State Bank of India may offer employee share options, recruit specialists and promote faster-radical changes that promise to shake up a bloated, debt-heavy sector.
Public sector banks (PSBs) are under pressure to improve profitability and slash bad loans, creating a more agile sector to help fuel economic growth. For the government and the banks, that has put the focus firmly on one issue: people.
“The primary problem we have to solve in the banking sector is of performance and talent,” Minister of State for Finance Jayant Sinha said recently, noting the search for talent is more important than banks raising capital to meet tougher international regulatory rules.
ADVERTISEMENT
SBI enjoys greater autonomy than some of its smaller rivals, but even straight-talking Chairman Arundhati Bhattacharya is wrestling with basic problems ranging from poor pay to the fallout of a 1990s hiring freeze that left PSBs with a dearth of senior managers. The Reserve Bank of India has dubbed 2010-20 the “retirement decade.”
Like her counterparts, Ms. Bhattacharya is grappling with an inflexible recruitment system where mid-career hires of outsiders are unheard of. PSBs hire largely through a nationwide exam system, bringing in entry-level staff who rise through the ranks over years.
Ms. Bhattacharya, whose bank employs more than 2.15 lakh people, is also working with the government to circumvent a 2013 court ruling banning PSBs from campus recruitment at elite universities, using contracts to pull in the much needed specialists, and even consultants for specific expertise.
ADVERTISEMENT
Basic problems range from poor pay to the fallout of a 1990s hiring freeze that left public sector banks with a dearth of senior managers |
PSBs hire largely through a nationwide exam system, bringing in entry-level staff who rise through the ranks over years |
The Modi government has promised greater autonomy for individual banks |
The Reserve Bank of India has dubbed 2010-20 the 'retirement decade' |
“Areas like credit, risk, human resources, IT, of course, economic research, analytics: wherever we have specialised areas, we can get people laterally on a contract basis,” she said.
This is a departure for banks that long offered only the option of a job for life, offsetting low cash pay with a web of benefits such as housing and a generous pension.
“We’ve flagged to the government that at least a portion of our recruitment we should be able to do from campuses. The government has assured us they are working on this,” Ms. Bhattacharya said.
This should come as a relief to many in the sector who saw the ban — supposed to enhance democratic hiring — as emblematic of banks’ struggles to meet private sector productivity targets while shackled by state constraints.
“They want efficiency, but they are tying our hands,” fretted one senior official at a large public sector bank.
Prime Minister Narendra Modi’s government has promised greater autonomy for individual banks such as SBI, and is also due to allow PSBs to specialise. Recruitment could test its political will — not least radical moves like the share option scheme being debated by the SBI board.
“It has not yet fully gone through. But we are working on it,” Ms. Bhattacharya said. “Definitely in the next 12 months you’ll see a lot of changes. That much I am quite sure.”