Friday, December 16, 2011

New Promotion Policy Framework - Good News for Bankers ?

With reference to new terms of promotion policy for bankers dictated by Ministry of Finance (copy of which collected form website of and pasted below , at the end of my views) I would like to place my views for consideration of bank employees, for union leaders who are supposed to protect the interest of bank employees and for top executives of bank management who have been directed by MOF to frame new policy of promotion for officers.

I would like to say that until there is system of Interview in promotion processes there is no guarantee that whimsical rejection or arbitrary promotions will not take place in Government Banks. Interview is the root of all maladies in all banks and in all government departments. Members of Interview panel more often than not apply their whims to select or reject a candidate ignoring completely the quality and quantity of work done by any particular officer. Various powerful officials are used by candidates as source called as Godfather to win the hearts of members of Interview panel and this give rise to flattery and bribery. As such I feel the system of Interview must be abolished completely.

I feel there is no benefit in conducting group discussion for promotion of any officer in any scale and neither is there any need for having a separate Merit Channel which gives scope of manipulation. During five to thirty years of service, top executive of banks get hundreds of opportunities like meeting, branch visit, correspondence, audit reports which give ample opportunity to judge the quality of an officer who is candidate for elevation. If the higher executives are not able and do not possess enough capability to assess and ascertain the level of proficiency, efficiency, communication skill, , behavior with customers, work performance, style of working, relationship, innovative and creativeness , level of initiative, loyalty to bank, level of corruption, honesty and integrity etc of an officer in span of five to thirty years , how can interview panel members judge all these in a minute or two of time available in Interview with candidate eligible for promotion?

Interview in my view is undoubtedly a tool given to management to reject good officers and whimsically select bad officers for higher assignment on some plea or the other. Same logic applies for all organization and government offices. This is why most of officers promoted to executive cadres are subsequently found to be guilty of various malpractices and later given non-sensitive assignment. It is different that such evil worker or officers get patronage and protection from his mentors sitting at top echelons and due to which they are never punished but always promoted to higher level.

Madu Koda , Harshad Mehta, A Raja, or Suresh Kalmadi succeeded in execution of their ill conceived ideas causing loss to government in tune of hundreds of crores of rupees. They succeeded in their dirty goal only because they could use their power to select flatterers for their team who blindly say yes to every order of Ministers and who do not talk of ideal or safety of the organization. By dint of money power they could earn through the rout of bribe and flattery they could manage the CBI official or vigilance official or inspecting and audit official to conceal their evil works. In the same fashion top bankers select a few flatterers and blind followers who can earn illegal money through bad lending or through ill motivated contractual works and share with them.

Similar is the line of action of top ranked official in banks who manage vital issues and who decide on big value loan proposals. In such position and in such a dirty environment, an honest and talented officer cannot visualize performing as per set procedures ensuring safety and security of the bank. And when the work culture depends on so many extraneous factors which are beyond control of officers there is no merit in talking of merit channel or group discussion or interview.

Root cause of all maladies lies in these delegated powers in top executives which shuts the mouth of good officers and when such culture is prevalent, even policy of whistle blower become futile. Officers who move opposite the line of bosses are transferred to such a critical branch that survival of officer and his family becomes an issue. Can an officer in such critical place of posting with humiliating background behind the scene perform as per his skill or as per his potential and give same growth as an officer posted at comfortable branch? Not at all.

There is no fixed yardstick which can measure perfectly the efficiency, honesty and loyalty of an officer until the intention of assessing authority is bad. It is therefore desirable to give all promotions based purely on seniority and punish officers who commit mistake or train officers who are willing to perform but lacks in knowledge. Same practice is prevalent in central government services as regards promotion and release of increment without stagnation. It is different that again politicians use transfer powers to make or mar the career of an officers for their vested self interest.

I further feel that the method of Fast Tract called as Merit Channel is another scope to bank officers to concentrate of academic knowledge and somehow or the other pass various examinations even by unfair means . In most of the cases officers who are weak in performance but strong in reading and raising knowledge level get success in written test and get promoted from one scale to other scale even though their performance in the field level is dismal, damaging and full of corruption.

Banking service is completely practice oriented and here focus remains on how an officer render service to customers and not on how much knowledge he or she possesses. There are many officers in banks who continue reading but do not perform at all in the branch they are posted. They know that if they acquire degree they will get better marking not only in appraisal and in interview but also create good impression in the minds of members of Interview panel. Such officers even at work place focus on circulars and make diary but they seldom apply their knowledge to enhance productivity of the bank.

It is true that practice without theory is blind, but it is also true that theory without practice is impotent. It is to be kept in mind that after passing ordeal of written examination, Interview and group discussion, a person is appointed in a bank. Once a person is selected for banking job, it is the duty of bank management to make him perfect in the line of activity he is supposed to work. As per assignment of duties the employees should be trained and motivated.

If banks fail to prepare an officer for particular job, it is the fault of training system and that of department of Human Resource Management and that of Planning Department. It is the duty of bank management to use the bank employee as per his attitude, skill, knowledge, interest and specialization. It is absolutely bad to deprive any office from promotion or even from annual increment if the bank does not have adequate vacancies or when bank fail to ensure good working culture. Besides if the assessing authorities fail to assess the merit of officers in a period of five to thirty years they cannot do the same in few minutes of group discussion or interview or by placing some questions in written test.

Many times officer in a bank do not succeed as per expectation of higher management due to situation beyond his control such as there is no adequate manpower in the office he works. Branch has to waste most of precious time in unproductive work like pension payment, No frill accounts as suggested by the government, salary payment of various department.

Interruption by higher bosses in normal functioning by asking various types of reports and statement by adding duties which are not reckoned with in appraisal system for assessment of work performance also adversely affect the efficiency of an officer in a branch.

When his predecessor has committed fraud, disbursed loans to bad borrowers without completing required formalities, when Non Performing assets in a branch is huge and the officers has to devote more time on recovery of past loan than in mobilization of new business. Image built by his predecessor is so bad that customers hesitate to oblige new incumbent and business do not grow as per expectation.

Higher bosses compel him verbally to sanction advances to persons of their choice and punish officer if he or she does not abide by verbal instruction and when such officers are threatened of transfer to critical places.

Area of posting plays a significant role in performance. If an officer is posted in bad area he cannot give good output. If the place where he works is crime belt or naxal affected or where security threat is more. Position of branch is at such a place that good customers dislike going to such branch.
And so on ------------------------------------
Moreover the business of any branch depends on potential of the area also. If an officer is posted at critically remote village or crime prone area or is disturbed mohalla he or she cannot increase business as an officer posted in an area where number of government departments are more, where schools and colleges are more, where the area is in developing stage and government sanctions hundreds of crores of rupees for development, where Multinational companies and big domestic companies are situated etc.

Sometimes multiplicity of banks in a particular area also dampens the prospect of growth. Private Banks offer better ambiance and skilled staff on front level counters backed by a team of marketing personnel whereas PSBs open their branches with one or two staff and place of branch is selected in remote corner so that rental payment is minimum. As soon as a branch of private bank is opened, customers of high standard prefer to switch over to Private Banks.

Branch Manager of branches of various banks is busy in preparation of reports or statement. VIP Customers are going away from public sector banks to private and foreign banks and pensioner, teachers, salaried people, NAREGA beneficiaries etc are now customers of PSBs. Even after having customer friendly service charges, customers prefer foreign and private banks because they are fed up with the attitude of employees of government banks. Employees in public sector banks are invariably short of manpower or incompetent or frustrated or busy in preparation of various reports and statements or in recovery of bad loans or busy in serving their bosses etc. Good customers dislike PSBs, they dislike share of PSBs and prefer buying shares of Private Banks even at higher PE but retired persons, students, low paid salaried people, small retailers etc like going government banks due to lesser service charges. There may be plenty of General Managers, DGMs, AGMs, and CMs in administrative offices but there is no adequacy of staffs in most of the branches to serve the real customers. Moreover the brainless expansion of banks and opening of new branches to cover up Financial Inclusion has also added fuel to fire. Total number of staff in a government bank is less than what it was ten years ago even though thousands of employees have left the bank, business of bank have grown ten or twenty times and new products have been added to banking industry. There is practically no proper man power planning due to some reason or the other. It is the employees who ultimately bear the brunt of higher management when they fail to perform as per the desire, whims and fancies of his bosses.

Similarly an officer may have influential IAS and IPS officers as his relative, ministers and important government officers as friends and may have linkage with high profile corporate houses. In such position he or she can attract good business for branch he is working as Branch Head. On the contrary some other officer may not have such good connections and so his power to mobilize business may appear low and weak even though he or she is good performer and when customers are happy with his services. Quality of a bank officer should be judged by service extended by his team to bank customers and safety provided to bank assets and not b y numerical numbers of growth in deposits and advances.

There are some officers who are good in mobilization of deposits, some have better expertise in lending, some have good marketing skills to sell Non banking products and some other have some other qualities. Every officer cannot be expected to perform similarly in different circumstances. Growth of bank’s business does not depend solely on quality of officers but also on various other factors which are beyond the control of officer. Policies framed by difference banks is different, quality of higher management in different banks at different level is different, quality and quantity of subordinate staff is different at different branches of different banks and so on……

Suppose an officer is corrupt , he indulges in bad lending and misuses his delegated powers to earn bribe from borrowers he may not only cause bank to incur loss in crores of rupees due to asset financed by him turning bad but he may also accumulate illegal money in huge quantity which he may use to increase business . Corrupt officers can easily motivate government offices to park their surplus fund in his branch. In such position though business growth is attractive there are greater chances of loan going bad and bank incurring loss. Trend of NPA exhibited by various banks in recent past is enough to indicate how corrupt bankers have spoilt the future of bank.

Politicians can talk of interview or that of group discussion or written test. They are habituated to select officers of their choice based on flattery and bribery only .They decide higher posting and higher assignment of an officer based on their relation with the officers, based on how are they treated on their visit to their offices and people of various caste ad communities like an officer to be promoted. Politicians give even election ticket to a candidate based on his money power and muscle power. Those who have developed an art of speaking, art of speaking lie and making false promises and delivering false lectures can only win the heart of high command. The theory of politician if applied in banks and in other public sector organizations, the situation will go beyond control and result which will precipitate will lead the bank to move from bad to worst. The conception and perception style of politicians in entirely different from that of bankers. Work culture in banks cannot be compared with that of politicians and other government officers who are least concerned with customer service. Politicians have already caused irreparable damage to banks through their vote bank politics during last few decades and it is they who have caused bad assets in Banks to grow to such a large extent. They have as such no moral to preach sermons to bankers.

As such politicians cannot and should not be allowed to dictate policy of promotion. Rather if there are true leaders in various employee unions and in any officers association , they must protest the newly dictated promotion policy as also existing policy and devise a better and transparent promotion policy removing all scope of discretion from all levels.

To safeguard banks and to weed away bad performers and corrupt person from the system the work of inspecting officials should be made more effective and that of Industrial Relation Department, Audit department, Human Resource Department, CBI, CVC who take punitive action against erring employees should be made more active and efficient. No delay in punishment should be tool to remove bad performers and isolate them from the system and No delay in awarding a good officer should be used a tool to spread positive culture in government banks.

I once again reiterate that the tools of Interview, written test or group discussion or that of campus recruitment in higher scales as per whims and fancies of top bankers are killing the very work spirit of bank employees and all right thinking bankers must protest and strive for other ways to bring about desired reformation instead of becoming a puppet in the hands of clever politicians.

Finance Ministry has lately realised that slowly PS Banks are becoming fiefdom of CMDs and EDs as they had absolute authority in promotions and processes have already been tinkered to suit their requirements in each individual bank.
Therefore, government thought it fit to intervene and issued draft guidelines sometime in October / November 2011 for views. Now on 5th December, 2011, they had issued the revised guidelines to all the PS Banks.
Although, we are of the view that even this policy has many pitfalls, yet it is likely to put at least some brake on the absolute powers of CMDs and EDs who were till now promoting people at their will.

The new policy if implemented sincerely is likely to reduce flattery to some extent. The cutoff date for determining eligibility as well as completed years of service will be as on the 1st of April of the financial year (April-March) in which the vacancies arise.

Relaxation in the Minimum Required Experience:
No officer would be given the benefit of relaxation in the minimum required experience by the Board at two successive levels of promotion in Scale - III and above.

Promotion from Scale — I to II and II to III :

There shall be a requirement of minimum 75% marks in APAR for each of the years of service eligible for promotion in case of promotion on merit / fast track channel
There shall be a mandatory requirement of two years continuous service in rural areas for promotion from Scale - I to II, and a total of three years in rural / semi-urban areas, including the rural service in Scale - I, for promotion from Scale - II to III. For the seniority channel, officers who have put in more than the aforesaid service in rural areas will get an advantage of further relaxation of 50% weightage in minimum experience for each additional completed year of service while assessing their eligibility.

Promotion to Scale — IV and above
• For promotion from Scale — Ill to IV and IV to V, it will be mandatory to pass an examination to test for computer literacy and computer knowledge.
• For being eligible for promotion to Scale - V, the candidates should have been a Branch Head for at least three years. Officers recruited for specialized cadre would be required to have field experience in a branch or as branch head. In case of officers in specialized cadres, this requirement can be complied with over the next three years, beginning with 2013-14 when experience of one yea, and two years for the year 2014-15 would be necessary.
• For being promoted to Scale-VI, the officer should have Regional / Circle Head or must have worked, in Scale - Ill to V, in the Regional / Circle Office for two years.

Process of Promotion :
It shall be mandatory to have a Group Discussion to assess the communication, conceptual and leadership capabilities for promotion to Scale - IV and V. For this purpose, a Board consisting of outside experts and officers of the Bank should be constituted with the approval of the Board.

Job Rotation :
Bank shall make appropriate job rotation policy giving exposure to all verticals for officers in Scale - V and VI and get it approved from the respective Board.

Written Examination :
Banks would be free to also have system of written examination for promotion at various levels as per their Board approved policies

Interview Committee and Broad Guidelines for the Committee for Selection :

The interview committee for promotion to Scales - V, VI and VII should have two outside expert with domain knowledge approved by the Board of the Bank for. each year.
During interview for Scales - V, VI and VII, weightage should be given to the following :-

a) Whether the officer has worked in different specialized areas of the banks.
b) Whether officer has been posted to different parts of India or has been only one / few Region / Circle.
c) Whether the officer has experience of working in the field as well as working in Regional / Zonal and Head Office.
d) Whether the officer has professional qualifications and has the officer acquired additional qualifications after joining the service.

Some Major Guidelines for Specialised Officers :

• For specialist cadres, namely, forex, credit, technology, HR, wealth management etc., it shall be mandatory that prior to joining the main stream cadre, the officers joining these cadres should necessarily remain in that cadre for at least five completed years of service. Thereafter, the officer should gain experience of at least two years in field operations. There will be exemption from. posting to rural areas for these officers.

• Officers recruited in the specialist cadre would be eligible for promotion in their respective cadre as per the eligibility and experience mentioned at pare 3 (i) above and shall be allowed to join the main stream in the event of completion of service as mentioned in pare 7(i) above. It must, however, be ensured that suitable replacements are placed in the vacancies likely to occur specialized cadres

• Banks should ensure that before moving the officer to a field position or to main stream cadre, they develop the capacities of other officers of the bank in order to ensure proper functioning of that specialized vertical. No officer shall be moved to the main stream cadre / field positions without ensuring these cadres.

Other Requirements :
• The zone of consideration for promotion should be strictly maintained at 1:3 ratio. However, in case, the required number of suitable persons is not available, the banks may enhance this to 1:4 with prior approval of the Board


  1. Good Job Mr. Jain >> Lets hope for some change in policy ::
    Keep it up to take such issues of common interests.

  2. sir g, what about marketing officers , can you please guide me............

  3. An almomt, similer policy was adopeted in 2006 in Public Sector Insurance Companies.
    The level of effency have come down...most of them are frusted . The company who conduct test get benifted . Intervew is another scam and fast track ... an other menace.