Public sector banks are battling with non-performing assets (NPAs) and frauds. There’s much discussion going in public forums about the reasons for this and they generally revolve around poor loan appraisal, poor corporate governance, political interference, lopsided judicial process, and absence of tough measures against fraudsters.

Being a part of the financial service industry, banks do not churn out goods by using any raw materials. The main input provided is talented and knowledgeable workforce. But what is the morale of the manpower employed by these banks?

Broadly, banks’ staff come under officer cadre and award staff (clerical and subordinate) cadre. The award staff are well protected under the Industrial Disputes Act with various settlements and awards that were provided long back under the law.

Their working hours are well regulated, their transfers are mostly within a small geographical area as per settlement and even their job role is well specified.

But the officers’ community belongs to another species. Their working hours are not regulated and they are transferable all over India. Higher officials base the promotion of these officers on performance, evaluated on quantitative parameters and qualitative perception.

The system has been worked out in such a way that ‘for anything that goes wrong’, some officer/s can be made accountable. It is also possible that for involvement in any fraud, prosecution will be initiated.

Bank officers take various decisions in their day-to-day functions. It may be a decision like passing of a cheque or authorising to open account or a loan sanction. They are accountable for these decisions.

At a later date, if something is found to be amiss, they will be questioned. When hundreds of payments are made every day and when many numbers of loans are sanctioned at any point of time, some errors are unavoidable. Banks are compelled to initiate action for the omission and commission of these officers.

There are well-settled procedures for fixing accountability or taking disciplinary actions. These disciplinary proceedings are subject to the supervision and guidance of the Central Vigilance Commission (for middle and higher management cadres). Most officers are always under threat of vigilance action.

As per CVC’s advice, during the year 2016, 1,027 bank officers were punished. There also could have been many cases of disciplinary action within the bank for junior level officers.

Bank officers fear their higher-ups. Even oral orders are executed. Banks need a talented and motivated workforce.

A workforce in a state of fear cannot be motivated to perform. Since financial compensation is not the main attraction, there should be dignity and protection of employment. No one can function when Damocles’ sword dangles over his/her head.

Banks need to re-evaluate their human resources policies. Free flow of effective communication should be encouraged. The entire workforce should work as a team. Disciplinary action should be initiated only as a last resort and looking for accountability angle for each and every thing should be dispensed with.

If a trained officer cadre is not maintained, no amount of measures can address issues such as NPA management.

The writer is a retired banker.

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