Fiasco in Bank of Baroda

Our Correspondent

The fiasco in Bank of Baroda (the issue of deploying unethical methods in BOB World mobile app registration by using a sim card not owned by the customer and without the knowledge of the customer) is the result of injecting private sector culture in a public sector bank and this cultural shock experienced is closely linked to the history of banking sector reforms in India and the internal ‘strategic’ and ‘tactical’ changes deployed. This article tracks the process of this cultural change endured by the operating personnel.

Pandit Jawaharlal Nehru held Indian Public Sector Enterprises “The Temples of Modern India”. During the regime of Srimathi Indira Gandhi 14 major private banks which were till then functioning only for private profits and exclusive enrichment of a few through capital accumulation were nationalised.

Bank Nationalisation

This bold move bolstered, in a big way, channelling public deposits to support country’s planning and progress and for promoting and fostering the priorities of nation building. Since nationalisation, Public Sector Banks in India underwent phenomenal growth, extended their outreach and services to undeveloped and underdeveloped areas and to economically backward sections of the society at least marginally, provided employment to millions including the marginalised and championed national priorities.

Advent of LPG

However, with the advent of LPG – Liberalisation, Privatisation and Globalisation, since 1990, the prevalent public policies, national priorities, policy prescriptions, preferences, plans and practices have undergone a sea change against the interest of the common man.  Banking industry was no exception.

Enormous efforts were being made to dismantle and decimate the public sector, especially the financial sector, from outside and within. Governments engaging in business are belittled. Market economy and profit seeking were/are adored, applauded and projected as the only most effective mechanism for efficiency, wealth creation and nation building.

Banks owned by Government of India were subjected to LPG prescriptions of global finance capital. Financial liberalisation agenda was set to align the domestic regulations with global Basel capital adequacy norms. The fact that despite adoption of these so-called stringent capital adequacy norms by the western countries, bank failures, especially in US, were frequent and recurrent.

Unrestricted entry of private banks

In the name of encouraging competition, banking licenses for commercial banks, payment banks, small finance banks were freely handed out to private capital. Developmental Finance Institutions were closed and the risky long term finance businesses carried out by these development finance institutions were shifted to commercial banks, thereby reducing the cost of long-term and infrastructure finance availed by big businesses and increasing the cost and risk burdens of the commercial banks, especially Public Sector Banks.

PSBs were branded and derided as inefficient, incompetent and operationally rigid. They were forced to raise capital [citing global capital adequacy Basel norms] from the market stating that market forces would discipline them, even though it is universal knowledge that stock markets are shallow and highly speculative in nature.  Government shied away from recapitalising the PSBs under one pretext or another.

Reforms agenda is being thrust on the PSBs.  Cost cutting and profit maximisation targets are dumped on their heads. Under branch rationalisation, so-called loss-making operational units (the branch concept vanished after implementation of Core Banking Solutions and centralisation of loan sanctions) are closed neglecting customer service.

Acute staff shortage and outsourcing

Lakhs of workmen and officers were removed from PSBs through VRS option. Vacancies are not filled up. Many branches are driven to run with skeleton staff forcing the employees to work for extended hours and almost on all holidays.

The business consultative model (from board level to the lowest controlling office), once a hallmark of PSBs, whereby representatives of staff were consulted for business growth on regular basis, has been discarded. Employee and officer directors are not appointed. Unrealistic targets, both business and profit, are imposed on operating units. Operating officials are intimidated to achieve set targets by any means, by hook or crook.

Engagement of consultants

Instead of consulting direct field functionaries, viz., permanent employees, officers and executives, corporate consultants are being engaged (usually from the big MNCs like Deloitte, E&Y, Mckensey, PWC, KPMG, BCG, etc.,) for huge payments. In the case of BOB many fancy names like ‘BOBNEXT’, ‘BOB-GENNEXT’, ‘BOBNOWW’, ‘BOB-UDAAN’, ‘BOB-UDAAN 2.0’, etc., were given to those consultative projects. Many of the proposals proposed by these consultants are said to be disassociated from the reality.

In one such case in BOB, inside each branch, segregations were made into ‘customer facing front-office’ and ‘back-office not facing the customer’, even though everybody in the organisation knew that it was not going to work. After spending enormous money, time and energy across the organisation, ultimately branches returned to normal style since there was acute shortage and even the ‘back-office’-branch head had to vacate his manager’s cabin and chair and sit in the ‘front-office’ counter. Currently these consultants are said to directly or indirectly drive the PSB reforms agenda of GOI.

The idea behind hiring the international consultants is to legitimise the top-driven target setting strategy and the pressurising tactics. This helps in inculcating and imposing private sector culture in PSBs directly or indirectly. To facilitate this cultural shift, whole time directors & chairmen of Public Sector Banks were selected from the market by Banks Board Bureau now Financial Services Institutions Bureau.

Hiring individual consultants directly

This apart, individual consultants are directly contracted to adorn senior executive positions for hefty salaries. They are usually posted in top, vital policy decision making positions with an authority to drive any set agenda non-commensurate to the ground realities and with no accountability whatsoever.

In a letter, dated 19th Oct 2023, written to the MD & CEO of the BOB, the General Secretary of All India Council of Bank of Baroda Employees Associations stated that the Chief Digital Officer, Mr. Akhil Handa (an individual consultant contracted directly from the market) personally created enormous pressure on branch functionaries bypassing heads of controlling offices. In the said letter, demand was made to take action against him and to remove him from the position of CDO. One good thing that happened following such a communication is that Mr. Akhil Handa was forced to resign. But the damages caused still remain. It is learnt that there was no accountability fixed on him.

Contracting and outsourcing of services

In the place of brick and mortar branches manned by own staff, in the name of financial inclusion and cost effective outreach, Business Correspondent model is getting imposed on PSBs and the RRBs sponsored by them. DSAs (Direct Sales Agents), recovery agents and business correspondent agents (in whatever names these field agents are called) are engaged on contract through corporate tie-ups. However, these agents receive paltry payments as commission or incentive based solely on their performance. Separate spin-off subsidiaries like Baroda Global Shared Service are formed for managing banking operations. The staff engaged by these subsidiaries are on contract, on hire-and-fire basis and they are not covered by industry level wages, social security schemes, etc.

Cause of the current fiasco

Bank of Baroda has been trying to bypass industry level settlements and impose local adjustments on the staff thus changing the work culture. When tie-ups were made for sale of third-party products in the name of increasing non-interest income, staff were induced to mis-sell, through ‘dine-with-ED/MD’, ‘free foreign trips’, cash incentives, etc., packages.

The external ‘strategies’ of GOI, the internal ‘strategies’ proposed by international consultants and other unhealthy and competitive labour practices causing cultural shift coupled with acute staff shortage has thrown open the ‘Pandora’s Box’. The current fiasco may be just a beginning of series of such goof-ups in future unless the parties involved in the game mend their ways.

This may not be a case in isolation. Many other PSBs also indulge is such practices as in the case of BOB. They are yet to be probed by regulatory agency. It is high time that the GOI shelves its pro-corporate / privatisation policies of PSBs and save the hard earned savings of the depositors.


  1. I am a retired cashier from bob in 2020 my opinion com. tarakeswar and Lakshmi narasimya are great because of their integrity and militancy. they are loyal to employees and public.but after them only corrupt leaders are leading the great employees union. one ex. for this in central govt.the family pension is 50 percent. but in banking ind. it 15 per. now only it is raised to 30 cent.govt.pension was updated in every pay commision but there was no updation pen.after every settlement.what is the use in having negotiating power.the present union leaders even though they retired from bank.service long back they are back stabbing the pensioners and also the present banking employees.the bank settlement was to reasonable only the corrupt leaders has to removed. they don’t want develop 2 nd line learship.that is the pathetic sene of for past 3 settlement and also the present settlement

  2. This is classic case where Government banks are not fit for technology or market driven experts.
    The systems prevail in psbs fail the market approach do leg pulling and blame the technocrats.
    You are presenting a bigger stories to substantiate your view. In the new generation people prefer to bank with Pvt Banks like HDFC and ICICI.

  3. Privatisation of banks must be stopped otherwise nation will pushed back 50 years back that is again nation will become economically backward.

  4. காலத்தே வந்துள்ள கட்டுரை!
    அரசுக்கு வேண்டுகோள் விடப்பட்டுள்ளது.
    அரசின் கொள்கையில் மாற்றம் கொண்டு வர ஊழியர்கள் முன் வரவேண்டும்!

  5. Change in culture is necessary with change in time. The people prefer to bank with private banks for technology and staff approach to customer. In nationalised banks staff is least bothered about customer service.

  6. 1.”Fair is foul and foul is fair,
    Hover through the fog and filthy air” -W.Shakespeare
    2.Whenever a corporate makes losses, the first step is to cut down on employees – A big flaw taught in B-Schools . Employees are a “factor of production” – It should be the last option to decimate it.
    However, the employees targeted are those who ” don’t ko-tow to the management but stock to the truth and righteousness”
    3.At present, the sense of right or wrong has gone awry to such an extent, that the system to “punish wrong doing” “protects” the wrongdoer in the name of “innocent till proven guilty” in exchange of ” some consideration”. This has led to loss of faith.
    4.Common sense , not taught in B-Schools, is the fact that business never generates ” net wealth ever ” , because at any point in time, asset equal liabilities. The impact is clear, the moment, corporate ceases to be a “going concern “.
    5.Corporate Czars will always clamour for unreasonable working hours, as they want more and more lucre , at the cost of employees” work life balance ” going topsy turvy.
    6.The concept of sustainable growth, is not fully understood.
    7. The question is the same, ” kalyug ka aaj ka Naya daur” , it’s the same as Dilip Kumar ‘s “Naya daur ” movie in modern”avatar “.

  7. Get rid of the encient banking system. Bring in a little more technologically advanced system which is customer friendly to all sections in the society.
    Raise salary reasonably to meet higher cost of living and inflation. Minimum 22 working days in a month. Promotions are to be based on performance plus seniority. Not on seniority only. Review post retirement benefits.

  8. Atleast don’t outsource blame. The lack of accountability is clear in this article. Every disaster is attributed to external factors. Whereas private banks are running successfully without any governance issues, that same culture that you are referring to seems to work fine. Ask HDFC customers if they’d like to move to a PSB, they’ll tell you why they wouldn’t even consider such a thing. No need to run complex analyses, just talk to your potential customers and face the truth.

  9. There is only way for PSB to survive adopt technology, not only new but the upcoming AI related latest software.
    These unions are coming out now when the PSBs are coming out of red, with a healthy
    Balance sheet, why they were vocal when thousands of crore of loans were disbursed to tainted industrialist by the pressure of corrupt ministers, why they were silent especially from 70s to 90? Why there was no nationwide strike opposing the method of sanctioning loans to the unviable project?
    Why these unions didn’t formed there own vigilant committee to look in to these kind of matters?
    Why they didn’t have an eye on the managers who even used to have cuts from loans to small vendors, students loan?
    Now when the things are falling in place there is a hue and cry that government is destroying the PSB system.
    Nowadays I find the New generation staff of PSB have adopted the new norms but hindrance is created by the old guard.
    So careful your days have gone, new norms will rule, your ideas will be discarded by your own followers.

  10. Youngsters shouldn’t try to come in this world. You won’t get any time to do anything other than banking. Depressive world it’s. Unethical practice.

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