Monday, July 30, 2012

Present Position of Public Sector Banks

Present position of public sector banks is like this:

Biggest bank called as State bank has become number one in Gross NPA. Second ranking bank PNB and  BOB have become second in gross NPA and a bank called as best performing  bank which was pioneer in change management and which was targeting to be number one among state run bank other than SBI is now number one in Gross NPA and number one in volume of restructured advances.

Root cause of growing sickness is that Human Resource Management department which was originally established to improve quality and to ensure merit based promotion has more or less been converted to Human Resource Manipulation Department. Everyone knows that HR manipulation department has ample power and potential to promote worst officer and reject the best officer. This is called manipulation and a person who is master in manipulation can only get the chance to occupy top post.

Credit recovery department is in fact working as Credit Restructuring Department. Fraud Control Cell is working as if it is Fraud Compilation Cell. Department of Planning Business and Operation in working as Data Pollution & Data Promotion Department and most of the time is busy in working on Power Point Presentation of Budget and Achievement from various angle of consideration. Credit Processing Department is busy in Renewal & Review Management Department to prevent accounts slipping into NPA category.

Department of Priority Sector which was set up for growth of lending for farm sector, industrial sector and for small traders has changed their priorities to government sector and corporate houses.Erstwhile Priority sector has become Non-Priority sector and vice versa.

State run banks are moving from mass banking to class banking, social banking to profit banking , customers satisfaction to officials satisfaction and so on...Trade Union Leaders who formed various Trade Unions and Association to protect the interest of employees are now second side of same coin which is represented by bank management. In other words top executives of banks management are working in nexus with top trader union leaders to serve their mutual interest at the cost of employees. So-called Protectors instead of protecting are threatening members of transfer to remote place or rejection in promotion processes if their dictates are not followed or if anyone goes against the management line of action. 

Customer Grievance Redressal cell is working as Executive Grievance Redressal Cell and Persons assigned the duty of taking care of customer’s grievances with a Board “May I Help You “ displayed in front of the counter are now functioning as helping counter for top executives. Officers in general forget to say ‘May I Help You’ to their valued customers but never forget to say this attractive combination of words to their bosses. Bank officers hesitate in saying ‘Sir’, ‘Yes sir’ to their customers but use these terms frequently for their bosses without any hesitation. Work is worship was treated the key to success in the past but now it is Flattery and Bribery which are keys to success.

Boards of Directors seldom get time to find out the reasons for growing sickness and pitiable health of bank they are associated with, but they have plenty of time to manage RBI and Ministry of Finance and in concocting a story of success to hand over the press. Directors of a bank are ready to sign on all papers containing right or wrong policies provided they are given red carpet welcome and given share in all costly gifts either in cash or in kind.

Similarly Auditors and inspecting officials need red carpet welcome and grand hospitality at every point of place they visit from early morning to late night when then go to bed. Wealth Wine and Woman are three tools which may manage most of top executives and top ranked government officials. 

Any officer who has the capacity to speak nicely and effectively, who can deliver a good speech on banking products and moral of officers are considered the star performer even though they may be the most corrupt and the greatest damager of fundamentals of bank. This is new India where politicians harp on reformation and reformation only. 

Last but not the least, top officials are busy in opening of new branches and new ATMs. The more branches and ATMs are opened the new business will be garnered. They will get an opportunity to call VIPs to attend inaugural and to preside such prestigious functions. Lacs of rupees will be spent on each of such functions. Officers with little experience will become branch head and he will do nothing but add fuel to fire. Old business from older branches will go out to other bank and new business in new branches will be added up. 

There is an old saying that it is easy to market good customers but difficult to sustain them. It is easier to open new branches but difficult to manage existing branches in fruitful and effective way. It is easy to recruit new staff but difficult to make them able and capable to do sound and healthy banking. it is easy to recruit new officers but difficult to keep them in bank for a longer period. 

It is easy to keep bosses happy but difficult to customers happy. It is easy to spend money on big bosses on their hospitality but very hard to spend    on improvement of customer service and in extension of time bound quality service to customers upto the level of their satisfaction and in delightful manner.And the more important is it is easy to enhance quantity of any element but difficult to enhance quality of them.

As a result of such mismanagement and lack of foresightedness, number of loss making branches has been increasing year after after. Volume of NPA in hundreds of branches in all banks has gone above 25% of their total advances and in many it is more than even 50 to 75% of total advances. Obviously new branches are being added and old branches are made facing threat of closure.

A prudent banker can visualize the future of such branches.RBI will go on harping closure of loss making branches and state run banks will continue to add more and more loss making branches to please their bosses sitting in offices of Ministry of Finance .

Now you judge whether banks are improving or deteriorating? 

Officers who get out of turn promotion start flattering top bosses and forget what is needed for health of bank. This is the tragedy which state run banks are facing. Only God can save these banks. It is true that the crowd of officers who are getting out of turn promotion and who are associated with such type of trade unions who may manage anything in collusion with top executives are not raising any voice against growing sickness in the system and there is undoubtedly peace and there is no problem which may disturb Industrial relation in the industry.

But time will tell whether Industrial peace purchased at the cost of overall health of bank will last long or not?

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