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Letter to BS: Revamping governance in PSBs not as simple as it looks

The position they find themselves in is a result of politically induced, management neglected, reckless lending in the last few years

Business Standard  |  New Delhi 

Bank unions on first major strike against merger
Bank unions on first major strike against merger

This refers to “Who’s afraid of bank trade unions” (November 25). While I agree in principle that public sector banks (PSBs) must pay wages of its employees according to their individual financial positions but in reality the problem is not that simple. The PSBs are government-owned entities, have similar governance structures and are more or less managed along the same lines by finance ministry babus. They have recruitment, HR and IT policies that resemble each other. The way they treat their customers is the same. There operational costs are high and productivity is low as compared to their private counterparts. The position they find themselves in is a result of politically induced, management neglected, reckless lending in the last few years.

The bank employees had very little to do with this type of lending. So the question is how can one only separate the wage agreements and attempt to pay according to their individual ability to pay. The failure to comprehensively reform their governance and other structures makes them more or less resemble each other. You can’t rationally segregate one aspect of their existence and functioning to professionalise it and lead all other systems/structures unchanged. Also performance-linked incentives work well in organisations that have clear systems and standards to judge performance.


Arun Pasricha, New Delhi

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First Published: Tue, November 26 2019. 21:07 IST
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