Narendra Modi Government told RRBs to Cut Jobs, Outsource Operations

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The Narendra Modi government has directed regional rural banks to become slim by cutting jobs and outsource non-core functions such as IT maintenance, cash remittance and house-keeping. The decision may not force RRBs to lay off people but these banks which collectively employ around 80,000 at present would need to downsize their future hiring plans by at least 10-12%. The government told them to handle higher volume of business with a lesser number of employees in a core-banking environment backed by modern IT infrastructure.
The move is aimed at improving productivity and profitability of RRBs. The move is based on the recommendations of SK Mitra committee on HR policy for RRBs, which was set up three-years back but its suggestions were buried under the carpet by the UPA-II government. SK Mitra was then the executive director of National Bank for Agriculture & Rural Development.

The Modi government wants RRBs to follow the recommendations. The nation's banking system has 56 RRBs with 19400 branches and a collective business volume of Rs 4.50 lakh crore. They lend primarily to small farmers and artisans.

"The committee had suggested steps with a view to improve productivity in RRBs," Mitra told ET on Thursday. "RRBs need to redeploy people and re-skill them according to the need. The future profile of RRB employees should match the requirement of modern banking," he said.

RRB employees have decided to resist this move as they see this as being impractical given the nature of RRB business. About 75% of their operation is in rural areas where branches typically need to attend a large number of customers daily.

"The move is going to affect customer service and business growth" said SK Bhattacharya, general secretary of All India RRB Officers' Federation. "We have to scale down our hiring plan too," he said.

The panel suggested that RRBs with business less than Rs 30 crore should outsource office attendants for house-keeping and branch maintenance. It has proposed that smallest branches with less than Rs 10 crore total business and less than Rs 6 crore advances should be managed by two people - one officer and an assistant, while RRBs can deploy 15 officials - 10 officers, three assistants and two attendants for the biggest branches with over Rs 200 crore total business and over RS 60 crore advances.

"The proposal related to staffing pattern is far from reality. Our branches have to negotiate with a large number of customers to perform daily operation. It will be impossible to manage business with this skeletal staff," All India Regional Rural Bank Employees Association secretary general A Sayeed Khan told ET. The committee however said that the staffing pattern is indicative and RRBs would enjoy flexibility to deploy people in branches based on need, within the overall ceiling of aggregate manpower.

To somewhat offset the proposed squeeze in manpower need, the panel said RRBs can hire an additional 2.5% of total staff strength - over and above regular recruitment for branches -- to meet future business opportunities, NPA management and gaps created by attrition.

But Bhattacharya said this would be inadequate given the recent attrition of staff. At present, RRBs follow an old HR policy prepared by former Nabard chairman YSP Thorat in 2008 when RRBs were not on CBS platform.

Source - Economics Times