Introduction

The State Bank of Pakistan (SBP) is incorporated under the State Bank of Pakistan Act, 1956, which gives the Bank the
authority to function as the central bank of the country. The SBP Act mandates the Bank to regulate the monetary and
credit system of Pakistan and to foster its growth in the best national interest with a view to securing monetary
stability and fuller utilization of the country’s productive resources.

Subsidiaries of SBP

Banking Service Corporation (SBP-BSC)

Established under the SBP-BSC Ordinance 2001, SBP-BSC supports SBP in performing functions such as
handling of currency and credit management, facilitating the inter-bank settlement system, and
sale/purchase of savings instruments of the Government on behalf of Central Directorate of National
Savings. SBP-BSC also collects revenue and makes payments for and on behalf of the Government. It also
carries out operational work relating to development finance, management of public debt, foreign
exchange operations and export refinance.

National Institute of Banking and Finance (NIBAF

NIBAF is the training arm of SBP, providing executive development trainings to new inductees and
various levels of SBP employees. The subsidiary also conducts international courses on central and
commercial banking in collaboration with the federal Government. Furthermore, NIBAF offers training
to SBP-BSC and other financial institutions.

Deposit Protection Corporation (DPC)

Deposit Protection Corporation (DPC) has been established as a wholly owned subsidiary of SBP under
the DPC Act 2016. Upon commencement, this entity will be responsible to provide protection of
deposits of member financial institutions operating in Pakistan. The objective of DPC is to compensate
the depositors to the extent of protected deposits in the event of failure of a member Financial
Institution. The limit of protected deposits shall be determined by DPC and will be announced in due
course.
For the purpose of protecting depositors of Islamic Banks and branches, a separate Sariah compliant
mechanism of deposit protection shall be put in place.

MUSEUM

The rationale of the establishment of SBP Museum is to introduce first Money Museum of Pakistan. The
Main objectives of the Museum are to (i) preserve our cultural heritage that exists in the form of the old
SBP Building and the acquisitions we have made over time; (ii) provide an opportunity to the general
public and especially the younger generation to learn about SBP's history, money and coins, monetary
policy and its evolving role over time; (iii) encourage the development of artistic talent in the country,
and (iv) establish a tradition of cultural exchange with other museums around the world.
Main Functions of Central Bank

Almost the primary functions of Central Bank in almost every country are same, but some secondary
functions of central bank may different from others.

1. It has sole right to issue note.

2. It serves as a banker to the state.

3. It acts as banker’s bank.

4. It is the lender of the last resort.

5. It is the guardian of money market.

6. It performs the duties of a clearing house.

The primary functions of central bank are given below in details:-

1. Monopoly of Note-Issue

In early banking, every bank has the practice of issuing currency notes, which lacking similarity, losing
public confidence, causing inflation and ultimately failure of the banks. Hence due to such reasons, this
right of issuing currency notes was given only to central bank of the country, everywhere in the world.
Now the central bank issues currency notes and maintains their value in the country also regulates them
according to the requirements of the country.

2. Bankers to the State

Another most important function of central bank is that it acts as a banker to the state or government. It
accepts cash deposits and cheques of the government and other incomes of the government like taxes
etc and provides cash requirements for payment of salaries, wages and for their expenditure. It
maintains the account of government. No interest is paid on the cash balance of the government
maintained by the central bank.

3. Banker’s Banks

Central bank also performs the duties of banker for other banks of the country. It is also acts as banker’s
bank. All the member banks are required to keep prescribed percentage of reserve with the central bank
to provide financial protection to the member banks. The ratio of cash reserve can be changed by the
state bank if required according to situation. Maintenance of cash reserve also helps in the process of
credit control in the country. Against this reserve, central bank helps the member bank in discounting
their bill of exchange and supply of cash in financial hardships and other requirements.

4. Lender of the Last Resort

Central bank also acts as the lender of the last resort. In difficult time a person can get help from
commercial bank. But in case of bank, his financial requirements are fulfilled only by the central bank.
Central bank provides financial, accommodation to commercial banks; cooperative banks and other
financial institutions in case of financial crises. Central bank helps them either by advancing loans or by
discounting bill of exchange held by the commercial banks. This is also one of the important functions of
central bank.

5. Act as a Guardian

Another function of central bank is that it is the custodian of all resources of country. It controls and
regulates the money market of the country. The central bank is vested with the power to control foreign
exchange, hence it exercises full control on both the visible and invisible payments from and to the
country. Similarly, credit performs the important functions of supplying money in the modern economy.
The value of money is influenced by the volume of credit. The volume of credit in the country is
regulated for the economic stability. This regulation of credit by the central bank is known as monetary
policy or credit control. Controlling credit is also from one of the important functions of central bank.

6. Clearing House

Central bank of country also acts as a clearing house for the remember banks. A clearing house is a place
where the representatives of commercial banks meet to exchange cheques drawn on each other and
then settle the difference owed to the other. It may also be defined as an association of banks to
facilitate the exchange, off-set and settlement of credit claims among them and to serves their mutual
interest. As every commercial bank keeps a certain percentage of the cash deposits with the central
bank, the settlement of inter-bank obligations becomes easy by simple process of book entries. With the
help of clearing house, the payments and receipts of large amounts become convenient and secure
without involving any cash. The advantage of this system is not only to secure the large amount of
payments without risk, loss of time and use of precious metal, but this facility also enables the central
bank to carry on the monetary policy of the country more effectively. Clearing house is no doubt is also
from one of the important functions of central bank.

Secondary function of state bank

Like a Central Bank in any developing country, State Bank of Pakistan performs both the
traditional and developmental functions to achieve macro-economic goal.

REGULATION OF LIQUIDITY
Being the Central Bank of the country, State Bank of Pakistan has been entrusted with the
responsibility to formulate and conduct monetary and credit policy in a manner consistent with
the Government’s targets for growth and inflation and the recommendations of the Monetary and
Fiscal Policies Co-ordination Board with respect to macro-economic policy objectives. The basic
objective underlying its functions is two-fold i.e. the maintenance of monetary stability, thereby
leading towards the stability in the domestic prices, as well as the promotion of economic growth.

To regulate the volume and the direction of flow of credit to different uses and sectors, the Bank
makes use of both direct and indirect instruments of monetary management. Until recently, the
monetary and credit scenario was characterized by acute segmentation of credit markets with all
the attendant distortions. Pakistan embarked upon a program of financial sector reforms in the
late 1980s. A number of fundamental changes have since been made in the conduct of monetary
management which essentially marked a departure from administrative controls and quantitative
restrictions to market-based monetary management. A reserve money management programme
has been developed. In terms of the programme, the intermediate target of M2 would be
achieved by observing the desired path of reserve money - the operating target. While use in
now being made of such indirect instruments of control as cash reserve ratio and liquidity ratio,
the program’s reliance is mainly on open market operations.

ENSURING THE SOUNDNESS OF FINANCIAL SYSTEM:

REGULATION AND SUPERVISION

One of the fundamental responsibilities of the State Bank is regulation and supervision of the
financial system to ensure its soundness and stability as well as to protect the interests of
depositors. The rapid advancement in information technology, together with growing complexities
of modern banking operations, has made the supervisory role more difficult and challenging. The
institutional complexity is increasing, technical sophistication is improving and technical base of
banking activities is expanding. All this requires the State Bank for endeavoring hard to keep
pace with the fast-changing financial landscape of the country. Accordingly, the out dated
inspection techniques have been replaced with the new ones to have better inspection and
supervision of the financial institutions. The banking activities are now being monitored through a
system of ‘off-site’ surveillance and ‘on-site’ inspection and supervision. Off-site surveillance is
conducted by the State Bank through regular checking of various returns regularly received from
the different banks. On other hand, on-site inspection is undertaken by the State Bank in the
premises of the concerned banks when required.

EXCHANGE RATE MANAGEMENT AND BALANCE OF PAYMENTS

One of the major responsibilities of the State Bank is the maintenance of external value of the
currency. In this regard, the Bank is required, among other measures taken by it, to regulate
foreign exchange reserves of the country in line with the stipulations of the Foreign Exchange Act
1947. As an agent to the Government, the Bank has been authorised to purchase and sale gold,
silver or approved foreign exchange and transactions of Special Drawing Rights with the
International Monetary Fund under sub-sections 13(a) and 13(f) of Section 17 of the State Bank
of Pakistan Act, 1956.

The Bank is responsible to keep the exchange rate of the rupee at an appropriate level and
prevent it from wide fluctuations in order to maintain competitiveness of our exports and
maintain stability in the foreign exchange market. To achieve the objective, various exchange
policies have been adopted from time to time keeping in view the prevailing circumstances. Pak-
rupee remained linked to Pound Sterling till September, 1971 and subsequently to U.S. Dollar.
However, it was decided to adopt the managed floating exchange rate system w.e.f. January 8,
1982 under which the value of the rupee was determined on daily basis, with reference to a
basket of currencies of Pakistan’s major trading partners and competitors. Adjustments were
made in its value as and when the circumstances so warranted. During the course of time, an
important development took place when Pakistan accepted obligations of Article-VIII, Section 2,
3 and 4 of the IMF Articles of Agreement, thereby making the Pak-rupee convertible for current
international transactions with effect from July 1, 1994.

After nuclear detonation by Pakistan in 1998, a two-tier exchange rate system was introduced
w.e.f. 22nd July 1998, with a view to reduce the pressure on official reserves and prevent the
economy to some extent from adverse implications of sanctions imposed on Pakistan. However,
effective 19th May 1999, the exchange rate has been unified, with the introduction of market-
based floating exchange rate system, under which the exchange rate is determined by the
demand and supply positions in the foreign exchange market. The surrender requirement of
foreign exchange receipts on account of exports and services, previously required to be made to
State Bank through authorized dealers, has now been done away with and the commercial banks
and other authorised dealers have been made free to hold and undertake transaction in foreign
currencies.

As the custodian of country’s external reserves, the State Bank is also responsible for the
management of the foreign exchange reserves. The task is being performed by an Investment
Committee which, after taking into consideration the overall level of reserves, maturities and
payment obligations, takes decision to make investment of surplus funds in such a manner that
ensures liquidity of funds as well as maximizes the earnings. These reserves are also being used
for intervention in the foreign exchange market. For this purpose, a Foreign Exchange Dealing
Room has been set up at the Central Directorate of State Bank of Pakistan and services of a
‘Forex Expert’ have been acquired.

DEVELOPMENTAL ROLE OF STATE BANK

The responsibility of a Central Bank in a developing country goes well beyond the regulatory
duties of managing the monetary policy in order to achieve the macro-economic goals. This role
covers not only the development of important components of monetary and capital markets but
also to assist the process of economic growth and promote the fuller utilization of a country’s
resources.

Ever since its establishment, the State Bank of Pakistan, besides discharging its traditional
functions of regulating money and credit, has played an active developmental role to promote the
realization of macro-economic goals. The explicit recognition of the promotional role of the
Central Bank evidently stems from a desire to re-orientate all policies towards the goal of rapid
economic growth. Accordingly, the orthodox central banking functions have been combined by
the State Bank with a well-recognized developmental role.

The scope of Bank’s operations has been widened considerably by including the economic growth
objective in its statute under the State Bank of Pakistan Act 1956. The Bank’s participation in the
development process has been in the form of rehabilitation of banking system in Pakistan,
development of new financial institutions and debt instruments in order to promote financial
intermediation, establishment of Development Financial Institutions (DFIs), directing the use of
credit according to selected development priorities, providing subsidized credit, and development
of the capital market.

Governance
The Board of Directors
The State Bank of Pakistan is governed by an independent Board of Directors, which is responsible
for the general superintendence and direction of the affairs of the Bank. The Board is chaired by
the Governor SBP and comprises of 8 non-executive Directors and Secretary Finance to the Federal
Government. Non-executives Directors of the Board are appointed by the Federal Government for
a 3 year term.

 Board of Directors

Monetary Policy Committee (MPC)

Monetary Policy Committee of the State Bank of Pakistan is an independent body responsible to
formulate the monetary policy of the SBP. More notably, MPC determines the policy interest rate
of the SBP and approves the Monetary Policy Statement. MPC consists of ten members: the
Governor (Chairman), three members of the Board, nominated by the SBP Board, three senior
executives of the SBP, nominated by the Governor, and three External Members (economists)
appointed by the Federal Government on recommendation of the SBP Board. The External
Members are appointed for a term of three years.

 Monetary Policy Committee

Management of the SBP

The Governor SBP is the Chief Executive Officer of the Bank and manages the affairs of the Bank on
behalf of the Board. The Governor is appointed by the President of Pakistan for a term of three
years which is renewable once. He is assisted by one or more Deputy Governors appointed by the
Federal Government for a period not exceeding five years. In addition to the Governor and Deputy
Governors, the management hierarchy includes Executive Directors, Chief Economic Advisor, and
Directors of various departments.

 Governor

 Deputy Governors

REGIONAL OFFICES OF BANKING SERVICES CORPORATION

REGIONAL OFFICES:
The sixteen (16) Field Offices of the Bank are structured into the following three Regions:-

S. No. Regions Regional / Field Offices

Karachi

North Nazimabad

1. Southern Region (5 Field Offices) Hyderabad

Sukkur

Quetta

Lahore

Faisalabad

Sialkot
2. Central Region (6 Field Offices)
Gujranwala

Multan

Bahawalpur
 Islamabad

Rawalpindi

3. Northern Region (5 Field Offices) Peshawar

D.I. Khan

Muzaffarabad

A comparative study of Performance Management system of State bank of Pakistan –

Banking Service Corporation and other organizations

What is Performance Management System?

Performance management system is the systematic approach to measure the performance

of employees. It is a process through which the organization aligns their mission, goals and
objectives with available resources (e.g. Manpower, material etc.), systems and set the
priorities.

The execution administration framework is a constant procedure of characterizing and

conveying the activity parts and duties, execution desires, goals and set their needs
between boss (administrator) and subordinates (workers). It incorporates association,
office and representative shared objective and targets which are lined up with frameworks
and assets. It is the channel of providing clarity about goals and also to improve the
business processes through various methods and mechanism.

The competency, skills and knowledge gaps are also identified through this process which
can be improved by providing guidance, trainings, coaching and mentoring to employees or
teams at different levels and designations. It optimizes the results through a roper channel
and process which reduces the conflicts and grievances among teams or employees.
Because each individual is clear about the expectations from his/ her role and put their
efforts to meet performance standards.

This process can be applied to single department / function or to whole organization. It

aims to continuously monitor and measure the performance standards against the desired
goals and objectives.
 Purpose of Implementing Performance Management System

Managing employee’s performance is the key objective of establishing systematic

Performance Management system in an organization. These process servers’ six main
purposes in the company:

1. Strategic

Performance managed system is a tool which should be align with overall organization goal
followed through department goal and individual goals.In other words, the organizational
strategic goals should be linked with each activity performed by every department or
employee.

2. Administrative

Performance management system is also set the deciding factor of employee’s promotion,
demotion, salary increment, transfer and terminations.It enables to identify the
performers, non-performers or under performer employees in an organization. It merits
the competency and skill level of employees. Hence, it clearly defines the administrative
role as well and supports the management decisions.

3. Communication

It is the effective communication channel to inform employees about their goals, job
responsibilities, key deliverables and performance standards. Further, it is also a structure
method to indicate the key areas of improvement required by the employee in order to
improvise his performance. In other words, it provides the platform to learn and train on
skills, and knowledge for better performance and results.

4. Developmental

It is the structure method of communicating the positive feedbacks, improvement areas,

and development plans. The manager can use various methods like training, mentoring,
coaching etc. and them their team members to perform better.

5. Organizational Maintenance

Performance management system is the yardstick of measuring employee, department

and organization achievements and evaluating the performance gaps through various tools
and techniques. Hence, it maintains the health of the organization and its performance
standards.

6. Documentation

The performance management reviews, feedback and forms should be documented and
maintained periodically by every organization. It would enable them to look forward, set
new targets, design developmental needs, design training and learning programs, and
career progression of employee and for department. Hence, it helps in driving the
organizational needs to desirable objectives.
 Benefits of Performance Management

In today’s global environment where the market is evolving at a very fast pace, it is
important for an organization to understand the benefits of performance management.
Therefore, managing employee’s performance is the ultimate need of an organization. The
employees are considered as an assert by the organization. The performance
management system serves various benefits to the organization, which are as follows:

1. It supports to provide data to find the skills and knowledge gaps of employees in order to
improvise them through trainings, coaching and mentoring systems.

2. It motivates employees to take new challenges and innovate through structure process.

3. It provides new opportunities to employees for their growth and development in their
professional careers

4. It defuses the grievances and conflicts among team members through proper performance
evaluation system.

5. It assesses the employee’s performance fairly and accurately against the performance
targets and standards.

6. Employees would enable to provide better results because of clarity on their performance
targets.

7. Performance management system provides the platform to discuss, develop and design
the individual and department goals thorough discussion among manager and their
subordinates.

8. The under performer can be identified through performance reviews and can raise their
skills levels objectively. It quantifies the learning needs through individual development
plans or performance improvement plans as well.
Performance Management System at SBP – BSC

Performance Mnagement at SBP – BSC is done in 4 phases

PMS Planning phase

Performance Management Phase

Performance Appraisal Phase

Performance Reward Phase

PMS Planning Phase:

 Responsibility Levels:

I. All Officers working at the Bank fall under the purview of Performance Management
System and are required to fill PMS forms through the online application.

The PMS Form I are classified as per the following responsibility levels at SBP BSC:

a. Individual Contributor

b. Unit Head

c. Divisional Head

d. Chief Manager

e. Regional Head

f. Director/ Head of Department

 II. Goal Setting:

A total of 5 goals have to be set by the appraisees.

1 Goals have to follow the SMART (Specific, Measurable, Attainable, Realistic and Time-
bound) principle. The performance measures against each goal should be defined in terms
of quality, quantity and time principle. Officers working at Cash Units shall select relevant
KRAs,

 IV. Competencies:

A total of 6 or 7 competencies have to be selected by the appraisees as per responsibility

level, 3/ 4 of which are core competencies and 3 are optional competencies detailed as
under. Selected competencies shall reflect appraisee’s developmental needs as well as
competencies related requirements for successfully completing the assigned goals.

 V. Weightage of Goals and Competencies:

The weightage of goals and behavioral competencies in the overall score of PMS rating is 60%
weightage for Goals and 40% weightage for competencies6.

PERFORMANCE MANAGEMENT PHASE:

I. STAR Form:

A STAR (Situations, Tasks, Actions, Results) Form can be filled during the year. It serves as a
memorandum for recording critical incidences, contributing factors and accomplishments in
addition to routine tasks during the year.

II. Mid- Year Performance Review:

Appraisers must give feedback to the appraisees during the year by identifying performance
gaps and ways to achieve desired level of performance during the performance year. Mid Year
Performance Review for Officers of the Bank is initiated from first of January and completed by
20th of January. Accordingly, appraisers are required to conduct focused discussions with the
appraisees on goal’s achievement so far and desired level of performance during remainder of
the performance year.

PERFORMANCE APPRAISAL PHASE:

I. Recording Performance on PMS Form II: For appraisal purposes, performance shall be
documented in PMF-II.

II. Appraisal Interview:

It is essential that the appraisers conduct an impartial and objective appraisal interview with
the appraisees. The appraisers should provide constructive feedback on appraisee’s
performance. Performance gaps and areas for improvement should be identified in a
constructive manner.

PERFORMANCE REWARD PHASE:

I. Bell Curve Clusters: The bell curve cluster for performance year 2016-17 is as under:
 Annual Merit Increase (AMI)

Annual Merit Increase (AMI) rates for the performance for officers under PMS are:

PMS of Other Financial Institutions of Pakistan:

Performance Management and Appraisal at

Habib Bank Limited – INTRODUCTION:
 Habib Bank Limited commonly referred to as “HBL” .
 HBL was established in 1941.
 Head-quartered in Habib Bank Plaza, Karachi, Pakistan.
 Largest bank in Pakistan.
 Network of 1425 branches in Pakistan
 55 branches worldwide.
 Domestic market share of over 40%.

Performance Appraisal Methods:

The performance appraisal methods that are used by the different organizations world wide.

MANAGEMENT BY OBJECTIVES:
This approach is used to compare expected performance with actual performance. The goals are established at the
beginning of the appraisal period and measured at the end of the appraisal period.

GRAPHIC RATING SCALE:

To use a numerical or scalar rating system whereby managers are asked to score an individual against a no. of
objectives.

360 DEGREE APPRAISAL:

Employees receive assessments from their manager, peers, subordinates and customers while also performing a self
assessment.

TRAIT RATING:
A list of personality traits to which the appraiser must assign a numerical rating or a descriptive rating of adjectives.

BEHAVIORALLY ANCHORED RATING SCALE:

BARS use the constituents of critical incidents and graphic rating scales. BARS involve identifying the range of
relevant job behaviors and a design of the appropriate performance dimensions.
 Performance Appraisal Forms of HBL:
HBL uses 2 types of appraisal methods:

1.Forced Distribution Methods / Bell Curve Method

 The raters, are “forced” to distribute ratings for the individuals being evaluated into a “prespecified” performance
distribution.
 Reflects the normal curve,
 Small percentage of ratees are required to be placed in the extremes (best and worst performers)
 Larger percentages of ratees are placed toward the middle of the performance distribution.
2.Graphic Rating Scale Method

 Is used for high executive level – Vice president and above him in HBL.
 A separate bell curve is developed according to function/branch category/division and group as per existing
practice.
 Forced Distribution Method:
Grading Scale Allocated %
Top performer 10%
Exceeding Most Parameters EMP 15%
Exceeding Some Parameters ESP 20%
Meeting All Parameters MAP 30%
Missing Some Parameters MSP 15%
Missing Many Parameters MMP 10%

Graphic Rating Scale Method:

 Managers are asked to score an individual against a number of objectives/attributes.
 HBL is using graphic rating scale method for its clerical staff to appraise them.
 HBL’s Graphic Rating Scale method appraisal form contains three sheets, one is FORM B1, FORM B2, FORM
B3.
 FORM B1:
 General information
 the criteria to evaluate its employees
5 Outstanding Performance consistently exceeds the required standards at all times. Highest
level of competencies demonstrated. Exemplary performance. (Exceeds targets
by 20%)
4 Exceeding Performance is well above the required standards most of the time in
Expectations accomplishing target/objectives of the assigned task. Exceed normal
expectations. (Exceeds targets by 15%)
3 Meeting expectations Performance is consistent & meets the required standards/objectives in all
important aspects. Good contributor.
2 Missing expectations Performance is inconsistent & behavior sometimes does not meet the basic
requirements/expectations. Performance is generally acceptable but
improvement is needed (misses targets up to 10%)
 1 Below expectations Performance falls below expectations on critical factors. Understanding is
inadequate, performance & behavior is inconsistent in completing tasks (misses’
targets more than 10%)

Guidelines:
Following guidelines are used by the HBL employees before doing a performance appraisal.

 Employees without an assignment for more than 6 months are not rated. N/R is marked against name of such
employees.
 Evaluation of employees depend on achievement in three key areas;
1. Business results
2. Customer satisfaction
3. Employee satisfaction
 Group heads assign weightages to the above sections as per the business requirement.
 With each section critical job elements are defined to facilitate development of key performance indicator.
 Group heads ensure that Key Performance Indicator’s (KPI’s) and targets are communicated to each individual
within the group.
 Overall performance rating of employees will be calculated as follows:
 Total (sum of all points) divided by No. of KPIs
 Supervisor’s should give reasons in the comment column, for assigning higher than 3 rating or assigning lowest
rating in any of the KPIs.
 Comments & signatures of 3 persons are necessary on the submitted forms
 Employees signature
 Supervisor’s signature
 Reviewer’s signature
 Supervisors do not assign performance Grades to the employees.
 Supervisors assign scores and submit it to divisions for finalization of performance grades.
 Staff data and the total score achieved should be mentioned on the front page.
 Specific training needs and job rotation should be highlighted in the development plan section.
 All regular employees executives on contract will be evaluated under this performance appraisal system.
 Groups must conduct mid year performance evaluation.

COMPENSATION
COMPENSATION AT HBL:
 HBL’s focus is on attracting, developing and retaining the best in the business by offering market driven
compensation and benefits packages.
 According to performance each employ gets benefits and compensation. Employees are paid in two forms
 Direct payments
 Indirect payments
Promotion Policy:
 60% marks are taken from the appraisals of the employees.
 10% marks are taken from the education
 10% marks are taken from the experience

 10% marks are taken of the mobility – hard areas

 20% marks are taken of the interview
 Total marks are 110

PMS in Reserve Bank of India

Nation’s Central Bank

• Was established on April 1, 1935

• The Governor is the Reserve Bank's Chief Executive

• RBI is made up of 26 departments

• RBI has 26 regional offices and branches and in addition to this it also has training centers across the
country.

Performance Management System:

Promotion of an employee is based on the combined score of PARS averaged for 3 best scores from the
previous 5 years and the interview score. Both the scores carry equal weightage in the final score
calculation.

• The study of the PARS Policy carried out for the following grades:

– Officer Grade A

– Officer Grade B

– Officer Grade C

Features of the PAR system at RBI

The PAR system provides for three different reporting formats for the following categories of officers:

a) Officers in Grades ‘A’, ‘B’ & ‘C’; (Area of focus for this project)

b) Officers in Grades ‘D’ & ‘E’ and

c) Officers in Grade ‘F’

The system also provides a set of competencies against which the performance of officers is to be
appraised. The officers from Grades ‘A’ to ‘E’ are to be appraised on ten competencies, while officers
in Grade ‘F’ are to be appraised on six competencies. Appraisal is to be done on a five point rating
scale. There is also a provision for feed-back and counseling in the system.
Performance appraisal process at RBI:

Reporting Format for officers in grade A to Grade E:

The design and contents of the reporting formats for officers in Grade ‘A’ to Grade ‘E’ are similar except
for the competencies identified for assessing the appraisee officer. The formats are divided into five
sections:-

• SECTION – I

It consists of two parts. The first part requires the concerned department / office to furnish the
appraisee officer's bio-data. In the second part, the appraisee officer is required to list out a record of
his/her postings and experience during preceding three years, including the reporting year. This part
does not require any authentication by the concerned department/office.

 SECTION- II This section serves the purpose of self appraisal.

• SECTION – III This section is for evaluation of the performance of the appraisee officer and is
required to be completed by the reporting and reviewing officers. There are ten competencies with five
boxes against each.

SECTION – IV This section deals with the assessment of the review committee which will be final. •
SECTION – V This section contains instructions for reporting/reviewing officers and review
committee.

Rating Scale:

Highest rating - ‘Far Above Requirement’ (FAR)

• Lowest rating - ‘Below Requirement’ (BLR).

• Between FAR & BLR - ‘Above Requirement’ (ABR), ‘Meets Requirement’ (MTR) and ‘Capable of
Meeting Requirement’ (CMR)

Reporting Period:

The following reporting periods may be adhered to for recording performance appraisal:- Category of
officers Reporting Period

• Grade ‘A’ - 1 October - 30 September of the following year

• Grade ‘B’ - 1 April - 31 March of the following year

• Grade ‘C’ to Grade ‘F’ - 1 July - 30 June of the following year

Recommendations:

The analysis of the PAR and Promotion interview marks revealed some pain points and loose ends in the
PAR and Promotion system. I make the following recommendations:

Performance Appraisal System at other nations’ Central Banks

• Bank of England - 360˚ feedback

• Reserve Bank of Australia - MBO and BARS

• Central Bank of New Zealand - defines goals for and objectives for each of the departments. The
performance of these departments is monitored against these planned objectives. Each department’s
plans and performance are scrutinized by the Bank’s Governors and by the Board of Directors.