By: Vinod Chandrashekhar Dixit
India’s banking sector is growing at a fast pace. It has become one of the most preferred banking destinations in the world. Indian banks are investing heavily in the technologies such as telebanking, mobile banking, net banking, automated teller machine (ATMs), credit cards, debit cards, smart cards, call centers, CRM, data warehousing etc. Productivity and efficiency are considered as leading indicators for evolving strengths or weaknesses of banking system across the world. Increasing productivity has become vital in banking today. When we increase our productivity levels, we can increase our client base or product sales.
Productivity and profitability are interrelated. Though productivity is not the sole factor, it is an important factor influencing profitability. The key to increase profitability is increased productivity. Public sector banks have not been as profitable as the other banks primarily because of two reasons—Low Productivity and High Burden ratio.
The key to success in the competitive environment is increased productivity and profitability. Indian banks especially the public sector banks and the old private sector banks are lagging far behind their competitors in terms of both productivity and profitability.
Productivity efficiency in vibrant banking environment relate to how well a bank employs its resources, how a bank simultaneously minimizes cost and maximizes revenue, based on an existing level of production technology.
Profitability can be improved only by improving productivity. It is very clear that there is great scope for increasing productivity. Manpower being face of banking, its productivity is largely depends on employees’ morale and quality of service being offered by them. Employee productivity can be improved only by winning the commitment of employees. Employee productivity is an important part of total productivity which comprise of per employee productivity means units of production by an individual in terms of deposits, credits, business, total income, total expenditure, establishment expenditure and spread. It is worth mentioning that due to progressive use of technology, employees’ strength has departed but their job has become so important that if not performed well, it is dangerous as well trim down the performance rather to enhance.
There is no ceiling up to which productivity has to be improved. Since productivity in banks is very low, we should put in very serious efforts at improving productivity. Improvement in productivity should constitute an important parameter in the performance budgets of banks. Branch productivity, a crucial factor of total productivity, evaluates branch level productivity means proportionate production of the banks per branch in terms of deposits, credits, business, total income, total expenditure and establishment expenditure. Every branch contributes rigorously to the productivity of a total bank and thus an outcome of all the branches functioning under the same bank. It is equally important to note that per branch productivity portrays the real picture and hence kicks off the banks to take necessary steps to be in command of the adverse position, if so. IT is playing a vital role in transforming the business so forth branches are not the exceptions. That’s why branch productivity is necessary to evaluate in the era of IT to examine that how the branch level productivity is responding.
The following suggestions can be considered for the purpose of improving productivity:-
1] There should be periodical meetings of staff members at various branches and offices so as to get their commitment and co-operation in the matter of implementation of accepted policies and programs.
2] There should be a system of maintaining workload information thereby providing the required data base for the assessment. There should be assessment of staff strength not only in respect of branches, but also in respect of administrative offices too.
3] There should be comprehensive scheme for recognizing the good efforts made by the employees at various levels. The contribution of officers and staff should be suitably recorded and recognized and the feed back in this regard should be given to them so as to motivate them.
4] Better deployment of staff resources, linking of performance budgeting on the part of branches in various areas, minimizing controllable expenses and bring about suitable attitudinal changes in the staff members will help improve productivity.
Better work organization, effective supervision and proper work distribution will no doubt help to achieve some improvement in productivity, but enduring results can be obtained only by motivating employees and by ensuring their participation in the Bank’s function. If banks are to grow on sound and healthy lines, employees have to adopt appropriate strategies and plans for improving productivity. Comprehensive planning in respect of all areas and parameters including productivity and profitability from the grass root level of branches with the participation of all employees at all levels will be vital from the point of view of improving the performance of banks.
Increasing Productivity in Banks
By: Vinod Chandrashekhar Dixit