TERM

Paper

HR Practices
in Financial
Institutions

SUBMITTED TO:
PROF. AMRITA BIHANI

SUBMITTED BY:
KEVAN BHANDARI
TY-IMBA
AU 1613029
 Table of Content
TITLE PAGE NO.

1. ABSTRACT 2

2. INTRODUCTION 3

3. LITERATURE REVIEW 4

4. EXAMPLES 8

5. MANGERIAL IMPLICATIONS 12

6. CONCLUSION 16

7. REFERENCES 17

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 Abstract
The finance service industry is largest earning industry in
the country. It has huge potential for jobs. People are
realizing its importance and getting for CFA and CA to get
employed for great salary packages. Business expanding
through NBFC is more as RBI is liberal relatively with
banks. Urban population are now investing in debt equity
instruments issued by banks. Rural sector have shown
great presence in financial inclusion after certain schemes
of govt like no minimum balance to be maintain. Now you
can open new bank account with only adhar card. After
such easy schemes more people have been financially
included and So the demand for personal in this sector is
increasing rapidly.

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 Introduction
Finance is lifeblood for many companies, industries and even
individuals. There is huge role of financial institution to fill the gap
between loan seekers and depositors. Each company, industry or
individual is financial unequal. Different business or individual have
different needs and wants. Financial Institution increase their
purchasing power or standard of living with proving them with great
returns or loans (payable in Emi’s). To organize, Control and direct
this mechanism of financial Institution we not only require Human
resource management but also to utilize this HRM practices
strategically. So this paper will include all the important and
required Human Resource practices that are performed to manage
financial institution or company. Recruiting and training from sales
staff to admin staff, clerk to Chief executive officer, junior
accountant to senior Auditor, Principal Officer to disbursement
agent. Compensation structure is very complex and dynamic in
accordance with different skill set required at different post. Human
interaction is very important to build trust with Indian consumer
mindset. NBFC’s (Non-Banking Finance Company) and Banks
have to hire sales experts to sell financial services like Investment
banking, Loans, Mutual funds, Fixed Deposits Schemes,
discounting of bills and many more. Human Resource practices used
presently and how they be improve or add more of this practices will
be major focus. Also managerial applicability and real life examples
or cases will be discussed in detail in this term paper.

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 Literature Review
Human resource is very crucial for this sector. Financial instruments
can sound right when human resource is capable and focused for
right job, at right time on right place. Finance sector deals with daily
interaction with system as well as representatives of the system.
Term and policies are explained by this representatives to the
potential customers. Customer trust company through their
representatives. Trustworthy personal is required in financial sector.
Companies have to test behavioral, intellectual, technical aspects
before selecting personal. People from same region should be hired
to make customer understand the scheme in their way. Also the trust
factor is covered while hiring personal from same region or caste of
which customer is expected from. I would be focusing finance sector
as a whole industry. It is very important to get human resource of
best quality. As the government is influencing people to open bank
account more people are getting involved in this sector. The industry
is increasing at rapid rate day by day after great initiative of digital
India taken by our Honorable Prime Minister Mr. Narendra Modi.
All the agricultural welfare scheme are linked with farmer’s bank
account. Farmers are provided with min. support price and subsidies
directly on their bank account. Under Agricultural welfare schemes
many farmers have experienced financial inclusion. This financial
inclusion also helps govt to measure growth rate of country which
was undetermined due to lot of unaccounted money flow in
economy. After financial inclusion of this rural population, the
finance industry has expanded very vastly. More people want to
access financial services like mutual funds, loan for agriculture,
consumption loans, fixed deposit accounts and many more. This has
led to increase in human required in this sector, to explain this
illiterate population about the features, uses and advantages of
financial services. For such, we also need to have strong training
curriculums for employees. Different branches may want different
course structure according to the need of customer. For example in
rural region basic knowledge on account opening, interest on
deposits and loans documentation will required as training course,

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while for urban region in depth training course regarding to equity
debt investments, online banking, electronic cards and currency
exchange will be required. There are many banking and non-
banking company to operate in this sectors. Employees transfer from
one company to another for better pay and respect because the
working is mostly equal as the rules adhere by Reserve bank of
India. So the employees are not loyalist in this sector. Company also
face huge hiring cost. Orientation and team building activities are
required to make employees feel valued. The colleagues should
satisfy their social and affection needs. This activities will reduce
labor turnover rate and also improve workforce efficiently. It is
equally important for companies to evaluate performance of
representatives. Graphical rating scale system to help us evaluate on
performance measures such as traits, behavior and results. This will
help to take correct feedback from peer members and customers.
This technique will provide us with grades of certain employees.
Than the grades will be compared with the standards or the
benchmarks set by the company. Performance measures help up in
making correct decision regarding the growth of employees both in
monetary and non monetary aspects. Employees feel encouraged
and motivated after such appraisals. Development of employees
should be important aspect to focus upon. If an employee get stuck
at one job doing same things everyday his or her efficiency is
reduced. Therefore, there should be growth and development
opportunities for employees, otherwise they will switch for better
pay and especially for job satisfaction. Promotion is very important
to sustain valuable employees for long period of time.
Top 7 Jobs in banking and finance:
1. Financial Accountant: recording, classifying, summarizing
and analyzing the daily transaction. This data is whole and
soul in finance sector, because here the product itself are
funds. Any mistake in that data can lead to huge mess from
both hand customer as well as the bank. For example the Emi
has been deducted from customers account but the NBFC
has not recorded, so the collection manager calls the

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 customer default. This can lead to distrust from that
company.

2. Financial Analyst: person who analyzes the cheap sources

of funds. They are investing expert. They can guide business
on where to invest and when to invest to achieve maximum
return on investment. CFA- certified finance analyst have
huge scope in this industry expansion.

3. Loan Officers: they are customer expert. They scrutinize the

customer for his creditworthiness and make loan sanctioning
decisions. They run credit score test, field verification test
(in which Field Investigating agency goes to the customer
address and verify the location of customer staying along
with asking neighbors), Telephone Verification test and
income stability test (through his past banking statement or
Income tax return). After satisfactory (company
benchmarks) result from all test the loan is disbursed.

4. Branch Manager: person who knows in and out about his

office. He is good at managing the admin workforce. He also
acts like relationalship manager with huge business man. All
the information from head office is transferred by him to his
branch office. Example changes in schemes in deposit and
loan, policies of operations, etc.

5. Sales Executive: In finance sector the product is loans,

mutual funds, Fixed deposit plans, etc. this instruments are
sold by sales executive. The job is to convince customer for
such product and complete required agreement. Sales
executive have incentive plans to keep them motivated.

6. Collection agent: recovery of EMI’s as well as penalty, is

important in this industry. Recovery rate should be less than
10% of loan amount sanctioned. Unsecured loans have high
risk factor. Secured are less risky because customer have

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 pledged his assets against loan. Example if the customer fall
in 4th bucket default list, than the asset is repossessed under
company and sell it to recover after legal warning through
R.P.A.D.

7. Disbursement personal: job is to sanction loan Amount to

beneficiary’s account once the credit or loan officer
approves the loan. Actual transfer of sanction amt happen
through this person. He is liable for all the disbursement
made to beneficiary.

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 Example of Organization Visited
Simandhar Finlease Private Limited is a NBFC incorporated on 22
July 2016. It is classified as Non-govt Company and is registered at
Registrar of Companies, Ahmedabad. The Managing Director of the
company is Mr. Gunjan Mehta. Its authorized share capital is Rs.
10,00,00,000 and its paid-up capital is Rs. 85,000,000. It is involved
in Activities auxiliary to financial intermediation, except insurance
and pension funding.
Simandhar Finlease also known as ‘Simfin' currently operates at
cheapest interest rate on two wheeler, because it wants to penetrate
the market by providing best services at lowest interest rate.
The organization believes that as the individual grows company
grows. Manpower at back office is determined and hardworking. As
well the sales staff at multiple dealerships is encouraged with
handsome salary plus incentive scheme to motivate sales staff.
Delinquency rate of defaulters is less than 10%, which is an
exceptional recovery in this industry.
In June 2018, company was awarded as Trescon BIG 50 BFSI
innovators award in Mumbai.

HR Practices in Simfin:
Following are the practices performed by SimFin:
1. Selective hiring: The selection criterion at Simfin is
different for different department. The basic requirement to
perform the job is kept in mind and according to that the
candidate is selected. For example: To hire a person that will
perform the job of a sale executive they conduct two rounds
of interview, first interview or the preliminary interview is
conducted by the HR manager ,it include questions that in
turn will give the gauge of candidate’s inter personal skills,
communication skills, grievance handling skill and
behavioral patterns. Second or the final interview is taken by
the members of top management where job specific and

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 technical questions are asked. Whereas, for filling up job
positions in administration department there is only one
round taken by the top management is conducted.
Management is selective while hiring because they believe
that the kind of work they do is more people driven than
machine driven. Therefore, people with great skills and
commitment are required. They follow a rigid selection
policy in order to know about a person’s ability, trainability
and commitment and after knowing that task is assigned to
the person as per their capabilities.

2. Employment security: The organization believes in the

ideology that “employees are more committed and devoted
when they feel secured about their job” therefore, SIMFIN
strives at ensuring job security by appointing people for a
bond period. Also, there is a policy of giving 2 months’
notice period to the employees before terminating them.

3. Contingent compensation: The compensation given to the

employees includes basic pay (slightly higher than market
rate) and guaranteed bonus at the end of the year.
The organization has started believing in the contemporary
methods of compensation recently and they said “we might
be willing to pay the candidate for their range, depth and type
of skills and knowledge, rather than for the job title they
hold”.

4. Performance management and feedback system: The

performance of the employees is measured through different
methods such as customer and peer feedback, comparing
their actual sales with the standard sales target. According to
the results, they are incentivized and are given needed
recognition.

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5. Employee incentive and recognition programs: They are
given monetary incentives which include hike in sales
commission and extra bonuses. Apart from monetary
incentives, employees performing well are also recognized
by giving them the titles of employee of the year and
employee of the month.

6. Self-managed and effective teams: Teams provide value

because they consist of people who think differently but are
working towards common goal. When people work in
groups there is more knowledge pool, more ideas are
processed and combined resulting in the best ones being
selected.

7. Extensive training: The Company believes in giving high

amount of training so that the performance will increase
which in turn will benefit the organization. They majorly
perform on the job training. Also, peer to peer training is
conducted so that the pool of the skills which they have
doesn’t remain concentrated at one hand and gets scattered
evenly.

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 What kind of work system do they follow?

This organization follows the various approaches like:

1. They follow the approach of job specialization in tasks
related to sales. Here, the employees follow the same
procedure to approach the client everyday in this way the
employee specializes in his/ her task and gains high level of
competence.

2. The approach of job enlargement where just the number of

tasks, activities or jobs to help alleviate the boredom of
highly specialized work is mainly practiced at level of admin
staff, they are given documentation work of different types
and loan amount.

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 Managerial Implications
How do these HR practices align with the overall system?

The basic principle of strategic human resource management is to

manage people in such a way that the activities performed by them
are aligned and in support with the organization’s overall objective.
Here at SIMFIN there vision is to be India’s biggest auto finance
company with largest live customers in India. The mission is to
provide loans at affordable rates.
When the human resource of an organization are put to use in the
best possible manner, they can create a great competitive advantage
because two organization can have same technical and financial
resources but they can never have same human resources.
SIMFIN is using HR practices which in combination help the
organization to achieve more. For example: selective hiring,
extensive training and contingent compensation all together
results in potential growth of the employees as well as the
organization. People at SIMFIN look at this practices in a different
way , they say it is nothing but investing in people with great
potential for growth, invest in them with learning and development,
and then reward them appropriately when they show superior
performance. The organization values its human resource that’s why
they believe in investing in their employees.
The organization intends to have the largest customer base and they
believe that they achieve valuable customer base when their sales
team will come in up front and communicate with their customers.
They believe apart from all technical factors their human resource
will help most to achieve their objective.

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Every employee working in the organization expects something in
return apart from compensation such as: work life balance,
discrimination free environment, fair representation and work place
safety. SIMFIN ensures all the above mentioned necessities are
provided to them employees.
 Work life balance
At simfin employees are provided with flexible working hours that
is between 8am to 8 pm (any 8 hours) also they are allowed for 52
sick leaves during year.
 Healthier environment
Employees are provided with health insurance. This claim is valid
at any hospital. This insurance also covers claim for spouse and
children. So employees feel safe and motivated to work at simfin.
 Employees equality
Open door policy for any employee who wants to raise voice against
any problem from peer group. Also simfin provide equal
opportunity to both gender. As their admin staff has 50% female
presence.
 Team building activities
At simfin employees are stress free, and to provide healthy work.
The tasks performed by various departments are interdependent on
each other, the work flows from one individual/ one department to
another. The timely completion and quality of work done by one
department affects the other.

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At SIMFIN the flow of work is as follows:

Sales department

(Customer acquisition and

relationship)

Operations department

(Loan processing, necessary

documentation)

Credit department

(Checking credit score, final

affirmation about credit
facility)

Hence, we can say that the system of interface followed by the

organization is Sequential in nature. Because the works begins
when the sales department brings in customer and ends when the
credit department finally approves it. This flow of work always
remains the same.

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Concerns regarding Human Resource practices
Flow of work is direct and hierarchal so the communication
relationship straight like superior subordinate relationship. This can
lead to misuse of authority. As the power is centralized at one
superior. One mindset and opinion on evaluating subordinate. The
subordinates feels helpless sometimes. He would not be able to
communicate to peer members because all subordinate have to
report to one superior.
Flexible working hours can be misused by employees sometime as
during the peak time like in morning 10am -1pm and 5pm -8pm in
the evening has heavy customer inquiry. So if employees planning
on skip that timeline is a serious concern.
Job security can make staff lazy, as the fixed component of salary is
more than the market rate. Incentive rate also better so employees
stay motivated.

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 Conclusion
Finance sector have been open to so much job opportunities in India
as the industry is growing rapidly. Strategic Human resource
management makes things easier and better to operate and interact.
Technology values employees as their assets, its high time
everybody does, in order to reduce mistakes in system by hiring new
personal every morning, explaining the same work and waiting for
them to bring expertise. It will save your time, money and efforts.
After conducting the visit, I realized that being a medium scale
organization values it human resource and believes in investing
them. By this we can make a reference that now the business world
is evolving and they understand the value of their human resources
and also to manage them efficiently.
Although, according to us finance sector can try more efficient ways
to integrate its work system and they should move from sequential
to other kinds of integration, it will help the organization evolve
better. The way this organization believes in the transformational
role of its human resource, we can say that their working techniques
resembles the framework developed by Ulrich.
Human Resource Management is observed as critical strategic
partner for finance sector in India which can help to achieve
organization’s strategic objectives. Now with increase in finance
sectors jobs keeping the experienced and trustworthy employees
intact with minimum cost and providing best job satisfaction is very
difficult. It can only be possible when the importance of Strategic
Human Resource Management curriculum in is brought
organization.

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 References

https://www.ibef.org/industry/financial-services-india.aspx
gary dessler, biju varkey. humam resource management . pearson,
2016.

Mello, jeffrey A. strategic management of human resources.

cengage learning , 2011.

http://www.careerizma.com/industries/financial-services/
https://www.google.com/amp/s/www.indiatoday.in/amp/education-
today/jobs-and-careers/story/7-career-options-in-the-finance-
industry-accounts-divd-1343005-2018-09-18

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