Are Public Sector Banks Deploying HR Cost Profitably? Overview of Decade Ending 2013-14

Abstract

With the advent of Basel III and other global and internal challenges, Indian banks have to address several issues simultaneously. Capital shoring up, financial inclusion requirements, risk mitigation and NPA issues are some of them. The common underlying factor among all of these is achieving, maintaining, protecting and growing profitability. To ensure sustainable advantage in all areas, it is essential that banks make all efforts to use every resource at their disposal towards this purpose. Huma resource has always been a key factor in success and profitability of banks. It also represents a major part of operating cost. Profitable deployment of HR cost will ensure both operating and financial advantage. Public sector banks in India have faced several challenges with respect to HR cost. The demand for competitive salaries and growth of business has led to substantial rise in HR costs of public sector banks in recent years. However there is a need to see if the costs are being deployed profitably. Profitable deployment of any cost indicates more efficiency in use of resources and hence a move towards better profitability. With the help of the HCROI ratio and statistical techniques, the study tries to find out if they have moved towards more profitable deployment of HR cost in the decade ending 2013-14.