Punjab National Bank recently lost four relatively senior executives. But in an interesting twist to the exodus, which is also being increasingly witnessed at many government-owned banks, these officers actually quit to join other public sector banks.
“What we are seeing is cannibalization... The public sector banking industry is already short of talent and if this trend continues, some of these banks may find it extremely difficult to run the show,” says a banking consultant who is a sought-after adviser on organizational and business restructuring issues at both public and private sector banks. He didn’t want to be named talking about specific clients.
This new trend of poaching within themselves appears to be actually intensifying. Indian Bank recently appointed two executives, one each from Syndicate Bank and Bharat Overseas Bank, a private bank that is being merged with Indian Overseas Bank. Corporation Bank has also picked up a few executives from other banks.
“This is happening in areas like treasury, infotech and risk management. We advertise these posts and employees of other public sector banks are not barred from applying for these jobs. If we find them suitable, we appoint them,” says Indian Bank’s chairman-cum-managing director K.C. Chakraborty. Corporation Bank chief B. Sambamurthy notes that his bank recently employed an executive from another public sector bank for their cash management business. Technically, these are called “lateral” recruitments. Public sector banks regularly advertise looking for executives in specialized areas. Since the pay packet is not that attractive, there is hardly any response from experts in private sector, but executives of fellow public sector banks apply and get picked up.
This is a win-win situation for both the officer and the bank, except, that is, if you are on the losing end of the transaction. While the hiring bank gets the right person for the right job, the officer typically moves up the career ladder in the new job, getting the additional perks associated with the new position.
So, one bank’s assistant general manager could become a deputy general manager in another public sector bank much faster than he/she would at his/her current job. Similarly, a deputy general manager could slip into a general manger’s role within months. Normally, such promotions take anywhere between two and five years.
H.N. Sinor, chief executive of the Indian Banks’ Association, the premier bankers’ body in India, says there is nothing wrong in such “cannibilization.” “How do you address the problem?” he asks. “The best way could be allowing the banks to pay the market-related salary. And they can afford it.” That isn’t easy for public sector banks that operate under government guidelines in terms of compensation and already face significant gaps between their pay and compensation outside.
Last month, 54-year-old G.K. walked out on his employer, a large public sector bank headquartered in Mumbai’s Bandra Kurla Complex to join a software firm. This is only the second job ever for the executive after a three-decade stint with the bank. What really enticed him was a fat pay cheque, roughly six times the amount he was making at the bank.
“The downside is limited,” he says. “I had six years to retire at the bank. This means, if I can stick to my new job just for one year, I will make as much money as I would have made in my bank till I retired.”
G.K., who didn’t want his surname used, is one of about 5,000 public sector bankofficers, by a rough estimate, who have left the industry over the past few years for greener pastures. A few public sector banks, such as Bank of Baroda, have recently tried to woo outside talent by offering a relatively higher salary. This is done by offering cash instead of perks such as accommodation and a car.
So, an executive of the rank of a deputy general manger is offered about a Rs12 lakh annual package instead of a flat, a chauffeur-driven car and about Rs4.5 lakh salary. But such schemes have limited success as even the higher amount is not that large.
A few banks, such as Union Bank are starting to take a pragmatic view and recruiting junior officers on fixed-term contracts. “I am taking 400 marketing officers on a three-year contract as even otherwise, they are unlikely to stay longer,” says chairman M.B. Nair. Indian Bank too is recruiting 500 junior officers from the market.
However, the Institute of Banking Personnel Selection, which conducts written tests for such recruitments, says the quality of candidates for even such contractual assignments is slipping. Adds a public sector bank chairman, “If we want to appoint 100 officers, we still get 1,000 applications, but not too many of them can cross the first hurdle of written test. We may have to ask the institute to lower the standard (of the written test).”
According to Sinor of IBA, about 10,000 people have joined public sector banks in the past one-and-a-half years.
An unusual fallout of bank officers’ recruitment is the weakening of the clerical cadre’s strength. Till 2000, when about one lakh of 8.5 lakh employees marched out of public sector banks after accepting a golden handshake scheme, there were five clerks and sub-staffs for every two officers.
Now, the officers equal the number of clerks in some banks, such as Andhra Bank and Syndicate Bank. Banking analysts say officers will soon outnumber clerks. But nobody is really complaining about this particular loss, at least among the bank bosses. Traditionally, the clerical cadre has been the hotbed of trade unionism in Indian banking.