ISSUES IN HUMAN RESOURCE DEVELOPMENT IN INDIAN BANKS

(AN EMPIRICAL EVALUATION)

Dr.A.Raghu
Assistant Professor
Indira Gandhi National Tribal University
Amarkantak, Madhya Pradesh

ABSTRACT
This study was undertaken from Jan`13 to March `13 on a sample of 100 respondents
who were bank staff to understand their perceptions about HR policies of Indian
Banks. Data was collected using a structured questionnaire. The collected data was
analyzed using graphical representations to avoid the bias and errors normally
fraught with the statistical tools. Analysis showed that the HR policy in Banks is yet
to evolve to a higher level because it is still in the stages of what can be called I.R.
or PERSONNEL stage where as the private sector has reached the level of HRM
where employee and his productivity are the centre of all corporate policies today.
Hence suitable recommendations have been made to evolve HRM in the Banks to the
next level.
KEY WORDS:

HR Policy, Bank HR vision, Staff Motivation, I.R. & Personnel stage,

HRM Era

1. Introduction
Banking industry in India is one of the most diversified and heterogeneous in terms of
ownership; co-existence of private and public sector. It is one of the best examples of
peaceful co-existence of two entirely different cultural systems in the services sector.
Coupled with that, the country has a large number of foreign banks with altogether a
different work culture and climate. The simultaneous existence of so many types of work
ethos, systems and processes are truly symbolic of the great Indian unity amongst diversity.
Notwithstanding the fact that lots of efforts have gone into bringing technological & process

congruence, it is really unfortunate that very little has been done on the human resource
front in this regard.
Unfortunately, public sector banking has been the biggest victim, being governed by
outdated & prohibitive sets of government guidelines. The Management often complains
lack of adequate power and flexibility; the Trade Unions often look at any directional change
with a sense of suspicion; majority of the workforce remains in dream-world of the preliberalized scenario of work security. The result is that public sector banks are least
concerned about human resource management and reforms thereto and consequently remain
under-productive.
Though renaming of Personnel departments to HR departments took place quite a few years
ago in some of the public sector banks, the work processes & culture in many of them till
today remain outdated and are not in a position to meet changing expectations of the human
talent within. The scope of this paper is limited to address some of the fundamental issues
in areas of human resource management front in the public sector banking in India.
There is a need for introduction of new technology, skill building and intellectual capital
formation. The most important need in this service industry is naturally the HRD. During
the early phase of banking development in India after independence, opportunities for
employment of the educated man-power were relatively limited. This sector was the
preferred employer for the educated persons in the country in addition to civil services. In
recent years, this position has changed dramatically. Certain rigidities have also developed
in HRD within the banking system as this system is public sector. Its hierarchical structure
gives preference to seniority over performance, and it is not the best environment for
attracting the best talent from among the young.
2. OBJECTIVES
1. To review the HR policies and practices followed by banks in India .
2. To identify the problems faced by the banks in respect of HR policies and practices..
3. To make recommendations for HR framework for banks in India.

4. To identify developmental aspects for future of HR in banks.

3. METHODOLOGY
The study includes primary and secondary data collection, analysis and report..
Secondary data: from books, periodicals, internet, reports of the banking industry,
industry association reports, bank records and other data which is readily available.
Primary data: Collected through a questionnaire administered to the respondents in the
sample selected.
Delphi Method: The data collected has been verified with field experts such as retired
bankers and senior faculty.

4. SAMPLING
Primary data was collected from 100 employees of the banks as under using a structured
questionnaire:
Bank Managers: 50
Bank staff: 10
Field experts: 10
Retired senior employees of banks: 10
RBI staff: 10
Others: 10
Sampling was based on stratified convenient sampling method.
5. SCOPE AND LIMITATIONS OF THE STUDY
Data collected is based on a short interview taken the research exercise was conducted
within a limited duration. So a detailed study could not be made. The findings and
conclusions are based on knowledge and of the respondent. Lack of support from the
management side while data collection due to their policy of maintaining secrecy.

The sample consisted of 100 respondents from Hyderabad only and may not represent all
India data. However the fundamental issues identified in this small study may be
extended to all India level based on a large scale study.
.
6.

Review of Literature
The literature has emphasized the important role played by the human
component in the competitiveness and response capacity of organizations, and this is
reflected in numerous publications and research studies that have appeared in recent years
(Barney, 1991; Barney and Wright, 1998; Wright et al., 1994). According to this view,
human capital is proposed as one of the key resources on which companies build their
competitive advantage (Becker and Gerhart, 1996; Boxall, 1996; Tyson, 1995). Without
doubt, Human Resource Management (HRM) is one of the company functions that have
experienced significant changes over the last few decades. Since the beginning of the
1980s, a vast literature has been developed calling for a more strategic role for human
resources (Guest, 1987; Miller, 1987; Armstrong, 1991).
The increasing interest in human resources is due to the assumption that
employees and the way they are managed is critical to the success of organization and can
be a source of sustainable competitive advantage (Itami, 1991; Lado and Wilson, 1994;
Wright et al., 1994; Kamoche, 1996; Mueller, 1996; Barney and Wright, 1998). Although
HRM is currently considered to be critical, researchers and professionals agree that its
importance will grow further in the future (Clark, 1993; Sparrow et al., 1994; Becker and
Gerhart, 1996; Anderson, 1997; Ulrich, 1998).

8.Data Analysis
The following questionnaire and data analysis is abridged from the original research work.
1. VISION of human resource management in Banks

a)
b)
c)
d)

Retraining
Learning
Unlearning
Separating

Options

No of respondents

50

25

10

15

2. MISSION of human resource management in banks

a)
b)
c)
d)

Legal compliance
Competitive edge
Work force adaptability
Productivity

Options
No of respondents

A
10

B
15

C
25

3. To achieve goals organizations require employees in banks

a) Control
b) Direction
c) Commitment

D
50

d) Cooperation
Options
No of respondents

A
55

B
20

C
15

D
10

4. Human resource management helps improve---------------------in banks

a)
b)
c)
d)

Production
Productivity
Profits
Power

Options
No of respondents

25

50

10

15

5. The amount of quality output for amount of input means

a)
b)
c)
d)

Productivity
Production
Sales increase
Increase in profits

Options
No of respondents

A
15

B
10

C
50

D
25

6. Responding to employees and involving them in decision making is referred to as

a)
b)
c)
d)
Options
No of
respondents

Quality of work life

Autonomy
Empowerment
Preaction
A
70

B
10

C
15

7) Which one of the following becomes a creative factor in production?

a) Land
b) Capital
c) Consumers

D
5

d) Human Resources
Options
No of respondents

A
15

B
20

C
10

D
55

8) People cast in the role of contributors to production are called

a)
b)
c)
d)

Capitalist
Land owners
Human Resources
Consumers

Options
No of respondents

A
10

B
15

C
55

D
20

9) Wide range of abilities and attributes possessed by people are called as

a)
b)
c)
d)

Management
Human Resources
Entrepreneur
Intreprenuer

Options
No of respondents

A
25

B
50

C
10

D
15

10) Deployment of which resource is difficult to master

a)
b)
c)
d)

Human
Land
Capital
Natural

Options
No of respondents

A
50

B
10

C
25

D
15

11) The focus of Human Resource Management revolves around------in banks

a)
b)
c)
d)

Machine
Motivation
Money
Men

Options
No of respondents

A
10

B
15

C
5

D
70

12) Quality- oriented banking organization primary concern centers around

a)
b)
c)
d)

Coordination
Communication
Human Resources
Discipline

Options
No of respondents

A
10

B
20

C
55

13) Quality goals require alignment with---------in banks

a) Production
b) Human Resources
c) Finance

10

D
15

d) Purchase
Options
No of respondents

A
15

B
50

C
25

D
10

14) Demand for human resources and management in banks is created by

a) Expansion of industry
(b) Shortage of labor
c) Abundance of capital
d) Consumer preferences
Options
No of respondents

A
50

B
15

C
25

15) Management function in banks arises as a result of

a) Consumer preferences
(b) Abundance of capital

11

D
10

(c) Expansion of industry

d) Shortage of labor
Options
No of respondents

A
15

B
25

C
10

D
50

16) Union function arises as a result of employees-------in banks

a) Problem of communication
b) Longing for belonging
c) Dissatisfaction
d) Change in technology
Options
No of respondents

A
25

B
10

C
50

D
15

17) Human Resource Management is primarily concerned with-------in banks

a) Sales

12

b) Dimensions of people
(c) External environment
d) Cost discipline
Options
No of respondents

A
15

B
50

C
25

D
10

18) Human Resource Management aims to maximize employees as well as bank`s

(a) Effectiveness
b) Economy
c) Efficiency
d) Performativity
Options
No of respondents

A
55

B
10

C
20

D
15

19) The difference between human resource management and personnel management is

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(a)Insignificant
b) Marginal
(c) Narrow
d) Wide
Options
No of respondents

A
15

B
10

C
20

D
55

20) Human Resource Management function does not involve----in banks

a) Recruitment
b) Selection
c) Cost control
d) Training
Options
No of respondents

A
10

B
15

14

C
55

D
20

21) Which one is not the specific goal of human resource management in banks ?
a) Attracting applicants
b) Separating employees
c) Retaining employees
d) Motivating employees
Options
No of respondents

A
20

B
55

C
10

D
15

22) Identify which one is an added specific goal of human resource management in banks
a) Retraining
b) Learning
c) Unlearning
d) Separating
Options
No of respondents

A
55

B
10

15

C
15

D
20

23) Identify the top most goal of human resource management in banks
a) Legal compliance
b) Competitive edge
c) Work force adaptability
d) Productivity
Options
No of respondents

A
20

B
15

C
10

D
55

24) To achieve goals organizations require employees

a) Control
b) Direction
c) Commitment
d) Cooperation
Options
No of respondents

A
10

B
15

16

C
55

D
20

25) Human resource management helps improve---------in banks

a) Production
b) Productivity
c) Profits
d) Power
Options
No of respondents

A
15

B
50

C
20

D
10

26) The amount of quality output for amount of input means--- in banks
a) Productivity
b) Production
c) Sales increase
d) Increase in profits
Options
No of respondents

A
55

B
15

17

C
10

D
20

9. Conclusions & Recommendations

Base on the above graphical analysis on feedback of the respondents, it is noted that the
issues related to human resources (HR) management in public sector banks and
implementation of the New Pension Scheme (NPS) will top the agenda. With a lot of
senior people in the banks retiring or going to and many more quitting for greener
pastures, banks are faced with an acute shortage of staff. High attrition and retirements
have created a vacuum at the top and middle levels in the system. Bankers are seeing
personnel issues as a new risk factor in the sector. The issue will be highlighted in the
meeting. As the NPS has not picked up, despite the governments efforts, Mukherjee is
likely to ask banks to make more of their branches NPS-enabled. A majority of public
sector banks had been registered as points of presence (PoPs) for its implementation.
However, only a few branches of these banks are NPS-enabled. The banking division has
already written to the banks in this regard.
Credit flow to various sectors like housing, agriculture, infrastructure, small and medium
enterprises, education and minority communities, as well as implementation of the
interest subsidy scheme on housing for the urban poor and the financial inclusion plan for
2010-12 will be discussed. The issues were initially planned to be taken up at the four
zonal meetings in Patna, Mumbai, Chandigarh and Hyderabad in the past two months.
However, the items could not fuelling speculation of a rise in interest rates.

HRM practices are found to show a considerable positive impact in affecting

performance.
Five critical HR issues in banking were identified for policy attention as under

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(1)
(2)
(3)
(4)
(5)

Performance management,
Equal pay demands for comparable worth,
Training and development,
How to best motivate individuals, and
Providing competitive compensation beyond the bounds of ones own industry.

Although the compensation area is a dominant concern, very few banks have developed
effective compensation plans.
The study also found that the bank with high disciplinary action were not able to reap a
sustained performance advantage, as indicated by the significantly negative association
with employee productivity. Overall, the results suggest that HR configurations that are
more difficult for competitors to imitate generally had positive relationships with bank
performance. On the other hand, because these findings are relatively novel and
exploratory, the attempt should be viewed simply as an attempt that requires further
explication and refinement in future studies. The significant relationships shown by this
study between HR practices and firm performance (employee productivity) are consistent
with institutional theory and the resource-based view of the Banks.

10. References :
1. Arora, K. (2003). Indian Banking: Managing Transformation through IT. IBA
Bulletin, 25(3): 134-138.
2. Bakshi, S. (2003). Corporate Governance in Transformation Times. IBA Bulletin,
25(3): 41-61.Bhattacharya, A. (1997).

The Impact of Liberalization on the

Productive Efficiency of Indian Commercial Banks. European Journal of

Operational Research, 98(5): 332-345.
3. Das, A. (1999). Profitability of Public Sector Banks: A Decomposition Model.
RBI Occasional Paper, 20(1): 45-56.
4. Das, M. S. (2003). An Objective Method for Ranking Nationalized Banks,
Prajnan, 31(2): 111-136.
5. Garg, M. (1994). Profitability of Indian and Foreign Banks in India: Comparative
Analysis, M. Phil. dissertation, Dept. of Economics, Delhi School of Economics,
Uni. of Delhi, Delhi.IBA, Bulletin (2003). 25(3), Special Issue, 2003.
6. Jalan, B. (2003). Strengthening Indian Banking and Finance: Progress and
Prospectus, IBA Bulletin, 25(3): 5-14.

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7. Kohli, S. S. (2001). Indian Banking Industry: Emerging Challenge. IBA Bulletin,

23(3): 48-54.
8. Mohan, R. (2003). Transforming Indian Banking: In Search of a Better Tomorrow.
IBA Bulletin, 25(3): 33-40.
9. Ram, T.T. (2002). Deregulation and Performance of Public Sector Banks. EPW,
37(5): 393-408.
10. Sarkar, P.C. & Das, A. (1997): Development of Composite Index of Banking
Efficiency: The Indian Case, RBI Occasional Papers, 18(1): 67-75.
11. Satyamurthy, B. (1994). A Study on Interest Spread in Commercial Banks in
India. NIBM, Working Paper.
12. Singh, I. & Kumar, P. (2006). Liberalization and Efficiency: The Case of Indian
Banking. Indian Management Studies Journal, 10(4): 77-93.

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