The Impact of PSU Indian Bank Mergers on Job Recruitment

With the anticipated mergers of most of the public sector banks (PSUs) in India, the question arises: Will this merger affect job recruitment in the banking sector?

On the surface, government officials and boards will try to reassure the public that there will be no closure of branches and no job losses. However, in the long run, there will likely be closures of bank branches and job losses. This is the nature of any merger to achieve synergies and drive efficiencies.

Consolidation and Mergers: A Natural Process for Synergies and Efficiency

Any merger involves the consolidation of processes and procedures from two companies, which can result in changes to the recruitment process and a decrease in job opportunities. This is one of the many challenges faced during such consolidations. To stay relevant, individuals must continuously upskill to ensure their employability in the future.

Realities of Bank Mergers and Their Impact

Consolidation and mergers often lead to the surplus of staff, leading to a slowdown in hiring for a few years. In some cases, voluntary retirement schemes (VRS) might be considered to manage staff surplus.

Let's consider a hypothetical scenario with four bank branches in a medium-sized town. If the branches were started due to competition, the outcome could be one of the following:

Four branches share the total business so that all of them are underutilized, and thus, they may not earn a profit. One branch captures 90% of the available business due to efficient management and excellent customer service, leading to good profits but potentially overutilizing the staff.

As a result, the other three branches become non-viable. During a merger, if two branches are retained and the other two are relocated to other needy areas, this would be ideal. However, if this scenario holds true across most locations, there are two possible solutions:

Deploy the excess staff to locations with no business or profit until increased business can absorb the excess staff. This would require a significant shift in staffing strategies. Stop the selection process of new staff, as all commercial banks are expected to earn profits and remain viable. This would necessitate adjustments in the recruitment process.

Furthermore, the adoption of automation, including artificial intelligence and robots, for customer service and transactions is increasing. This raises the question of whether hiring can be slowed down or stopped. It's a challenge to balance the need for fast and accurate service with the ability to achieve these efficiencies.

Perceptions from the Staff and Officer Side

From the perspective of workers and officers, to avoid retrenchment and increase recruitment, one might think of abolishing cash counting machines, manual implementation of funds transfer among branches, and other measures that can utilize more staff. However, these solutions might result in less efficiency and performance, ultimately increasing unemployment.

It's important to note that the topic of job recruitment and its impact in PSU banks after mergers is complex and requires thorough study. While there are challenges, there are also opportunities to enhance efficiency and customer satisfaction through the use of modern technologies.