beyondbrics

A million employees of India’s state-owned banks joined a nationwide strike today, protesting against job insecurity and government plans to open up the banking sector to private players.

The paradox is that India’s banks are looking to employ more people – so long as they have the right skills. Just at the time of the strike, bank executives were meeting in Mumbai’s luxury Trident hotel, discussing… how to create jobs.

The occasion was the Indian Banks’ Association annual conference. The top bankers in attendance warned they needed more people with better skills to fulfil their promise of inclusive growth. But they felt the ageing state-run bank employees seem to lack the qualities required.

OP Bhatt, chairman of the country’s largest lender State Bank of India, said that the country required thousands of new bank branches, but he questioned the industry’s ability to meet these growing demands.

“Can [the banking sector] open another 50,000 branches? Can it have another 100,000 ATMs? … Do we have the people?” he asked, wooing the audience of executives with his rhetoric.

His answer was unequivocal: “As it is, in the banking industry we don’t have enough people or enough people with the right kind of skill sets.”

That fits with a recent report on the future of Indian banking by Boston Consulting Group. It stressed that state-owned banks needed more talent or risked losing competitiveness.

Acquiring and retaining talent is the most critical challenge facing the banking industry, especially public sector.

Without addressing its Human Resources issues, the public sector cannot rise to the challenge of financial inclusion in a meaningful way.

Participants in today’s strike – organised by the Communist Party, which is strong in Calcutta and the southern state of Kerala – argue that publicly-owned banks weathered the financial crisis better than their private and foreign peers. That may be true, but India’s banking system needs more competition. The government’s privatisation plans are welcome, given that private companies currently comprise only about 30 per cent of the industry.

Could a way not be found for employees of state-owned banks to be re-trained for the sector’s more competitive future?

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India’s bank shake-up raises questions, beyondbrics