Total Workmen Staff 4,59,757 4,52,936 4,73,190
RATIOS
Officer to Clerk 1.12 1.14 1.21
Officer to Sub-staff 0.55 0.59 0.64
Officer to Workmen Staff 1.67 1.73 1.85
Source: IBA and Questionnaire
Table: S-1108 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table S-2
OFFICER CLERK RATIO – PSBs
I Nationalised Banks March
2009
March
2008
March
2007
March
2006
March
2005
1 Allahabad Bank 0.93 0.91 0.91 0.91 0.93
2 Andhra Bank 0.35 0.31 0.33 0.35 0.36
3 Bank of Baroda 1.14 1.14 1.25 1.48 1.63
4 Bank of India 1.23 1.24 1.20 1.50 1.72
5 Bank of Maharashtra 1.58 1.54 1.56 1.57 1.74
6 Canara Bank 0.94 0.92 1.13 1.32 1.44
7 Central Bank of India 1.04 1.29 1.25 1.43 1.40
8 Corporation Bank 0.98 1.04 1.11 1.16 1.22
9 Dena Bank 1.05 1.13 1.14 1.23 1.57
10 Indian Bank 1.18 1.15 1.19 1.18 1.43
11 Indian Overseas Bank 1.11 1.33 1.51 1.50 1.63
12 Oriental Bank of Commerce 0.63 0.76 0.73 0.75 0.85
13 Punjab & Sind Bank 0.24 0.71 0.75 0.75 0.79
14 Punjab National Bank 1.36 1.39 1.46 1.55 1.68
15 Syndicate Bank 1.13 1.20 1.18 1.34 1.43
16 UCO Bank 1.16 1.25 1.42 1.79 1.75
17 Union Bank of India 0.70 0.78 0.76 1.01 1.30
18 United Bank of India 1.34 1.33 1.46 1.63 1.89
19 Vijaya Bank 0.84 0.93 0.94 1.08 1.19
Average of 19 Nationalised
Banks [I] 1.02 1.09 1.14 1.28 1.40
II State Bank of India (SBI) 1.50 1.33 1.46 1.53 1.56
III Associates of SBI
1
State Bank of Bikaner &
Jaipur 1.05 1.20 1.21 1.35 1.47
2 State Bank of Hyderabad 0.99 1.01 1.04 1.05 1.17
3 State Bank of Indore 1.23 1.29 1.39 1.44 1.55
4 State Bank of Mysore 1.42 1.39 1.47 1.56 1.74
5 State Bank of Patiala 1.12 1.09 1.24 1.41 1.57
6 State Bank of Saurashtra 1.45 1.56 1.59 1.66
7 State Bank of Travancore 1.22 1.21 1.36 1.44 1.67
Average of 7 Associates
[III] 1.15 1.20 1.28 1.37 1.51
Average of SBI Group
[II+III] 1.41 1.29 1.40 1.48 1.54
IV Other Public Sector Bank
1 IDBI Bank Ltd. 0.20 0.29 0.45 0.20 0.21
Average of PSBs
[I+II+III+IV] 1.12 1.14 1.21 1.33 1.43
Source: IBA and Questionnaire
Table: S-2
Officer Clerk Ratio
March 2009
PSBs Excluding
IDBI
Highest 1.58 1.58
Lowest 0.20 0.24
Average 1.12 1.15REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 109
Table S-3
CADRE-WISE STAFF POSITION IN THE INDIAN BANKING
SECTOR
MARCH 2009
Officer / Total Staff
Public Sector Banks 0.37
Private Sector Banks 0.85
Foreign Banks 0.93
Clerk / Total Staff
Public Sector Banks 0.42
Private Sector Banks 0.10
Foreign Banks 0.04
Sub-Staff / Total Staff
Public Sector Banks 0.21
Private Sector Banks 0.04
Foreign Banks 0.02
Source: IBA and Questionnaire
Table: S-3110 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table S-4
BUSINESS AND PROFIT PER EMPLOYEE – PSBs
2008-09
I Nationalised Banks Business
per
Employee
(Rs. crore)
Profit per
Employee
(Rs. crore)
1 Allahabad Bank 7.03 0.04
2 Andhra Bank 7.26 0.05
3 Bank of Baroda 9.13 0.06
4 Bank of India 8.28 0.07
5 Bank of Maharashtra 6.35 0.03
6 Canara Bank 7.37 0.05
7 Central Bank of India 6.10 0.02
8 Corporation Bank 9.83 0.07
9 Dena Bank 7.28 0.04
10 Indian Bank 6.20 0.06
11 Indian Overseas Bank 6.86 0.05
12 Oriental Bank of Commerce 11.39 0.06
13 Punjab & Sind Bank 6.82 0.05
14 Punjab National Bank 6.65 0.06
15 Syndicate Bank 7.88 0.04
16 UCO Bank 7.12 0.02
17 Union Bank of India 8.11 0.06
18 United Bank of India 5.95 0.01
19 Vijaya Bank 7.52 0.02
Average of 19 Nationalised Banks [I] 7.48 0.05
II State Bank of India (SBI) 6.24 0.04
III Associates of SBI
1 State Bank of Bikaner & Jaipur 6.04 0.04
2 State Bank of Hyderabad 8.44 0.05
3 State Bank of Indore 7.95 0.04
4 State Bank of Mysore 6.05 0.03
5 State Bank of Patiala 9.12 0.05
6 State Bank of Saurashtra
7 State Bank of Travancore 6.58 0.05
Average of 7 Associates [III] 7.37 0.04
Average of SBI Group [II+III] 6.50 0.04
IV Other Public Sector Bank
1 IDBI Bank Ltd. 21.16 0.08
Average of PSBs [I+II+III+IV] 7.31 0.05
Source: IBA and Questionnaire
Table: S-4
Range No. of
Banks
> 8 Crores 8
7 - 8 Crores 8
6 - 7 Crores 10
< 6 Crores 1
Above Average 12
Business per Employee
PSBs Excluding
IDBI
Highest 21.16 11.39
Lowest 5.95 5.95
Average 7.31 7.02
Profit per Employee
PSBs Excluding
IDBI
Highest 0.08 0.07
Lowest 0.01 0.01
Average 0.05 0.05REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 111
       Table S-5
STAFF COST RATIO – PSBs
I Nationalised Banks 2008 -09
(%)
2007-08
(%)
1 Allahabad Bank 62 60
2 Andhra Bank 57 56
3 Bank of Baroda 66 63
4 Bank of India 63 63
5 Bank of Maharashtra 60 58
6 Canara Bank 61 60
7 Central Bank of India 68 70
8 Corporation Bank 47 48
9 Dena Bank 61 57
10 Indian Bank 69 69
11 Indian Overseas Bank 66 64
12 Oriental Bank of Commerce 55 51
13 Punjab & Sind Bank 75 75
14 Punjab National Bank 70 70
15 Syndicate Bank 61 62
16 UCO Bank 68 68
17 Union Bank of India 52 53
18 United Bank of India 67 71
19 Vijaya Bank 65 58
Average of 19 Nationalised Banks [I] 63 63
II State Bank of India (SBI) 62 62
III Associates of SBI
1 State Bank of Bikaner & Jaipur 59 60
2 State Bank of Hyderabad 59 59
3 State Bank of Indore 55 51
4 State Bank of Mysore 58 55
5 State Bank of Patiala 56 54
6 State Bank of Saurashtra -- 60
7 State Bank of Travancore 61 61
Average of 7 Associates [III] 58 57
Average of SBI Group [II+III] 61 61
IV Other Public Sector Bank
1 IDBI Bank Ltd. 43 40
Average of PSBs [I+II+III+IV] 62 61
Staff Cost: Establishment Expenses as % of Total Operating Expenses
Source: IBA and Questionnaire
Table: S-5
Range No. of
Banks
> 65% 8
60 - 65% 9
55 - 60% 6
< 55% 4
Above Average 12
Staff Cost Ratio (2008-09)
PSBs Excluding
IDBI
Highest 75% 75%
Lowest 43% 47%
Average 62% 62%112 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table S-6
AGE PROFILE OF STAFF
MARCH 2009
Nationalised Banks GM DGM AGM CM SM M AM Clerks SubStaff
Allahabad Bank 56 57 54 52 51 50 41 47 46
Andhra Bank 56 55 53 53 51 49 45 46 48
Bank of Baroda 57 55 54 53 52 49 40 48 44
Bank of India 58 56 55 54 53 49 47 50 47
Bank of Maharashtra 57 56 55 54 52 48 43 48 50
Canara Bank 58 58 56 54 52 48 47 51 45
Central Bank of India 58 56 55 53 52 51 50 52 51
Corporation Bank 55 53 54 53 51 48 41 42 42
Dena Bank 53 53 52 50 47 47 42 43 49
Indian Bank 58 57 56 54 53 50 50 50 49
Indian Overseas Bank 57 57 56 54 53 48 45 47 44
Oriental Bank of Commerce 56 54 54 53 48 45 39 42 40
Punjab & Sind Bank 59 58 56 55 55 54 52 49 51
Punjab National Bank 58 57 54 54 52 50 48 50 47
Syndicate Bank 58 58 57 55 54 53 45 50 50
UCO Bank 58 57 55 51 51 50 48 51 49
Union Bank of India 56 55 55 53 49 48 40 47 43
United Bank of India 57 58 55 51 52 51 49 50 50
Vijaya Bank 58 57 55 53 52 49 44 48 45
State Bank of India 55 54 53 52 50 50 43 43 49
Average Age 57 56 55 53 51 49 45 48 47
Average Age of Scale V onwards 56
Average Age of
Scale I to IV
50
Source: IBA and Questionnaire
Table: S-6REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 113
Table S-7
RECRUITMENTS IN NATIONALISED BANKs AND SBI
Bank April 2005 –
September 2009
Tentative Plan for
2010–13
Officers Clerks Sub-
Staff
Total Officers Clerks Sub-
Staff
Total
Allahabad Bank 1243 1900 0 3143 990 990 NA 1980
Andhra Bank 997 815 1328 3140 NA NA NA NA
Bank of Baroda 2032 1255 730 4017 4850 5000 6 9856
Bank of India 495 342 764 1601 3911 3041 1271 8223
Bank of Maharashtra 1060 543 269 1872 2000 2400 400 4800
Canara Bank 394 769 669 1832 600 1000 NA 1600
Central Bank of India 491 0 0 491 1155 2200 NA 3355
Corporation Bank 1216 2299 921 4436 4335 2586 960 7881
Dena Bank 1857 1521 534 3912 NA NA NA NA
Indian Bank 71 725 180 976 1304 1550 NA 2854
Indian Overseas Bank 562 1485 1289 3336 1533 1500 NA 3033
Oriental Bank of Commerce 717 1309 368 2394 1676 3226 1950 6852
Punjab & Sind Bank 83 24 5 112 1581 581 NA 2162
Punjab National Bank 1209 180 1781 3170 459 1246 614 2319
Syndicate Bank 1303 926 642 2871 3626 2700 455 6781
State Bank of India 4277 31335 1260 36872 4178 22000 0 26178
UCO Bank 1142 894 0 2036 300 1000 0 1300
Union Bank of India 3138 964 1744 5846 0 0 0 0
United Bank of India 129 142 18 289 1600 600 100 2300
Vijaya Bank 917 420 616 1953 0 0 0 0
Total 23333 47848 13118 84299 34098 51620 5756 91474
*NA = Data not provided
Source: IBA and Questionnaire
Table: S-7114 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table S-8
RETIREMENTS OVER NEXT 5 YEARS IN
NATIONALISED BANKS AND SBI
2010-11 2011-12 2012-13 2013-14 2014-15 Total
Executives 1,420 1,524 1,583 1,556 1,653 7,736
Officers 5,726 9,121 10,884 11,960 13,955 51,646
Clerks 6,728 7,630 9,638 11,447 13,143 48,586
Total 13,874 18,275 22,105 24,963 28,751 107,968
Source: IBA and Questionnaire
Table: S-8REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 115
Table S-9
WOMEN EMPLOYEES AND EMPLOYEES BELONGING
TO SC/ST CATEGORY IN NATIONALISED BANKS
MARCH 2009
Women Employees Employees belonging
To SC/ST category
No. % to Total
positions
No. % to Total
Executives 326 2.66 992 8.10
Officers 18,583 10.87 40,913 23.93
Clerks 47,722 26.50 42,267 23.47
Sub-staff 11,403 12.03 38,948 41.09
Total 78,034 17.03 123,121 27.00
Source: IBA and Questionnaire
Table: S-9116 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table D-1
INDIAN BANKING SYSTEM – 1969 THROUGH 2009
1969 2009 Change
Branches (No.) 8,262 65,412 57,150 á
Deposits (Rs. crore) 5,256 40,53,638 40,48,382 á
Advances (Rs. crore) 3,731 29,94,334 29,90,603 á
* Source of 1969 data: RBI
INDIAN BANKING SYSTEM – 1991 THROUGH 2009
1991 2009 Change
Branches (No.) 46,051 65,412 19,361 á
Deposits (Rs. crore) 2,43,701 40,53,638 38,09,937 á
Advances (Rs. crore) 1,51,341 29,94,334 28,42,993 á
Customer (No.)* 8,64,18,430 58,16,58,012 49,52,39,582 á
Staff (No.) 9,47,544 9,41,375 6,169 â
Source : RBI
*As of March 31, 2008 –
Table: D-1REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 117
       Table D-2
BUSINESS PER BRANCH – PSBs
MARCH 2009
I Nationalised Banks Rs. crores
1 Allahabad Bank 63.6
2 Andhra Bank 72.3
3 Bank of Baroda 113.1
4 Bank of India 109.1
5 Bank of Maharashtra 60.9
6 Canara Bank 119.0
7 Central Bank of India 61.6
8 Corporation Bank 116.2
9 Dena Bank 60.8
10 Indian Bank 75.5
11 Indian Overseas Bank 91.2
12 Oriental Bank of Commerce 119.1
13 Punjab & Sind Bank 65.0
14 Punjab National Bank 82.3
15 Syndicate Bank 88.6
16 UCO Bank 81.7
17 Union Bank of India 92.0
18 United Bank of India 62.0
19 Vijaya Bank 81.6
Average of 19 Nationalised Banks [I] 86.7
II State Bank of India (SBI) 109.6
III Associates of SBI
1 State Bank of Bikaner & Jaipur 80.3
2 State Bank of Hyderabad 102.9
3 State Bank of Indore 106.3
4 State Bank of Mysore 86.8
5 State Bank of Patiala 122.5
6 State Bank of Saurashtra
7 State Bank of Travancore 103.0
Average of 7 Associates [III] 100.3
Average of SBI Group [II+III] 107.0
IV Other Public Sector Bank
1 IDBI Bank Ltd. 483.9
Average of PSBs [I+II+III+IV] 95.8
Source: IBA
Business per Branch
(Rs. crores)
PSBs Excluding
IDBI
Highest 483.9 122.5
Lowest 60.8 60.8
Average 95.8 91.9
Range
No. of
Banks
> 100 Crores 11
80 - 100 Crores 8
50 - 80 Crores 8
< 50 Crores 0
Above Average 11
Table: D-2118 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table D-3
NET PROFIT PER BRANCH – PSBs
MARCH 2009
I Nationalised Banks Rs. crores
1 Allahabad Bank 0.34
2 Andhra Bank 0.46
3 Bank of Baroda 0.75
4 Bank of India 0.99
5 Bank of Maharashtra 0.26
6 Canara Bank 0.76
7 Central Bank of India 0.16
8 Corporation Bank 0.85
9 Dena Bank 0.36
10 Indian Bank 0.76
11 Indian Overseas Bank 0.69
12 Oriental Bank of Commerce 0.65
13 Punjab & Sind Bank 0.48
14 Punjab National Bank 0.70
15 Syndicate Bank 0.41
16 UCO Bank 0.27
17 Union Bank of India 0.67
18 United Bank of India 0.13
19 Vijaya Bank 0.24
Average of 19 Nationalised Banks [I] 0.55
II State Bank of India (SBI) 0.78
III Associates of SBI
1 State Bank of Bikaner & Jaipur 0.47
2 State Bank of Hyderabad 0.60
3 State Bank of Indore 0.59
4 State Bank of Mysore 0.50
5 State Bank of Patiala 0.63
6 State Bank of Saurashtra
7 State Bank of Travancore 0.84
Average of 7 Associates [III] 0.60
Average of SBI Group [II+III] 0.73
IV Other Public Sector Bank
1 IDBI Bank Ltd. 1.92
Average of PSBs [I+II+III+IV] 0.61
Source: IBA
Net Profit per Branch
(Rs. crores)
PSBs Excluding
IDBI
Highest 1.92 0.99
Lowest 0.13 0.13
Average 0.61 0.60
Table: D-3REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 119
Gross NPA
PSBs Excluding
IDBI
Highest 2.88% 2.88%
Lowest 0.65% 0.65%
Average 2.00% 2.09%
Net NPA
PSBs Excluding
IDBI
Highest 1.76% 1.76%
Lowest 0.17% 0.17%
Average 0.93% 0.98%
I Nationalised Banks Gross
NPA (%)
Net
N PA ( % )
1 Allahabad Bank 1.83 0.72
2 Andhra Bank 0.83 0.18
3 Bank of Baroda 1.28 0.31
4 Bank of India 1.73 0.44
5 Bank of Maharashtra 2.33 0.79
6 Canara Bank 1.57 1.09
7 Central Bank of India 2.71 1.24
8 Corporation Bank 1.15 0.29
9 Dena Bank 2.15 1.09
10 Indian Bank 0.89 0.18
11 Indian Overseas Bank 2.57 1.33
12 Oriental Bank of Commerce 1.54 0.65
13 Punjab & Sind Bank 0.65 0.32
14 Punjab National Bank 1.79 0.17
15 Syndicate Bank 1.96 0.77
16 UCO Bank 2.24 1.18
17 Union Bank of India 1.99 0.34
18 United Bank of India 2.88 1.48
19 Vijaya Bank 1.97 0.82
Average of 19 Nationalised Banks [I] 1.79 0.66
II State Bank of India (SBI) 2.87 1.76
III Associates of SBI
1 State Bank of Bikaner & Jaipur 1.64 0.85
2 State Bank of Hyderabad 1.11 0.38
3 State Bank of Indore 1.39 0.89
4 State Bank of Mysore 1.44 0.50
5 State Bank of Patiala 1.32 0.60
6 State Bank of Saurashtra
7 State Bank of Travancore 1.66 0.58
Average of 7 Associates [III] 1.40 0.61
Average of SBI Group [II+III] 2.48 1.45
IV Other Public Sector Bank
1 IDBI Bank Ltd. 1.39 0.92
Average of PSBs[I+II+III+IV] 2.00 0.93
Table D-4
GROSS NPA AND NET NPA – PSBs
MARCH 2009
Source: IBA
Table: D-4120 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table D-5
EFFICIENCY RATIOS - PSBS
Parameter Highest Lowest Average No. of
Banks
above
Average
Return on Average Assets (RoAA) 1.62 0.34 0.87 19
Return on Equity (RoE) 27% 6% 16.5% 15
Cost Income Ratio 0.59 0.36 0.45 16
Net Profit Margin 15.8% 3.8% 10.9% 11
Business per Employee (Rs. crores) 21.16 5.95 7.31 12
Net Profit per Employee (Rs. lakhs) 8.4 1.22 4.7 13
Business per Branch (Rs. crores) 483.9 60.8 95.8 11
Source: IBA
Table: D-5REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 121
Table D-6
RETURN ON AVERAGE ASSETS (ROAA) – PSBs
I Nationalised Banks March
2009
March
2008
1 Allahabad Bank 0.90 1.32
2 Andhra Bank 1.09 1.16
3 Bank of Baroda 1.09 0.89
4 Bank of India 1.49 1.25
5 Bank of Maharashtra 0.72 0.75
6 Canara Bank 1.06 0.92
7 Central Bank of India 0.45 0.54
8 Corporation Bank 1.24 1.29
9 Dena Bank 1.02 1.06
10 Indian Bank 1.62 1.64
11 Indian Overseas Bank 1.17 1.30
12 Oriental Bank of Commerce 0.88 1.02
13 Punjab & Sind Bank 1.26 1.49
14 Punjab National Bank 1.39 1.15
15 Syndicate Bank 0.81 0.88
16 UCO Bank 0.59 0.52
17 Union Bank of India 1.27 1.26
18 United Bank of India 0.34 0.68
19 Vijaya Bank 0.59 0.75
Average of 19 Nationalised Banks [I] 1.00 1.05
II State Bank of India (SBI) 1.04 1.01
III Associates of SBI
1 State Bank of Bikaner & Jaipur 0.92 0.87
2 State Bank of Hyderabad 0.91 1.00
3 State Bank of Indore 0.88 0.88
4 State Bank of Mysore 0.91 1.08
5 State Bank of Patiala 0.83 0.83
6 State Bank of Saurashtra - 0.28
7 State Bank of Travancore 1.30 0.89
Average of 7 Associates [III] 0.96 0.83
Average of SBI Group [II+III] 1.00 0.92
IV Other Public Sector Bank
1 IDBI Bank Ltd. 0.62 0.67
Average of PSBs [I+II+III+IV] 0.87 0.88
Source: IBA
Table: D-6
ROAA - March 2009
PSBs Excluding
IDBI
Highest 1.62 1.62
Lowest 0.34 0.34
Average 0.87 1.00122 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table D-7
RETURN ON EQUITY – PSBs
I Nationalised Banks March
2009
(%)
March
2008
(%)
1 Allahabad Bank 13.1 18.7
2 Andhra Bank 17.9 17.7
3 Bank of Baroda 17.4 13.0
4 Bank of India 22.3 19.0
5 Bank of Maharashtra 14.9 18.4
6 Canara Bank 17.0 14.9
7 Central Bank of India 8.9 9.3
8 Corporation Bank 18.2 17.4
9 Dena Bank 19.5 20.0
10 Indian Bank 17.5 19.5
11 Indian Overseas Bank 18.5 24.7
12 Oriental Bank of Commerce 12.2 6.1
13 Punjab & Sind Bank 20.4 18.3
14 Punjab National Bank 21.1 16.6
15 Syndicate Bank 18.2 19.8
16 UCO Bank 14.1 14.1
17 Union Bank of India 19.8 18.9
18 United Bank of India 6.0 12.0
19 Vijaya Bank 8.3 14.7
Average of 19 Nationalised Banks [I] 17.1 16.2
II State Bank of India (SBI) 15.7 13.7
III Associates of SBI
1 State Bank of Bikaner & Jaipur 19.7 18.4
2 State Bank of Hyderabad 19.2 20.7
3 State Bank of Indore 17.8 17.8
4 State Bank of Mysore 14.8 23.1
5 State Bank of Patiala 17.0 15.3
6 State Bank of Saurashtra 4.5
7 State Bank of Travancore 27.0 22.5
Average of 7 Associates [III] 19.2 18.0
Average of SBI Group [II+III] 16.4 14.6
IV Other Public Sector Bank
1 IDBI Bank Ltd. 9.1 8.3
Average of PSBs [I+II+III+IV] 16.5 15.2
Note: ROE = Net profit / Capital + Reserve & Surplus
Source: IBA
Table: D-7
ROE (2008-09)
Range No. of
Banks
> 20% 4
15% - 20% 14
< 15% 9
Above Average 15
ROE (2008-09)
PSBs Excluding
IDBI
Highest 27.0% 27.0%
Lowest 6.0% 6.0%
Average 16.5% 17.3%REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 123
Table D-8
COST INCOME RATIO – PSBs
I Nationalised Banks March
2009
March
2008
1 Allahabad Bank 0.42 0.44
2 Andhra Bank 0.46 0.46
3 Bank of Baroda 0.45 0.51
4 Bank of India 0.36 0.42
5 Bank of Maharashtra 0.55 0.55
6 Canara Bank 0.44 0.49
7 Central Bank of India 0.56 0.58
8 Corporation Bank 0.36 0.42
9 Dena Bank 0.51 0.49
10 Indian Bank 0.39 0.46
11 Indian Overseas Bank 0.43 0.43
12 Oriental Bank of Commerce 0.45 0.47
13 Punjab & Sind Bank 0.49 0.51
14 Punjab National Bank 0.42 0.47
15 Syndicate Bank 0.50 0.50
16 UCO Bank 0.55 0.58
17 Union Bank of India 0.42 0.38
18 United Bank of India 0.59 0.66
19 Vijaya Bank 0.51 0.51
Average of 19 Nationalised Banks [I] 0.44 0.48
II State Bank of India (SBI) 0.47 0.49
III Associates of SBI
1 State Bank of Bikaner & Jaipur 0.47 0.53
2 State Bank of Hyderabad 0.42 0.45
3 State Bank of Indore 0.42 0.49
4 State Bank of Mysore 0.50 0.52
5 State Bank of Patiala 0.45 0.48
6 State Bank of Saurashtra 0.69
7 State Bank of Travancore 0.43 0.49
Average of 7 Associates [III] 0.45 0.50
Average of SBI Group[II+III] 0.46 0.49
IV Other Public Sector Bank
1 IDBI Bank Ltd. 0.49 0.42
Average of PSBs [I+II+III+IV] 0.45 0.48
Source: IBA
Cost Income Ratio
March 2009
PSBs Excluding
IDBI
Highest 0.59 0.59
Lowest 0.36 0.36
Average 0.45 0.45
Table: D-8124 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Table D-9
NET PROFIT MARGIN – PSBs
I Nationalised Banks March
2009
(%)
March
2008
(%)
1 Allahabad Bank 9.0 13.7
2 Andhra Bank 10.6 11.9
3 Bank of Baroda 12.5 10.4
4 Bank of India 15.5 13.9
5 Bank of Maharashtra 7.8 8.6
6 Canara Bank 10.7 9.5
7 Central Bank of India 5.0 6.3
8 Corporation Bank 12.4 14.1
9 Dena Bank 10.9 11.4
10 Indian Bank 15.8 16.2
11 Indian Overseas Bank 11.8 13.7
12 Oriental Bank of Commerce 9.1 4.7
13 Punjab & Sind Bank 12.0 15.1
14 Punjab National Bank 13.9 12.6
15 Syndicate Bank 8.7 9.6
16 UCO Bank 6.1 5.7
17 Union Bank of India 12.9 13.2
18 United Bank of India 3.8 7.9
19 Vijaya Bank 4.4 8.2
Average of 19 Nationalised Banks [I] 11.0 10.9
II State Bank of India (SBI) 11.9 11.7
III Associates of SBI
1 State Bank of Bikaner & Jaipur 9.2 8.9
2 State Bank of Hyderabad 9.5 11.0
3 State Bank of Indore 9.1 9.2
4 State Bank of Mysore 9.0 10.9
5 State Bank of Patiala 8.3 8.4
6 State Bank of Saurashtra 2.9
7 State Bank of Travancore 12.9 10.0
Average of 7 Associates [III] 9.6 9.3
Average of SBI Group [II+III] 11.3 10.9
IV Other Public Sector Bank
1 IDBI Bank Ltd. 6.6 7.6
Average of PSBs[I+II+III+IV] 10.9 10.8
Net Profit Margin = Net profit as % of Total Income
Source: IBA
Table: D-9
Net Profit Margin
March 2009
PSBs Excluding
IDBI
Highest 15.8% 15.8%
Lowest 3.8% 3.8%
Average 10.9% 11.1%REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 125
ANNEXURES
A – I Order from Government of India appointing the Committee
A – II Questionnaire sent to Banks
A – IIIMeetings and Interfaces of the Committee on PSBs
A – IV‘Branch of the Future’ – A Typical ModelREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 127
ANNEXURE I
Annexure: I128 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Annexure: IREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 129
ANNEXURE II
QUESTIONNAIRE
(Please take time to document your HR practices in this questionnaire. Soft
copy has been mailed to facilitate furnishing the information below each
questions. If however, the answers are quite descriptive, you can use separate
sheet, giving reference to the questions. Should you require any clarifications
relating to any questions etc., you can send us an e mail on hrmcommittee2009@
live.com”)
Part A
Background Information
1 Name of the Bank
2 Year of establishment of the Bank
3 No . of branches as on 30
th
 November,09
Category No. of Branches
Metro
Urban
Semi-urban
Rural
4 No. of Specialized branches
Sr. No. Specialized Branch - type No. of Branches
Annexure: II130 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
5 Any other type of branches
6 Branch Expansion plan (including license on hand) for the next 2 years
7 Any Subsidiaries / joint ventures
8 No of Overseas Branches / subsidiaries / joint ventures
9 Snapshot of Key Financials for the last 3 years and up to 30
th
Sept.09 :
Parameters 2005-06 2006-07 2007-08 2008-09 Up to
30/9/09
Deposits
Advances
Gross NPA
Net NPA
Gross Profit
Net Profit
C A R
Net Worth
10 Status of Technology initiatives :
• Software deployed for Core Banking :
• % of Branches on CBS :
• ATMs deployed :
• List other Technology initiatives undertaken such as AML, Cash Management
system, Payment messaging system etc.
• Call centre
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 131
Part B
HR Related Information
Please provide information on the following from 2005-06 till 30
th
 Sept.09
Data on 2005-
2006
2006-
2007
2007-
2008
2008-
2009
2009-
Sept.09
a Ratio of Officers to Clerks to Sub staff
b Business per employee ( in crores)
c Business per Branch ( in crores)
d Profitability per employee (in lacs)
e Profitability per Branch(in lacs)
f Employee attrition rate for the last 4
years and upto 30
th
 Sept.09
Officers’
Clerks
Sub – staff
g Training budget for the last 4 years =====
h Total number of Officers’ posted in
HR Department of the Bank (no. of
HR specialists may be indicated in the
brackets)
i Percentage of Generalists to Specialists
j Please provide age profile of employees of your Bank:
No of employee in the age group of
Grade/
Scale
Strength % to
total
<
35
36
to
40
41
to
45
46
to
50
51
to
55
56
to
60
Average
Age
% of
SC / ST
emp.
No. of
female
emp.
GM
DGM
AGM
CM
SM
MM
JMG
Clerical
Sub Staff
TOTAL
Annexure: II132 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
K Please provide grade wise data on officers and clerks having following
qualifications (if there is combination, only one qualification be included):
Grade /
Scale
CAs MBAs Engineers IT HR CISA PHDs Any other
specify
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 133
Part C
Description of HR Practices
A VISION, MISSION, GOALS
The broad direction and the long range plans that the Bank has agreed to
be guided by in its functioning., Vision may be as vague as a dream or as
specific as a mission or a goal statement
1 Does your Bank have a laid down Vision/
Mission?
(YES/NO)
(If yes, Please mention Bank’s Vision & Mission )
2 Are the Vision & Mission of the Bank known
to employees?
(YES/NO)
(If yes, how was the Vision, Mission of the Bank communicated to the
employees? Kindly elaborate the process followed)
3 Does your Bank have a separate Human
Resource/People Management Policy?          
(YES/NO)
 (If yes, please mention the HR vision, HR Philosophy being practiced by your
Bank to support your answer.)
B AUTONOMY ON HUMAN RESOURCES ISSUES
1 In February 2005, the Government offered an autonomy package for Public
Sector Banks in order to enable PSBs to be market driven and aimed at
creating level playing field with private banks and foreign banks.  How this
autonomy has helped your bank in building HR – business connect, motivation
& retention?
2 Which are the areas in which you need autonomy / extended autonomy and
why? Please elaborate.
3  Autonomy package offered by the Government, provides board driven pay
structure for “specialized cadre” and differential pay, linked to performance
within the pay-scales decided after negotiations to those who are genuinely
outstanding performers.  How this freedom has been used by your Bank?
Please give details.
Annexure: II134 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
C ORGANISATIONAL  STRUCTURE
1 What is the current organisational structure – whether 2 / 3 / 4 tier?  Please
provide an  Organogram of your  Bank covering  executive positions:
l Corporate centre ;
l Zonal Office   or Circle office;
l Regional Office;
l Branches - Operating units.
2 For the purpose of Operational efficiency and Organisational effectiveness
whether your bank has undertaken any Organisational restructuring in the
recent past? If yes, please list out salient features and benefits accruing out of
the same.
3 Please provide information on the following
Sr.
No.
Unit Number
I No. of Zonal Offices or Circle offices
II No. of Regional Offices
III Average No. of  ROs under  Zone
IV Average No. of Branches under  Regions
V Average no. of Staff at  the Zonal Office/Circle office
VI Average no. of staff at   the Regional Office
VII % of Staff at R/o to branches
VIII % of Staff at Administrative Offices to operations
4 Is the Corporate Centre structure devised on the basis of functional departments
or designed to support  Lines of Business / Business segmentation: If, on the
basis of business segmentation; please specify how business segmentation is
done?
5 Are the functional roles identified at Corporate office / line of business/ Zonal /
Regional offices?
6 Are the roles, responsibilities & skill requirements (technical, managerial
& behavioral) outlined for each of the roles?  If yes, please provide role,
responsibilities & skill requirements framed for GM (HRM)
7 Has Performance Measures for each roles identified and defined to enable
tracking successful achievements of the accountabilities / responsibilities of
each position? Please provide a copy in relation to the role of GM (HRM)
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 135
D MAN POWER PLANNING
1 Briefly state, how your Manpower planning is linked to Business planning?
2 What is  the basis & process of Manpower Planning  in relation to Branches
and  Administrative offices  for :
1. Executive cadre;
2. Officers’ Cadre;
3. Clerical cadre; and
4. Sub Staff cadre.
3 What is the Periodicity of Manpower Planning?
4 Does your Manpower planning exercise focus on skill and competency planning
at different units in the Bank? Please describe.
5 Is Manpower Planning for specialized branches such Corporate Banking
Branches, Asset Recovery Branches, Agriculture Finance Branches etc is done
differently? If yes, please detail the same, indicating the linkage to business
(or any other parameter used), level of branch head position, reporting
relationship etc.
6 What is the staffing pattern in case your Bank has centralized certain new
functions like Central Back Office, Regional Back Office, City Sales Office,
SME outlet, Retail Outlet or any other equivalent of these. Please provide
organisation structure and staff provided to such units.
7 Please indicate  the Business levels fixed for the following  positions :
Sr.
No.
Position Business level Grade / Scale /
Rank
a Zonal Head
b Dy. Zonal Head
c Regional Head
d Dy. Regional Head
e Any other positions
Annexure: II136 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
8 Please provide the staffing pattern for  Small, Medium, Large, Very Large,
Extremely Large, Specialized branches, RO, ZO, other administrative offices,
Shared services branches etc.
9 Please provide norms of categorization of posts below branch Head position
for branches classified as Small, Medium, Large, Very Large and Exceptionally
Large branches  indicating :
l Criteria;
l Periodicity ;
l Bulk deposit is excluded or included?
10 Post CBS, have you rationalized the manpower at branches? If yes, please
provide details.
11 If no, what is the plan of action?
12 Whether any internal / external study undertaken on Manpower Planning in
the recent past? If yes, please list out the salient features.
13 Please list out your constraints in rationalizing Manpower both at Administrative
offices and in Branches?
14 Please share, if any innovative approaches have been adopted for Manpower
assessment in your bank?
E RECRUITMENT
1 In the context of autonomy granted in the area of Recruitment, what specific
changes were brought about in  recruitment (including improvements made
in the  entry level criteria from earlier government  guidelines in terms of  Age,
Education Qualification, Written test, methodology of selection etc) Please list
out the changes and the benefits accruing thereon? If needed, separate sheets
may be attached.
Category Changes brought about Benefits accruing
thereon
Officers
Clerks
Sub-staff
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 137
2 Please provide data on all Recruitments made in the last 4 years & up to
Sept.09
Recruitment made  in last 4 years  &  till Sept. 09
Category
2005-
2006
2006-
2007
2007-              
2008
2008-
2009
2009-
Sept.09
Officers – Generalist
(including Mngt.
trainees)
Clerks
Sub staff
Total
3 Please provide data on Lateral Induction of Officers  on Campus, Contract
basis  and on regular basis( in scale II & above) in the last 4 years & up to
Sept.09: *
2005-
2006
2006-
2007
2007-
2008
2008-
2009
2009-
Sept.09
Campus **
Contract Basis
Lateral recruitment in
Scale II & above
*    If  the data is inclusive of Specialist, please provide in a separate sheet, the    
      Grades and areas in specialization in which the recruitment was made – year
wise.
**   If campus recruitment is on contract basis, they may be indicated in Brackets
4 Please provide your recruitment plan for the next 3 years
Category 2010 -  2011 2011 -  2012 2012-2013
Officer-Generalist
Clerical
Sub Staff
Total
Annexure: II138 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
5 Please provide your plan for recruitment of  specialist  for the next 3 years
Specialist Category  2010 -  2011 2011 - 2012 2012 -2013
6 Please provide your recruitment plan for the next 3years in respect of positions
in AGMs cadre & above
7 What is the  Percentage of Direct Recruitment to Officers’ cadre to Promotion
from clerical cadre?  If any internal settlement governs such ratios &
constraints, please provide them
8 Please provide data on Direct Recruitment made in officers’ cadre vs.
Promotion to officers’ cadre in the last 5 years.
Recruitment vs. promotion in last 5 years & till sept.09
2005-
2006
2006-
2007
2007-
2008
2008-
2009
2009-
Sept.09
Officer*
* Promotions may be indicated in brackets.
9 Whether a Recruitment Policy has been put in place? Please list out its salient
features.
10 Kindly enumerate the type of test administered (including computer literacy
test) for  recruitment: In case you are using any psychometric test / assessment
centre etc. Please specify.
Category  Type of Test
Clerical
Probationary Officers
Specialist
Management Trainees
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 139
11 How are you meeting the changing skill requirement (multi-tasking) such as
Sales, Service orientation and marketing, through Recruitment?
12 Whether services of any Recruiting agency used for recruitment? If yes,
indicate the activities entrusted to the agency vis a vis Bank.
13 Time taken for each recruitment cycle for :
Category Campus  recruitment
Lateral
recruitment
in Scale II
& above
All India
Recruitment of
officers/ Regional
recruitment of
Clerks
Management
trainees
Officers’
Clerks
14 What are areas where you have key competency shortages? What plan of
action is envisaged to meet these shortages?
15 Constraints, if any faced :
a) in hiring highly qualified persons for specialist positions?
b)   in recruitment?
16 Are you offering CTC package to those who are being hired on Contract? If
yes, please indicate at what level and the CTC offered.
17 What measures are taken by your bank to reduce the increasing employee
turnover rate among new recruits?
18 Innovative practices, if any adopted by your bank in recruitment
F INDUCTION AND INTEGRATION
1 Does your Bank have a formal structured induction programme for fresh
recruits (clerks & officers) joining the organisation as well as for internal
promotees? If yes, please provide the salient features.
2 What role of HR department play in facilitating induction and integration of
new recruitees / promotees? Who monitors the induction process?
Annexure: II140 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
G HRM FUNCTION
1 Please provide Organisation structure of HR department at Corporate level,
Zonal level and Regional level.
2 Are there a Board level / Bank level Committee on HR?  If yes, what is its main
role / contributions in the last 3 years?
3 Do you undertake an annual HR plan? If yes, please provide a copy.
4 Do you think that your Bank requires the services of professionally qualified
and trained HR specialists?  If yes, what should be their qualification and at
what levels?
5. Please provide the profile of  the GM holding the portfolio of HRM function
in the last 5 years  specifically indicating his age, educational qualification,
experience in HR  among other profile details.
6 How the Performance of GM (HRM) is assessed and what are the key expectations
from this role? Whether the expectations are fulfilled? Constraints if any.
7. What are the 5 key issues in HR to meet the competition, that need immediate
attention?  What are your suggestions to overcome the same.
8 Please give an account of your best HR practices?
9 In the context of competition, what are the areas  for reform in HR at :
a) Bank level
b) Government level  and
c) IBA level
10 Whether you have bank has conducted employee satisfaction survey? If yes,
mode and periodicity of the survey and corrective action initiated thereafter.
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 141
H TRAINING
1 How are you meeting the competition through training system?
2 What are the new competencies that are built through training system?
3 How the performance of training system is assessed?
4 What are the operating mechanisms for improving effectiveness of training
system?
5. What is the training infrastructure  in your bank?
6. What % of   training effort is distributed between clerks & officers?
7 How are you meeting the developmental needs of your Executive cadre?
8 What measures are undertaken by your bank to bring about attitudinal and
mind set change of front line staff since the nature of work is changing with
new market realities?
9 What Best Practices have been adopted in the area of training in the context
of competitive Banking landscape?
I  PERFORMANCE MANAGEMENT SYSTEM
1 Are executives assessed through the Performance Management System (PMS)
circulated by the Government or you have undertaken any changes? If yes,
details of the same.
2 Please list out the salient features of Performance Management System followed
for your Officers.
3 How do you assess the performance of your Award Staff? Please specify whether
the Performance rating is used for Promotions, training, placement etc.,
PLEASE PROVIDE A COPY EACH OF THE APPRAISAL FORMAT.
Annexure: II142 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
4 Does the present  Appraisal system for Executives and officers’ adequately
serves the purpose   of  :
1. Measuring  the Performance :
2. Initiating developmental measures.
5 What developmental interventions are in place in your bank in respect of slow
pacers?
6 How are you ensuring objectivity in Performance Appraisal System?
7 How is consistency in implementation of PMS across the bank is ensured?
8 What are the innovations in PMS introduced by your Bank?
9 What are the Key issues / problems in management of Performance appraisal?
10 What are your suggestions for improving PMS?
J EMPLOYEE   DIVERSITY MANAGEMENT
(Employee diversity refers to human characteristics that make employees
mutually  different & includes gender, nationality, ethnicity, culture,
economic background, physical status etc.,)
1 Do you have Diversity Management policy in your bank?
2 Which are the major areas in diversity management which your Bank focuses
on such as Gender, Nationality, Ethnicity, Culture, Economic Background,
Physical status, Religious belief etc.,
3 What initiatives are taken by the bank to raise the awareness of diversity
among employees?
4 How does your bank ensure cordial work environment among diverse people?
5 Any special HRD initiatives for development of SC/ST/OBC employees? Please
elaborate.
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 143
Annexure: II
6 Any special HR policy for development of Women employee, their career
development or facilitative measures / concessions for taking care of their
family?
7
What formal/informal systems / mechanisms have been provided for helping
women employees facing difficulties with their male colleagues & work life
balance?
8 Do you have a transfer policy for women employees? How it is integrated with
career progression?
9 What problems, if any, you face in effective utilization of women employees in
managerial level?
10 How many Women employees have refused promotions in the last 3 years?
K REWARDS & RECOGNITION
1 What are the various types of rewards (monetary / non-monetary) given to
employees for their performance? Give a brief outline of different rewards and
incentive schemes operational in your bank with their objectives and coverage?
2 Constraints & suggestions in management of reward and recognition.
3 Is the present incentive scheme for employees / officers in  PSBs  stipulated
by Government,  adequate? If yes, salient features of its operationalisation
including number and category of employees covered, please give year wise
break-up.144 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
L CREATING A TECHNOLOGY TALENT POOL
1 In the context of large scale adoption of technology  to banking operations and
making the service delivery  system technology-dependent,  what HR Strategy
are   in place  to create a technology talent pool ?
2 What HR policy changes are envisioned to start the IT competency building
process?
M SUCCESSION PLANNING  &  LEADERSHIP DEVELOPMENT
1 How succession issues are addressed as a process intervention in your Bank?
2 Which are the strategic positions / roles requiring Succession Planning in your
Bank?
3 Has any exercise carried out for identification of critical attributes of the
role requiring succession planning as well as profiling the competencies of
probable role holder? If so, provide us details.  
4 How are potential leaders identified? Give details of process / mechanism of
identification.
5 Have leadership competencies relevant to various strategic positions of the
bank identified? Please give us the details.
6 What are grooming strategy / processes involved for development of identified
potential leaders? Please elaborate on constraints in developing leaders of
future.
7 Your suggestions for development of leaders for various levels
8 How leadership impact is evaluated in your bank? Give details.
9 Do you suggest any industry level mechanisms for development of leaders?
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 145
N TALENT MANAGEMENT
1 What are the strategies adopted by the Bank for talent retention?
2 What are the strategies adopted by the  Bank for talent development?
3 How employees are groomed in Key roles such as Branch Head, Regional
Head, Zonal Heads?
4. What is the mechanism for grooming adequate number of officers in key
functional areas such as Credit, Forex, IT, Marketing, HR, Treasury, Risk
Management etc.? What are the constraints?
5 How the bank is developing a sales culture in the organisation?
O EMPLOYEE  ENGAGEMENT AND MOTIVATION
1. What are your strategies for seeking commitment of staff? Please detail the
initiatives undertaken.
2. What are the specific initiatives undertaken for engaging front line staff?
3. What are the constraints in motivating staff?
P WELFARE SCHEME
1 What are the Welfare Scheme in the bank and expenses incurred
thereon for the last 5 years?
2 Is the current allocation towards Welfare adequate? What are the
constraints in managing   Welfare?
Annexure: II146 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Q WAGE RELATED
1 Staff cost  to Total income( labour ratio )for the last 4 years –
(an indicator of the pressure put on bank operations by staff expense.  The
labour ratio is a very useful gauge of efficiency  and is free from subjective
judgments)
2 Staff cost to Total Operating expenses for the last 4 years
3 What specific steps are initiated for controlling staff cost?
4 State facilities provided beyond the provisions of Industry level settlement –
BPS & OSR.
5 What is your bank stand in regard to :
a) Bank should have common wage and service conditions ; or
b) They should have their own wage settlement.
R INDUSTRIAL RELATIONS
1. Competitive Banking scenario requires a  positive IR  frame work.  What
initiatives have been initiated by your bank in this direction?
2. What policy frame work is in place  in your bank for resolution of :
a) Individual grievances ;  and
b) Group grievances – of employees’ organisation;
S HR TECHNOLOGY
1 What Technology initiatives have been undertaken by your Bank in the area
of HRM?
2 Please specify, use of technology in HR administration.
3 What are the challenges in popularizing HR technology?
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 147
T OUTSOURCING
1 Which aspects of HR administration, if any, are outsourced?
U DEPLOYMENT OF STAFF
1 Do you have a deployment policy? If yes, please provide a copy.
2 Has present scope for deployment of staff upto a stipulated distance of
100 KMs operationalized in the bank? If yes, any further suggestions.
3.   Your constraints and suggestions in deployment of staff.
V HR AUDIT
1 How do you audit HR function in your Bank?  What is the periodicity?
W PRODUCTIVITY
1 What measures are initiated by your bank to bring about improvement
in productivity of employees?
X PROMOTION  AND CAREER PLANNING
1 What are the changes brought about in the Promotion policy for introduction
of Fast Track promotions?
2 Any highlights in selecting people for promotions?
3 What are the concerns in the Promotion process?
4 Looking to the opportunities of multiple careers within the Officers’ cadre, has
your bank put in place a carrier planning system. If yes, please provide the
salient features.
Annexure: II148 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
5 Please provide data on Promotions carried out in the last 3 years :
Y IT  SECURITY
1. What are the rules/ regulations  prohibiting IT security violations such as :
a) sharing the password?
b) using external devises like pen drive in the secured network etc.,
c) unauthorized sharing of information.
Z RETIREMENT
Please provide retirement profile of employees of your bank.
Annexure: II
Retirement Profile of Executives (1.04.2010 to 31/03/2015 )
  REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 149
Please provide data on Attrition**  in the bank  for the last 5 years
Category 2004-05 2005-06 2006-07 2007-08 2008-09
Executives
Officers
Clerical
Sub staff
Total
** Data  on  Retirements may  please be indicated in the bracket
Annexure: II150 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
 Part D
Self Evaluation of People Management Processes/Practices
1 What are you proud of in your People Management Processes/Practices?
 (Human Resource/Talent Management systems and practices).
2 What do you consider as innovative in your People Management
Processes/Practices / HR practices and why?
3 What do you consider as bench-markable in your People Management
Processes/ Practices/HR practices and why?
4 How do you describe your People Management Processes/Practices/HR
culture (including employee engagement and commitments)?
5 Comment on the role played by top management and line managers
in implementing and using various People Management Processes/
Practices/HR systems & processes?
6 Comment on the impact of your People Management Processes/
Practices/HR on intellectual capital and financial performance of your
Bank?
7 Comment on the role of People Management Processes/Practices/HR
in your Bank in helping decide the Bank’s business strategy.
Annexure: IIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 151
ANNEXURE III
MEETINGS AND INTERFACES
OF HR COMMITTEE ON PSBs
Sr.
No.
Name Designation & Organisation
I PUBLIC SECTOR BANKS
Shri J P Dua
Shri D Sarkar
Shri M R Nayak
and their team
CMD, Allahabad Bank
ED,
ED
Shri  R S Reddy
Shri A A Taj
and their team
CMD, Andhra Bank
ED
Shri  M D Mallya
Shri N S Srinath
and their team
CMD, Bank of Baroda
ED
Shri  Alok Mishra
Shri B A Prabhakar
Shri M Narendra
and their team
CMD, Bank of India
ED
ED
Shri  Allen CA Periera CMD, Bank of Maharashtra
Shri  A C Mahajan
Shri H S U Kamath
Shri P L Jagdish Pai
and their team
CMD, Canara Bank
ED
ED
Shri  S Sridhar
Shri Ramnath Pradeep
Shri Arun Kaul
and their team
CMD, Central Bank of India
ED
ED
Shri  J J M Garg
Shri Narendra Singh
Shri Asit Pal
And their team
CMD, Corporation Bank
ED
ED
Shri  D L Rawal
Shri Bhaskar Sen
and their team
CMD, Dena Bank
ED
Shri  M S Sundara Rajan
Shri V Ramgopal
Shri Anup S
Bhattacharya
and their team
CMD, Indian Bank
ED
ED
Annexure: III152 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
Shri  S A Bhat
Smt. Nupur Mitra
and their team
CMD, Indian Oversea Bank
ED
Shri  T Y Prabhu
Shri Ratnakar Hegde
Shri S C Sinha
 and their team
CMD, Oriental Bank of Commerce
ED
ED
Shri  P K Anand ED, Punjab & Sind Bank
Shri  K R Kamath
Shri M V Tanksale
Shri Nagesh Payde
and their team
CMD, Punjab National Bank
ED
ED
Shri  O P Bhatt
Shri Diwakar Gupta
Shri A Banerjee
Shri N Raja
Shri B B Das
and their team
Chairman, State Bank of India
DMD
DMD
DMD
CGM
Shri  Basant Seth
Shri P Ramachandran
and their team
CMD, Syndicate Bank
ED
Shri  S K Goel
Shri V K Dhingra
Shri Ajai Kumar
and their team
CMD, UCO Bank
ED
ED
Shri  M V Nair
Shri S Raman
Shri S C Kalia
and their team
CMD, Union Bank of India
ED
ED
Shri  Bhaskar Sen
Shri T M Bhasin
and their team
CMD, United Bank of India
Shri  Albert Tauro CMD, Vijaya Bank
II BANK EMPLOYEES’ ORGANISATIONS
Shri  C H Venkatachalam  General Secretary, AIBEA
Shri Vishwas Utagi Secretary, AIBEA
Shri L Balasubramaniam President, NCBE
Shri  S A Kadri            General Secretary, NCBE
Shri  Pradip Biswas General Secretary, BEFI
Annexure: IIIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 153
Shri  Subhash Sawant General Secretary, INBEF
Shri  Ashwani Rana General Secretary, NOBW
Shri  G D Nadaf General Secretary, AIBOC  
Shri P V Mathew Vice President, AIBOC
Shri Alok Khare President, AIBOA
Shri P G Golvankar    Dy. General Secretary, INBOC  
Dr. S U Deshpande General Secretary, NOBO        
III INSTITUTIONS
Dr. Asish Saha Director, National Institute of Bank Management,
Pune
Shri R Bhaskaran Chief Executive, Indian Institute of Banking and
Finance, Mumbai
Dr. S K Barua Director, IIM, Ahmedabad
Dr. Ram Narayan Professor, Indian School of  Business, Hyderabad
Shri Prathap Oburai Director, National Insurance Academy, Pune
IV FORMER DIRECTORS ON BANK BOARDS
Dr. Pradip Khandwalla  Former Director on Board of Bank of Baroda
Shri R R Nair Former Director on Board of Union Bank of India
Prof. S K Maheshwari Former Director on Board of Andhra Bank
V GOVERNMENT OFFICIALS
Shri Vinod Rai Comptroller & Auditor General of India
(Former Secretary, Financial Services, Ministry of
Finance, Government of India)
Shri R Gopalan Secretary (Financial Services), Ministry of Finance,
Government of India
Shri G C Chaturvedi  Former Additional Secretary, Ministry of Finance,
Government of India
Shri K V Eapen Joint Secretary,  Ministry of Finance, Government
of India
Shri Samir Sinha Director, Ministry of Finance, Government of India
Annexure: III154 REPORT OF THE COMMITTEE ON HR ISSUES OF PSBs
VI PRIVATE SECTOR BANK
Shri K V Kamath Chairman, ICICI Bank Ltd.
Shri K Ramkumar ED (HR), ICICI Bank Ltd.
VII PUBLIC SECTOR UNDERTAKING
Shri  S Mohan HR Director, BPCL
VIII CONSULTANCY FIRMS
Shri Renny Thomas and
his Team
M/s. McKinsey & Co
Shri  Ajai Soni and his
Team
M/s. Hewitt Associates
Shri Jai Sinha and his
Team
MD, M/s. Booz & co
_____
Annexure: IIIREPORT OF THE COMMITTEE ON HR ISSUES OF PSBs 155
Annexure IV
Annexure: IV
`BANK BRANCH OF THE FUTURE
(ALL SERVICES BRANCH IN METRO / URBAN AREA)
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