Fear at PSBs: Younger talent keeping away from project loan appraisal

Public sector banks (PSBs) say they are not able to fill their staff position at project appraisal and credit teams, with younger employees not interested in building a careers in areas where decisions could later come under scrutiny from investigative agencies.
 
If banks are not able to make a healthy pipeline in credit assessment teams, and there are not enough people to appraise a project, chances of money being approved four doubtful projects would be accordingly higher.
 
“This is a real problem. In future, you might have to get your projects evaluated by third-party private sector experts,” said a senior banker.
 
Seniors are most unhappy at what they see as law enforcement agencies harassing bankers on not clearly established charges.
 
“If the government spells out what it exactly wants from PSBs, it would do the country immense good. Please tell us your strategy in clear terms. They are so far very vague,” said a former senior Reserve Bank of India executive. “The recent incidents (bank officials’ arrests and the like) are detrimental to the morale of bankers. Decision making will freeze further.”

 
Getting talent for credit teams is a problem that PSBs have had for some years, particularly since Kingfisher Airlines burnt a hole in banks’ pockets and investigative agencies knocked at the doors of the senior management at IDBI Bank and other lenders in this regard. In one large PSB at Mumbai, the chairman had to force his employees to join the project management team, with not many volunteering.
 
Earlier, functions such as project appraisals, corporate credit and treasury were the most sought among younger recruits — these fields accelerate the promotion path.
 
According to a senior public sector banker involved in training for infrastructure finance, many are also hesitant to take up credit assignments, especially on big-ticket projects, due to laxity in professional standards and weak training in appraisal and monitoring. Sub-optimal training in these fields saps their confidence on taking such positions.

 
At present, only a few banks have robust skill sets for project appraisal, credit monitoring and management. Earlier, too, many PSBs depended on approvals from large lenders like State Bank of India and term lending institutions such as IDBI or ICICI – the latter two have since turned into banks themsevles.
 
Laxity in professional standards - audit, valuation, legal -- exposes them to the risk of taking wrong decisions. At a later date, they could be hauled up for credit decisions. The spate of arrests of IDBI Bank officers in the Kingfisher case and recent arrests at Bank of Maharashtra on the Kulkarni Developers case has created fear among officers across the board, said a functionary at an employee union.

 
According to a retired bank chairman, it is not easy to deal with investigative agencies, particularly at a junior level. “These agencies treat senior management with due courtesy and respect but there is no such thing for mid-level and junior managers. The treatment and language used for them is horrendous. Obviously, no one would want to get into a situation where they are mistreated, when there is no difference in salary across various functions,” said the banker.
 
Bankers also contend that investigative agencies are sweeping in with impunity, without even bothering to check the appropriate law. In his media conference, the Indian Banks’ Association head said the law under which Bank of Maharashtra chief executive Ravindra Marathe was arrested did not apply for bankers.

 
Beside, investigative agencies might get after executives who might have sanctioned a loan many years earlier but which went bad recently.
 
The decision to support bankers legally even after retirement is a welcome change, said officers. “If a private sector banker is arrested, he or she can hire a senior lawyer and get bail in a day. We public sector bankers cannot afford to hire a decent lawyer,” said one.
 
Bankers say almost all PSB staffers are honest; a handful of bad apples are making life miserable for everyone.