Introduction of Bank:

Finance is the life blood of trade, commerce and industry. Now-a-days, banking sector acts
as the backbone of modern business. Development of any country mainly depends upon the
banking system. The term bank is either derived from old Italian word banca or from a
French word banque both mean a Bench or money exchange table. In olden days, European
money lenders or money changers used to display coins of different countries in big heaps
(quantity) on benches or tables for the purpose of lending or exchanging. A bank is a
financial institution which deals with deposits and advances and other related services. It
receives money from those who want to save in the form of deposits and it lends money to
those who need it.

Characteristics / Features of a Bank:

Dealing in Money: Bank is a financial institution which deals with other people´s money i.e.
money given by depositors.

Individual / Firm / Company: A Bank may be a person, firm or a company. A banking

company means a company which is in the business of banking

Acceptance of Deposit: A bank accepts money from the people in the form of deposits
which are usually repayable on demand or after the expiry of a fixed period. It gives safety to
the deposits of its customers. It also acts as custodians of funds of its customers.

Giving advances: A bank lends out money in the form of loans for those who require it for
different purposes.

Payment and Withdrawal: A bank provides easy payment and withdrawal facility to its
customers in the form of cheques and drafts. It also brings bank money in circulation. This
money is in the form of cheques, drafts, etc.

Agency and Utility Services: A bank provides various banking facilities to its customers.
They include general utility services and agency services.

Profit and Service Orientation: A bank is a profit seeking institution having service
oriented approach.

Ever increasing Functions: Banking is an evolutionary concept. There is a continuous

expansion and diversification as regards the functions, services and activities of a bank.

Connecting Link: A bank acts as a connecting link between borrowers and lenders of
money. Banks collect money from those who have surplus money and give the same to
those who are in need of money.

Banking Business: A banks main activity should be to do business of banking which should
not be subsidiary to any other business.
Name Identity: A bank should always add the word “bank” to its name to enable people to
know that it is a bank and that it is dealing in money.

Electronic banking and E-banking: Electronic banking is offering improved services to the
customers are as follows:

 ATM Cards

 Credit Cards

 Electronic transfer of money

THE STRUCTURE OF BANKING SYSTEM IN INDIA AND OTHER DETAILS ( WITH DIAGRAMS )

The structure of banking system in India is significantly different from other countries. It can
be classified as given below
1. Reserve Bank of India:

Reserve bank of India is the Central Bank of our country. It was established on 1 st April 1935
under the RBI Act of 1934. It holds the apex position in the banking structure. RBI performs
various developmental and promotional functions. It has given wide powers to supervise
and control the banking structure. It occupies the pivotal position in the monetary and
banking structure of the country. In many countries central bank is known by different
names. 10 For example, Federal Reserve Bank of U.S.A, Bank of England in U.K, and Reserve
Bank of India in India, Central bank is known as a banker‟s bank. They have the authority to
formulate and implement monetary and credit policies. It is owned by the government of a
country and has the monopoly power of issuing notes.

2. Commercial Banks:

Commercial bank is an institution that accepts deposit, makes business loans and offer
related services to various like accepting deposits and lending loans and advances to general
customers and business man. These institutions run to make profit. They cater to the
financial requirements of industries and various sectors like agriculture, rural development,
etc. it is a profit making institution owned by government or private of both.

Commercial bank includes public sector, private sector, foreign banks and regional rural
banks:

a. Public sector banks:

It includes SBI, seven (7) associate banks and nineteen (19) nationalized banks.
Altogether there are 27 public sector banks. The public sector accounts for 90
percent of total banking business in India and State Bank of India is the largest
commercial bank in terms of volume of all commercial banks.
b. Private sector banks:
Private sector banks are those whose equity is held by private shareholders. For
example, ICICI, HDFC etc. Private sector bank plays a major role in the development
of Indian banking industry.
c. Foreign Banks:
Foreign banks are those banks, which have their head offices abroad. CITI bank,
HSBC, Standard Chartered etc. are the examples of foreign bank in India.
d. Regional Rural Bank (RRB):
These are state sponsored regional rural oriented banks. They provide credit for
agricultural and rural development. The main objective of RRB is to develop rural
economy. Their borrowers include small and marginal farmers, agricultural labourers,
artisans etc. NABARD holds the apex position in the agricultural and rural
development.

3. Co-operative Bank:

Co-operative bank was set up by passing a co-operative act in 1904. They are organized and
managed on the principal of co-operation and mutual help. The main objective of co-
operative bank is to provide rural credit. The cooperative banks in India play an important
role even today in rural cooperative financing. The enactment of Co-operative Credit
Societies Act, 1904, however, gave the real impetus to the movement. The Cooperative
Credit Societies Act, 1904 was amended in 1912, with a view to broad basing it to enable
organization of non-credit societies.

Three tier structures exist in the cooperative banking:

i. State cooperative bank at the apex level.

ii. Central cooperative banks at the district level.
iii. Primary cooperative banks and the base or local level.

4. Scheduled and Non-Scheduled banks:

A bank is said to be a scheduled bank when it has a paid up capital and reserves as per the
prescription of RBI and included in the second schedule of RBI Act 1934. Non-scheduled
bank are those commercial banks, which are not included in the second schedule of RBI Act
1934

5. Development banks and other financial institutions:

A development bank is a financial institution, which provides a long term funds to the
industries for development purpose. This organization includes banks like IDBI, ICICI, IFCI etc.
State level institutions like SFC‟s SIDC‟s etc. It also includes investment institutions like UTI,
LIC, and GIC etc.

Commercial banks:

Banks are those institutions which conduct the business purely on profit motive. Banks
receive surplus money from the people who are not using it and lend to those who need it
for productive purpose. When we speak of a bank, we generally mean a commercial bank.
Commercial banks are those institutions which conduct the business purely on profit motive.
Commercial banks receive surplus money from the people who are not using it and lend to
those who need it for productive purpose. A commercial bank is a dealer in short and
medium-term credit. It borrows money from a group of people at a lower rate of interest
and lends to the other group of people at some higher rate of interest. The difference
between the two rates of interest is the profit of the bank.

1. Definition Of A Commercial Bank:

Some important definitions of commercial bank are given below.
1.1. Professor G. Crowther: "A bank is a firm which collects money from those who
have it spare. It lends to those who require it."
1.2. Professor Parking: "A bank is a firm that takes deposits from households and
firms and makes loans to other household and firms.

FUNCTIONS OF BANKS - IMPORTANT BANKING FUNCTIONS AND SERVICES

What are the Functions of Banks? Diagram ↓: The functions of banks are briefly
highlighted in following Diagram or Chart
INTRODUCTION OF HUMAN RESOURCE MANAGEMENT:

Human resource management (HRM or simply HR) is a function in organizations designed to

maximize employee performance in service of an employer's strategic objectives. HR is
primarily concerned with the management of people within organizations, focusing on
policies and on systems. HR departments and units in organizations typically undertake a
number of activities, including employee recruitment, "training and development",
performance appraisal, and rewarding (e.g., managing pay and benefit systems). HR also
concerns itself with industrial relations, that is, the balancing of organizational practices with
requirements arising from collective bargaining and from governmental laws. HR is a product
of the human relations movement of the early 20th century, when researchers began
documenting ways of creating business value through the strategic management of the
workforce. The function was initially dominated by transactional work, such as payroll and
benefits administration, but due to globalization, company consolidation, technological
advances, and further research, HR as of 2015 focuses on strategic initiatives like mergers
and acquisitions, talent management, succession planning, industrial and labor relations,
and diversity and inclusion.

ADVANTAGES / BENEFITS / SIGNIFICANCE / IMPORTANCE / NEED OF HUMAN RESOURCE

MANAGEMENT:

I emphasize this - no matter how good or successful you are or how clever or crafty, your
business and its future are in the hands of the people you hire.
--- Akio Morita (Late) (Businessman and co-founder of Sony Corporation. Japan) Ref:

The Book: MADE IN JAPAN. Page.No.145 Human Resource Management becomes significant
for business organization due to the following reasons.

Objective:

Human Resource Management helps a company to achieve its objective from time to time
by creating a positive attitude among workers. Reducing wastage and making maximum use
of resources etc.

Facilitates professional growth:

Due to proper Human Resource policies employees are trained well and this makes them
ready for future promotions. Their talent can be utilized not only in the company in which
they are currently working but also in other companies which the employees may join in the
future.

Better relations between union and management:

Healthy Human Resource Management practices can help the organization to maintain co-
ordinal relationship with the unions. Union members start realizing that the company is also
interested in the workers and will not go against them therefore chances of going on strike
are greatly reduced.

Helps an individual to work in a team/group: Effective Human Resource

practices teach individuals team work and adjustment. The individuals are now very
comfortable while working in team thus team work improves. 28

Identifies person for the future:

Since employees are constantly trained, they are ready to meet the job requirements. The
company is also able to identify potential employees who can be promoted in the future for
the top level jobs. Thus one of the advantages of HRM is preparing people for the future.

Allocating the jobs to the right person: If

proper recruitment and selection methods are followed, the company will be able to select
the right people for the right job. When this happens the number of people leaving the job
will reduce as the will be satisfied with their job leading to decrease in labour turnover.

HUMAN RESOURCE MANAGEMENT PRACTICES IN SELECTED PUBLIC AND

PRIVATE SECTOR BANKS
INTRODUCTION:

The study of human resource management practice has been an important and critical area
in management and organizational performance from last several years especially in the
banking industry. Influence of Human Resource Management practices on organizational
performance has been an important area of research in past 25 years indicating positive
relationship between HR practices and organizational performance. Human resource
management (HRM) practices are being increasingly treated as dependent rather than
independent variables in the olden days, management gurus and researchers were involved
in exploring how HRM practices affected employee performance, and overall bank
performance. The banking industry, one of the major segments of the financial system plays
a crucial role in the economic and social development of a country. A strong and healthy
Banking system is indispensable in a modern society as a financial intermediary and occupies
a unique position in a nation‟s economy. Indian banking sector has been passing through
different phases such as pre-nationalization, postnationalization and post liberalization
phase.

II. PUBLIC SECTOR BANKS:

Public sector banks are those banks that are owned by the government. The government
owns these banks. In India 20 banks were nationalized in 1969 and 1980 respectively. Social
welfare is there main objective of these banks. They are divided into two groups i.e.
Nationalized Banks and State Bank of India and its associates. Among them, there are 19
nationalized banks and 8 State Bank of India associates. Public Sector Banks dominate
deposits and advances in the banking industry. Public Sector banks dominate the
commercial banking scenario in India.

These public sector banks can be further classified into:

1) State Bank of India

2) Nationalized banks

3) Regional Rural Banks 33

III. PRIVATE SECTOR BANKS:

These banks are those banks that are owned and run by private sector. An individual has
control over these banks in proportion to the shares of the banks held by him. Private sector
banks came into existence to supplement the performance of Public sector banks and serve
the needs of the economy better. As the public sector banks were merely in the hands of the
government, banks had no incentive to make profits and improve the financial. The main
difference is only that public sector banks follow the RBI Interest rules strictly but private
sector banks can effect some changes but only after approval from the RBI!
IV. WHY HUMAN RESOURCE MANAGEMENT IS IMPORTANT FOR BANKS:

Human Resource Management is important for banks because banking is a service industry.
Management of people and risk are two key challenges faced by banks. Efficient risk
management may not be possible without efficient and skilled manpower. Banking has been
and will always be a „People Business‟. Though pricing is important, there may be other
valid reasons why people select and stay with a particular bank. Banks must try to
distinguish themselves by creating their own niches or images, especially in transparent
situations with a high level of competitiveness.

In coming times, the very survival of the banks would depend on customer satisfaction.
Values need to be emphasized through concrete actions on the ground and it would be the
bank‟s human resource that would deliver this.

HUMAN RESOURCE MANAGEMENT IN BANKS

The Classification of the Indian Banks into broad groups such as public sector, old private
sector, new private sector, foreign, regional rural banks and cooperatives are largely on the
basis of ownership pattern. It is also well known that the business mix, delivery channels and
IT strategies of these organizations vary substantially. What is little known but of greater
importance is that each of these banks follows very distinct HR practices which have
contributed, substantially, to the business processes.

HUMAN RESOURCE MANAGEMENT IN PUBLIC SECTOR BANKS

In the recent times, the contours of HR function in public sector banks are slowly but
definitely changing. One could say that these banks are discovering the HR function and it is
hoped that these banks will fast catch up with others. It may be recalled that, in a controlled
environment and to meet with the rapid branch expansion since 70s- Public Sector Banks
(PSBs) have adopted HRM practices similar to that of Government departments. Herein HRM
did not have a direct role in business development but was more concerned with centralized
recruitment to staff and providing them across the country.

HUMAN RESOURCE MANAGEMENT IN PRIVATE SECTOR BANKS

The HR function has practiced by private banks is effectively involved in the identification of
specific skills that each job warrants and recruiting suitable staff by every way possible. In
these banks, recruitment is a continuous process with a strong focus on getting the right
person for the right job by offering appropriate compensation, incentives and designation.
There is a great energy spent in keeping the turnover low and offering appropriate training
inputs. Possibly there are as many pay structures as there are employees. More importantly,
HRM has a role in monitoring and mentoring the employee. There are no routine transfers.
Rather people are recruited in different geographical locations and different levels.
Technology has helped in centralizing the back office and other functions such that service
can be provided from a distance. These institutions adopt a proactive performance appraisal
system but still short of 360 Degree appraisals. Their training process is concerned with both
skill building and motivating. It should, however be said that the demand for professionals
on account of growth of Indian Business is such that the efforts of HRM have not helped it
from completely staving off staff turnover in the ranks.

RESPONSIBILITIES OF THE HUMAN RESOURCE MANGEMENT DEPARTMENT IN BANKS

Role:

The role of the Human Resource Department is to create the climate and conditions in
which management throughout the Bank will be enabled to optimize the individual and
collective contributions of all employees to the short and long term success of the Bank.

Responsibilities:

 To be the principal sponsor & “guardian” of HR policies in the Bank.

 To propose and obtain agreement on changes to these policies which have been
agreed are being implemented throughout the Bank.
 To contribute fully to the task of meeting the business challenges which the bank
has to face by supporting Branch / Unit Managers in continuously developing the
potential of employees and in creating conditions in which all the employees are
motivated to meet the objectives of the Bank.
 To continuously monitor the Bank‟s strategies to ensure that HR policies are
appropriate and that employees numbers and skills are fully supportive of such
strategies. To deliver a full range of personnel services in support of line
management. These services include manpower planning, recruitment/transfer,
remuneration, training and employee welfare.

 To support line management in their day-to-day management of the workforce by

providing advice and consultancy on personnel and performance management
issues.

CURRENT CHALLENGES FACED BY BANKS IN HUMAN RESOURCE MANAGEMENT

Effective work force:

A time-consuming and hectic job is to hunt the right talent. Higher the professional
value of the vacancy, tougher is the search. Identifying the right stuff followed by
negotiation is the element which makes the job tough for the employee. Banks are
keenly interested to fill up two types of breeds of professionals.

Ones who are outstanding professionals with high job hopping attitude--- these are
those who come-in-work for some time and then leave for better prospects. Others
are those who are keenly picked-up, trained and area somehow retained to be
developed as future management within the bank.

Management trainees are a growing popular phenomenon where freshly qualified

business graduates are engaged by banks and a certain percentage of these well-
equipped professionals stay back within the organization to grow into the footsteps
of senior managers.

Banking jobs being apparently lucrative for many, attract a large number of
candidates against advertised vacancies in media creating a large database
management problem. This has been facilitated by specialized hiring agencies who
may take up the job of hiring in case of large number of vacancies.

Right People:

The most difficult agenda of HRM across the banking sector is to retain the right
people. Sudden growth of retail banking and other services has put pressure on HR
Managers in banks to engage more professionals within shorter span of time thereby
attracting manpower in other banks on attractive packages has made the job market
very competing.

A bank in a normal course invests time and money to hire and train the appropriate
workforce for its own operations. This readymade force is often identified and
subsequently picked-up on better terms by others.

Compensation:

How much to pay the right employee and how much to the outstanding performer.
Banks have traditionally followed pay scales with predetermined increments, salary
slabs, bonuses and time based fringe benefits like car and house advance, gratuity,
pensions, etc.

The situation is not the same anymore. An increment of Rs500-800 per annum is no
more a source of attraction for a professional anymore. A basic pay with traditional
formulas of linkage with medical and other facilities has no soothing today.

A promise of future growth, learning culture and corporate loyalty is out of

dictionary and does not mean anything to this energetic and competent performer
today.

A waiting period of 3-4 years in each cadre haunts the incumbents who strongly
believe in immediate compensation. A freshly hired professional requires a brand
new car or car loan n resuming office quite contrary to his previous breed Of bankers
who would wait for the job seniority to qualify for a car loan.
Job Satisfaction:

Everybody in the bank wants to work in the professional department, preferential

location, city of his own choice and boss of his liking. An administrative deviation
from any of these results in lowered job satisfaction.

Although hiring is normally based on regional requirement matching the area of

activity with that of employee‟s nativity yet other elements like appointment in the
department of choice and preference makes the job of HR manager quite
challenging.

What the HR manager cannot afford is the dissatisfied employee who not only
disrupts the smooth working himself, but also spreads the negativity to others by his

Morale Boosting:

What has long been overlooked is the morale boosting of the employees by the de-
motivated attitude.organization. Human beings even if satisfied of material wellbeing
need to be appraised and encouraged constantly.

Smart banks have realized this need and have taken steps to keep their work force
motivated through proper encouragement like man of the mouth awards, repeat
get-togethers, conferences, sports events, dinners, company sponsored travel,
reunions, etc. This is the way employees create a feeling of belongingness.

Challenges Faced By Banking Industry

Here are the ten challenges that the HR function in India faces:

1) The first and foremost challenge that HR function in India faces is to convert the
abundant population pool into useful human resource.

2) Training and development of human resource to match ever changing industry

demands re-quires HR to develop new and innovative ideas that suit individual as
well as industry criteria.

3) Employee motivation and satisfaction is another area of concern for the HR today.
In order to reduce attrition, HR needs to realize that monetary needs are not the
only drive for an individual and that a sense of belongingness must be imbibed in
employees.

4) With the increase in number of job options available nowadays, the HR function
of an organization must take care that they hire those people who believe in
longterm commitment to the organization. The HR then must take up the challenge
of retaining them by developing retention techniques like Holiday plans fun-at-work
etc.
5) Because of cutthroat competition, HR in India also faces the task of building
competitive ad-vantage for the company over national and international
competitors.

6) The growing importance that companies are nowadays giving to cost-cutting has
posed HR with the challenge to minimize expenditure on HR not compromising on
the productivity.

7) Since right-sizing has been a growing trend in Indian organization, the HR now
faces the task of identifying and retaining the key employees of an organization and
letting go those that do not suit its future requirements.

8) HR also faces the challenge of creating a balanced organization that originates

from mergers and acquisitions. HR needs to assimilate those policies that are
mutually agreeable to the companies being merges as well as profitable for the new
organization.

9) Globalization poses HR with challenges such as expatriation and repatriation. HR

needs to train employees that leave their nation for fulfilling a foreign assignment. It
also needs to pro-vide such employees with adequate moral support and assure
them of job security on their return.

10) With multinational organizations on the rise, HR needs to focus on issues such as
cross-cultural training so that problems that can arise because of differences in
international professional values can be diminished.

Meeting HR Challenges:

The banking sector has been growing at a very fast pace in India not only in the
terms of its size but also in terms of the services being provided. With banks
reaching the remote areas in the country one can anticipate positive things like
financial aid to farmers and increased financial awareness. However, with the
increase in size and activities of banks, the number of banks in private sectors has
also increased thereby posing challenges like cost-efficiency, technological
advancement, and credibility related issues. The task before the HR is to develop
strategies that help banks in gaining competitive advantage and encourage
innovation in its products and services.

Managing Human Resource:

Considering the above HR challenges which our Indian banking industry is facing, we
can manage the human resources by proper Planning like

 Hiring the right person for the right job

  Retaining and Developing
 Managing people/ conducting exit interviews

Hiring the Right Person for the Right Job:

In assessing whether the "right person" has been selected for the "right job", the
most prominent theoretical concept that emerges is the concept of "fit". Different
writers emphasize different types of fit. Sekiguchi (2004: 179) in a review of
literature on person-environment fit discusses two types of fit that emerge as the
most prominent types of fit: person job fit and person-organization fit. In pursuing
person-job fit, companies seek to match the job holder's knowledge, skills and
abilities to the requirements of the job. Companies can ascertain person organization
fit by focusing on how well the individual fits with the culture or values of the
company and the individual's capacity to work well with other company employees.

Banks have to plan for the following:

 A steady, carefully calibrated recruitment programme.

 As rapid technological changes transform business – continuous skill
upgradation.
 A new generation of the workforce working alongside an older generation as
a

team. Banking, it is a team work and these new situations require cultural
adjustments and therefore, change management.

Retaining and Developing Employees:

We may be able to get the most suited people for our work but then the
challenge is to retain these people and to develop them. There are several
dimensions to this issue such as training/ re-skilling of employees, performance
measurement, promotion policy, transfer policy, talent management,
communication, etc. In this study some of them for discussion:

Training and Development:

With drastic growth of banks it calls for efficient and well trained staff members
to handle/deal with the consumer needs. Banks are shaping up as financial hub
for their clients to grow in size and well recognized in the world market. To pull
consumers banks are offering traditional with advance services like SMS banking,
ATM, internet banking, priority banking, demat. So we can say that it caters to
the need of the bottom to the highest class of society providing something to
everyone. Universal banks have become modern day‟s supermarket extending
almost every facility of banking under one roof.
Banks like Bank of Baroda are conducting Grooming and etiquettes programmes
for front line employees and also for employees selected for overseas posting in
order to improve their service levels and qualitative interaction with customers
and various stakeholders better. SEED (Self efficiency and effectiveness
development) programme being run for frontline staff of the Bank in order to
improve their service skills and servicing efficiency.

In Punjab National Bank, in the light of the large scale human resources gaps
that Bank is likely to face in the next few years need for Succession Policy has
been felt. The Policy envisages mapping of the 'existing pool' against the 'future
requirement' from the projected business figure to ensure that adequate number
of officials are available in the pool and also to foresee the surplus / deficit in the
pool for ascertaining the requirement of succession in a particular vertical. Bank
has a three tier training set up comprising of Central Staff College (CSC) at Delhi
at apex level catering to training needs of Top / Senior / Middle Management
Grade officers, three Regional Staff Colleges (RSCs) located at Belapur Navi
Mumbai, Lucknow and Panchkula for training needs of Senior / Middle /Junior
Management officers as well as workman staff and seven Zonal Training Centres
(ZTCs) at Dehradun, New Delhi, Jaipur, Kolkata, Kozhikode, Ludhiana and Patna
looking after the training needs of Middle / Junior Management Grade officers &
Workman Staff. IT Training Centre located at Faridabad caters to the training
needs of officers exclusively in the areas of Information Technology.

Performance Management:

Banking service is one sector where a great degree of attention is being paid to
performance appraisal system. Several of the nationalized banks have changed
their performance appraisal system or are in the process of changing them. In
most of the banks that follows the traditional system, their officers are being
assessed on the following characteristics:

 General Intelligence
 Job Knowledge
 Initiative and resourcefulness
 Supervision
 Business Capacity
 Ability to assess sound
 Business propositions
 Dependability
 Relationship with junior & senior colleagues
 Relationship with public
 Conduct, manners, Managerial ability
 Failures that attracted issue of warning by superiors
 Several of the banks also have self-appraisal as a part of performance
appraisal, although mostly such self-appraisal is more of a communication of
achievements.

A fair, transparent and objective mechanism for performance management

is a must for all banks because an effective Performance Man-agement
System is the key to talent management and succession planning. RBI is
shortly going to introduce a new Performance Management System that will
work on goal setting, potential appraisal of performers and developing a
talent pipeline. With all these changes we are also going to face major
challenges on the Talent Management front.

In coming times, the work force will get complex and there will be a need to
juggle a wide variety of people with varied needs and preferences, resulting
in an array of relationships between the organization and those who work for
it.

Peter Drucker had, more than a decade ago, expressed the need for what he
called “non-traditional” work relations: flexible schedules, contract
arrangements, virtual teams, etc.

Some other HR practices and benefits given to employees:

Gratuity:

HDFC Bank provides for gratuity to all employees. The benefit is in the form
of lump sum payments to vested employees on resignation, retirement,
death while in employment or on termination of employment of an amount
equivalent to 15 days basic salary payable for each completed year of
service. Vesting occurs upon completion of five years of service.

HUMAN RESOURCE MANAGEMENT IN PUBLIC AND PRIVATE SECTOR BANKS

Introduction:
At present, Indian banking sector is facing wide variety of opportunities and the
bright future scenario. The changing economic scenario, represented by rapid
process of globalization has brought out all the nations of the world together,
without geographical boundaries for trade and commerce but with great amount
of employment opportunities for individuals. Due to rapid advancement in
information technology and telecommunication in the recent years, the banking
industry has been undergoing rapid changes, reflecting a number of ongoing
reform processes. However, there are certain problems in the Indian Banking
system, which require great attention.
Some of the major problems are:
  Continuous accumulation of morass, which hampers the profitability of
the banks.
 Accumulation of Non-Performing Assets (NPAs), which threatens capital
adequacy and continuous stability of banks.
 Some of the public sector banks are facing heavy over staffing, which
reduces productivity of the banks.
 Above all these require a drastic change in the recruitment, training,
placement and promotion policies of the banks. Thus, the main concern
is how to remove legacies of the past and meet the demands and
challenges of the new era.
HUMAN RESOURCE MANAGEMENT PRACTICES
Human resources management practices play a very vital role in achieving the
organization‟s goals and maintain the competitive advantage.
HRM practices refer to organizational activities directed at managing the pool of
human resource and ensuring that the resources are employed towards the
fulfillment of organizational goals (Schuler & Jackson 1987). Human resource
management practices is the management of people within the internal
environment of organizations, comprises the activities, policies, and practices
involved in planning, obtaining, developing, utilizing, evaluating, maintaining, and
retaining the appropriate numbers and skill mix of employees to achieve the
organization‟s objectives (Appelbaum 2001). Presently organizations are
competing through implementing the unique HRM practices and due to the
globalization organizations adopt the most up-to-date HRM practices in order to
accomplish the organizational goals. Best HRM practices are advantageous for
both employee and employer; it plays an important role in constructive growth of
the organization.
Keeping in view of HRM practices, it is understood that the HRM did not has
direct role in business development but was more concerned with centralized
recruitment to staff. In this context, the review of the study covers the following
most important indicators of HR practices, which were followed by any public
sector bank.
Job analysis:
Job analysis involves collecting information about the characteristics of a job
using one of several methods: observation, interviewing, questionnaires, or more
specialized job analysis methods such as position or functional analysis.
Organizations sometimes use a combination of job analysis methods (Hawthorne,
2004; Mathis & Jackson, 1997).

All the Banking authorities reported that they follow a combination of several
methods for job analysis of the employee.

Recruitment and selection:

Public Sector Banks follows systematic procedure in recruitment and selection
activities. For Recruitment and Selection these banks follows some standard most
of the cases. The practiced arrangement for selection and recruitment is the
corporate decide what positions will have to fill and how to fill the immediate as
well as future requirements.

This total procedure is designed to cover all positions from bottom to top level.
Indian Public Sector Banks use both methods of recruitment i.e., internal and
external markets. Usually, for clerical and officer posts, external market is used
through advertising etc. On the other hand, the managerial/executive positions
are filled up through promotions and transfers i.e., for higher positions the
internal market is usually relied upon. In some of the PSBs in India, the practice of
recruiting specialists such as technical employees, management trainees etc.
directly from the reputed institutions through campus interviews have been
started. Some banks are also utilizing the services of consultants and
employment on contract basis.
Training and Development:
HRD as one of the major functional area in HRM. Continuing education and
training programmes are essential considerations to enrich their careers and
excel their development. Banking activities and knowledge is ever changing. In
order to cope up with these changes and to develop employees‟ careers all banks
established their own training institute. Those institutes organized different types
of training and development programmes based on the employees need. Those
needs are identified by need assessment activities.
Volume-3, Issue-12, DecTraining is more in IPSBs because the training system in
the banking industry has a strong structural base, and has capabilities to handle
training in large numbers. The system has also developed several innovative
activities in the training area such as on-location training, manager to messenger
programmes. Further the IPSBs have a good support to training efforts from apex
level training institutions such as National Institute of Bank Management (NIBM),
Bankers Training College (BTC), and College of Agricultural Banking (CAB). The
IPSBs have more than three hundred individual bank level training colleges and
training centers.

Training is given emphasis by all banks, although not much systematic training
need analysis is carried out. The training colleges conduct training programmes
for relatively junior level bank staff. For most of the senior level training, banks
depend on external agencies, especially foreign training organizations. Training
establishments of some of the bigger banks complain of under utilization.

Performance Appraisal:
Performance appraisal is the systematic, periodic and an impartial rating of the
employee‟s excellence in matters pertaining to his present job and of his
potentialities for a better job.(Edwin B. Flipp).
Public Sector Banks in India give more attention towards performance appraisal
in the organizations. Performance appraisal based on quality of output, potential
of the employee within the organization etc. need to be incorporated across all
grade, cadres and levels. This will not only ensure maximizing productivity, but
also go a long way in motivating star performers aligning with the long-term
mission and vision of banks.

Compensation:
In general, the compensation in Public Sector banks is mostly based on seniority
or work experience. The Indian public sector banks should reward their
professionally qualified employees by scale up-gradation and special increments
besides motivating and encouraging them to acquire new knowledge. Common
pay structures based on number of years of service with the bank put in etc need
to be phased out in a planned manner.

STATE BANK OF INDIA

HUMAN RESOURCE MANAGEMENT IN SBI BANK :

State Bank of India is the nation's largest and oldest bank. Tracing its roots back
some 200 years to the British East India Company (and initially established as the
Bank of Calcutta in 1806), the bank operates more than 15,000 branches within
India, where it also owns majority stakes in six associate banks. State Bank of
India (SBI) has more than 80 offices in nearly 35 other countries, including
multiple locations in the US, Canada, and Nigeria. The bank has other units
devoted to capital markets, fund management, factoring and commercial
services, credit cards, and brokerage services. The Reserve Bank of India owns
about 60%of State Bank of India Human Resources Development Department
HRDD Vision
The Vision of the Human Resources Development Department (HRDD) is
essentially to facilitate the Bank to carry out central banking activities, i.e. to
create an enabling environment to enhance the efficiency of the organization. To
draw out from our staff the very best by a system of proper placements,
incentives, To create an atmosphere of trust, a certain security of expectations
and feeling that the organization cares about the well-being and personal
aspirations of the staff. This would help align personal aspirations with
professional goals and help enhance efficiency.

The Mission of HRDD is to create a facilitating environment to enhance the

efficiency of the Bank; to empower the staff so as to draw out the latent
potential; and to catalyze conditions for a more wholesome quality of life on the
work as wells personal front. Functions of to evolve HR policies on Recruitment:
For the decade as a whole, for the SBI group, 25.4% of the staff were officers,
51.0% were clerks, and 23.6% were subordinate staff. The composition of staff
was the same for the nationalized banks with 27.9% of staff being officers, 50.7%
being clerks, and 21.4% being subordinate staff.
Performance and Potential Appraisal:
The promotion to a higher management level is best thought of through the lens
of a tournament model (Lazar and Rosen, 1981) where the prize in terms of
compensation for a position in the hierarchy is fixed in advance and is
independent of absolute performance. In effect, an employee is 54 promoted to
the next higher level/grade not because he is good, but because he is better than
everybody else at the current level/grade.
Placement Promotion and Career Progression, Out of Turn Promotion/
Increment to Sports Person industrial Relations, Deputation / Secondment.
Retirement and Voluntary Vacation Motivation, Training Establishments, Mobility
(Transfer/Rotation),Remuneration and Reward Mechanism, Staff Welfare,
Communication Organizational Development, Training and Skills Up gradation
(Policy and Implementation,

Other than policy aspects:

Interface with other institutions, government, central banks, etc. on HRD issues.
To maintain up to date database on human resources in the Bank and undertake
analytical studies and ongoing research on different manpower related issue. To
make ongoing review of the appraisal system in order to make it ineffective tool
for HRD policy management. To install and implement an effective counseling
system. To design career and succession plans. To review and revitalize the
training functions, Summer Placement, Formulate and administer the Staff
Suggestion Scheme, Publication of House Journal, Without Reserve.

CASE STUDY OF HUMAN RESOURCE MANAGEMENT IN SBI BANK

Case Details:
Case Code : HROB007

Case Length : 04Pages

Period : 2001

Organization : State Bank of India

Pub Date : 2001

Teaching Note : Available

Countries : India
Industry : Banking and Finance
Themes: HR Practices and Policies
Issues: » How poor manpower planning led to problems with the bank's VRS
Keywords: State Bank of India, VRS, developments, Indian public sector bank,
SBI, VRS, reasons, employees, protesting, post-VRS scenario
"They are propagating the VRS in such a manner that the employees are being
compelled to opt for the scheme."
- V.K.Gupta, SBI employee's union leader in December 2000.

VRS TROUBLES:
In February 2001, India's largest public sector bank (PSB), the State Bank of India
(SBI) faced severe opposition from its employees over a Voluntary Retirement
Scheme (VRS). The VRS, which was approved by SBI board in December 2000,
was in response to Federation of Indian Chambers of Commerce and Industry's
(FICCI)1 report on the banking industry. The report stated that the Indian banking
industry was overstaffed by 35%. In order to trim the workforce and reduce staff
cost, the Government announced that it would be reducing its manpower.
Following this, the Indian Banks Association (IBA)2 formulated a VRS package for
the PSBs, which was approved by the Finance ministry.
Though SBI promoted the VRS as a 'Golden Handshake,' its employee unions
perceived it to be a retrenchment scheme. They said that the VRS was completely
unnecessary, and that the real problem, which plagued the bank were NPAs3 .
The unions argued that the VRS might force the closure of rural branches due to
acute manpower shortage. This was expected to affect SBI's aim to improve
economic conditions by providing necessary financial assistance to rural areas.
The unions also alleged that the VRS decision was taken without proper
manpower planning. In February 2001, the SBI issued a directive altering the
eligibility criteria for VRS for the officers by stating that only those officers who
had crossed the age of 55 would be granted VRS.

The Protests:
The SBI was shocked to see the unprecedented outcry against the VRS from its
employees. The unions claimed that the move would lead to acute shortage of
manpower in the bank and that the bank's decision was taken in haste with no
proper manpower planning undertaken. They added that the VRS would not be
feasible as there was an acute shortage of officers (estimated at about 10000) in
the rural and semi-urban areas where the branches were not yet computerized.
Moreover, the unions alleged that the management was compelling employees
to opt for the VRS. They said that the threat of bringing down the retirement age
from 60 years to 58 years was putting a lot of pressure on senior bank officials to
opt for the scheme...
 ICICI BANK

HUMAN RESOURCE MANAGEMENT IN ICICI BANK:

The achievement of an organization is the result of the combined efforts of each
and every employee. All individuals want to do a good job, and if they are
provided with the proper environment, they will do so. People rarely succeed at
anything unless they enjoy doing it. The Bank has always viewed Human
Resource (HR) Development as a critical activity, as it plays a very important role
in culture building and gives an impetus to the effort put in achieving business
goals more efficiently. A seminar was conducted in January 1999 which enabled
the Bank to establish clearly the link between businesses strategy and human
resource strategy. Accordingly, different kinds of mindsets were worked out to
ascertain there requirement in the staff in the three main lines of business
corporate banking, retail banking and treasury operations. In the foreign banks
and private sector banks, however, there has been growing recruitment amongst
the officers' cadre with a decline in the recruitment of clerical and subordinate
staff. Private Banks started the decade with 24.5% of staff as officers, 54.8% as
clerical, and 20.7% as subordinate staff. By the end of the decade 36.2% of the
staff were officers, 45.9%were clerical, and 17.9% were subordinate staff. A new
organizational structure effective April 1, 1999 was implemented successfully
with the µchange agent role played by the HR Department. Three different job
profiles viz., customer service and cross selling of products, back office operations
and marketing and sales emerged after the new organizational structure was put
in place. The recruitment process has been fine-tuned through specially devised
processes that identify an individual‟s degree of customer orientation ± the
principal trait needed in the banking business. New recruits have been provided
training in skill up gradation and team building and development of an
appropriate mindset for better conduct of banking business. Training programs of
shorter duration were designed for the existing staff, with specific focus on
product information, customer service, cross selling of products and operational
excellence. The promotion process has been designed on the principles of
openness and transparency. Career progression is based on performance of
employees being above an acceptable level with emphasize on those with high
business drive and potential. These exercises are carried out by the Career
Development Centre, which offers a comprehensive competency building
program. This process has been followed for the last 5 years and has been
perceived as being fair and credible by the employee. 60 A high level of
performance is rewarded by a system of performance bonus. The ratio of variable
bonus to fixed salary is fairly high to attract and retain the best talent in the Bank.
In the private and foreign banks there are larger pay differentials, fewer rewards
for tenure, and individual incentives are high. Further, to ensure that the Bank
does not lose high performers and to increase the motivation levels and instil a
feeling of ownership, the Bank has introduced an Employee Stock Option Scheme
(the Scheme). The first grant of stock options under the Scheme was made during
the year. The total number of staff of the Bank increased from 891 as on March
31, 1999 to1, 344 as on March 31, 2000. On an average, an employee received 37
hours of training during the year. The Bank conducted 34 internal and 67 external
training programs involving 658 and 198 employees respectively. Further, 22
employees were a part of overseas training programs.
CASE STUDY OF HUMAN RESOURCE MANAGEMENT IN ICICI BANK Case
Details:

Case Code : HROB157

Case Length : 08 Pages
Period : 2000-2013
Organization : ICICI Bank
Pub Date : 2013
Teaching Note : Not Available
Countries : India
Industry : Banking and Finance
Themes: Human Resources Management/ Leadership Development/
Mentoring Issues:
 Critically analyze talent management strategies at ICICI Bank.
 Understand the mentoring process adopted by Kamath to groom young
employees at the bank.
 Understand the need to set up a formal leadership development process
at the bank.
 Understand the issues and challenges faced by the mentors while
mentoring employees.
Key Words:
ICICI Bank, Talent management, Leadership talent, Mentoring, Nurturing talent,
Leadership development, Performance appraisal, Human capital, Talent
assessment, Leadership pipeline, Entrepreneur model, Talent screening, 360-
degree performance management process, ICICI DNA, Talent retention

"Leadership is the ability to handle the job at the next level with
comfort. Being able to perform your future role in the present. It
is especially important in an industry like ours where people are
our most important asset, and we depend on people for growth.
When your business focuses on growth, grooming talent is
crucial". –

Chanda Kochhar, Chairman and MD, ICICI Bank Ltd., in 2010. "

The bank's leadership in the industry is exemplary. But nothing to compare its
ability to spot, groom, and deploy leaders in-house". –
Indrajit Gupta, editor, Forbes India & George Smith Alexander, reporter at
Bloomberg, in 2008.

Introduction:
ICICI Bank Ltd. (ICICI Bank), the India-based financial banking institution, began a
process of identifying and nurturing talent in the 1980s. This practice paid rich
dividends, with ICICI Bank becoming known as a powerhouse of leadership
talent. Ever since N Vaghul (Vaghul) became the chairman and MD of Industrial
Credit and Investment Corporation of India Limited (ICICI) in 1985, the bank had
fostered a culture of nurturing young talent. Vaghul brought in a fresh and
different approach to working in the organization. He involved younger people at
the bank in big projects unlike CEOs of other organizations who preferred to pick
senior level managers.

This was a bid to develop a talent pool at the bank. Vaghul‟s way of empowering
young people, nurturing talent, and developing a leadership pipeline became
part of the bank‟s culture and was carried forward by former CEO and MD, KV
Kamath (Kamath) and present CEO and MD, Chanda Kochhar (Kochhar).

Kamath who joined ICICI Bank as CEO and MD in 1996, created an incredible
talent for spotting employees with leadership potential. He was instrumental in
grooming several people who later took up key positions at the bank. Kamath
nurtured people with potential leadership at the bank by moving them from one
assignment to another and making them take up different leadership roles and
serving the bank. Commenting on Kamath‟s ability to nurture talent, Kalpana
Morparia (Morparia), former joint managing director, ICICI Bank, said, "Mr
Kamath has an amazing ability to pick a leader and identify potential way beyond
what the people believed in. Less than 20-25% of us had any clue where we were
headed in our careers.

" Kamath‟s vision was to enable ICICI Bank to surge ahead and capture a vital
share of the market. He planned to create leaders within the organization who
could foresee opportunities ahead of others.
The mentoring process started with picking young employees who had joined
the bank as management trainees and giving them hard-to-achieve targets to test
their potential. Employees passing the test were promoted to lead senior-level
positions.
The success of the mentoring process led to the bank institutionalizing a formal
leadership development process that identified talented employees through a
performance appraisal system after which they were assessed for future
leadership roles.
Experts felt that the bank's successful transformation from a lending financial
institution to a retail powerhouse could be attributed to its mentoring and
leadership development process.
Background Note:

In the changing environment, ICICI transformed itself from a traditional

development finance institution to a customer-centric private-sector bank. It was
not just merely a growth story of a corporate but the success of a clearly
envisaged leadership strategy adopted by Kamath for the growth and
development of the bank leveraging human capital and technology. In January
2002, the merger was approved by shareholders of ICICI and ICICI Bank. In March
2002, the merger was approved by the Gujarat High Court and in April 2002 by
the High Court of Judicature at Mumbai and the Reserve Bank of India.
Subsequently, ICICI Group's finance and banking operations - wholesale as well as
retail - were integrated into a single entity. It was reported that Kamath's ability
to sense potential in the retail business ahead of others and inspire his people to
go for it was a major contributor to ICICI's success. From 2001 to 2006, ICICI Bank
bagged The Asian Banker's „Best Retail Bank in India' award.

Over the years, ICICI Bank adopted smart initiatives in the rapidly growing
financial sector of India and created a state-of-the-art banking infrastructure in its
branches across India. The main strengths of ICICI Bank were its talent pool,
complete product suite, large capital base, extensive customer relationship,
strong brand franchise, technology-enabled distribution architecture, and
universal banking presence. Though ICICI Bank was mainly involved in retail
banking, it ventured into other products such as insurance, corporate banking,
venture capital, etc. In 2007, ICICI Bank created history by raising US$ 5 billion in
the largest-ever public offering in India and emerged as a valuable financial
organization. In 2009, Kamath stepped down from the post of CEO and MD of
ICICI Bank in favor of Kochhar. For the FY ended March 31, 2012, ICICI Bank had
assets worth US$ 83.6 billion, which made it the second largest bank in India.

Bank of Baroda

INTRODUCTION
Bank of Baroda (BSE: 532134) (BoB) is the third largest Public Sector bank in
India, after State Bank of India and Punjab National Bank. BoB has total assets in
excess of Rs. 2.27 lakh crores, or Rs. 2,274 billion, a network of over 3000
branches and offices, and about 1100+ ATMs. It offers a wide range of banking
products and financial services to corporate and retail customers through a
variety of delivery channels and through its specialized subsidiaries and affiliates
in the areas of investment banking, credit cards and asset management.
Maharajah of Baroda Sir Sayajirao Gaekwad III founded the bank on July 20, 1908
in the princely state of Baroda, in Gujarat. The bank, along with 13 other major
commercial banks of India, was nationalized on 19 July 1969, by the Government
of India.
A saga of vision and mission of enterprise

Vision:
It has been a long and eventful journey of almost a century across 25 countries.
Starting in 1908 from a small building in Baroda to its new hi-rise and hi-tech
Baroda Corporate Centre in Mumbai is a saga of vision, enterprise, financial
prudence and corporate governance. It all started with a visionary Maharaja's
uncanny foresight into the future of trade and enterprising in his country. On
20th July 1908, under the Companies Act of 1897, and with a paid up capital of Rs
10 Lacs started the legend that has now translated into a strong, trustworthy
financial body, THE BANK OF BARODA. It has been a wisely orchestrated growth,
involving corporate wisdom, social pride and the vision of helping others grow,
and growing itself in turn. The founder, Maharaja Sayajirao Gaekwad, with his
insight into the future, saw "a bank of this nature will prove a beneficial agency
for lending, transmission, and deposit of money and will be a powerful factor in
the development of art, industries and commerce of the State and adjoining
territories."
HUMAN RESOURCES
Bank of Baroda has the tradition of continuous enrichment of its human asset so
that they deliver value to the business.
In the ongoing Business Transformation Programme, our PEOPLE play a vital role
and are one of the key business enablers. Under its plan of organizational
transformation through people processes and systems, the Bank has launched a
few innovative employee centric initiatives and has also undertaken revamp of
key systems and practices.

HR Objectives
 To initiate & institutionalize globally competitive HR practices in the
Bank in our pursuit to become a Bank of international standards and to
become an employer of preferred choice;
 To put in place relevant HRD strategies and use modern methodologies
to undertake organizational renewal; identify and nurture talent, bring
about marked changes in the mindset of employees at all levels so as to
enhance HR Quality;
 To create a performance-driven culture and an exciting workplace for
the employees To create a pool of entrepreneurial managers and
business leaders for future;
 To inculcate a strong and effective sales and service culture across levels
in the organization in order to generate strong stakeholder affiliation;
 To create a learning organization for employees’ intellectual growth
and creativity; and to re-skill the workforce to operate in digitally
enabled modern core banking environment.

HR Initiatives
Board level approved strategy paper outlining various organization wide
HR reforms /interventions »
HR Steering Committee Board Level HR Committee for piloting HR
initiatives and reforms. The Committee comprises of Directors and
leading professionals as Experts from outside the Bank.
» KHOJ Organization wide Talent identification and Development
Programme for Officers and Clerks (Through scientific process of
identification and selection, employees with high potential to be
deployed in key business areas. Such employees to be provided with
suitable grooming and career growth opportunities)
» SAMPARK SOS Employee HELP Line (Employees in distress can directly
approach the CMD for immediate relief)
» PARAMARSH Employees Counseling Centre (Counseling centers for
providing psychological assistance and guidance to overcome their stress,
complexities and conflicts in order to lead a better life. This is totally
confidential between the employee and the counselor. First such center
set up at Mumbai where services of professional Clinical Psychologist are
available.

BARODA FINANCIAL REWARDS FOR BUSINESS LEADERS Weighted Index

based Model (with pre-defined weightages for different business KRAs)
for balanced assessment of efforts of Business Leaders (Branch Heads,
Regional Heads, Deputy Regional Heads and Zonal Heads). Rewards in
Cash for achievement of business KRAs
» MEP-TIKSHNA Management Education Programs for Executives (GM,
DGM, AGM, Chief Managers) in association with top B-Schools like IIM-
Ahemedabad and Management Development Institute, Gurgaon. The
specially designed programme is aimed at development of strategic
business leaders for the future. So far, 213 executives have undergone the
programme.
» HR POLICY FOR OVERSEAS SELECTION & DEPLOYMENT Scientific and
process orientation in the new revamped policy for selection and
deployment of officers at the Bank’s overseas territories.
» HR RESOURCING POLICY New HR Resourcing Policy formulate to take
care of various recruitment needs of the bank consequent upon abolition
of the erstwhile Banking Services Recruitment Board (BSRB)
» Performance Appraisal System for Clerical and Sub-Staf With the
objective of bringing an organization wide performance culture in the
 organization, hitherto uncovered employees in the Clerical and Sub-Staff
cadre brought in under a new performance appraisal system.
» Massive Recruitment of Specialist officers and also graduates from B-
Schools through campus recruitment To take care of the Bank’s
requirement in different specialized areas like IT, Treasury, HR, Marketing
& Sales, Credit, International Business etc (Around 500 officers being
recruited).
» A New Induction cum Grooming Programme for Young Officers With
the objective of developing future managers and leaders and for
deployment in key areas, a revamped Officers’ Induction cum Grooming
Programme is launched. » Fast Track Career Growth Opportunities for
Executives and Officers In order to provide fast track growth
opportunities to aspiring Executives and Officers, promotional
opportunities have been provided.
» BARODA LEADERSHIP DEVELOPMENT CENTRE Board has taken the
decision to set-up a World-Class Leadership Development Centre to be
set up to prepare future leaders for the Bank.
» NEW GROUP HR STRUCTURE A new Group HR Organization Structure is
being put in place to take care of the strategic business – HR needs of the
Organization. The Structure would have balanced focus on HRM and HRD
aspects and will put in place competency based HR systems and practices.

CONCLUSION:
 The face of banking is changing rapidly.
 Competition is going to be tough and with human resources management
of public and sector private banks.
 Banks in India will have to benchmark themselves against the best in the
world.
 These are some of the issues that need to be addressed if banks are to
succeed, not just survive, in the changing milieu.
 Taking the banking industry to the heights of international excellence
will require a combination of new technologies, better processes of
credit and risk appraisal, treasury management, product diversification,
internal control and external regulations and not the least, human
resources.
 A high level of performance is rewarded by a system of performance
bonus. The ratio of variable bonus to fixed salary is finally high to
attract and retain the best talent in the bank.
 The scope of public sector and private bank have great human resource
management is different but the competition which have various system.
 Specializing in various human resource management tasks and
functional leadership engaging in strategic decision-making across the
business.
 To train practitioners for the profession, institutions of higher education,
professional associations, and companies themselves have established
programs of study dedicated explicitly to the duties of the function
of study dedicated explicitly to the duties of the function