upon how well it is harnessed. it is one of the most important challenges, rather a risk, which needs to be appropriately managed. for the bank employees to be “ foolproof ”, the hr personnel would have to review their existing policies and practices and reorient them, wherever necessary. 22. my purpose in putting forth the future challenges facing the banking sector is to enable you to ideate and deliberate on them during the course of the conference and come out with actionable ideas for reforming the hr in your respective banks. i would like to stress that the “ people ” factor will be at the centre stage and play a critical role in the transformation of the indian banking sector. we need to improve their skill set, mould their mindsets towards providing customer service and convert our human capital into high value factors of production. as future is always difficult to predict, we need not be too disheartened even if employees are not fully “ future - proof ”, but we must at least ensure that our employees develop a sense of empathy for the customers and do their best to serve the objectives towards which their banks are committed. importantly, the inherent unpredictability in the business environment makes it imperative for hr processes to be flexible and to imbibe this flexibility and adaptability in the organization ’ s ethos. as heads of hr in your respective banks, it is your duty to optimally harness the potential of your human resources both in the present and in the future. as thomas edison said “ there is always a better way ”. we cannot be complacent even with our employees becoming “ foolproof ” under the existing environment. we would need to remain alive to the changing business scenario and keep revisiting our policies and procedures to ensure that the employees stay prepared to face new challenges. the transformation of the hr function has to, necessarily, be top driven and i am sure that the hr heads assembled here would don the role of change agents in their respective organization. i wish the conference all success and wish you successful and purposeful deliberations. thank you! bis central bankers ’ speeches

with the implementation of basel iii, banks ’ return of equity is likely to go down, the same can be recouped by improving the return on their human capital by enabling the ordinary people to produce extraordinary results so as to prop up their sinking bottom lines. 13. i would also like to utilize this opportunity of interacting with the heads of hr function in the banking sector to share my views on some of the other hr issues which would have a bearing on “ fool proofing of the banking personnel ” going forward. a ) employees compensation 14. finding skilled, experienced, responsible employees is a challenge for human resource departments in any industry, more so in a service - oriented industry like banking. the main task of the hr policy of banks is to create a favourable atmosphere where people get the opportunity to showcase their potential and receive adequate compensation. inadequacy of compensation is made out as an issue in the psbs, which encourages attrition. let me set the record straight here. i have done comparative analysis of the staff compensation in the public sector and private sector banks and my finding is that the average compensation of the public sector bank employees is more than that of the private sector bank employees in this country. add to that, the job security in a public sector and the scale tilts decisively in favour of the public sector. i think the challenge for the hr heads of psbs is to percolate this message down to the lower levels. it will help in tackling the challenge of staff attrition and improve employee morale. 15. a related issue that i want to raise is why do public sector banks still conclude industry level wage settlements rather at individual bank level. some of the banks have precarious financial conditions and if forced to give a raise at par with other banks, that would severely constrain their ability to do business going forward. therefore, in the long term interest of the banks, it is necessary that each bank revises the wages of its employees as per its ability to pay. further, why the psbs cannot even do employee wise negotiations on salary hike as in the private sector? this would be a motivating factor for the performers. b ) differential salary structure 16. the recruitment policy of the banks should be oriented towards having a right - sized and right - skilled workforce in tune with their medium to long term business plans. for instance, in line with the national emphasis on financial inclusion and spreading banking services to unbanked remote areas,