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PSU banks stare at staff crisis

Mumbai, Dec. 1: Nationalised banks are likely to face a severe shortage of manpower, particularly at the senior management level, over the next three years.

According to a report by McKinsey & Company, about 60-90 per cent of the deputy general managers/ general managers at PSU banks are set to retire by 2016-17. However, this number could jump to 93-100 per cent by 2020, the report said.

In the next fiscal, PSU banks could face a 10-15 per cent shortfall at higher levels that include senior managers and those ranked above, initial estimates by the management consulting firm reveal.

These projections come at a time nationalised banks are focussing on opening branches in rural and semi-urban centres as part of their financial inclusion programme.

Further, the Reserve Bank is likely to grant banking licences to new entrants in January. This could lead to higher attrition in both PSU and private sector banks at the higher management level as the new entrants are likely to poach experienced personnel from the existing lenders.

Data available from the RBI show that the total number of branches of nationalised lenders rose to 52,480 in March this year from 48,636 at the end of March 2012. While more branches were opened in rural, semi-urban, urban and metropolitan areas, the highest growth came in rural and semi-urban locations.

“The shortfall of talent for public sector banks is driven by high average age leading to high retirements at senior management levels,” the McKinsey report named “Reimagining banking in India—gearing up to the new environment” said.

Average age of employees in these banks was 41 years in 2012-13 compared with 46 years in the previous fiscal. In private banks, the average age of employees during 2013-13 was 33 years.

Experts have emphasised the need to improve the compensation structure at PSU banks. They have also suggested that these banks weigh lateral recruitment to bring in talent with experience and specific skill sets.

During 2012-13, close to 76 per cent of the remuneration in PSU banks were through entrance exams and advertisements with lateral recruitment accounting for a only two per cent. On the other hand, close to 53 per cent of the hiring in private sector banks came through lateral recruitment.

 
 
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