SBI to promote staff faster, recruit specialists

SBI chairman Arundhati Bhattacharya

GOOD news for the employees of State Bank of India, country's largest lender as SBI is mulling faster promotions, stock options and recruit specialists in a bid to infuse fresh blood into the banking system.

The bank, that has more than 215,000 employees, is battling bad loans and to improve profitability

"The primary problem we have to solve in the banking sector is of performance and talent," minister of state for finance Jayant Sinha said recently, noting the search for talent is more important even than banks raising capital to meet tougher international regulatory rules.

The SBI...

enjoys greater autonomy than other banks, but chairman Arundhati Bhattacharya is grappling with problems ranging from poor pay to the fallout of a 1990s hiring freeze that left state banks with a dearth of senior managers. The central bank has dubbed 2010-20 the "retirement decade".

She is also facing an inflexible recruitment system where mid-career hires of outsiders are unheard of.

All public sector lenders recruit through a nationwide exam system, bringing in entry-level staff who rise through the ranks over years.

Bhattacharya is also working with the government to circumvent a 2013 court ruling banning state-run banks from campus recruitment at India's elite universities, using contracts to pull in much needed specialists, and even consultants for specific expertise.

"Areas like credit, risk, human resources, IT of course, economic research, analytics: wherever we have specialised areas, we can get people laterally on a contract basis," she told an international news agency recently.

This is in sharp contrast to its earlier policy when offers were made with low package with a web of benefits like housing and a generous pension.

"We've flagged to the government that at least a portion of our recruitment we should be able to do from campuses. The government has assured us they are working on this," Bhattacharya said.

Around 24 public sector banks dominate India's banking sector with more than 70 percent share of loan assets, but they account for only a third of profits. Bad loan ratios are on average more than double those at private sector counterparts, after years of profligate lending, weak due diligence and government pressure to fund often risky infrastructure projects.

The Centre in February for the first time allowed private sector applicants for the chief executive officer role at five public sector banks.

Also the chiefs of the public sector banks get a pay package that is far less than their counterparts in private banks. Thus, the CMD of second largest lender Bank of Baroda before becoming a deputy governor at the Reserve Bank of India, earned about $40,000 in 2013-14, a twentieth of ICICI Bank CEO Chanda Kochhar's salary. Jiang Jianqing, chairman of state-controlled Industrial and Commercial Bank of China, took home around $326,000 in salary, bonus and benefits.

Figures do paint a pathetic picture in so far as the salaries of the chiefs of public sector banks go.