Q. What do public sector banks in India lack in comparison with the private sector banks?
A. I think it is a myth that public sector banks lag behind the private sector banks, because if you look at facts and figures, public sector is doing far better. Talking of the operating expenses, the figure of the Indian Bank Association for private sector was 22.76 per cent for 2012. On the other hand, it was 21.54 per cent for the public sector. These figures portray greater efficiency of the public sector in comparison to the private sector. If we consider the figures of return on assets for 2012, it was 0.24-1.83 for the private sector and 0.26-1.31 for the public sector. The figure for the public sector banks is not too dismal. It is just a perception that the performance of private sector banks is better than the public sector, which is far from the reality.
Q. If we talk of world class services in foreign banks, how do public sector banks of India fare in comparison?
A. In foreign banks, there is an increased use of technology, but in India, we totally lack on that account. Our employees are not so proficient in customer dealing and the top management is to be blamed for not investing in their training programmes. If we look at the financial aspect, then Indian banks are doing well in comparison to the foreign banks. We have similar figures when it comes to the return-on-assets, despite the fact that the CEOs in foreign banks are earning far better than CEOs in Indian banks.
Q. There is a perception that public sector banks invest heavily in enhancing skills of their employees. So where does the problem lie?
A. I think the problem lies with the top management. They are hardly ever held accountable for what is happening down the line. It is important for them to change the mindset because their responsibility does not end with providing the training. It is also important to evaluate the outcome of the training programmes and figure out the return out of investments made. In India, we have training institutions set up by banks, where the trainers and trainees both are promised jobs. So, it becomes difficult to evaluate the outcome of such training programmes. On the other hand, the foreign banks assign huge budgets for their training programmes. They set realistic targets and make sure the customer service improves. In India, the scenario is absolutely different. Here, the people are hardly interested in listening to the queries of customers.
Q. What do you think the top management is lacking?
A. It is not merely the responsibility of top management to look after the training programmes, but they are accountable for it. The top management must understand that it is important for them to personally evaluate the work of their staff and customer services that they deliver.
Q. What are the demands of the new age banking?
A. The new age is all about competition, cost reduction and providing good customer service. Competition leads to good customer service, and good service is important to attract and retain customers. The public sector banks in India hardly care about the customer or client. It is the government that gets the business. Efforts need to be made to take care of customers and retain them. Competition is likely to increase and partial privatisation of public banks will help a lot. There is an interesting phenomenon in this. Private sector banks have not been able to improve their efficiency but partial privatisation of the public sector banks have actually improved their efficiency. I believe the new age banking will focus on better customer service, increased use of technology, high competition and good governance. These factors will determine the success of the sector.
Q. Today, as the baby boomers approach retirement age, there is a huge inflow of government jobs. Do you think the y-generation can make a difference in the public sector banks?
A. Baby boomers are on the way out in every country including India. The youth is certainly prepared to work in the public sector banks. It is a good sign but these people are not likely to stay in the public banks for a long time since they are also becoming increasingly choosy about the employers. At my time, getting a job in RBI used to be a big achievement. There were only a few opportunities in private sector. But now the opportunities have gone up significantly. Mobility has to be improved to make sure public sector banks create good working conditions for their staff.
Q. Please share some solutions for the public sector banks and a holistic view on how HR can make a difference here?
A. The most important solution is increasing the training inputs and finding ways for better training. There is a need to focus on the top management to hold them accountable for work. Conducting training programmes is their output and it is mandatory to measure the outcome they draw from these training programmes. The top management also needs to be trained. Another factor we can work on is privacy. Whenever I have visited banks in India to discuss my issues, I have found people around me. If this happens in Australia, we can sue them under the privacy act. As far as HR is concerned, it can make a lot of difference. Trained HR will add value to the efficiency of banks. If the banks devise good training programmes, the outcome will be great.
