IBA Wants Banking Sector To Be Totally Out Of CVC Ambit

Kolkata, April 14 | Updated: Apr 15 2004, 05:30am hrs
There is an immediate need to keep the banking industry out of the ambit of the Central Vigilance Commission in order to allow them to function independently and judiciously, according to the Indian Banks Association (IBA).

In a recent report on the Indian banking industry, the IBA has pointed out that an important issue relevant to the human resource management in the banking sector is to create a conducive working environment in which the bankers can take commercial decisions judiciously and, at the same time, without fear.

This calls for a re-look into the vigilance system as it exists today, and perhaps there is a need to keep the banking industry out of the CVC, the IBA report has stated. Alternatively, the IBA has suggested that the banks boards may be allowed to have their own system of appropriate checks and balances as well as accountability.

When contacted, the United Forum of Bank Unions (UFBU) convener, Mr Ashoke Kumar Dutta, said that the CVC interference in banks functioning has both its merits and demerits. The UFBU is an umbrella organisation of nine staff and officers associations operating in the banking industry.

Because of the CVC presence, while tendering, the banks have to purchase goods at the lowest tender rate and naturally the quality hampers. This is undoubtedly a great demerit. However, at the same time, if the banks functioning is brought completely out of the CVC ambit and left to the sole discretion of the individual bank boards, there is every possibility of increase in corruption and favouritism. So in my opinion, the CVC may continue to act as an independent watchdog, without interfering in the day-to-day affairs of the banks functioning, Mr Dutta said.

It is learnt that apart from voicing to bring out bank functioning completely out of the CVC ambit, the IBA has also suggested some revolutionary HRM measures for the banking sector as a whole. According to it, all the banks should immediately introduce fast track merit and performance based promotion from within in order to inject dynamism and youthfulness in the workforce. The UFBU convener, however, feels that if only performance-based promotion is introduced ignoring the seniority factor, it will slowly lead to the hire and fire policy in the sector. We will oppose any such initiative, Mr Dutta said.

The IBA has further suggested that in order to institutionalise talent management, the first priority of the banking industry would be to spot, recognise and nurture the talent from within and the industry has to attract the best talent from the market to maintain the required competitive edge vis-a-vis global players.

Mr Dutta is, however, opposed to the creation of special pay-scales out of the bank wage agreements for these specialist officers which might lead to the growth of nepotism within the industry. Who can ensure that these specialist officers will not exploit these special scales as a negotiation point for shifting to other private or foreign banks. If that happens, the entire exercise would prove to be counter-productive for the industry as a whole, Mr Dutta said.

It is further learnt that the IBA is of the opinion that another important ingredient of HR management is reward and compensation, which at present do not have any linkage to skills and performance in the Indian banking industry. A system of reward and compensation that attracts, recognises and retains talent, and which is commensurate with performance is an urgent need of the industry, the IBA committee has pointed out in its report.

The UFBU is, however, against the introduction of such reward and compensation schemes in the nationalised banks.