Mukt Shabd Journal ISSN NO : 2347-3150

Recent Change Management Initiatives of of India-Responding to PCA framework

Ravindra Sangvai General Manager MSc MBA CAIIB Mumbai, India 400028

Abstract— Setting out with the objective of understanding how is responding to the wave of changes impending on it after the prompt corrective action (PCA) framework has been imposed on it by in the light of rise non-performing assets, loss to profitability and the changes it has been making to its culture, technology and geographical spread, the author has examined various actions taken by bank’s change leaders for managing the change. The author has concluded that the successful merger is setting up a template for reviving other weak public sector .

The study explores and establishes how the Bank of India has responded to the changes in the last few years, through several strategic changes initiated in the bank having significant impacts on the performance of the bank. The case provides interesting insights into the various forces that trigger changes in an organization, resistance to these changes and interventions adopted to manage the change illustrating either effective or ineffective handling of an administrative or business situations. The study has amply established that pursuing and monitoring change management is an enabler for survival and retention of marketshare as well as growth of marketshare for the bank in competitive environment. The study has helped in depicting the impact of change triggers and how the bank has been responding by appropriate action has by the change leaders. change management strategies regarding technology transformation and developing leadership talent pool have made great difference in banks performance and have helped it to come out of prompt corrective action framework imposed by Reserve Bank of India which had restricted its loaning and expansion activities, proving the hypothesis that it is the implementation of robust change management strategies which helps banks to survive through troubled financial position and corrective growth path.

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I. INTRODUCTION The Bank has over 5000 branches in India spread over all states/ union territories including specialized branches. These branches are controlled through 55 Zonal Offices and 8 NBG Offices. There are 60 branches/ offices and 5 Subsidiaries and 1 joint venture abroad.

The Bank has been in the forefront of introducing various innovative services and systems. Business has been conducted with the successful blend of traditional values and ethics and the most modern infrastructure. The Bank has been the first among the nationalised banks to establish a fully computerised branch and ATM facility at the Mahalaxmi Branch at Mumbai way back in 1989. The Bank is also a Founder Member of SWIFT in India. It pioneered the introduction of the Health Code System in 1982, for evaluating/ rating its credit portfolio. Presently Bank has overseas presence in 18 foreign countries spread over 5 continents – with 52 offices including 4 Subsidiaries, 1 Representative Office and 1 Joint Venture, at key banking and financial centres viz., Tokyo, Singapore, Hong Kong, London, Paris and New York.

The bank has managed to exit from RBI's prompt corrective action (PCA) framework due its credit positive, net non-performing loan (NPL) ratios and capital which are two of the four parameters that the Reserve Bank of India (RBI) tracks as part of the PCA framework. The bank has improved significantly in the quarter ended December 2018 and on January 31, the Reserve Bank of India announced it had removed Bank of India (BoI) from its PCA plan after the bank improved its asset quality and capital, a credit positive. The government's capital injections into the banks' Rs 10,100 crore in December 2018 was a key driver in the banks' improvement.

II: Objective of research: Objective of research is to trace the multiple change management programs undertaken by the banks, assess the changes done in response to internal and external triggers and their success in terms of retaining and growing its market share and improving customer journeys. It’s also aimed to assess the performance of the bank under successive Chairman and MD who have been the change leaders in the bank and to examine whether the change management practices are helping in creating the new merged entity and introduce the required culture synchronisation.

Hypothesis: Change management is an enabler for survival and retention of marketshare as well as growth of marketshare for banks. Understanding the impact of change triggers and responding by appropriate action has to be main task of the change leaders.

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Methodology: The research is based on published research papers, books, newspaper articles and annual reports of the bank. Being a central banker himself, authors interaction with senior officials of the bank has helped in gaining understanding of the various changes introduced by the bank.

III Key Performance Indicators of banks business-March 2019: Total business crossed the milestone figure of `4 trillion to reach Rs.429972 Crore with a robust growth of 15.89%. Deposits grew by Rs.33782 Cr (16.22%) to Rs.242076 Cr and Advances by Rs.25170 Cr (15.47%) to Rs.187896 Cr. Profitability: Operating Profit Rs.4880.62 Cr while Net Profit was at`321.95 Cr. Reduced due to NPAs provisions. Return on Assets (ROA) of 0.12%. Mandatory targets surpassed: Priority Sector Advances as a percentage of Adjusted Net Bank Credit (ANBC) -41.93% Agriculture lending (`31747.Cr) at 19.91% as against the target of 18%. Bank has international presence in Singapore and Colombo &Jaffna in Sri Lanka. Both these Centres are Profit making and Bank has focused on further business improvement at these Centres. Controlled asset quality: Gross NPAs to Gross Advances Ratio and Net NPAs to Net Advances Ratio reduced to 7.11% and 3.75% respectively from 7.37% and 3.81% respectively as on 31stMarch 2018. Stressed Assets Ratio too reduced from 8.65% as on 31.03.2018 to 8.50% as on31.03.2019.

Financial Inclusion initiatives: The bank has been a forerunner in supporting the Government of India’s National Mission for Financial Inclusion Pradhan Mantri Jan-Dhan Yojana (PMJDY). Bank’s performance has been exemplary since its launch as the following facts indicate; -37.78 lakh BSBD accounts opened since inception of the scheme. -Average monthly transaction done per each Business Correspondent (BCs) is more than 1000 - Highest in the Industry in terms of number of transactions. -Enrolled 10 Lakh customers under PMJJBY & 22 Lakh customers under PMSBY customers since the launch of the scheme. -Sourced more than 5.8 lakh APY subscribers since the launch of the scheme in 2015. During the current fiscal your Bank sourced 2.3 lakh subscribers against the annual target of 1.62 lakh given by PFRDA.

Social Responsiveness: Bank as a responsible Corporate Citizen reached out to the needy and marginalized population through various contributions: -Clean India Movement: Donated automatic napkin vending machines and incinerators to Government schools/ colleges and hostels for women in .

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-Women Empowerment: Sponsored Event "Parampara"organized by Parichay Foundation on 2nd September 2018 at Delhi. -Inclusive Growth: Extended sponsorship for constructing1800 ft road under CSR from Village Maujdin to Government Primary school Madhao Singhania’s Haryana. -Donated `24 lakhs towards construction of National Academy of RUDSETI (NAR) Building at Bengaluru for Skill Development under CSR. -Green Initiative: Contributed `9 lakhs for Green Vellore Project of VIT Vellore Robust capital structure: BOI is the only PSB which did not require Government's capital assistance as it has been self-sustaining in terms of Capital by continuous plough back of internal accruals. With CRAR at 13.21% under Basel III as at the end of March2019, the bank is adequately capitalized. The bank has raised capital of Rs.294.35 Cr in May 2019 through Employees Stock Purchase Scheme (ESPS) and there are plans to tap the market at the appropriate time during FY 2019-20 to raise Capital for the growth plans and also to bringdown the stake of Government of India below 75% as per regulatory guidelines for which near approval from esteemed Shareholders are available. Market Capitalisation of the Bank was at Rs.13446 Cr. I. IV Major Change Management Initiatives of the Bank are as under; i) Human Resource Development-Developing leadership talent pool: Bank of India is roping in human resource (HR) consultancy outfit to identify and develop leadership talent pool. The advisory outfit hired will help in succession planning at top and explore feasibility for introduction of a 360-degree feedback system. This is especially for the executive cadre for their development. The proposed HR Interventions will be implemented in such a way that the milestones are set to ensure tangible results periodically from six months onwards. The timeline for the project was 18 months. BoI appointed Ernst & Young Pvt Ltd in 2013 and KPMG in 2015 as consultants for HR development and is now looking for a new consultant in 2020. Earlier in 2002 also it had used consultants’ services to upgrade HR practices.

The main reason for taking up the exercise ids that the banking industry is passing through a ‘Retirement Decade’ (2010-2020). This has led to shortage of competent personnel in critical positions such as Risk Management, Information Technology, foreign exchange (FOREX), Credit Appraisal/ Monitoring, HR, Marketing etc. Also, there is a perceptible gap between requisite skill requirement vis-à-vis availability. This has meant, a need to improve requisite credentials, capabilities and experience to lead in specialised areas like IT, FOREX, Treasury etc. Many bank executives have seen quick career progression due to gaps arising out of large-scale retirements. However, personnel climbing up the ladder may not be experienced enough,

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though maybe academically and theoretically competent. The lack of adequate experience in different areas and fields results in weaknesses in skill sets necessary in the top management which has to shoulder multifarious responsibilities without segment specialization. Bank needs to build new capabilities to attract and retain talent. As the Bank is going through business and technology transformation, massive re-skilling is required. The challenge for the bank is that transformation of HR has to be conducted concurrently with business growth. New HR processes and methods have to be institutionalized.

Use of technology in HR: BOI is outsource its human resource (HR) related requirements with a view to introduce sophisticated HR practices, processes and techniques in managing its workforce. The plan is to use technology in the areas of HR process management system in order to achieve higher operational efficiency, streamlined processed and workflow automation in HR functions. BoIs Board of Directors has given an in- principle approval to the plan. A sub-committee has also been formed to formulate and evaluate the plan, which is in line with the banks business strategy. The bank has decided to use Web-based solutions as well as best of HRM systems on outsourced basis by a tender inviting applications has also been put up on the banks website.

Banking has changed drastically over a period. It is extremely important that employees upgrade their skill sets to cope with the new challenges. The idea is also to take assistance to familiarise the workforce with the latest banking technologies adopted by the bank. BoI has plans to introduce datamining and e-learning with the assistance of the vendor, which is supposed to develop the software for this. "Our effort is to increase job satisfaction and motivation levels. The terms of reference for HR outsourcing is to bring in the best of HR systems to enhance work efficiency and to develop an appraisal system and technique to complement the existing system. The vendor assisted the bank in developing an e-workplace concept by providing self service facilities to employees like browsing leave records and online submission of various applications. The bank has also outsourced the existing information technology (IT) infrastructure and bring in new IT initiatives.

Summing up: Bank of India had engaged a consultant to advise it on the implementation of an integrated HR framework in the bank. Broadly, the bank intended to initiate and institutionalize globally competitive HR practices and to enhance its brand image. As part of this plan, it wanted to put in place relevant HRD strategies and use modern methodologies to undertake organisational renewal; identify and nurture talent, bring about marked changes in the mindset of employees at all levels so as to enhance HR quality; create a performance-driven culture and an exciting workplace for the employees, create a pool of entrepreneurial managers and business leaders for future; and inculcate a strong and effective sales and service culture across levels in the organization.

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At present, the average age of employees of the bank is high and substantial proportion of the bank’s senior team is to retire over the next 3 years taking with them a vast amount of experience and expertise and leaving behind a need to develop new skill sets quickly. The bank is also going through business and technology transformation and massive re-skilling is required. The challenge for the bank was that transformation of HR had to be conducted concurrently with business transformation. As such, the bank wished to appoint a competent consultant to provide assistance for formulating and implementation of an integrated human resource framework for the bank and carrying out various initiatives under the same as part of the overall project plan. Among the top priority tasks to be entrusted to the consultant will be redesigning of overall HR strategy and its alignment with business imperatives, empowering the frontline staff and operationalisation of single window concept, creating a recruitment / talent induction model to attract talent as well as to ensure sustained growth in head count in line with business growth. BOI received awards like India’s Top Organisation with Innovative HR Practices in PSUs by the Asia Pacific HRM Congress for 2017-18 and India’s Top Organisation with Innovative HR Practices award in PSUs in the Asia Pacific HRM Congress in Bengaluru, which prove the usefulness and business alignment of the HR development. ii) Expanding Bank's footprint and business with technology transformation: The bank has created centralized processing units (CPUs) exclusively for processing MSME loans were operationalised in 8 Centres during the year and 24 Retail processing Centres (IRPCs) functioning across India are driving growth of MSME/Retail loans. The bank is onboarded in three TReDS platform for discounting of Bills of MSME units. The bank has 39 specialized Microsate branches deliver exclusive and specialized attention towards SHGs. The portfolio size of SHG increased by `697.91 Cr during FY 2018-19 to touch `4733.41 Cr. Bank has been bagging the Best Bank award for 10consecutive years "in SHG Bank linkage Programme" from Govt of Tamil Nadu. Towards enhancing its pan-India network and to extend its reach to the under- banked and unbanked areas 91 branches were opened during the year to touch 9786 touch points including 2872 Brick & Mortar branches and 3892ATMs/BNAs and 3022Business Correspondents. Bank has continued to invest in modernising its infrastructure with focus on improving efficiency in delivering services through digital channels. The bank is top performing bank for multiple scheme payments under Public Financial Management System (PFMS). The bank showed fourfold increase in Mobile banking transactions and 5th among all banks in ATMs, 2 nd highest among PSBs transactions and was highest Rupay Platinum card issuer among all banks. New initiatives included commencement of operations of Tamil Nadu Grama Bank as exclusive for the State sponsored by BOI from April 1, 2019 with 630 branches and business of more than Rs.22500 Cr after successful amalgamation of of with Bank's Pallavan Grama Bank. The bank successfully

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implemented the newly launched PM-Kisan Scheme of Government of India as a sole Banker for Tamil Nadu and Puducherry. The online opening of Savings Bank Account enabled through Bank's website/MobileApp using Based OTP has started. The bank’s Mobile APP (IndPAY) is now available in 5 languages (viz. English Tamil Malayalam Hindi and Marathi) for customer convenience. Bank’s Website revamped with a new look and feel as per the current industry standards. New look Internet Banking website launched with value added features.

V Conclusion: The above two change management strategies regarding technology transformation and developing leadership talent pool have made great difference in banks performance and have helped it to come out of prompt corrective action framework imposed by Reserve Bank of India which had restricted its loaning and expansion activities, proving the hypothesis that it is the implementation of robust change management strategies which helps banks to survive through troubled financial position and corrective growth path.

Future Change Strategy: The bank is continuing the future change path with quite a few initiatives under its belt. Bank's strategy for FY 2019-20 is aimed at concentrating on growth with profitability. The prime focus now is on increasing current account and savings account balances (CASA) to curtail cost increasing revenue other than from interest accelerating recovery in respect of impaired assets and containing the level of NPA. In the process growth in business would culminate into improving the bottom line of the Bank. The bank’s strategies are focusing on offering efficient and excellent customer service with frequent employee customer connect measures and educating customers for increasing the use of digital banking to give them great ease and convenience. The Management team is confident that with the collective effort and teamwork along with continuous patronage, trust and encouragement of customers to surpass the expectations of all the stakeholders in the years ahead. Government's overarching framework for reforms agenda is "Responsive and Responsible PSBs" aimed at EASE-Enhanced Access and Service Excellence which together with Recapitalization of PSBs is aimed at strengthening PSBs increasing lending to MSMEs and making it easier for MSMEs and retail customers to transact as well as significantly increase access to banking services. As the cleaning up of Balance Sheet of PSBs through the process of recapitalisation of Public-sector Banks and resolution of stressed assets under the Insolvency and Bankruptcy Code (IBC) would improve the business and investment environment which in turn will aid robust growth in banking sector as the credit needs of the economy are inter twined.

References Annual Report 2019, 2018 Website: https://www.bankofindia.co.in/english/home.aspx

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