Psu Banks Gear Up For Competition

The public sector banks, which till recently were functioning like any other government organisation, are now working hard to shed their lackadaisical attitude in an effort to refurbish their image.

With the Reserve Bank of India (RBI) welcoming more private participation in the banking sector and foreign banks making a beeline to tap the hitherto unexplored market, the public sector banks in the country are gearing up to cope up with the increasing competition.

The public sector banks, which till recently were functioning like any other government organisation, are now working hard to shed their lackadaisical attitude in an effort to refurbish their image.

 

The image building phenomenon has become more pronounced in the case of banks headquartered in the eastern region, which drew the Union finance minister's ire for their sagging work culture, abysmal productivity levels, deficient competitiveness, and above all, huge accumulated losses.

As the finance minister of the Deve Gowda government, P Chidambaram, had expressed concern over the state of three Calcutta-based banks - the United Bank of India (UBI), the Allahabad Bank (AllBank) and the UCO bank. Although there is scope for debate on whether Chidambaram's dig was only directed towards the banking sector or the work culture in the eastern region as such, the three city-based banks, it seems, have learnt from experience and realised the importance of competitiveness and efficiency in the present context. The CMD of AllBank, Harbhajan Singh said, "If we are to compete we have to do that through profitability and efficiency." According to the chairman-cum-managing director of UBI, Biswajit Choudhary, "The level of awareness among the common people is much higher now and everyone understands the need for better customer services." Choudhury, however, observed that "a lot of ground is yet to be covered."

In fact, "things which continued for so many years will naturally take some time to change."

All the public sector banks in general and the three city-based banks in particular, have also started a drive to recover various forms of bad debts which constitutes a considerable chunk of their non-performing assets (NPA)

Although, according to Choudhary, "The NPA in case of public sector banks has been higher because of historical reasons," yet "efforts are on to upgrade these into performing assets and deploy them for various remunerative purposes." The repayment ratio in the case of public sector banks is very low because of certain factors most of which do not come under the purview of the banks, yet the three city-based banks are taking resort to various techniques to recover bad debts. And in most cases the stress is on out of court settlements. The chairman-cum-managing director, UCO bank, Sharda Singh stressed on "initiating the process of debt recovery for smaller accounts at the branch level involving the panchayats and local administration." The UCO bank is also chalking out a special compromise policy to recover dues wherever possible. UBI is concentrating on regular contacts with the customers for recovering bad debts. "We do not envisage any steep improvement but want to take advantage of the continuing

positive trend to reduce bad debts," says Choudhary.

All the 3 banks are also concentrating, more than ever before, on human resource development for increasing the productivity levels of their workforce. While, the AllBank has roped in the prestigious Indian Institute of Management, Calcutta, to conduct incompany programmes, the UCO Bank is seeking advice from the Pune-based National Institute of Banking Management (NIBM) for reorganisation of their workforce.