HRM in banking sector BANK OF BARODA

INTRODUCTION

Banking Sector- Fulcrum of Indian Economy Banking sector plays a crucial role in the
functioning and economic development of an economy. In all economic systems, banks play a
leading role in planning and implementing financial policy. The difference lies in prioritizing
goals and methods embraced for their attainment. Going by the neo-liberal approach, earning
higher profits by utilizing all resources is an end in itself, while in the socialistic systems bank
operations also aims at improving economy in general and at satisfying social needs. Banks
accepts deposits and provide loans and derive a profit from the difference in the interest rates
paid and charged to depositors and borrowers respectively.

The process undertaken by banks of taking in funds from a depositor and then lending them out
to a borrower is termed as financial intermediation. Banking sector flourish on the financial
intermediation capabilities that allow them to lend out money and receiving money on deposit.
The bank is the most significant financial intermediary in the economy as it bridges the gap
between surplus and deficit economic agents. Banks contribute immensely towards the economic
development of a nation by facilitating business activities. Banks also facilitate the development
of saving plans and hold a key position in the determination of Government’s monetary
strategies. With reference to India, banking sector is substantially different from that of other
Asian nations because of country’s distinct geographic, social and economic facets. India possess
a gigantic land size, a diverse culture, and extreme income differences, which are marked among
its regions.

There are high levels of illiteracy among a substantial percentage of populace but at the same
time, the country has a huge pool of managerial and technologically advanced talents.
Approximately 30 to 35 percent of the population lives in metro and urban cities while the rest of
population resides in semi-urban and rural areas. The country’s economic policy structure is a
combination of both socialistic and capitalistic characteristics with a heavy bias towards public
sector investment. India’s emphasis on growth-led exports rather than “export led growth” of
other Asian economies, with thrust on self-reliance through import substitution and aforesaid
features are all reflected in the structure, size, diversity of the country’s banking and financial
services sector. Towards the dawn of the 20th century, with the arrival of modern industry in our
country, the need for government regulated system was realised. The British Government began
to pay attention towards the requirement for an organized banking sector in the country and the
Reserve Bank of India was established to regulate the formal banking sector in the country. Ever
since the banks were nationalized in 1969, banks have been playing a 1 Chapter -1 Introduction 2
Indian Banking Sector - Initial Public Offering Scenario & its Impact crucial role in the
socio-economic life of the country.
 Their role was not only restricted to suppliers of credit, but also as harbingers of social and
economic development through various enterprises, many of which were tiny but possess
phenomenal capabilities. It is noteworthy that India is one of the emerging economies of the
globe and paucity of proper banking services will jeopardize its economic growth.
In past several decades, Indian banking sector have attained numerous milestones. Its operations
are no longer shackled in big cities, rather they have expanded their wings to Tier-II & III towns
and far flung areas of India, thereby contributing immensely towards the objective of ‘Financial
Inclusion’. Banks have diversified their activities and forayed into new products and services that
include opportunities in credit cards, consumer finance, wealth management, life and general
insurance, investment banking, mutual funds, pension fund regulation, stock broking services,
custodian services, private equity and so on and so forth.

Further, several leading Indian banks have forayed into offshore markets by establishing offices
in foreign countries, by themselves or through their subsidiaries. Growth of Indian banking
sector and the role it is playing in adding steam to the economic growth is evident from the
deposit and credit statistics (please refer exhibit 1 & 2). It can be observed from the exhibits that
deposits have taken a giant leap from US$ billion 495 in FY06 to US$ billion 1,466 in FY16,
whereas, Credit soared from US$ billion 428 in FY07 to US$ billion 1016 in FY16. Deposits
under Pradhan Mantri Jan Dhan Yojana (PMJDY) are rising.

As on November 09, 2016, US$ 6,971.68 million were deposited, while 255.1 million accounts
were opened. Exhibit 1 Healthy Growth of Banking Sector- Deposits Indian Banking Sector -
Initial Public Offering Scenario & its Impact 3 Exhibit 2 Healthy Growth of Banking Sector -
Credit Thus looking to the prodigious growth of Indian banking industry, it generates paramount
academic and research interests to delve deep into the sources of long term finance of banking
sector, especially through IPO. The study will cover IPO (Initial Public Offer), FPO (Follow-on
Public Offer) and OFS (Offer for Sale). Contribution towards Financial Inclusion India has
nearly 600,000 villages and 640 districts. A substantial chunk of population, particularly in rural
areas, is excluded from the convenient access to finance (Gounasegaran, Kuriakose & Iyer,
2013). Forty percent of the households having bank accounts, but merely 38 percent of the
117,200 branches of scheduled commercial banks are functioning in rural areas. Accessibility of
financial services at affordable and apposite prices has always been a global issue.

Hence, a need of inclusive financial system has been felt in a broader way not only in India, but
has become a policy priority in different countries. It is a well accepted fact that financial access
can play a big role in improving the financial conditions and living standard of the poor and the
deprived class. In view of this, RBI has been constantly fostering the banking sector to extend
the banking network both by establishing new branches and installation of new ATMs (Dangi &
Kumar, 2013). Financial inclusion implies the delivery of financial services, including banking
services and credit, at a reasonable cost to the majority sections of the disadvantaged and
lowincome groups, based on the magnitude of their access to financial services like savings and
payment account, credit insurance, pensions etc. (Singh et al., 2014). The various financial
services cover access to savings, loans, insurance, payments and remittance facilities provided by
the formal financial system. This facet of financial inclusion is of big significance in offering
economic security to individuals and families (Kelkar, 2014). It is heartening to note that
Financial Stability and Development Council (FSDC) of India have a specific mandate for
financial inclusion and financial literacy. 4 Indian Banking Sector - Initial Public Offering
Scenario & its Impact Providing fillip to the concept of financial inclusion, a broad network of
financial institutions has been set up over the years. The measures initiated by the Reserve Bank
of India (RBI) and the Government of India towards strengthening financial inclusion since the
late 1960s have significantly improved the access to the formal financial institutions.

RBI set up a commission (Khan Commission) in 2004 to look into Financial Inclusion and the
recommendations of the Commission were included into the Mid-term review of the policy
(2005-06). In the report RBI insisted upon “no-frills” banking account in order to attain greater
Financial Inclusion. It can be said without an iota of doubt that efforts invested for stimulating
financial inclusion have delivered fruits and it is manifested in the number of households (as per
2001 and 2011 census) subscribing to banking services and growth in the number of branches of
public sector banks-Population Group Wise (please refer exhibits 3 and 4). Exhibit 3
Comparative statement of number of households availing banking services as per Census 2001 &
2011 Source: Department of Financial Services, Ministry of Finance, Government of India
Exhibit 4 Number of functioning branches of Public Sector Banks-Population Group Wise As on
Rural Semi Urban Urban Metropolitan Total 31.03.2011 20658 16217 13450 12612 62937
31.03.2012 22379 17905 14322 13244 67850 31.03.2013 24243 19642 15055 13797 72737
31.03.2014 27547 21952 16319 14644 80462 31.03.2015 29634 23549 17387 15325 85895
Source: Department of Financial Services, Ministry of Finance, Government of India Indian
Banking Sector - Initial Public Offering Scenario & its Impact 5 Literature Review Indian capital
markets have displayed a prodigious growth in the post liberalization eon.

It remains one of the most pliant globally and poised to be one of the top destinations for
domestic and global businesses to expand and invest into. Procuring capital is a strategic priority
across India and role of Capital Markets has assumed far greater importance and urgency. Much
has happened in the Indian capital market in more than a decade. With its foundations laid in
socialist based economy of four decades, with stringent government control over private sector
participation, foreign trade and foreign direct investment, India opened its doors to the globe in
the early 1990s. Since then its economy and financial markets witnessed drastic changes, largely
in response to the economic crisis of the late 1980s. The government control on foreign trade and
investment were relaxed and the blockades to entry in the days of licence raj were relaxed. The
birth of Securities and Exchange Board of India (SEBI) as the supreme capital market regulator
displayed India’s commitment to come across as a robust economic force, through setting up of
market best practices of increased corporate disclosure and enhanced investor protection.
Important reforms were initiated in the regulation of the securities market since 1992 in
conjunction with the overall economic and financial reforms. A significant component of the
reform strategy was building a robust independent market regulator. The SEBI Act, which was
enacted in early 1992, established SEBI as an autonomous body. The apex capital market
regulator was empowered to regulate stock exchanges, brokers, merchant bankers and market
intermediaries. The Act provided SEBI the requisite powers to ensure investor protection and
orderly development of the capital markets.

The initiation of free pricing in the primary capital market has substantially deregulated the
pricing control instituted by the erstwhile CCI regime. While, the issuers of securities can now
procure capital without taking approval from any authority pertaining to pricing, however the
issuers are needed to adhere to the SEBI guidelines for Disclosure and Investor Protection,
which, in general, cover the eligibility norms for making issues of capital (both public and rights)
at par and at a premium by different types of companies. The freeing of the pricing issues
resulted to an unprecedented increase of activity in the primary capital market as the corporate
mobilized mammoth resources. However, it did expose the insufficiencies of the regulations. In
order to address these inadequacies, SEBI strengthened the rules for public issues in April 1996.
SEBI introduced the theory of IPO grading, done by a credit rating agency registered with SEBI,
for all primary market issues, who file their draft Red Herring Prospectus, on after 1st May,
2007.

The grading is done after taking into account governance structure and financial strength.
Numerous studies have observed the performance of initial public offerings (IPOs) in several
markets. These studies document that the initial under-pricing is a common phenomenon in
every stock market, with the amount of under-pricing varying from one market to another. The
majority of studies include the equity markets of US (Ibbotson 1975), (Ritter 1984), (Ritter
1991), (Aggarwal and Dahiya 2000), (Tinic, 1989), (Peavy 1990), (Loughran, Ritter et al. 1994),
UK (Keasey and H. 1992; Levis 1993), Germany 6 Indian Banking Sector - Initial Public
Offering Scenario & its Impact (Uhlir 1989; Ljungqvist 1997), Canada (Jog and L. 1987) (Suret,
Cormier and Lemay, 1990), (Falk and Thornton 1992), (Jog and Siristrava 1994; Jog 1997; Kooli
and Suret 2001), China (Dongwei and Fleisher, 1999), Switzerland (Kunz and Aggarwal 1994),
Australia (Lee, Taylor et al. 1996). There are relatively lesser studies on IPOs in the equity
markets of non-European countries. Among them, (Lee, 1996) investigates IPOs in Singapore;
(Kim, 1995) in Korea, (Aggarwal, Leal et al. 1993) in Chile, Mexico and Brazil; (Firth and
Liau-Tan 1997) in New Zealand, (Laiw, Liu et al. 2000) for Taiwan. These studies also report the
existence of the initial under-pricing in these markets. Ajay Shah (1995) studied the basic
time-series properties of the number and value of Indian IPOs per month, variation in issue and
listed price, factors leading to delay in listing, and modelling the cross-sectional variation of
issue and listed price. 2056 IPOs traded and listed during 1991 – 1995 were chosen by the
researcher in which 1819 (88.5%) provided positive returns from issue date to listing date and
aggregate variation between issue price and listed price was 105.6%. Time series analysis
showed a remarkable rise in the number of IPOs per month from 20 a month before the abolition
of Controller of Capital Issues in May 1992 to the region of 80 a month from the later part of
1993 onwards due to the commencement of free pricing of securities. Arwah Arjun Madan
(2003) assessed the long run performance of IPOs in the Indian primary market during the pre
and post liberalization eon. A sample of 1597 companies having made IPOs during 1989 to 1995
at Bombay Stock Exchange, now BSE Ltd. were studied.

Considering the net return, 79.4% of the total 1597 IPOs recorded a positive return on the listing
day and 20.6% of IPOs registered negative returns. Ajay Pandey (2005) studied initial returns
(difference between issue price and listing price) and long run performance of IPOs. The
researcher considered 84 IPOs from the period 1992-2002, coming out with fixed price and book
building trajectory from the Indian capital market. The study revealed that the IPOs offered
through fixed price method raised only a small amount of capital. On the contrary, IPOs offered
through book building approach mobilized. It was further observed that IPOs offered through
both fixed price and book building approach under performed in the first two years subsequent to
listing. Kumar (2007) analyzed the short-run and long-run performance of IPOs issued through
book building method. For the analysis, offer to close return, open to close return, buy and hold
market adjusted return and monthly market adjusted returns were computed for 156 IPOs listed
from 1999 to 2007. It was found that in the short-run, IPO listing didn’t provide economically
significant trading opportunities for day traders and in the long-run, IPOs beat the market after
two years of listing. Shikha Sehgal & Balwinder Singh (2007) investigated the initial and
long-run performance of 438 IPOs listed on the BSE from 1992 to 2006. To observe the long-run
performance of Indian IPOs, Buy-and-Hold Abnormal Returns (BHAR) and Cumulative
Abnormal Returns (CARs) were computed for 120 months. Buy-and-hold returns were found to
be negative between 18 and 40 months of holding. After 40 months, the underperformance of
IPOs has vanished, i.e. in India, underperformance persists for nearly one-and-a-half years to a
little above three years. Priyanka Singh & Brajesh Kumar (2008) conducted an investigation on
the short as well Indian Banking Sector - Initial Public Offering Scenario & its Impact 7 as
long-run performance of the Initial Public Offerings in the Indian Capital Market. The study
proposed an approach taking oversubscription variables along with age and issue size to explain
the performance of IPOs in India. Since various sectors have varied level of private and public
information, the researchers performed industry wise analysis. The period for the study was 22
months (Jan, 2006- Oct, 2007) considering 116 IPOs. It was observed that both short and long
run return of IPOs are positive for this period. In the short run, only 18% of IPOs lisited price
was more than offer price and in the long run, it was only 11.5%. Oversubscription variables,
namely, total oversubscription, institutional investors and retail investors oversubscription, were
found to be the main determinants for listing and offer price performance of Indian IPOs.
Infrastructure, financial and entertainment sectors with positive long run return fell under this
category for the period of study. On the contrary, IT sector gave higher initial return but negative
return in the long run. Seshadev Sahoo and Prabina Rajib (2010) attempted to specify the
relationship between post-issue promoter groups’ retention and IPO performance on listing . The
researchers investigated the impact of financial variables,i.e., offer size, times subscribed, age of
the firm, book value, leverage, market volatility, ex-ante uncertainty and the post issue promoter
group holding on listing performance of an IPO. 92 IPOs from manufacturing and non
manufacturing sectors were used as sample and found that in 46.55% of IPOs, lisiting price was
more than the offer price during 2002 - 2006. The study documented a positive relationship
between post-issue promoter group holding and IPO performance on listing . The results further
indicated that offer size, times subscribed and post-issue promoter group holding were
statistically significant in influencing the performance of listing. Bandgar & Atul Rawal (2012)
studied the impact of pricing of Banks IPOs in long and short run. The researchers also evaluated
the effect of size and issue nature (par, premium or at discount) of IPOs on its pricing. A sample
of 10 banks were selected randomly which issued their equities through initial public offering
(IPO) during the period 2000 – 2010.It was found that the average return in short run was at - 8%
and long run was at - 53%. Further findings from the study revealed that big issue size IPOs got
listed with a higher listing price and the small issue size IPOs got listed with a lower listing
price. IPOs with lower issue price gave more returns on the listing day than the IPOs with higher
issue price. Private sector banks IPO’s gave higher return than the public sector banks IPOs
during the study period. Ganesamoorthy & Shankar(2012) attempted to study the price behaviour
of IPOs and its persistent effect after listing . For this purpose a standard event study
methodology by taking market adjusted return model was used. As per the methodology, Annual
average abnormal return (AAR) and cumulative average abnormal return (CAAR) were
calculated along with the t-statistics for testing significance. The study covered a ten years period
from 2001 to 2010. 219 initial public offerings made by Indian companies during the period were
selected as sample for the study. The overall result indicated that the issue price was more than
listed price for the Indian IPOs during 2001 to 2010. Even though the AAR on the first trading
day was more than one per cent, in the subsequent days the price was adjusted by the market.
CAAR at the end of the event window (75th day) stood at -10.7 per cent. The negative CAAR of
68 days out of 75 days were found to be significant, which strongly indicate the
underperformance of Indian IPOs during the period. 8 Indian Banking Sector - Initial Public
Offering Scenario & its Impact Baluja Garima(2013) observed the efficiency of IPO grading
mechanism by using a sample of 50 graded IPOs listed with BSE from 2007 to 2010. The
researcher identified that the IPO grading is not an effective mechanism in reducing information
asymmetry. The One Way ANOVA result exhibits no significant difference in listing price
performance of the different graded IPOs. Hence, listing price performance of different graded
IPOs varies due to chance or due to some other factors such as subscription level, Issue size, age
of the firm etc. but it was irrespective of level of grades obtained by IPOs. Equity Scenario of
Public and Private Sector Banks Before proceeding to the capital raising scenario of public and
private sector banks in India by espousing the IPO trajectory it is pertinent to have a brief
discussion on Primary Market in India and Initial Public Offering. A sound capital market is an
important prerequisite for the industrial and commercial development of a country. Capital
market is a central coordinating and directing mechanism for free and balanced flow of financial
resources into the economic system functioning in a country. It assist the corporate houses in
need of capital to expand, modernize or diversify their business. To obtain the capital that is
needed by the company it usually embrace the primary market for issue of shares and the process
of issuing shares is done in the primary market. The primary market in a simple way can be
defined as a market where the securities are issued to procure funds or capital require by the
company. It is a market for new issues, i.e. a market for fresh capital. It provides the medium for
sale of new securities. The securities can take different forms, such as, equity shares, preference
shares, debt instruments, bonds etc. A company may raise capital in the primary market with the
help of IPO, rights issue or private placement. An Initial Public Offer (IPO) is the selling of
securities to the public in the primary market. It is the biggest source of funds with long or
indefinite maturity for the company. “An initial public offering (IPO), referred to simply as an
"offering" or "flotation", is when a company (called the issuer) issues common stock or shares to
the public for the first time.” The Reserve Bank of India in 2010 stated that private sector banks
should take its approval before espousing the IPO route, preferential issues, or qualified
institutional placement. It was mandatory for private sector banks to approach RBI for prior ‘in
principle’ approval in case of qualified institutional placements. Banks required to approach RBI
along with details of the issue once the bank’s board gave nod to the raising of capital through
IPO route. Public sector banks were permitted to procure capital from the capital market to
fortify their capital adequacy ratios and bring down the government holdings. The Banking
Companies (Acquisition and Transfer of Undertakings) Act, 1970/ 1980 and State Bank of India
Act, 1955 were amended to permit banks to raise capital not more than 49 percent of their equity.
The State Bank was the first public sector bank to tap the equity market in December 1993. In
October 1996, it once again knocked the doors of the capital market through a GDR issue of INR
1,270 crores. With these two issues, the holdings of the RBI slashed to 59.7 percent in State
Bank of India. Over the years 1993 to 2001, 12 PSBs procured capital through IPO trajectory to
the extent of INR 6,501 crore. The market responded positively to public sector banks IPOs. The
year 2002 witnessed the IPO market dominated

Bank of Baroda (BOB) established on July 20, 1908 is an Indian state-owned banking and
financial services organization, headquartered in Vadodara (earlier known as Baroda), in Gujarat,
India. Under the ‘Alternative Mechanism’ scheme, the Government announced the
amalgamation of Vijaya Bank and Dena Bank with Bank of Baroda which came into effect on
April 1, 2019. Bank of Baroda is one of India’s largest banks with a strong domestic presence
spanning 9,449 branches, and 13,153 ATMs and Cash Recyclers supported by self-service
channels as of Sep’19. The Bank has a significant international presence with a network of 100
branches/ offices subsidiaries, spanning 21 countries. Moreover, Bank of Baroda has a
state-of-the- art technology and offers a wide range of alternate delivery channels such as net
banking, mobile banking, e-lobbies etc. to ensure superior customer convenience. The Bank has
6 wholly owned domestic subsidiaries namely BOB Financial Solutions Limited (erstwhile BOB
Cards Ltd.), BOB Capital Markets Ltd, Baroda Asset Management India Limited, Baroda
Trustee India Private Limited, BarodaSun Technologies Ltd and Baroda Global Shared Services
Limited. Bank of Baroda also has joint ventures with India First Life Insurance Company
Limited for life insurance and India Infradebt Limited engaged in infrastructure financing. The
Bank owns 98.57% in The Nainital Bank. The Bank has also sponsored three Regional Rural
Banks namely Baroda Uttar Pradesh Gramin Bank, Baroda Rajasthan Gramin Bank and Baroda
Gujarat Gramin Bank. As of end Sep’19, BOB’s global business touched a level of Rs 15,31,470
crore, of which the domestic business was Rs 13,16,666 crore and overseas business was Rs
2,14,804 crore.

Bank of Baroda (BSE: 532134) (BoB) is the third largest Public Sector bank in India, after State
Bank of India and Punjab National Bank. BoB has total assets in excess of Rs. 2.27 lakh crores,
or Rs. 2,274 billion, a network of over 3000 branches and offices, and about 1100+ ATMs. It
offers a wide range of banking products and financial services to corporate and retail customers
through a variety of delivery channels and through its specialized subsidiaries and affiliates in
the areas of investment banking, credit cards and asset management. Maharajah of Baroda Sir
Sayajirao Gaekwad III founded the bank on July 20, 1908 in the princely state of Baroda, in
Gujarat. The bank, along with 13 other major commercial banks of India, was nationalized on 19
July 1969, by the Government of India.

Human resource management (HRM) has long been overlooked in the corporate sector in the
country where a small section, comprising mostly the multi-national companies was practicing
the same. With the growing realization of proper HRM in the corporate sector, it has grown into
an important activity. Now the head of HRM is an important member of the senior teams of any
thriving business. Although the idea is new for many local businesses where entrepreneurs are at
the beginning of the learning curve yet in reality the theme is getting support from the organized
entrepreneurs.

The banking sector has grown from a few institutions primarily involved in deposit acceptance
and trade finance into a complex multi player markets where large number of commercial banks,
financial institutions and specialized banks are operating with various products and activities.
The banking has become a complex activity within the financial market linked directly and
indirectly with an over-all national growth and its impact as an integral part of regional segment
of a global banking environment. Almost every bank and financial institution is involved in
various functions in a day's job and thus requires a highly effective team and appropriate
manpower to run the show. Corporate goals are translated into viable realities and profits only
with human element that play their due role in achieving the desired results. Thus even the high
automation would require proper man behind the machine to make things happen. This idea has
been realized by top managements in progressive banks. Like many other organized sectors,
banking requires a multi layer manpower for its various requirements of professionals and
support staff. The range may require reasonably educated security guards on the one end and a
highly educated and trained professional as head of corporate finance at the other. With
liberalization of activities within the banking sector, for example, more emphasis on consumer
and house finance and personal loans, etc. banking has turned itself into a more market-based
business where banks have expanded their reach more to customers' door steps in a big way
making banking more practical.

This has further highlighted the need for proper deployment of man-power to run banks
efficiently. For many years, HRM banks like other institutions have been handling this sensitive
activity through respective personnel departments. This means human resources were managed
like other physical assets e.g. pieces of furniture, calculators, equipment and appliances.
Personnel departments were primarily engaged in approval of leaves, handling of staff loans,
issuance of show cause, conducting disciplinary enquiries and termination from service.
Recruitment was a routine function and was done in a mechanical way to hire people with
specific educational background irrespective of their real value to the institution. Success stories
of large banking companies have been evident of the fact that HRM is quite different from
management of physical assets. Human brain has its own peculiar chemistry. Its strong sensory
and decision-making capacity has to be greatly emphasized by the employers. The work forces
constituting all levels of employees are constantly thinking in many dimensions. On the one hand
it is the assigned duty and task they are to perform and for which they are paid by their employer,
on the other they think of their long run goals and objectives.

Objectives of the Study The study is framed with the following objectives

1. To know about Indian Banking Sector.

2. To study the challenges faced by Indian Banking Sector. 3. To know how to manage the
Human Resource in Banking Sector. 4. To give suggestions for well-built Human Resource in
Banking Sector.
Technology advancement is one of the powerful driving forces which paved the way for
E-HRM. It has reshaped the way we play, communicate, live, work and also the way business is
conducted. The technology and digital business communications improvement have changed
various organizational activities. The way that organizations perform their task is currently
associated to contemporary concepts such as digital business, e-commerce, customer relationship
management, human resource management etc. Nowadays, digital business services are being
considered as pertinent and prominent parts of the organization.
Banking industry viewed from personnel angle has its peculiarities. It is a labour intensive
industry and efficiency of employees has got a bearing on the quality of services offered. This
being the case, it should have been natural that professionalization of personnel management
should have gained better priority but unfortunately personnel management should have gained
better priority but unfortunately personnel happened to be the most neglected aspect of banks
management. The typical working of banks as such does not require any professional training not
require any professional training and here is an industry where it is strongly believed that every
one can do anything and as one know‟s no body does much to the prosperity of the organization.
This aspect is further accentuated by the fact that banks operate in a seller‟s market with total
absence of an element of competition and the prices of deposits accepted is determined by the
banks, but by an external agency like the RBI and the GOI.

In a sheltered environment like this, the need for professionalisation of bank management was
never felt personnel happened to be managed by a non-expert and usually by a medicore officer
who could not otherwise prosper on banking operations. With the implementation of
recommendations of Pillai Committee a controversy was ranging among bankers whether or not
Personnel Management is a specialized function. In the absence of scientific personnel practices
being developed in the banking industry, a discontent workforce emerged which strengthened the
trade union movement in banking industry

HRM is an organized learning experience aimed at matching the organizational need for career
growth and development. It is a process involving series of learning activities designed to
acquire desired level of competence among employees. HRM programs offer long term benefits
to an organizationThe human being is the pinnacle of existence. If you assist a man in honing his
talents, he will be able
to do great things. A satisfied and happy man would give his life for the organization. Give him
a sense of
identity, praise him for his good deeds, and correct him when he does anything wrong(Mehta,
2016). Human
resource management is the most crucial consideration for any business because it decides its
sustainability and
development. Human resources are relevant in any industry, large or small, as a
well-developed and well-
managed human resource management mechanism will provide the enterprise with good
opportunities(Piago
and Pabangou, 2020). Human resource management (HRM) is the process of acquiring, training,
appraising, and
compensating employees and attending to their labor relations, health and safety, and fairness
concerns (Dessler,
2020). Bangladeshi businesses have gained some human resource management skills, but there
are still gaps,
such as poor workforce productivity, low management ratios, and obsolete management
philosophies. More
research into the connection between human resource practices and employee commitment is
needed. More
research is required to define the antecedents of employee engagement across multiple
domains (Allen and
Meyer, 1990). The banking industry is knowledge-based. A knowledgeable and well-equipped
employee is
essential to operate the business. People can be transformed into human resources when they are
equipped with
adequate knowledge, skills, and competencies. Banking industries are going through a series of
rapid changes
because of technological development. Technological advancement has changed the nature of
banks demanding
employees perform better(Roknuzzaman 2007). Bangladesh has 61 scheduled banks that
operate under full
control and supervision of the Bangladesh Bank. 43 private commercial banks are majorly
owned by
individuals/private entities. The country is home to the largest number of banks in the world,
with more than
branches across the country.There are 10 PCBs based on Islamic Shariah and they are doing
banking on the
ground of Islamic Shariah (Bangladesh Bank, 2021).
Human growth and civilization have made changes possible in the world. Technologies are
developing day by day and in response to that human beings have become more wiser and
smarter. Today, huge number of people are working inside a same roof and work are carried
away efficiently with the help of management and technology. ‘Management’ refers to
controlling things or people. However, human resource management (HRM) refers to the
management of Human resources of an organization. HRM in a big organization is only possible
with the help of different factors such as technology, communication and skilled manpower. The
topic ‘HRM’ is documented universally in literature (Bratton & Gold 1999; Armstrong 2006;
Rouse 2011).

The definition of HRM is not a discipline, but the field of study drawing on concepts and
theories from core social science disciplines including anthropology, economics, psychology,
sociology, law and political science. Disciplines provides relatively elastic boundaries within
which to analyse how the employment relationship is structured and managed in the increasing
competition, development in technologies, change in work places and future trends and
globalization (Mishkin 2013). This thesis overviews the practices of HRM in the bank and
present their outcome. The main reason behind selection of the term ‘banking sector’ is because
of the future competitiveness and growing commercial banks that has more potentiality in
increasing employment and economy in the world.

This thesis helps reader to simplify the view of HRM and its importance and reflect the role and
practices of HRM in banking institutions. Additionally, motivation theories have been discussed
by clarifying the best theory on managing the people in the work places. The main aim of this
thesis research is to find out the performance of HRM in Finnish cooperative bank. Furthermore,
finding include challenges affecting HRM. The subject of employee satisfaction and employee
motivation are always the biggest thing to concern about. A lot of research has been done to find
out the best methods to apply. The theoretical approach covers the root ideas of classic theories
of motivation such as, Maslow’s need theory, ERG Theory, Herzberg theory of comfort at work,
need theory compli- 2 cations for this study, equity theory, goal setting theory, expectancy theory,
reinforcement theory reviewing the Work motivation Thesis by Bergström (2005) Motivating
people (2005) for the study.

The book ‘‘Human Resource Management’’ Gary Dessler 14th edition (2015) and ‘‘Key
concepts in Human resource Management’’ by John Martin (2010) has been used as the major
study materials during the research process. Additionally, various different journals, books, thesis
and E-books were used as a theoretical material. During the thesis process, A qualitative
approach has been applied. An Interview is the major part of this thesis research where two bank
representatives were interviewed Mr. Aatto Ainali who is a former Bank Director officer and Mr.
Kimmo Peuranto who is the present Managing Director of keskipohjanmaan OP well-known
cooperative bank of Finland. For the research an interview plan will be made. Semi-structured
interview method will be applied in this thesis. The questions are arranged in themes and the
interviewees’ personal opinions and experiences are asked. The research is useful because it will
help the reader to know more about the main idea of HRM and its practices in service-oriented
organization especially in banking institutions. This study will reflect the important roles of HR
and management strategies at work places Overall, the thesis consists of seven main chapters,
starting with introduction along with the theoretical background, research methodology,
observational study, conclusion and discussion. Introduction contains of the general ideas of
thesis with research purpose highlighting the theoretical approach, research approach,
highlighted research questions and structure of the thesis.

Besides, the theoretical framework consists of the broad concept of HRM, its strategies and
different concept of motivational theories that are practiced by different organizations and
banking institutions based on studies. Similarly, research methodology consists of the research
approach that will be used for the research. Categorically, the fourth chapter consists of the
observational study of the Bank in general. This chapter includes basic introduction of bank
following with types of banking institutions, 3 HRM in banking institutions, current situation and
organizational performance of HRM, challenges and shortly, practices of HRM strategy in the
bank. The fifth chapter consists of a brief study of the Finnish cooperative bank presenting the
general outlook of Finnish banking sector. Next in order, representing OP as the short
fundamental example of the study. Along with concise responsibility of HR committee in OP.
However, the sixth chapter contains information of research approach methodology and research
results. The final, seventh chapter includes conclusion and discussion for further development of
the HRM in banking institutions.

Human resource management (HRM) is the practice of recruiting, hiring, deploying, and
managing an organization's employees. HRM is often referred to simply as human resource.
(HR). A company or organization's HR department is usually responsible for creating, putting
into effect, and overseeing policies governing workers and the relationship of the organization
with its employees. Human resource management, HRM, is the department of a business
organization that looks after the hiring, management and firing of staff. HRM focuses on the
function of people within the business, ensuring best work practices are always in place. Human
Resource Management is a function in organizations designed to maximize employee
performance in service of their employer’s strategic objectives.HR is primarily concerned with
how people are managed within organizations, focusing on policies and systems. HR
departments and units in organizations are typically responsible for several activities, including
employee recruitment, training and development, performance appraisal, and rewarding. HR is
also concerned with industrial relations, that is, the balancing of organizational practices with
regulations arising from collective bargaining and governmental laws. For banking, the
importance of human resource management has grown manifold because the nature of banking
industry, which is mainly service based. The management of people in the organization along
with handling the financial and economic risks at the wider level is the most potent challenges in
front of the banking industry in any given time frame. Efficient and skilled manpower in the
sector can only manage the financial risks that the banks need to take on regular basis. The
Human Resource department is responsible for finding such talented manpower and placing
them in right jobs in the banks. Apart from the risks in the banking sector, the people handling
the day-to-day affairs in the banks need to keep the customer satisfaction in mind. The people
working at the front office become the face of the bank and thus it is the responsibility of the HR
to make sure there are eligible people working up front. They need to make sure that the
candidates selected in the banks go through necessary training before they begin their work, so
that they are aware of the nuances of the core banking industry and customer relationship, better.

The HR management needs to think both about the quantity and quality requirement in the
banking sector and deal with the shortage in the skilled manpower supply in the sector
efficiently. Human resources are the most valuable and unique assets of an organization. The
successful management of an organization's human resources is an exciting, dynamic, and
challenging task, especially at a time when the world has become a global village and economies
are in a state of flux. The scarcity of talented resources and the growing expectations of the
modernday worker have further increased the complexity of the human resource function. Even
though specific human resource functions/activities are the responsibility of the human resource
department, the actual management of human resources is the responsibility of all the managers
in an organization.

Human Resource Management or Personnel management is the activity of managing personnel,

usually employees. In any organization, managing personnel is the process of making sure the
employees (not the customers) are as productive as they can be. This can include hiring, firing,
or transferring people to/from jobs they can do most productively. This subject is a major at
many universities, or a minor in the business school. It is also known as personnel
administration, which is functionally an equivalent term. It is therefore necessary for all
managers to understand and give due importance to the different human resource policies and
activities in the organization. Human Resource Management outlines the importance of HRM
and its different functions in an organization. It examines the various HR processes that are
concerned with attracting, managing, motivating, and developing employees for the benefit of
the organization.

What do all businesses have in common regardless of the product or service? Employees!
Unless you are a sole proprietorship, you will have to navigate the process of planning for,
recruiting, hiring, training, managing, and possibly firing employees. These responsibilities all
fall under the heading of human resource management. Human resource management (HRM or
HR) is essentially the management of human resources. It is a function in organizations designed
to maximize employee performance in service of an employer’s strategic objectives. HR is
primarily concerned with the management of people within organizations, focusing on policies
and on systems. HR departments in organizations typically undertake several activities, including
employee benefits design, employee recruitment, training and development, performance
appraisal, and rewarding (e.g., managing pay and 8 benefit systems). HR also concerns itself
with organizational change and industrial relations, that is, the balancing of organizational
practices with requirements arising from collective bargaining and from governmental laws. HR
is a product of the human relations movement of the early twentieth century, when researchers
began documenting ways of creating business value through the strategic management of the
workforce. The function was initially dominated by transactional work, such as payroll and
benefits administration, but due to globalization, company consolidation, technological
advances, and further research, HR today includes strategic initiatives like talent management,
industrial and labor relations, and diversity and inclusion.

Most companies focus on lowering employee turnover and on retaining the talent and knowledge
held by their workforce. New hiring not only entails a high cost but also increases the risk of a
newcomer not being able to replace the person who worked in a position before. HR departments
strive to offer benefits that will appeal to workers, thus reducing the risk of losing corporate
knowledge. Businesses are moving globally and forming more diverse teams. It is the role of
human resources to make sure that these teams can function, and people are able to communicate
cross-culturally and across borders. Due to changes in business, current topics in human
resources are diversity and inclusion as well as using technology to advance employee
engagement.

In short, HR involves maximizing employee productivity. HR managers may also focus on a

particular aspect of HRM, such as recruiting, training, employee relations, or benefits. Recruiting
specialists oversee finding and hiring top talent. Training and development professionals ensure
that employees are trained and receive ongoing professional development. This takes place
through training programs, performance evaluations, and reward programs. Employee relations
deals with employee concerns and incidents such as policy violations, sexual harassment, and
discrimination. Benefit managers develop compensation structures, family-leave programs,
discounts, and other benefits available to employees. At the other end of the spectrum are HR
generalists who work in all areas or as labor relations representatives for unionized employees.

This report highlights about evaluation and assessment of AB Bank Human Resource
Practices. Information has taken from company’s website, internal papers and practical works.
The main objective was to find out the overall condition of Human Resources Management
Practice in Banking Sector: A Case Study on AB Bank Ltd. To prepare this report the researcher
mainly depends on the experience and secondary data. Besides this I have also used primary
data. Company Insight, advertising, catalogues of the Company brochures, books, reports etc. are
the sources of secondary data. Based on these information, I prepared this qualitative report,
because it was like having an unstructured exploratory research methodology based on
observation for providing insight of the report topic.

The AB Bank Limited, the first private sector bank under Joint Venture with Dubai Bank
Limited, UAE incorporated in Bangladesh on 31st December 1981 and started its operation with
effect from April 12, 1982. The AB Bank Limited Management Team comprises of a group of
people and each of them comes with an international working background and is committed in
leveraging their experience to take ABBL to greater heights by ensuring top line revenues with
dynamic capabilities.

Human resource management can be defined as a process of procuring, developing &

maintaining competent human resource in the organization so that goals of an organization are
achieved in an effective and efficient manner. Human Resource Management ‘The policies and
practices involved in carrying out the “people” or human resource aspects of a management
position, including recruiting, screening, training, rewarding, and appraising. Human Resource
Division of ABBL is one of the most valuable departments with the responsibilities of staffing,
training and development, organization development, performance appraisals, rewarding, control
and maintenance etc. The Human Resource of ABBL is exactly well thought and perfectly
managed. As from the very first, top management beloved in empowered employees, where they
refused to put their finger in every part of the pie. These employees are not suffocated with
authority but are able to grow as the organization matures. Job description is a necessary
accomplishment should have for each position for recruiting the most suitable candidate on the
basis of skill and experience required. Still hundred percent job descriptions is not prepared or
collected by the HR Division. Human Resources Information System is must for a corporate
environment like ABBL. ABBL is going to establish a new HRIS very soon.

ABBL is committed to focus all its energy on its customer as well as its employees.
This is sure a strong Human Recourse practices will help ABBL to pave the way leading to
outmost destination. Human Resources Division in ABBL is under massive reconstruction
program which ensure will the future benefits and high corporate culture and the secured place of
contribution and dedication the experience and the exposure of high professionalism.Thesis
paper experience plays a vital role for every student to implement his or her theoretical
knowledge and to get knowledge from any organization. In order to complete BBA degree,
Thesis paper report is one of crucial part in the final semester to complete BBA degree from
Stamford University Bangladesh. AB Bank Limited gives the opportunity for, preparing this
report.

Well- educated, dedicated, skilled and enterprising workforce is the sine-qua-non for the
progress and development of a service oriented industry like Bank. From very first emergence
and inception of modern civilization, Bank plays a pivotal role in case of overall financial and
socioeconomic development of any modern country. The economic development of our country
mainly depend upon the efficiency of the banking results is so far as, whether the bankers have
been able to read the economic situation properly and are successful in selecting the promising
industrial sectors seeking import and export assistance to grow. With the rapid changes of time
mans are readily depend on banking services in case of handling cash, transferring cash, and also
financing in various industrial and business projects. So it is very much needed to develop the
banking practices in order to provide better day-to-day banking services to the valued customers.
Because a service oriented industry a bank should believe that customers is all and the king. The
government of our country and the central bank i.e., the Bangladesh Bank has decided to extend
considerable help in every aspect of banking to concerned people. Like other nationalized and
non-nationalized commercial banks the AB Bank limited serves the nation by providing various
modern banking services and products.

Objectives of the Report:

General Objective:

The general objective of the study is to gather practical knowledge regarding banking system and
operation and human resource division. The practical orientation gives us a chance to relate the
four year long theoretical learning of BBA Program with the practical experience. This consists
the following:

1. To achieve overall understanding of AB Bank Limited

2. To know the different practices of the Human Resources Division of a Bank.
3. To review the Human Resource policies of AB Bank Limited.
4. Identify the constraints in implementing Human Resource Policies.
5. Find out some problems and to suggest some solutions to facilitate the future Bank
administrators.

Specific Objective:

1. To fulfill of particular requirement of BBA program

2. To apply theoretical knowledge in the practical field.
3. To present an overview of AB Bank Ltd.
4. To develop our skill on the banking sector.
5. To analyze general banking practices of the bank.
6. To earn valuable knowledge about the foreign trade in banking sector.
7. To compare the real practices of the bank with the rules and regulation of the country.
8. To know the customer service of banking sector.
 9. To know how to well manage the customers.
10. To find out the problems regarding the general banking confronted by the bank.
11. To observed the practice of modern technology in banking sector.
12. To know about foreign exchange system
13. To get practical knowledge about money transactions.
14. To observe the different types of products & services available in AB Bank Ltd.
15. Understanding the customer behavior for assure the creativity of product features.
16. To assess the strength and weakness.
17. To identify possible areas of improvement.

Research Methodology

The present study is analytical and descriptive in nature. The purpose of this study is to enlighten
the role of public sector banks in Indian Economy regarding its financial performance.

Sample Design: It is not possible to measure the financial performance of public sector banks.
So only the alternative is to take a sample which is representation of whole universe.
It includes: Sample Frame: The present study includes the financial performance of Canara Bank
which is the representative bank of all the Public Sector Banks.
Population: All the Public Sector Banks across India constitutes the population of the present
study. Allahabad Bank
Andhra Bank
Bank of Baroda
Bank of India
Bank of Maharastra
BhartiyaMahila Bank
Canara Bank
Central Bank of India
Corporation Bank
Dena Bank
IDBI Bank ltd.
Indian Bank
Indian Overseas Bank
Oriental Bank of Commerce Punjab & Sind
Bank State Bank of India
Syndicate Bank
UCO Bank
Union Bank of India
United Bank of India
VijayaBank
Sample Size: The study includes Canara Bank as sample of population. All the 5643 branches of
Canara Bank are included in the sample

. Sampling Technique: Due to the lack of time, the researcher has adopted convenient sampling
technique to select the sample.

Data Collection: Data relating to Bank and financial performance analysis are collected from
standard books, various web-sites and research publications. The annual reports and publications
of various banks are utilized for the purpose of secondary data.

Data Analysis: The all secondary data will be statistically processed, classified and tabulated
using appropriate methods and techniques.As there are various methods and techniques to
analyze the financial performance

. Data will be evaluated with the help of the following techniques:

Ratio Analysis
Cash Flow Statement