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HRM in Banking and Insurance


Human resource is one of the natural resources of any country's economy. It is the wealth
of the country. In the context of banking, human resource is of greater importance. The
success of any bank or organization largely depends on efficient human resource
management, apart from operations, marketing and sales, the HR department manages all
the efficient people working in operations and marketing divisions in any organization.

Need for HRM in banks :

Ø There is a qualitative change in the banking paradigm on account of changes in the

industry due to the entry of new private sector Banks. Therefore, it has become a
necessity to recruit, train and deploy people at all level efficiently, for better performance
and success. This is the basic function of HRD, which includes the concept of HRM.
Ø An view of the changes in the political scene in the recent past, changes are expected to
take place in the banking industry. It is expected that only a few banks will remain after a
series of amalgamations and mergers, not only in the Indian banking industry, but also at
the international level.
Ø Emergence of new private sector banks, disintermediation and competition and self-
regulation in monitoring banking has necessitated efficient Human Resources
Management in banks.

Role of HRM

Ø The crucial factors behind successful banking will be continuous and sustained build
up of skills, knowledge, education and attitudes among people working in the banks,
particularly the frontline staff, working in the branches.

Ø It is possible through professionalization, which is an internal part of HRM. Bank staff

should be motivated and encouraged to practice professionalism for their personal growth
and thus contribute to the organization's growth.

Ø Building efficiency in banking is, therefore largely dependent on the best selection
process adopted by the HR department. There is imperative need to build up skills within
an organization for the successful managing of available HR.
Challenges of HR in banking and Insurance Sector

o People should be prepared to 'accept changes. The upgraded technology in banks

might create fear among the staff regarding their adaptability to the new
environment. It is the responsibility of the HR department to properly counsel
people and prepare them to face the challenges before them. Their mind should be
fine - tuned to work in the new technological environment.

o The main function of HRM is to build up capabilities in people working in banks

and intensify their sense of belonging to the organization. To improve their
performance and increase the bank's productivity HR must incorporate challenges
in routine work

o Team spirit has to be inculcated in the branches and greater focus should be on
customer care. This would be possible only through the unprecedented efforts to
be put forth by the HR department.

o HR department should make efforts to provide appropriate incentives, rewards

and increase remuneration to employees. Otherwise, dissatisfaction may creep
into all levels of the bank, resulting in" inefficiency, perfunctory attitude, and
poor service standards. These will ultimately affect the functioning of the

o With regard to the accountability for non-performance and for the mistakes, the
HR department's intervention is a must for establishing the facts of each case.
Proper judgment "with impartial attitude helps develop satisfaction among the
staff members.
o The HR department to formulate appropriate policies with regards to
punishments. A set of guidelines and procedures has to be formulated and
followed for punishments to staff in case of any indiscipline.
There are certain inevitable situations in working where the staff needs to
experiment in order to take decisions.
o The HR department should formulate suitable policies to retain the staff by
providing 'incentives, rewards, and better increments every year. These policies
will ensure organizational efficiency.
o In this process, the HR departments of all banks should realize the importance of
recruiting experienced people in higher positions to ensure utmost efficiency. It
will increase the productivity and profitability of the organization.
o Strategic prioritization – The emerging new systems are both an opportunity as
well as a challenge for the HR professionals. Therefore, reviewing staffing needs
and prioritizing the tasks to meet the changes in the market has become a
challenge for the recruitment professionals