Mumbai: India’s largest lender, State Bank of India (SBI), is shedding an intermediate layer from its organizational structure in an attempt at faster decision making.
Based on advice from consultant McKinsey & Co, SBI is getting rid of its 58 module offices or zonal offices, headed by deputy general managers, or DGMs.
“This is the process of de-layering of the structure. There are, at present, three layers between the customer and the chief general manager, or CGM, who is the head of the circle. We are trying to restructure this business model by removing the DGM module layer,” said Ranjana Bharij, general manager for business process re-engineering of SBI.
Firstword? : Banks in New Delhi. (Photo: Madhu Kapparath)
De-layering is not new among public sector banks. In December, Punjab National Bank closed 26 zonal offices for faster decision-making. About 2,000 employees were then shifted to generate new business and marketing. PNB was advised by The Boston Consulting Group Inc.
Under the existing organizational structure in SBI, the bank’s corporate office controls 14 local head offices or circles, headed by CGMs with two general managers under them. These 58 modules are headed by DGMs who report to the general managers in local head offices. Each module has between three and seven regional managers who, in turn, control more than 10,000 branches.
The bank’s DGMs were responsible for administration, business and processes. Now, their work will be distributed among assistant general managers and they will control various processing activities that have been migrated to centralized processing centres or CPC.
Out of its 14 circles, the new structure has already been put in place in eight.
According to Bharij, all senior officers, including DGMs, will now focus on business instead of dividing their time between business, administration and processes.
Under the new structure, assistant general managers and regional managers will be responsible for marketing and procuring the business whereas the DGMs will be responsible for a faster delivery of the processes by heading the processing centres. The bank’s trade unions, which have a say in such changes, don’t seem to have any major issues with the new structure.
“Initially, we opposed the move because of some HR (human resource)-related issues. After the management cleared our doubts, we have given a go-ahead to it,” said T.N. Goel, president of All India State Bank Officers’ Association.
“When the bank wants to meet the competition and do what other banks the world over are doing, we don’t want to be an obstacle in the way. Tomorrow, we won’t like to hear that the bank is losing out to the competition because of us,” Goel added.
Marketing of financial products has been a weakness of state-run banks in India that account for 70% of the banking industry in terms of assets. New private and foreign banks in India mostly use their branches as sales offices, but state-run banks continue to follow the old pattern where there is virtually no distinction between a back office and a branch. McKinsey started working with SBI during the mid-1990s. Its next assignment in the bank is recasting SBI’s wholesale business.