Performance Appraisal of Union Bank: Introduction To Banking Sector

Performance Appraisal of Union Bank
CHAPTER I
Introduction to Banking Sector
Banking can be defined in various ways as the definition of the bank varies from country to
country and keeps on changing on the basis of the activities carried out by the banks. In
present dynamic business scenario, banking can be defined as the activities carried out with
the bank on individual or corporate level. We can understand the concept of the banking by
looking into the activities of the bank.
A bank is a well regularized and licensed financial institute to assist the individual and
corporate customer in their financial needs. Normally banks provide the following services to
its retail (individual) and corporate clients:
Transactional services,
Services related to monetary transaction through current and saving account,
Investment services,
Fixed deposit ,
Letter of credit ,
Treasury services ,
Bill of exchange ,
Foreign exchange ,
Assisting in trade through Letter of credit,
Letter of guarantee,
Performance bond ,
Project financing ,
Personal loan ,
Credit card ,
Home loan etc.
Banking sector In India

Banking in India originated in the last decades of the 18th century. The oldest bank in
existence in India is the State Bank of India, a government-owned bank that traces its
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origins back to June 1806 and that is the largest commercial bank in the country. Central
banking is the responsibility of the Reserve Bank of India, which in 1935 formally took over
these responsibilities from the then Imperial Bank of India, relegating it to commercial
banking functions. After India's independence in 1947, the Reserve Bank was nationalized
and given broader powers. In 1969 the government nationalized the 14 largest commercial
banks; the government nationalized the six next largest in 1980.
Currently, India has 88 scheduled commercial banks (SCBs) - 27 public sector banks (that is
with the Government of India holding a stake), 31 private banks (these do not have
government stake; they may be publicly listed and traded on stock exchanges) and 38 foreign
banks. They have a combined network of over 53,000 branches and 17,000 ATMs. According
to a report by ICRA Limited, a rating agency, the public sector banks hold over 75 percent of
total assets of the banking industry, with the private and foreign banks holding 18.2% and
6.5% respectively.The banking industry in India seems to be unaffected from the global
financial crises which started from U.S in the last quarter of 2008. Despite the fallout and
nationalization of banks across developed economies, banks in India seems to be on the
strong fundamental base and seems to be well insulated from the financial turbulence
emerging from the western economies. The Indian banking industry is well placed as
compare to their banking industries western counterparts which are depending upon
government bailout and stimulus packages.The strong economic growth in the past, low
defaulter ratio, absence of complex financial products, regular intervention by central bank,
proactive adjustment of monetary policy and so called close banking culture has favored the
banking industry in India in recent global financial turmoil.Although there will be no impact
on the Indian banking system similar to that in west but the banks in India will adopt for more
of defensive approach in credit disbursal in coming period. In order to safe guard their
interest; banks will follow stringent norms for credit disbursal. There will be more focus on
analyzing borrowers financial health rather than capability.
The report Indian Banking Sector Forecast to 2012 contains comprehensive research and
rational analysis on various segments, like assets size, income level and number of
cardholders, in the Indian banking industry. It also analyzes the current performance and key
market trends, and helps clients to understand various products available in the market and
their future scope. The forecast given in this report is not based on a complex economic
model but is intended as a rough guide to the direction in which the market is likely to move.
The future projection is done on the basis of the current market scenario, past trends, and
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rules and regulations laid
by
the
regulator
and supervisor of the financial
system, Reserve Bank of India (RBI).

The Economic Liberalization process has increasingly exposed the Banking Sector to
international competition. The role of Banking in the process of financial intermediation has
been undergoing a profound transformation, owing to changes in the global financial system.
Consequently, the revolution in information technology has brought about sea changes in the
way banking transaction are carried outAlmost 80% of the businesses are still controlled by
Public Sector Banks (PSBs). PSBs are still dominating the commercial banking system.
Shares of the leading PSBs are already listed on the stock exchanges.The RBI has given
licenses to new private sector banks as part of the liberalization process. The RBI has also
been granting licensees to industrial houses. Many banks are successfully running in the retail
and consumer segments but are yet to deliver services to industrial finance, retail trade, small
business and agricultural finance.The PSBs will play an important role in the industry due to
its number of branches and foreign banks facing the constraint of limited number of branches.
Hence, in order to achieve an efficient banking system, the onus is on the Government to
encourage the PSBs to be run on professional lines.To promote banking sector in India, Govt.
has taken many steps and formed several committee to review the banking needs and the
prospect the current scenario along with the safeguarding the interest of the customers
Reserve bank of India

Economists and Planners consider monetary stability in an economy as the most important
function of a Central Bank. The Prime function of a Central Bank is to ensure and secure
monetary stability i.e. to ensure that the growth rate of money supply is consistent with the
growth rate of output of goods and services. In an open economy framework however the
Central Banks is additionally entrusted with the responsibility of managing the exchange rate.
Since the inception of the economic reforms when the Indian Economy embarked on a
programme of liberalization and exchange rate flexibility, the Reserve Bank of India is
managing its twin responsibilities of monetary stability and exchange rate stability. The
economy follows a managed float system with RBI intervening in the event of violent
fluctuations in exchange rate. In an open economy framework with lesser restrictions on
capital flows, managing the monetary stability and exchange rate stability pose a challenge
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for the Central Bank. Managing the twin functions simultaneously is accompanied by tradeoffs and conflicts.
The central bank of the country is the Reserve Bank of India (RBI). It was established in
April 1935 with a share capital of Rs. 5 crores on the basis of the recommendations of the
Hilton Young Commission. The share capital was divided into shares of Rs. 100 each fully
paid which was entirely owned by private shareholders in the beginning. The Government
held shares of nominal value of Rs. 2, 20,000.Reserve Bank of India was nationalized in the
year 1949. The general superintendence and direction of the Bank is entrusted to Central
Board of Directors of 20 members, the Governor and four Deputy Governors, one
Government official from the Ministry of Finance, ten nominated Directors by the
Government to give representation to important elements in the economic life of the country,
and four nominated Directors by the Central Government to represent the four local Boards
with the headquarters at Mumbai, Kolkata, Chennai and New Delhi. Local Boards consist of
five members each Central Government appointed for a term of four years to represent
territorial and economic interests and the interests of co-operative and indigenous banks.
The Reserve Bank of India Act, 1934 was commenced on April 1, 1935. The Act, 1934 (II of
1934) provides the statutory basis of the function of the bank.The Bank was constituted for
the need of following:
To regulate the issue of banknotes
To maintain reserves with a view to securing monetary stability and
To operate the credit and currency system of the country to its advantage.
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Human Resources Management Approach (H.R M Approach)
Human resource management's objective is to maximize the return on investment from the
organization's human capital and minimize financial risk. It is the responsibility of human
resource managers in a corporate context to conduct these activities in an effective, legal, fair,
and consistent mannerThe Human Resources (HR) function provides significant support and
advice to line management. The attraction, preservation and development of high caliber
people are a source of competitive advantage for our business, and are the responsibility of
HR.H.R can be well understood as a model of personnel management that focuses on the
individual rather than taking a collective approach. Responsibility for human resource
management is often devolved to line management. It is characterized by an emphasis on
strategic integration, employee commitment, workforce flexibility, and quality of goods and
services. Human resource is an increasingly prominent field that is taking shape throughout
industries and workplaces world wide. Recognizing the fact that people are a companys
greatest asset, business leaders across the globe are coming to rely more and more upon an
effective management policy that applies specifically to the area of human resources.
With a rapid increase a boom, in fact of professionals, generalists and specialists in the
area of human relations, there has also been a major rise in the amount of knowledge and
innovation pertaining to the most efficient and productive methods of streamlining workforce
management policy. When applied, there are already a great number of proven techniques
which result in the actual increases of profit margins. But what, exactly, is the definition of
human resources? Essentially, HR applies to the workforce managed by any employer. A
business of any size needs employees in order for it to run. As an important the most
important asset for any business leader, employees need to be properly managed in order
for optimal efficacy to be achieved. Now, properly managing a workforce is a lot more
complicated than, say, the maintenance of a companys material capital such as machinery,
computer systems, etc. Indeed, the mechanistic approach to employee relations has often
failed. Fortunately, this failure has prompted close study into how to effectively see that
human capital is treated right and is able to reach its full potential. Thats why the application
of human resources management focuses largely on a more sensitive and human analysis to
determine what really works with employees. One of the major aspects of HR maintenance
involves employee recruitment, training and development as a function of human capital
management.
Page 5
Making sure that employees abilities are correctly and optimally nurtured is essential to
seeing a worthwhile return on investment come from their contribution to the company, once
their training period is over. Along with employee training, human resources departments also
delve into the area of applicant tracking. How to find the best talent available on the global
labor market place is often a problem that the human resources department will strive to
tackle. In addition, human resources departments take care of a variety of concerns such as
labor relations the crucial and highly sensitive negotiations between employees and
management the production of job descriptions, the monitoring of interplay between
workers in order to design a more efficient employee management system, the compilation of
benefits packages as well as a variety of other vital functions that relate directly to the
employee workforce Organizational Psychology holds that successful organizations do not
owe their success solely to market realities and sustainable competitive advantages. Actually,
there is a lot more. Successful companies are those that consider their human capital as their
most important asset. Facts and figures are the quantitative elements of successful
management, yet the qualitative, i.e. the cognitive aspects, are those that actually make or
break an organization.Human Resources Management (HRM) is the strategic management of
the employees, who individually and collectively contribute to the achievement of the
strategic objectives of the organization. Assuming that the employees of an organization are
individuals with own mental maps and perceptions, own goals and own personalities and as
such they cannot be perceived as a whole, HRM holds that the organization should be able to
employ both individual and group psychology in order to commit employees to the
achievement of organizational goals.Aiming to enable the organization to achieve its strategic
goals by attracting, retaining and developing employees, HRM functions as the link between
the organization and the employees. A company should first become aware of the needs of its
employees, and at a later stage, understand and evaluate these needs in order to make its
employees perceive their job as a part of their personal life, and not as a routine obligation.
To that end, HRM is very crucial for the whole function of an organization because it assists
the organization to create loyal employees, who are ready to offer their best.The HRM
activities in modern organizations are typically performed in communication with the General
Management in an effort to provide a variety of views when a decision must be taken. In that
way, decision making is not subject to the individual perceptions of the HR or the General
Manager, but it becomes the outcome of strategic consensus.
Page 6
The main goals / responsibilities of HRM are:

To achieve these goals, Human Resources Management trains and motivates the employees
by communicating ethical policies and socially responsible behavior to them. In doing so, it
plays a significant role in clarifying the organization's problems and providing solutions,
while making employees working more efficiently.On the other hand, challenges do not cease
for the HRM. Modern organizations can survive in the dynamic, competitive environment of
today only if they capitalize on the full potential of each employee. Unfortunately, many
companies have not understood the importance of the human capital in successful operations.
The recruitment and selection of the best employees is a very difficult obligation. Even
companies that are voted in the top-ten places to work at, often endure long periods of hard
work to realize that human element is all an organization should care about.New challenges
arise even now for the organization, and it is certain that new challenges will never cease to
emerge. Therefore, the use of proper Human Resources techniques is a really powerful way
for organizations to overcome these challenges, and to improve not only their quantitative
goals but also their organizational culture, and their qualitative, cognitive aspects.
Current trends in HR
Human resource management is a process of bringing people and organizations together so
that the goals of each other are met. The role of HR manager is shifting from that of a
protector and screener to the role of a planner and change agent. Personnel directors are the
new corporate heroes. The name of the game today in business is personnel. Nowadays it is
not possible to show a good financial or operating report unless your personnel relations are
in order.Over the years, highly skilled and knowledge based jobs are increasing while low
skilled jobs are decreasing. This calls for future skill mapping through proper HRM
initiatives.Indian organizations are also witnessing a change in systems, management cultures
and philosophy due to the global alignment of Indian organizations. There is a need for multi
skill development. Role of HRM is becoming all the more important.
Functions of H. R
1. Recruitment & Selection
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2. Training and Development (People & Organization)
3. Performance Evaluation and Management
4. Promotions
5. Redundancy
6. Industrial and Employee Relations
7. Record keeping of all personal data.
8. Compensation, pensions, bonuses etc in liaison with Payroll
9. Confidential advice to internal 'customers' in relation to problems at work
Performance Appraisal A Systematic Approach
Performance Appraisal, also known as employee appraisal, is a method by which the
job performance of an employee is evaluated (generally in terms of quality, quantity, cost and
time).
Performance Appraisal is a part of career development.
Performance Appraisals are regular reviews of employee performance within organizations.
Generally, the aims of a Performance Appraisal are to:
1. Give feedback on performance to employees.
2. Identify employee training needs.
3. Document criteria used to allocate organizational rewards.
4. Form a basis for personnel decisions: salary increases, promotions, disciplinary actions,
etc.
5. Provide the opportunity for organizational diagnosis and development.
6. Facilitate communication between employee and administration
7. Validate selection techniques and human resource policies to meet federal Equal
Employment Opportunity requirements.
Performance Appraisal is a management tool which is helpful in motivating and effectively
utilizing human resources. Assessment of human potential is difficult, no matter how well
Page 8

designed and appropriates the performance planning and appraisal system is, the
Performance Appraisal system should:
be correlated with the organizational mission, philosophies and value system;
cover
take
assessment
care
of
of
performance
organizational
as
as
well
well
as
potential
as
for
individual
development;
needs;
and
help in creating a clean environment by

- Linking
rewards
with
achievements,
- generating information for the growth of the employee as well as of the organization,
- suggesting appropriate person-task matching and career plans.
Feedback is an important component of Performance Appraisal. While positive feedback is

easily accepted, negative feedback often meets with resistance unless it is objective, based on
a credible source and given in a skilful manner.
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THE PROCESS OF PERFORMANCE APPRAISAL
(a)
Performance Appraisal System: The Process
Performance Appraisal involves an evaluation of actual against desired performance. It also

helps in reviewing various factors which influence performance. Managers should plan
performance development strategies in a structured manner for each employee. In doing so,
they should keep the goals of the organization in mind and aim at optimal utilization of all
available resources, including financial. Performance Appraisal is a multistage process in
which communication plays an important role.
Craig, Beatty and Baird (1986) suggested an eight-stage Performance Appraisal process:
(i) Establishing Standards and Measures

The first step is to identify and establish measures which would differentiate between
successful and unsuccessful performances. These measures should be under the control of the
employees being appraised. The methods for assessing performance should be decided next.
Basically, management wants to:
Page 10
know
the
behavior
and
personal
characteristics
of
each
employee;
and
assess their performance and achievement in the job.

There are various methods available for assessing results, behavior and personal
characteristics of an employee. These methods can be used according to the particular
circumstances and requirements.
(ii) Communicating Job Expectations
The second step in the appraisal process is communicating to employees the measures and
standards which will be used in the appraisal process. Such communication should clarify
expectations and create a feeling of involvement.
(iii) Planning
In this stage, the manager plans for the realization of performance expectations, arranging for
the resources to be available which are required for attaining the goals set. This is an enabling
role.
(iv) Monitoring Performance
Performance Appraisal is a continuous process, involving ongoing feedback. Even though
performance is appraised annually, it has to be managed 'each day, all year long.' Monitoring
is a key part of the Performance Appraisal process. It should involve providing assistance
as necessary and removing obstacles rather than interfering. The best way to effectively
monitor is to walk around, thus creating continuous contacts, providing first-hand
information, and identifying problems, which can then be solved promptly.
(v) Appraising
This stage involves documenting performance through observing, recalling, evaluating,
written communication, judgment and analysis of data. This is like putting together an
appraisal record.
(vi) Feedback
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After the formal appraisal stage, a feedback session is desirable. This session should involve
verbal communication, listening, problem solving, negotiating, compromising, conflict
resolution and reaching consensus.
(vii) Decision Making
On the basis of appraisal and feedback results, various decisions can be made about giving
rewards (e.g., promotion, incentives, etc.) and punishments (e.g., demotion). The outcome of
an appraisal system should also be used for career development.
(viii) Development of performance
The last stage of Performance Appraisal is 'development of performance,' or professional
development, by providing opportunities for upgrading skills and professional interactions.
This can be done by supporting participation in professional conferences or by providing
opportunities for further study. Such opportunities can also act as incentives or rewards to
employees.
The ESSENTIALS of an effective performance system are as follows:
Documentation means continuous noting and documenting the performance. It also

helps the evaluators to give a proof and the basis of their ratings.
Standards / Goals the standards set should be clear, easy to understand, achievable,
motivating, time bound and measurable.
Practical and simple format - The appraisal format should be simple, clear, fair and
objective. Long and complicated formats are time consuming, difficult to understand, and do
not elicit much useful information.
WHAT SHOULD A PERFORMANCE SYSTEM BE?
Correlated with the organization's philosophies and mission
Cover assessment of performance as well as potential for development
Look after the needs of both the individual and the organization
Help create a clean environment
Rewards linked to achievements
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Generate information for personnel development and career planning
suggesting appropriate person-task matching
HOW CAN THE PERFORMANCE APPRAISAL SYSTEM HELP?
Promote better understanding of an employee's role and clarity about his or her
functions
Give a better understanding of personal strengths and weaknesses in relation to
expected roles and functions
Identify development needs of an employee
Establish common ground between the employee and the supervisor
Increase communication
Provide an employee with the opportunity for self-reflection and individual goal
setting
Help an employee internalize the culture, norms and values of the organization. This
helps develop an identity with and commitment to the organization and prepares an
employee for higher-level positions in the hierarchy
Assist in a variety of personnel decisions
APPROACHES IN PERFORMANCE APPRAISAL

Intuitive
Self-appraisal
Group
Trait
Page 13

Achievement of results
TECHNIQUES OF PERFORMANCE APPRAISAL
Easy appraisal method
Graphic rating scales
Field review method
Forced choice rating method
Critical incident appraisal method
Management by objectives
Work standard approach
Ranking methods
PERFORMANCE APPRAISAL SYSTEMS
PROBLEMS
Measurement
Deciding
what
Judgement
to Appraising
evaluate
performance
Policy
Organization
Using the results of the Recognizing

appraisal
how
managers work and

the
organization
culture
SYMPTOMS
Ambiguity
roles
responsibilities
each job
in Disagreement on Top management Appraisal forms

and ratings
of
Official review
changes ratings
fails
to
reward not completed
managers
who
excellent
in
assessment
Page 14
are
staff
and
plain
Managers
about
com
time

Job performance
is
difficult
to grievances,
quantify
Appeals, development
accusations of bias,
discrimination
No
clear
needed
Marginal performers System seen as

receive promotions or belonging
to
the
salary increases
not
the
designers,
statement of overall
users
objectives of units or
the organization
Personnel/HR
specialists
take
Appraisal contains
enforcer not adviser
only
role
numerical
indices
system
revised
frequently
POTENTIAL CURES
Job analysis and
credible
Observable, Top management
job behaviorally based actually
description
criteria
Outcomes of each
job identified
Overall goals set
time
Appraisal itself
Performance
Management (PM)
Polices
for
Performance
Appraisal consistently
applied
Effective
documented communication
judgements
Appraisal using the
practice
Train managers to
make
Performance
over
for units and the rater training and

organization
uses Performance
Performance
documented
of
Implement
performance-
contingent
system operates
performance
expectations
Page 15
reward
Page 16
Page 17

CHAPTER II
Literature Review
Prashanta Athma (2000), in his Ph D research submitted at Usmania University
Hyderabad, Performance of Public Sector Banks A Case Study of State Bank of
Hyderabad, made an attempt to evaluate the performance of Public Sector
Commercial Banks with special emphasis on State Bank of Hyderabad. The period of
the study for evaluation of performance is from 1980 to 1993-94, a little more than a
decade. In this study, Athma outlined the Growth and Progress of Commercial
Banking in India and. analyzed the trends in deposits, various components of profits
of SBH, examined the trends in Asset structure, evaluated the level of customer
satisfaction and compared the performance of SBH with other PSBs, Associate Banks
of SBI and SBI. Statistical techniques like Ratios, Percentages, Compound Annual
rate of growth and averages are computed for the purpose of meaningful comparison
and analysis. The major findings of this study are that since nationalization, the
progress of banking in India has been very impressive. All three types of Deposits
have continuously grown during the study period, though the rate of growth was
highest in fixed deposits. A comparison of SBH performance in respect of resource
mobilization with other banks showed that the average growth of deposits of SBH is
higher than any other bank group. Profits of SBH showed an increasing trend
indicating a more than proportionate increase in spread than in burden. Finally,
majority of the customers have given a very positive opinion about the various
statements relating to counter service offered by SBH.
Zacharias Thomas(1997)Ph D Thesis, Performance effectiveness of Nationalised
Bank- A Case Study of Syndicate Bank, submitted to Kochin University (1997),
Thesis studied the performance effectiveness of Nationalized Bank by taking
Syndicate Bank as case study in his Ph.D thesis. Thomas has examined various
aspects like growth and development of banking industry, achievements of Syndicate
Bank in relation to capital adequacy, quality of assets, Profitability, Social Banking,
Growth, Productivity, Customer Service and also made a comparative analysis of 'the
performance effectiveness of Syndicate Bank in relation to Nationalized bank. A
period of ten years from 1984 to 1993-94 is taken for the study. This study is
Page 18

undertaken to review and analyze the performance effectiveness of Syndicate Bank
and other Nationalized banks in India using an Economic Managerial-Efficiency
Evaluation Model (EMEE Model) developed by researcher. Thomas in this study
found that Syndicate Bank got 5th Position in Capital adequacy and quality of assets,
15th in Profitability, 14th Position in Social Banking, 8th in Growth, 7th in
Productivity and 15th position in Customer Service among the nationalized banks.
Further, he found that five nationalized banks showed low health performance, seven
low priority performance and eleven low efficiency performance in comparison with
Syndicate Bank.
Singh R (2003), in his paper Profitability management in banks under deregulate
environment, IBA bulletin, No25, has analyzed profitability management of banks
under the deregulated environment with some financial parameters of the major four
bank groups i.e. public sector banks, old private sector banks, new private sector
banks and foreign banks, profitability has declined in the deregulated environment.
He emphasized to make the banking sector competitive in the deregulated
environment. They should prefer non-interest income sources.
Singla HK (2008), in his paper, financial performance of banks in India,in

ICFAI Journal of Bank Management No 7, has examined that how financial
management plays a crucial role in the growth of banking. It is concerned with
examining the profitability position of the selected sixteen banks of banker index for a
period of six years (2001-06). The study reveals that the profitability position was
reasonable during the period of study when compared with the previous years. Strong
capital position and balance sheet place, Banks in better position to deal with and
absorb the economic constant over a period of time.
Das and Udaykumar Lal (2002), in his book Banking Reforms in Lead Bank
Scheme, (Deep and Deep Publication, new Delhi) was the critical evaluation of the
lead bank scheme in the light of banking sector reforms. Das in this book observed
that high level of NPAs, large number of un-remunerative branches, low productivity,
overstaff and archaic methods of operations have affected the profitability of public
sector banks. Das sincerely felt that the whole banking sector in India is to be
Page 19

revolutionized to cope with the changing dimensions of the satellite one world.
Further, he felt that the backward areas should be given more funds for investment in
priority sectors and more and more people should be brought under its coverage and
the procedures of extending credit should be simplified and there should be least
hassle cost.
Subramanian and Swami (1994) in their paper, Comparative performance of

publc sector banks in india Prjanan, Vol. XXII, have analyzed and compared the
efficiency in six public sector banks, four private sector and three foreign banks for
the year 1996-97. Operational efficiency is calculatedin terms of total business and
salary expenditure per employee. The analysis revealed that higher per employee
salary level need not result in poor efficiency and business per employee efficiency
co-efficient was also calculated. Among the PSBs, Bank of Baroda registered the high
efficiency and operating profit per employee. Among the private sector banks Indus
Bank followed by Citibank Registered highest and second highest operating profit per
employee respectively. However, among the Nationalized Banks there existed wide
variations in efficiency. Frequent changes are order of the day for the topics of this
nature. Therefore, one should rely on latest information. Some organizations like,
RBI, IBA, SBI and ICRA have carried out several research studies on various issues
relating to banking and exclusive banking journals/periodicals like Bank Quest, The
Bankers, RBI occasional papers, RBI bulletins and general magazines like Business
Today, Business India, Finance India, have been publishing papers on various aspects
like NPAs, capital adequacy, branch expansion, credit dispensation, deposit
mobilization, service quality, technology, performance evaluation, etc. Same studies
and papers suitable to this study are being reviewed here.
SBI Research Department in 2000, through its paper Performance analysis of
27 Public sector banks published in SBI monthly review performance, Vol XXXIX,
was prepared by Economic Research Department of State Bank of India, is to
analyze the Performance of the 27 Public Sector Banks for the year 1999-2000 vis-avis the preceding year. Selecting four different categories of indicators-Business
Performance, Efficiency, Vulnerability and labor productivity indicators, carried out
the analysis. Altogether, 39 indicators were selected for this purpose. For the purpose
Page 20

of analysis, 27 PSBs disaggregated into four groups, namely, the SBI, ABs (7), the
SBGs (8), the NBs (19). During 1999-2000, the PSBs exhibited better show in terms
of several parameters studied above. Nevertheless, the problems of NPAs and capital
adequacy remain to be taken care of. Researchers in this paper opinioned that greater
operational flexibility and functional autonomy should be given to PSBs especially to
strengthen their capital base. Further, they felt that since net interest margin will
continue to remain compressed in a deregulated interest rate regime, a lot of effect
would have to be made to mitigate this through generation of non-interest income. As
far as NPAs are concerned, they believe' that, the outdated laws and regulations that
pose hindrance to banks in getting back their dues need to be suitably amended.
In a paper published in the Financial Express in 2004, titled Indias Best
Banks has been doing for several years through its annual exercise to evaluate and
rate Indian banks. They claim that this survey is a comprehensive one, which
evaluates the performance of private, public, Indian, and foreign Banks operating in
India. With the objective of making the comparison more meaningful, Banks were
categorized into Public Sector Banks, New Private Sector Banks and Foreign Banks.
Financial information for the year ending March 31st, 2002 and March 31, 2003
relating to each of the banks falling into the aforesaid categories was collected from
the data available from RBI. Five major criteria were identified against which the
banks were ranked. 'These criteria are (1) Strength and soundness (ii) Growth, (iii)
Profitability, (iv) Efficiency/Productivity, and (v) Credit quality. Considering the
current banking, industrial and over-all economic scenario, pertinent weights were
assigned to each of the major criteria. In the first category of "State-Run" or Public
Sector Banks, State Bank of Patiala and Andhra Bank is the top two. In the category
of best old private sector banks, the magazine ranks the Jammu and Kashmir Bank
and Karur Vysya Bank as the first best and second best. In the category of 'New'
Private Banks, HDFC as number one and ICICI Bank at number two. Finally, in the
category of Foreign Banks, the magazine ranks Standard Chartered Bank and Citi
Bank at the top two slots.
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CHAPTER III
Data Analysis
1. Are you aware of the objective of the performance appraisal system?
OPTIONS
NO OF
RESPONDENT(SAMPL
E SIZE 50)
PERCENTAGE
42
84%
14%
2%
VERY MUCH
SOME WHAT
DONT KNOW
90
80
70
60
50
40
30
20
10
0
very much
some what
Page 22
don't know

INTERPRITATION- 84% Employees are aware of the object of the performance
appraisal system.
2. Performance appraisal helps the organization in achieving goal.
OPTIONS
NOS OF
RESPONDENT(Sampl
e size 50)
YES
38
76%
NO
10
20%
DONT KNOW
4%
PERCENTAGE
80
70
60
50
40
30
20
10
0
yes
no
INTERPRITATION - 76% Employees say yes that performance

appraisal helps the organization in achieving goal.
Page 23
don't know
Page 24

3. Hold meeting in the beginning of the year to explain & clarify activity
task & goals to be achieved.
OPTIONS
NOS OF
RESPONDENT(Sample
size 50)
PERCENTAGE
YES
39
78%
NO
11
22%
90
80
70
60
50
40
30
20
10
0
yes
no
INTERPRITATION-: 78% Employees say that yes organized meetings helps goal
and task. While the other 22% employees that is not very much helpful.
Page 25

4. Organization has to make a fixed duration for performance appraisal.
OPTIONS
NOS OF
RESPONDENT (Sample
size 50)
PERCENTAGE
YES
40
80%
NO
10
20%
90
80
70
60
50
40
30
20
10
0
yes
no
INTERPRITATION -: 80% Employees agree with that is organization should have

to make a fixed duration for performance appraisal. While the other 20% employees
do not agree with this statement.
Page 26

5. Satisfied for point allocation on the basis of KRAs & managerial
dimension.
OPTIONS
NOS OF
RESPONDENT(Sample
size 50)
PERCENTAGE
FULLY SATISFIED
20
40%
SATISFIED
26
52%
DISSATISFIED
4%
UNCERTAIN
4%
60
50
40
30
20
10
0
fully satisfied
satisfied
dissatisfied
uncertain
INTERPRITATION-: 40% Employees are fully satisfied for point allocation on the
basis of KRAs and managerial dimension.
Page 27

6. Performance appraisal affects the working efficiency of employees.
OPTIONS
NOS OF
RESPONDENT(Sampl
e size 50)
PERCENTAGE
YES
42
84%
NO
16%
90
80
70
60
50
40
30
20
10
0
yes
no
INTERPRITATION-: 84% Employees say that yes performance appraisal system

affect the working efficiency of employee. While the other 16% employees do not
agree with this statement.
Page 28

7. Appraisal system is able to develop high result orientation approach.
OPTIONS
NOS OF
RESPONDENT(Sampl
e size 50)
PERCENTAGE
YES
47
94%
NO
6%
100
90
80
70
60
50
40
30
20
10
0
yes
no
INTERPRITATION-: 94% Employees say that yes the appraisal system is able to
develop high result orientation approach. While the other 6% employees do not agree
with us.
Page 29

8. The systems will also contribution in potential appraisal.
OPTIONS
NOS OF
RESPONDENT(Sampl
e size 50)
36
PERCENTAGE
72%
YES
10
20%
8%
NO
DONT KNOW
80
70
60
50
40
30
20
10
0
yes
no
don't know
INTERPRITATION-: 72% employees think that the systems will also Contribution
in potential appraisal.
Page 30

9. Promotion process in the organization is based on
OPTIONS
NOS OF
RESPONDENT(Sampl
e size 50)
PERCENTAGE
PERFORMANCE
4%
EXPERIENCE
12%
BOTH
42
84%
90
80
70
60
50
40
30
20
10
0
Performance
experience
both
INTERPRITATION-: 4% employees say that promotion says that

process in the organization is based on performance, 12% employees
say that based on experience and 84% say both.
Page 31

10 .The present performance appraisal system is transparent &
Free from bias.
OPTIONS
NOS OF
RESPONDENT(Sample
size 50)
PERCENTAGE
YES
42
84%
NO
16%
90
80
70
60
50
40
30
20
10
0
YES
NO
INTERPRITATION-: 84% Employees agree with this statement that the

present performance appraisal system is transparent and free from bias.
Page 32

11 .Satisfied with the current performance appraisal system.
PERCENTAGE
OPTIONS
NOS OF
RESPONDENT(Sample
size 50)
HIGHLY SATISFIED
27
54%
SATISFIED
18
36%
DISSATISFIED
2%
JUST SATISFIED
8%
60
50
40
30
20
10
0
Highly satisfied
Satisfied
Dissatisfied
Just satisfied
INTERPRITATION-: 54% Employees are highly satisfied with the current Performance
appraisal system. While 36% employees are satisfied with the current performance appraisal
system.
Page 33
Page 34

Bibliography
www.infoindia.com
www.proindia.co.in
www.sipnsurf.com
www.7506259405.com
Page 35

Annexure
QUESTIONNAIRE
(PERFORMANCE APPRAISAL SYSTEM AT AXIS BANK.)
1) Are you aware of the objective of the performance appraisal system?
a) Very much
b) Some what
c) Dont know
2) Performance appraisal helps the organization in achieving goal?
a) Yes
b) No
c) Cant say
3) Do you hold meeting in the beginning of the explain & clarify activity task & goals to be
achieved?
a) Yes
b) No
4) Should organization have to make a fixed duration for performance appraisal?
a) Yes
b) No
Page 36

5) To what extent are you satisfied for point allocation on the basis of KRAs & managerial
dimension?
a) Fully satisfied
b) Satisfied
c) Dissatisfied
d) Uncertain
6) Do performance appraisal affect the working efficiency of employee?
a) Yes
b) No
7) Whether the appraisal system is able to able to develop high result
a) Yes
b) No
8) Do you think that the system wills also contribution in potential appraisal?
a) Yes
b) No
c) Cant say
9) Promotion process in the organization is based on-
a) Performance
Page 37

b) Experience
c) Both
10) Do you think that the present that the present performance appraisal system is transparent &
free bias?
a) Yes
b) No
11) Are you satisfied with the current performance appraisal system?
a) Highly satisfied
b) Satisfied
c) Just satisfied
d) Dissatisfied
Page 38

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Banking sector In India