Res­tart­ing the re­forms

Banking Frontiers - - Editor's Blog -

The gov­ern­ment in a ma­jor pol­icy shift in Au­gust 2015 had ap­pointed pri­vate sec­tor pro­fes­sion­als to head two pub­lic sec­tor banks - Bank of Bar­oda and Ca­nara Bank - in pur­suit of its de­sire to ini­ti­ate re­form pro­cesses in the pub­lic sec­tor bank­ing in­dus­try. The gov­ern­ment had also picked up top pri­vate sec­tor ex­ec­u­tives to be non-ex­ec­u­tive chair­men of these two banks. The per­cep­tion then was that the gov­ern­ment would con­tinue with such mea­sures and pos­si­bly other banks too would open up for pro­fes­sion­als from the pri­vate sec­tor. This did not hap­pen. On the con­trary, the ear­lier process of pick­ing up heads from among the se­nior-most EDs of the banks con­tin­ued. There were, how­ever, sig­nals that re­sults are what the gov­ern­ment wants when it shifted some of the heads of not-so per­form­ing banks and brought in per­form­ers to re­place them.

There is ap­pre­hen­sion that the move has been an ex­per­i­men­ta­tion. Pos­si­bly that is why the two CEOs were given short tenures. There has to be a rea­son­able pe­riod of time for any chief ex­ec­u­tive to prove his cre­den­tials. All the pri­vate sec­tor banks would vouch for this. Se­condly, a turn­around is pos­si­ble only when there is con­ti­nu­ity in the man­age­ment. For ex­am­ple, when P.S. Jayaku­mar ends his term at Bank of Bar­oda in 2018 as per the man­date of the gov­ern­ment, he would have fol­lowed a par­tic­u­lar course, which his suc­ces­sor need not adopt, for he or she would have dif­fer­ent pri­or­i­ties.

This is not a de­sir­able sit­u­a­tion.

There is an­other as­pect too. While banks need to have com­pe­tent pro­fes­sion­als to head, man­age­ment of new gen­er­a­tion bank­ing re­quires high cal­iber ex­perts to head do­mains like ethics, mar­ket­ing, in­vest­ment, learn­ing, big data and an­a­lyt­ics, gov­er­nance etc and these skillsets can­not nor­mally be found from among the ranks. The way out is lat­eral or di­rect hiring. There are in­stances where such lat­eral or di­rect hiring has brought in re­sults. State Bank of In­dia en­gaged a CTO from out­side and the bank could make tech­nol­ogy leapfrogs in a mat­ter of 2 years.

It is there­fore nec­es­sary that CEOs of the pub­lic sec­tor banks – whether they are from within the or­ga­ni­za­tion or brought in from out­side – should have longer tenures to con­ceive strat­egy and im­ple­ment it. Be­sides, staff in the pub­lic sec­tor banks need to face the re­al­ity and ready them­selves to ac­cept tal­ent from out­side to be able to be com­pet­i­tive.

N. Mo­han

Mobile : 9322895820 Email : mo­han@bank­ingfron­

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