Thursday, November 10, 2011


Bank employees!! Be ready to face sweeping, upside down changes( or attacks?) in Banking Industry!!

Yes!! Govt. of India  has accepted 56 recommendations out of 105 of  Kandelwal Committee and sent letters to all Public Sector Banks for early implementation.

Here is the details of the letter.

F. No. 9/18/2009-IR
Government of India
Ministry of Finance
Department of Financial Services

Jeevan Deep Building, Sansasd Marg
New Delhi, the 21st October 2011

The CEOs of all PSBs

Sub: Recommendations of the Khandelwal Committee – reg.


          I am directed to state that a committee was set up on 22nd October, 2009 to conduct a study of the HR issues of the Public Sector Banks and making appropriate recommendations, thereon under the Chairmanship of Dr.A.K.Khandelwal, former Chairman & Managing Director of Bank of Baroda with Shri. T.V.Rao, Professor, IIM, Ahemedabad, Dr.Deepak Phatak, Professor, IIT, Mumbai and  Shri. M.V.Nair, the then Chairman, Indian Banks Association as members. The committee submitted its recommendations (grouped into 13 chapters and 105 recommendations) to the government which has since been examined.

2.       Approval of the Government is hereby conveyed on the following recommendations of the Khandelwal Committee. A copy of the Khandelwal committee is enclosed for further reference. It is requested that an HR plan for each bank incorporation these recommendations be prepared and got approved by the Board of Directors latest by 31st December 2011, a copy of the approved HR plan should also be forwarded to this Department for record and review.

Recommendation(s) of the Khandelwal Committee
Decision of the Government

Manpower and Recruitment Planning

MPP exercise to be carried out by the PSBs to be a rigorous exercise and to factor all possible contingencies in HR area – both quantitative and qualitative considering the impact of technology, staff cost and expansion programmes, etc. Each bank’s MPP to have both short term and long term projections.

Each PSB to carry out detailed and structured manpower planning exercise every year for a time spectrum of 5 years linking it with strategic and business plans. banks to take steps to institutionalize manpower planning with the help of outside expert advice, if required and subject to review every year by the proposed steering Committee of the Board on HR.

Each PSB to lay a roadmap for reaching officer-clerk ratio of 1.0-0.5 for metro and urban branches and 1.0-0.75 for rural and semi-urban branches in the next 3 years.

Individual Banks to decide / consider their needs.
The industry body IBA to undertake some benchmarking studies with the help of outside experts, if necessary and come out with some models for reference.

Banks to outsource more and more non-core activities in a time bound manner and its impact to be factored in MRP.

Banks to draw a time frame for implementing BPR and Change Management and Boards to monitor its progress every 6 months.

(To be reviewed on quarterly basis)


Clerical and sub staff to be re-designated.


The standard of recruitment including methodology and content for testing has to be raised. For this purpose, a committee of experts including bankers can design the content for testing, methodology for conducting such test and also review the existing arrangements.

Testing of computer skills to be mandatory for officer and clerical cadres.


Recruitment of direct officers to be 50% of total officer vacancies,

Clerical staff may be granted age relaxation for promotion.

Minimum qualification for clerical recruitment to be graduation and for sub-staff to be X standard pass.

Fresh recruitment of clerks to be restricted to rural and semi-urban branches. Further, rural / semi-urban service for a minimum period of 3 years should be made mandatory for the new clerks joining the PSBs.

Banks to decide rural & semi-urban postings of 3 years should be completed within first 10 years of service.

Banks to endeavour to to incentivize mobility of clerical staff to rural areas through special house rent, fast track promotion etc.

Accepted in principle.
Lateral recruitment on term appointment (say 5 years) to be made largely for specialized positions.
The officers in the specialized areas identified as IT, Risk Management, HR, Treasury, Marketing and Legal at the level of AGM, DGM, GM may be taken either from other banks on deputation basis or from the open market on contract basis for a minimum period of 5 years.

Training and Skill Development of Staff

Training systems of banks to focus on creation of talent pool of officers in critical areas like Treasury, Corporate Credit, International Banking, Retail Banking, Social Banking, Technology, Risk Management, Marketing, Infrastructure Financing, Financial Inclusion, etc. Internal certification of training programmes to be introduced to build talent pool

Training college of individual banks to be upgraded as centres of excellence with mandate to carry out in-house research, provide learning support to the management and be responsible for continuing education efforts :

Banks are required to initiate the action for upgrading the training facilities.  In case of cost consideration, wherever feasible necessary tie-up with training institute of other PSBs should be explored.  IBA to devise the curriculum

Training strategy to focus on staff working in rural areas and women employees and priority to be accorded for regular in-house training to rural staff.

E-learning and other alternate delivery channels for learning to be extensively used for training and learning

Linkage between training and operations to be improved by proper training need analysis and evaluation of effectiveness of training.  Focus to be to understand world class practices and changing requirements of customers

Functional heads / business leaders to be accountable for training and development of cadre of officers in their area.

Internal processes in training such as faculty selection process, training of faculty, introduction of core faculty in some key areas of management, top management support, etc. to be improved.

Training of newly recruited officers to be strengthened and re-vitalized.  Two years training to be made mandatory for these officers to provide systematic exposure to all aspects of banking.  During training period, they should not be posted in regular jobs.  Mentoring of newly recruited officers can be entrusted to recently retired executives say in the last 5 years.


To be left to the Banks.
Role related training to be made compulsory for all executives in Scale IV and above.  Objective is to develop leadership, decision making, risk management skills, etc. Leadership training to precede posting to senior levels, after the promotion decision is taken.  This is meant for understanding the role, developing the skills and competencies required to perform the role.

All banks to have Governing Board on training / Advisory Committee on training (many banks already have ) and they should invariably meet once in three months to address the issues of skill building and engagement to staff.

External and overseas training to e-aligned to a clearly laid down talent management strategy.

Every bank to develop a training policy.  Policy to include mechanisms for ensuring that training inputs are properly used.


Career Planning

Systematic job rotation in the formative stages of an officer to be ensured for providing rounded exposure in operational areas of banking.  Career plans for officers to aim at providing functional expertise in one or two areas before he enters the executive cadre.

The present mandatory rural / Semi-urban service for a minimum period of three years for generalist officers to be continued.

In view of the fact that rural economy is becoming important with emphasis on financial inclusion, credit to agriculture and micro small enterprises.  Implementation of this scheme will benefit the system as a whole without any discrimination.  Banks are required to formulate the action plan.

PSBs to bring about rigour in promotion process in all cadres

Eligibility criteria in the matter of minimum length of service in a particular Scale to be suitably reduced for fast track promotions to talented employees – as a motivational and retention tool besides for creating leadership pipeline.


Subject to Government policies / guidelines by Government in this regard.
Promotions in executive cadre to be preceded by thorough testing of competencies and potential measurement through Assessment Centre for holding the position to which the employee is being promoted.  External experts to be associated in all promotions in executive cadre.


Each PSB to come out with a HRD plan for development of women and SC / ST employees.  Special HRD efforts to be put in place for developing these groups in key skills of banking.


(Persons with disabilities may also be included in this group)

Performance Management

PSBs to introduce and implement PMS for promoting high performance culture

All categories of Staff including workmen staff to be covered by PMS.  PMS to be credible, transparent and interactive system.  Online PMS to be introduced.

Discipline of PMS to be enforced by the management.  Appraising authorities to be accountable for proper and timely assessment.

PMS to include some form of performance planning.  All performance plans to include statement of key activities under each KPA / KRA and linkage to Branch / Regional / Functional / Business Unit / Organisational goals

PSBs to introduce 360° feedback as a leadership development.  Succession management and grooming tool for executives in Scale IV and above.
Accepted in principle

Succession Planning and Leadership Development

PSB to introduce system of succession planning for key critical and leadership positions.  Each critical position should be backed up by three potential successors in the reserve.  Review of critical positions to engage the attention of the proposed Steering Committee of the Board on HR.


Subject to Government policies / guidelines by Government in this regard.
The indentified potential successors should be groomed through variety of mechanisms to prepare them for the indentified positions.  The proposed Steering Committee of the Board on HR to monitor this process.


Subject to Government policies / guidelines by Government in this regard.
A comprehensive leadership development strategy, based on leadership competency model for each role, must be developed by each bank for executives in Scale IV and above.


Subject to Government policies / guidelines by Government in this regard.
Leadership competency should be developed through a planned exposure to different jobs, tracking performance, training and development at different stages of career and grooming through management and leadership courses and through project work.  Focus should be on developing high potential individuals.


Subject to Government policies / guidelines by Government in this regard.


Potential identification should be done through modern HRD tools like Assessment Centre and  360° feedback to indentify talent for various roles. Eventually this should become part of leadership development process and managed by BLDI.  BLDI or any other institution which facilitates this for PSBs should also help them develop mentors to guide, coach and promote internal talent.


Subject to Government policies / guidelines by Government in this regard.

Employee Engagement and Motivation


PSB to introduce online resolution of grievances.



Banks to install a credible system to encourage free flow of ideas and suggestions from their staff – technology tools like intranet, interactive portals, on line quizzes, etc. to be used.



Each bank to evolve employee involvement programmes covering all sections of employees.



Banks to encourage learning initiatives among employees through appropriate recognition and reward schemes.


Professionalisation of HR


Every CMD should take HRD on his agenda.  A Steering Committee of the Board on HR to be constituted in each bank, with Government Director and two outstanding HR professionals (having knowledge of 360, Assessment and Development Centre, etc.) apart from CMD and ED, as members, to discuss critical issues in HR every quarter.



Banks to recruit HR professionals at both senior and junior levels to undertake HR activities.  Lateral recruitment should be encouraged for getting top talent in HR.  All HRD staff should be trained before they are posted to HR roles.

Officers for HR may be taken upto Scale IV.  Banks to initiate the action.  For speedy redressal of Staff grievances, Cell to be created with.  GM / HR and another GM.


All PSBs to automate HR administration through web-based system, for efficiency, cost reduction and transparency in HR management.



Banks to introduce and carry out HR audit once in two years.


Creating Risk Culture

Accountability of non-performance to be dealt with through pre-mature retirement provisions.  Review for reaches the age of 55. Sub-Committee of the Board to monitor such cases.

Accepted in principle. 
All PSBs to put in place a staff accountability policy for Non-Performing Assets.

PSBs to fix accountability for delays in concluding disciplinary cases

PSBs to strengthen their risk management systems across the board.


Industrial Relations

PSBs to revisit and review all internal settlements that affect mobility, flexible utilization of staff, productivity, performance and customer service.

Unions to be consulted by the PSBs.
Bank managements to accord priority treatment to the issues of productivity and performance acceleration while dealing with IR issues


2.       An advisory Group has been constituted by the Government to guide each PSBs in formulating its HR plans in accordance with these guidelines and any other guideline issued by Government from time to time.  (copy of the order of constitution of the committee enclosed).

3.       The other recommendations of the Khandelwal Committee are under active consideration of the Government and decision on these shall be communicated, in due course for appropriate action.

Yours faithfully,
(Manish Kumar)
Under Secretary to Government of India
Tel : 011 – 2374 8742

Copy for information to the Chief Executive Officer, IBA Mumbai.


Anonymous said...

With regard to Compulsory rural posting for officers for further posting :- My concern is ther are number of officers who are working in metro/large branches/ treasury/risk management or other division .. who never got rural posting. So far in PSU ther is no system of choosing posting . its always management who give posting . Issue lies here is nw all the officers would become unqualified for further promotions who have not completed rural posting but fact lies here is they never got opportunity to work in one can be debarred from promotions for something(rural potiong) which was never offered to him ?

Anonymous said...

You are right my friend .. i fully agree with you...Rural service should be must but should not be precondition for further promotions atleast not for next three years .. and option may be taken from officers who have not completed rural services..and who get promotion should be invariably posted atrural branch..

Anonymous said...

It should not be implemented with immediate effect, rather it should be done in phased manner like 4-5 years henceforth.
, so that those who are on threshold can plan properly there future course of action.

Anonymous said...

There are public sector banks that are encouraging the specialist officers to join the main stream. The strategy adopted is going against the employee morale and will to work. the recommendations though cover the grievance redressal aspect but ignores that in majority of banks, HR professionals are not deployed for such functions. It is not understandable how HR professionalism will be inculcated in the conventionally managed banks? It is a big question?????

Anonymous said...


Unknown said...

Good content