Given the legacy and the financial performance, it was just a matter of time before the banking industry awarded its due recognition to Punjab National Bank. In a freewheeling conversation with People Matters, K.R. Kamath, CMD, PNB shares his thoughts on what it means to be awarded the Best Bank Award 2011 by Business India magazine, and its future organizational priorities

The year 2008 was an inflexion point for the Indian banking industry; there was a visible shift in focus from the aggression led growth dominated by private players, to the stable and sustained growth of public sector banks. While global banks were crumbling and a few Indian private banks were grappling with issues related to exposure; it seemed that Indian public sector banks were apparently prepared to withstand the turmoil. Thanks to strong fundamentals and corporate governance standards in place, the public sector banks were able to bring stability to the banking system at a time of chaos and panic. Punjab National Bank (PNB), the second largest public sector bank in India, which places paramount importance on trust, is one amongst these banks. In its journey of 117 years, what has not changed for PNB is its value system, vision and its commitment to people.

Today with more than 65 million customers, over 55,000 employees; 5,300 branches, overseas presence in 10 countries and moving towards Rs. 6 lakh crore of business, the leadership team at PNB believes that the best is yet to come. For the first time, since its inception, the bank has been awarded the ‘Best Bank Award 2011’ among all banks in India by the corporate magazine Business India. The Award is in recognition of PNB’s consistent performance, ability to withstand the challenges and difficulties posed in the economy in the last few years and emerging out successful against all odds. The Jury observed that while selecting the best bank they not only focused on the numbers but went behind the numbers in terms of governance standards, consistency, sustainability & quality of growth; PNB fared better on all these accounts than the other banks vying for the top slot. “The Award has motivated us and makes us more responsible bankers,” says K.R. Kamath, CMD, PNB.

What sets PNB apart?

All through the years, PNB’s relentless effort has been towards inclusive banking and in the process they have put in place robust systems and practices so as to make banking a pleasant experience. In terms of technology, the bank has been a true trendsetter; the strong IT set up is run by its internal talent and unlike other banks it has not had to outsource the function. IT and risk management are its core businesses, and it is the internal capabilities of PNB that take care of these; in fact the bank has built 22 models for risk mitigation. It is team PNB that is responsible for the success and capability building at PNB.

Further, the bank has selected 100 high potential people who are being groomed and trained to take up leadership positions not only for the bank but for the industry per se. The selection is a result of ‘Team 2020’ whereby people were exposed to various functions of banking including that of forex, credit, treasury, manpower planning amongst others and geographical exposure. The succession planning exercise is a proactive initiative by the bank with the intent to fill the void which is likely to arise out of superannuation.

The leadership team is leaving no stones unturned to take the bank to the next level and generation; while on one hand it is seeking the involvement of all rank and file to mobilize 20 lakh savings account, on the other hand, it is recruiting 10,000 people who will be the new faces of PNB. Kamath, shares his thought, “The customers belong to the new generations and hence the approach to service delivery must also change. Every branch will have a qualified youth representing the new face of PNB and deliver the services the way the new customers want.”

The challenges and response initiatives

The bank has taken due measure to tackle the challenges arising out of retirements slated in the next few years. With the new generation joining the workforce, the challenges lying ahead are in terms of recruitment, training and retaining. The expectations of GenX are different, very few like to cling on to one job unlike the previous generation people who spent their entire career with one organization. The new workforce prefers to work with one organization for some time, gain experience and then move on to some other greener pastures – the banking industry as a whole is no exception to this ongoing trend and hence retaining the right talent is a key challenge. The bank has in place an effective induction plan which is used as a platform to infuse a sense of belongingness among the newly recruited employees. The new recruits are welcomed by the CMD himself on the date of joining and then the Executive Directors and General Managers brief them on the various aspects of the bank. In the context of generational gap, the challenge lies in bridging the ideological gap. The fast track promotion as adopted by the bank seeks to overcome this challenge in some way. In order to sustain the performance and growth momentum over the long run, the bank has also implemented a comprehensible incentive scheme to motivate the staff into better performance thereby increasing the productivity levels and a healthy competition within the organization.

Change is first resisted and then accepted. The resistance as a result of the fear of destabilization is more psychological than anything else. Thus the challenge in terms of initiating change is building acceptability that change is good/beneficial for the organization. Kamath suggests that any change initiative undertaken should ‘always carry a theme and must award the internal critics.’ For that matter, PNB has always taken a calibrated approach towards change – building acceptability and taking the organization together. In the present context, the focus is on HR, organizational issues (in terms of structures and processes) and new business initiatives; all of which are aimed at strengthening and sustaining its position.

Leading the way

Kamath says that he has been lucky to get a full five year term as the CMD of the bank. He says that he came with a determination to PNB and it has taken 20 months to translate his determination into PNB’s determination. For that matter, Kamath has divided his entire tenure into three parts of 20 months each. The first part, he says, he has used to understand the organization, its culture & philosophy, build acceptability among his employees and thereby become an insider. He argues that if a leaders is seen as an outsider, the idea of change initiative by him/her is resisted but the same is not true if you are considered an insider. Having built the acceptance, the next 20 months will be spent on bringing about the much required change and the last 20 months in office will be spent on cherishing the benefits of change. “Kamath has the qualities of a leader to lead a large bank like PNB in the long term and has built the team,” says a veteran banker present at the Business India Best Bank Award function.

As a banker who has been keenly associated with banking and financial technology, he feels that technology should help banks leverage more business and reduce the cost of operation. For him, technology is a front end investment and for PNB the initial part of investing in technology is over and that the time has come to reap the benefits out of it.

Over the last one year, Kamath, who has been at the helm of PNB, has steered the bank towards better performance and profitability by following a calibrated approach, leveraging on the power of technology and focusing on risk management. PNB has been a consistent performer with distinction and merit; the felicitation of being awarded the Best Bank 2011 is recognition of the legacy and inherent strength of the bank. This is certainly the beginning, and as Kamath puts it, “The best in us is yet to come.”