K C Chakrabarty: Talent management in the Indian banking system

Address by Dr K C Chakrabarty, Deputy Governor of the Reserve Bank of India, at the Silver
Jubilee function of the Institute of Banking Personnel Selection (IBPS), Mumbai, 2 April 2010.

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The assistance provided by Shri Suddhasatva Ghosh in preparation of this address is gratefully acknowledged.

Shri M. Balachandran, Director, IBPS, Shri Alok K. Mishra, CMD, Bank of India, Shri D. P.
Sharda and Shri R. K. Chaudhury, ex-Directors, IBPS, Executive Directors of banks,
distinguished guests, ladies and gentlemen; I am indeed very happy to be in your midst
today for the Silver Jubilee function of IBPS. April 1 has special significance for both RBI and
IBPS. It is the day RBI was established 75 years ago and it is also the foundation day for
IBPS. Yesterday, we celebrated the grand finale event of our platinum jubilee year and,
today, IBPS is celebrating its silver jubilee year. So, first of all a very hearty congratulations
to all the employees, governing council members and all the stakeholders on this day.
Reaching such a significant milestone in the life of an institution is always very special. It is
not only a day to feel proud, it is a day to reflect, a day to share, and a day to celebrate. It is
also an opportunity to reemphasize what the institution stands for, to renew its values. Such
a moment constitutes one of the few opportunities for collective sharing in an institution. The
coming together and the camaraderie that this day evokes is also perhaps the appropriate
moment for introspection and reflection on the evolution of the institution, its current and
future challenges, and how the institution can fulfill its objectives even better.
Over these years, the IBPS has made a mark as a premier national level Institute for
recruitment, training and research related to selection and management of human resources.
Since its inception, the Institute has provided commendable services to various organizations
for recruitment, internal promotions, placement and admissions. It has also been assisting
the financial sector towards employees’ selection, promotion and placement. In recent years,
the Institute has also engaged itself in a variety of extension services related to personnel
selection and human resource development/human resource management.
Far-reaching developments in the roles and activities of banks and financial institutions in
recent years have put a premium on appropriate manpower planning and personnel
development, indeed the human resource function generally. Ensuring that the banks can
recruit and retain appropriately qualified and experienced staff is at the heart of this
challenge. This is made increasingly difficult by developments outside the financial sector
and competition for key personnel even from international agencies.
In India too, banks and banking have changed substantially over the years. As we view
matters in retrospect, one of the major landmark events which constituted strategic inflexion
points in the history of Indian financial sector has been the reforms process that gained
momentum in the early 1990s. These reforms have heralded a dramatic shift in the way
banks functioned and operated in India. The changed overall environment and the internal
compulsions to generate and sustain faster policy responses have given rise to the quest for
greater efficiency and the need to reorient the banking practices. This unmistakable urgency
of realigning our organizational resources has indeed altered the way we view the whole
gamut of key issues relating to our human resources.
In such an environment, sometimes somewhat stylistically termed as “war for talent”, even
public sector banks can perhaps no longer take a life time employment for granted. Issues
relating to how to attract talented people, how to nurture them, how to develop them and give
them the necessary space have now, therefore, moved to the centre stage and today
constitute the major concerns that we may need to address adequately in the near and
medium term.

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While these issues have always been important, it is just that the imperatives to address
them squarely in substance were never so compelling. There have been broadly three
catalytic forces that have brought about this changed perception of human resources: First,
as the widespread use of the personal computer and the advent of the internet in the 1990s
attained a critical mass, it marked a specific game-changing point which ushered in the
Information Age. In this age, the intangible assets such as intellectual capital and talent have
in a sense supplanted hard assets of the Industrial Age such as capital, factories and
inventories. The new reality is that people are increasingly the principal assets of any
organization and institutions are dependent not just on the sum total of their individual human
capital, but also on how effectively they are able to draw out the best from their talent bank.
Secondly, in India as elsewhere, a host of new industries, some sector-specific like new
generation Indian private sector banks and foreign banks and other sector-neutral like
companies in the fields of information technology and media, have given rise to a supply
demand imbalance. Today, these new industries are competing with the old for talent and
have triggered the need for banks to look afresh not only at their recruitment strategies but
also how to develop and retain their talent.
Thirdly, there is the issue of ownership. While organizations own physical and financial
assets, their ownership rights, however, do not extend to people. In Indian financial sector, in
the pre-reforms days, employment bonding, especially in the public sector, worked on what
was termed the “psychological contract” or the “loyalty contract” wherein long-term
employment was co-terminus with employee loyalty. This, in today’s world, has been
seriously undermined, spurred not in the least by a spurt in job opportunities. The old values
of loyalty have eroded and greater demand for talent has changed the playing field for the
search and retention of personnel. This is the new reality that the banks in India, among
others, have to contend with.
Importantly, effective recruiting is the beginning of effective retention. Matching between
tasks and talents is a challenging problem and it is essential for allocational efficiency that
people get allocated to right occupations. Refashioning the recruitment process may well
therefore be the precursor of an effective talent management strategy. This may include
identification of key positions and turnover risks associated with these positions, and
competency/behavioural-based selection criteria that support the retention strategy and
business drivers.
Only a carefully designed and integrated set of initiatives that allow the employee to align
himself with the organisational goals and objectives, map competencies for diverse work
areas, build up capacities through a well-crafted and sustained strategy and draw out latent
possibilities optimally would ensure emergence of leadership talent that is critical to any
organisation’s prosperity and is therefore a central element of talent management.
The aim is to align the current and future talents of individuals with the strategic challenges of
our business. So while employees need to understand how to be more effective in their
current roles, deliver specific business challenges, and pull together a personal development
plan for shaping future careers, organizations too have to strategize how best to utilize the
people’s talents and identify areas for internal development necessary for ensuring future
success.
Engaged as it is in the critical exercise of getting the right people for the right job for
organizations across the banking sector, the IBPS therefore has a central role to play in the
broad mandate of talent management in the Indian banking system. Not only would the
Institute need to develop appropriate methodology to carry out its prime task of conducting
recruitment tests for increasingly demanding clients, but it would also require to have on
board dynamic professionals on its faculty to handle the core functions and emerging
challenges as well as other administrative support systems staff to support the handling of
these functions to precision.

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Apart from its core task of assisting in recruitment of personnel, the Institute has to widen its
services and engage itself more and more in other emerging areas like providing training
workshops for executives on “interviewing skills”, training programmes in the fields of
performance appraisal, counseling services, performance counseling, team-building and
organization development, manpower planning and organization restructuring and
undertaking sponsored Research Projects, just to name a few.
We in RBI have had the pleasure of associating with your Institute for a number of years for
the recruitment of our personnel through written examinations conducted in co-ordination
with you as part of our selection process. As our Bank understandably attaches a lot of value
to taking in bright, young professionals as Direct Recruits, your Institute’s role in helping us in
building up our human resource pool has been substantial. More recently, your Institute has
been providing us valuable support in implementing our initiative to select “Young Scholars”
under the RBI Young Scholars Scheme which seeks to effectively carry forward our efforts to
afford greater access to financial services to the vast hitherto unreached segment of our
population, as well as the associated issue of bridging the extant knowledge gap in financial
education and literacy in our country.
As we pause and introspect, let me draw your attention to some of the future challenges that
IBPS would face. IBPS should look into these issues so that it is able to compete globally.
(a) It is generally accepted that the processes followed by IBPS for selection are fair
and transparent. IBPS endeavours to select the best people from among the
universe of applicants. However, for its continued relevance for the next 25 years,
IBPS must not only endeavour to select the best people but the most appropriate
people for a job. Out of my own experience as a bank chairman, I can tell you that I
found very few people willing to undergo rural postings. As the Indian banking
system embarks on the massive goal of financial inclusion, IBPS would have to
ensure that candidates having compassion for poor and underprivileged, willing to
work in rural areas, etc. are selected for the banking industry. The key challenge,
thus, is how to integrate such requirements into the selection process itself so that
the most appropriate and not just the best people are selected.
(b) The second challenge is to meet the growing needs of an ever expanding financial
sector. It is heartening to note that during 2009–10, IBPS would be clocking close to
10 million candidates in screening for various assignments. In a globalised world,
everyone would be competing to attract the best people and the requirement is only
going to go up. IBPS would have to upscale itself with appropriate methodology,
technology, manpower, etc. to be able to effectively deliver on its clients’
requirements.
(c) The third challenge is bracing for possible competition in future. Today, IBPS is
alone in this field. As the number of institutions and the services desired increases,
newer institutions providing similar services may come up. Thus, IBPS must strive to
move up the value chain. It should not only upscale itself but widen its basket of
services and engage itself more in newer areas like banks’ internal promotions and
other areas. It should strive for greater utilization of its services so that it can face
competition if and when it comes.

To conclude, I once again congratulate all of you and your families on this landmark
occasion. I am sure that in the years to come IBPS will grow from strength to strength and
attain greater glory, and the next 25 years will be even better than the past 25! I wish the
Institute all success in its future endeavours.
Thank you.

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