Around 1.8 lakh of the 8 lakh public sector bank employees will need to be replaced over the next five years. According a 2010 report by the government-constituted Khandelwal committee on human resource (HR) policies in public sector banks, over 22,000 employees will retire in 2012-13. This number is expected to go up to around 30,000 in 2014-15. With experienced bank professionals leaving and new hires not fully prepared to take over, a serious vacuum in middle and top management is on cards. The Khandelwal committee report said that up to 2015, around 80% of general managers, 65% of deputy general managers, 58% assistant general managers and 44% of chief managers would be retiring.
Many of these officials who will need to be replaced have been with banks for over 30 years and their exit will leave a gap difficult to fill. A report by management consultancy Boston Consulting Group (BCG) notes that retirements in public sector banks will add to the already-burgeoning manpower needs of the sector. BCG estimates that the banking industry will need to hire 9-11 lakh employees over the next five years, with the largest number of vacancies in public sector banks.
The reason for the mismatch, bankers say, is that public sector banks failed to assess their own growth potential. Shortages in manpower have arisen mainly because the post-nationalisation recruitment spree of the seventies and eighties was followed by a hiring lull from 1990s, ostensibly to reduce excess flab. Voluntary retirement schemes and adoption of information technology have worsened the situation.
Bankers say they have increased hiring over the last couple of years, but this is still not enough to match the industry’s rate of growth. BCG says the banking industry has been witnessing rapid growth over the last decade and is expected to grow at 20% over the next decade. Taking cognisance of the challenges, the government has permitted the appointment of a third executive director (ED) at large public sector banks like Bank of Baroda (BoB) and Punjab National Bank (PNB) to look into HR issues.
With more than half a dozen chairman and managing directors