BANKING KPIs

These are days of KPIs (Key Performance Indicators) for anything and everything. A couple of decades back most of the ordinary folk may not have heard of KPIs and score cards. But the twin torrents of liberalisation and globalisation have changed all that. More and more ordinary people know about KPIs now and would like to have them fixed for many of their expectations. In the twenty first century, it is of no use to have expectations alone. Expectations must be calibrated with suitable KPIs and score cards if we need to decide on celebration or depression when the results are finally out. The results are so vague and publicity techniques so effective that many a time we feel lost when a party we contracted claims successful completion of assignment. The only way to avoid such scenarios is to have KPIs fixed upfront and sticking to them for monitoring progress of work.

The advantages of KPIs are many fold. By proper fixing of KPIs, we can not only expect better performance in existing work but also put optimum resources to maximum use in their core and non-core areas of operation. The case of a policeman catching more and more thieves every month is a direct example of having his monthly KPI fixed as the number of thieves caught. But imagine its impact on our society if we decide to have the KPI of the same job changed to the number of people he helps. The attitude and approach of our fearsome conventional policeman will give way to a more sober and friendly one. Similar change can be brought about in all positions and even institutions by a suitable change in the KPIs applicable. It will go to the full credit of any government if it can identify a few such potential areas and bring about catalytic changes.

Instruments of Change

The easiest way to progress for any nation is for governments in power to work through the most effective instruments that can bring about change in the lower and middle strata of society. Rather than tackling social issues directly by means of mass literacy programmes and empowerment, it is always easier to approach the same through a related economic conduit. We have already seen this phenomenon when the government announced incentives for those who resort to inter-caste marriages. The social evil of untouchability and casteism can be buried forever if the monetary incentives for participation are attractive enough. We should remember that these evil practices came about because of a selfish few who wanted to limit competition for limited wealth. And it will definitely go away if equally good incentives are offered for reversing it. What a thousand preachers can do is easily achieved by a simple economic policy of the rulers.

It is in this context that the role of banking institutions and other types of institutions that handle flow of wealth assumes more importance. A great amount of social levelling in any society can be achieved by providing the basic necessities to every one. And this can be achieved only by enabling a reasonable distribution of wealth in a realistic and effective manner. A local branch of any bank, which is the meeting ground of wealthy few and needy many in the locality, is a natural choice for this purpose. The bank personnel are not only approached by those want to deposit their money but by far more people who want money for running their business and household. The same is the case with all such meeting places where people with varying needs are coming together. Co-operative institutions and even places of worship are potential avenues where social changes can be stimulated by triggering economic activities. Redefining KPIs of those who work in these areas is a sure shot to bring about drastic changes in our society with much less effort than by conventional means.

Best Bet Banks

Banks have a unique place in everyone’s life. All people may not be familiar with the local village office, many may not feel necessary to visit the post office and some may avoid the hospital. But there is hardly anyone who can stay away from any bank in the contemporary world. Banks play a very vital role in the day-to-day lives of the business communities. It can play a much more vital role in the life of each and every common man if there is a little more imaginative thinking on the part of the governments in power. India has over 25 banking groups in the public sector and the number of bank branches in the country is over 50,000. The reach and depth of a potential instrument for touching the common man’s life through an economic conduit seems to have missed the attention of our planners all these years.

The biggest mistake lies in considering banks as purely commercial institutions and having their KPIs linked to the annual profits they make. But a bank can be much more than a commercial being. It is directly dealing with hundreds of customers and affecting their lives directly. The current practice of ranking such vital institutions on the basis of the profits they generate is ludicrous to say the least. Instead, performance of every bank, atleast those in the public sector, must be pegged to the number (and not value) of loans they have given to ‘good’ customers and their attempts to maintain a zero-profit. Banks must no doubt make no loss, but it is much more absurd to think of such vital social institutions vying with one another for making profit. Profitable operation must not be the motto of any bank. Bank in a locality must vie with one another to make loans available and encourage those who return it in time.

The social impact of this one change can be tremendous. Various banks in our public sector have made an operating profit close to Rs. 50,000 crores in 2006. Imagine a situation when the same banking institutions are competing to spread this amount among 50 million ordinary Indians in the form of loans. The banking personnel can bring about much more changes in our society than all others in the services sector of this country. All that is required is a redefinition of their KPIs to extend loans to a vast section of our population rather than making profit out of deposits by a wealthy few. Loans must be easily available to any Indian who is willing to pay it back with reasonable interest. Poverty and backwardness will be a thing of the past if Key Performance Indicators for banks are changed in this direction.