THE HR CRISIS AT PSU BANKS

By Ruma Dubey

You want to meet the CEOs of Andhra Bank, Bank of Baroda, Bank of India,  Canara Bank and Punjab National Bank? That’s simply not possible. Not because we as aam aadmi rarely have access to the CEOs, that too of PSU Banks. But simply because these banks do not currently have a CEO. IDBI Bank’s CEO will retire eight days from now.

That’s not all. Recently, United Bank of India, Indian Overseas Bank, Vijaya Bank and Oriental Bank had a change at the top – the top slot has been divided into two. One would be the Executive Chairman who will guide the Board while day-to-day operations will be managed by MD and CEOs.

So on one hand, the PSU banks are grappling with rising NPAs and on the other, major of these PSUs are headless. If this is not a crisis at PSU banks, what is?

The rising bad loans issue would take a while to resolve but human resource crisis could be coming to an end – now that sounds like an oxymoron statement! Yesterday, news came in that a panel at RBI, headed by Rajan, have shortlisted 11 candidates for the post of CEO and MD for 5 PSU banks – PNB, BoB, BoI, IDBI Bank and Canara Bank.

The entire process of inviting application is what caused the delay. Earlier, when the department of finance had issued the ad for inviting application, the maximum age limit was stipulated at 55 years and they needed to have mandatory Board experience of 3 years. There was a mere trickle of applications and then the Department of Finance had to modify the ad – they raised the age limit to 57 years and reduced Board experience to one year.

After this correction, the Govt received application from 48 candidates and for the first time, one could see some private sector bankers also applying for the post. Of these 48, the Govt called 26 for an interview. After this filtering, RBI shortlisted 11 candidates for the final interview. Out of these 11, five names will be selected to head the five PSU banks. The final selection will be done by the Cabinet headed by the PM – this will happen only by next month. So till then, these banks will remain headless.

Two facts emerge out of this HR crisis at PSU banks – the middle management at these banks is almost hollow. We say this because there was literally no application till the age limit was increased to 57. This means that the middle level has been very likely poached upon by the private sector banks. And even these middle level executives, preferred the private sector to public sector. Isn’t that something to really ponder upon?

The second fact which has emerged is that yes, this is the first time that the Govt saw applications from the private sector but why is it that the response was so lukewarm? All the 11 candidates currently shortlisted are from the PSU banks.

And it is not just PSU banks which have a HR crisis. So many PSUs are currently headless – HMT is looking for a MD since May 2014, Cochin Shipyard had issued a vacancy for CMD in December’14 and it continues to remain vacant. CMDs are wanted at NMDC, Shipping Corporation of India, TCIL, South Eastern Coalfields, HPCL, Andrew Yule, Bharat Coking Coal, Mineral Exploration Corp, Indian Telephone Industries, Madras Fertilizers, Indian Rare Earth, SAIL and Bhrahamaputra Valley Fertilisers. (For a complete list of vacancies at the top boards, go to http://pesb.gov.in/vacancies.asp)

The PM did a good job of appointing a thorough banking professional from the private sector, KV Kamath, former chief of ICICI Bank to head the prestigious BRIC Bank. Maybe we need more such people at the helm of PSU Banks to get them out of the NPAs.

But does that mean that the PSUs do not employ good talent at all? Not all! In fact they have some of the best talent in the country but the shackles of red tape and crony capitalism, lack of autonomy, corruption, nepotism and persistent interference from the politicians keeps these talented men/women from doing what is right and what is required.  Priority sector banking, forcing down divestment stakes down their throats, opening branches in non-viable areas – all have collectively perpetuated the current crisis at the PSU banks, both in terms of bad loans and finding no takers for top jobs.

Unless the way of working of these PSU banks, which is run like a personal fiefdom of the politicians is not stopped, even getting the best talent from the private sector will not help. In all probability, they will most likely quit. It is wrong for us to assume that fresh capital infusion would bring back the PSU banks to life; that will be a temporary relief only. The crux of the problem is undoubtedly political and bureaucratic interference in management. It would serve the Govt better if it brushes out the dust from the P J Nayak recommendations. A complete revamp of the way in which PSU banks work, complete autonomy, stricter standards of accountability for its Board and least interference from the Govt could be a new beginning.

What the Govt needs to work on is making the PSU banks work like a private sector, giving it full freedom and making labor more accountable. Merely bringing in a brilliant CEO will not help.