Beyond the meltdown: It’s public sector all the way in Himachal


By: Varun

At a time the whole world is talking about the end of capitalism following the financial crisis that started in the US, the ‘good old public sector institutions’ certainly seem to be back in the reckoning. – partly because the global meltdown has made private institutions appear very risky, and maybe also because government institutions are proving better than their private counterparts in delivering service. This may not be a universal truth, but in Himachal it certainly appears very much true.

Himachal has recently seen several financial institutions like ICICI and HDFC opening there branches across major towns. Similarly, offices of brokerage and share trading firms like Reliance Money and India Infoline too have come up at a rapid pace, while roadside hoardings can be seen advertising insurance companies such as Bajaj Allianz, HDFC Standard Life, Reliance Insurance and Max New York Life among many others. Certainly, people who earlier had no option but to deal with public sector behemoths, now have newer options and opportunities to seek better financial services. But the question here is, “Are these private sector firms offering any better services?’’

The picture is not as rosy when it comes to the service delivery aspect of it. In the last three months the HimVani team has been hearing stories of private institutions giving a raw deal to many of its readers and citizen journalists. Boudhayan, a marketing executive working with a major co-operative, who had recently moved to Shimla from Delhi, wanted to renew his motorcycle’s insurance policy. The last one was issued by Reliance General Insurance in Noida. But he was shocked to find that in spite of having centralised systems, the company’s branch in Shimla was unable to process the renewal of the policy – the reason given was that the branch did not fall in the same zone as Delhi. The option available to him was to go back to Delhi with his vehicle, and get it inspected there to get the new policy issued.

Service delivery in private sector banks is no better. On a visit to ICICI Bank in Shimla, one is bound to find bored-to-death faces of front desk staff, who are just doing their job rather then creating a customer experience. The latest PR campaign of the bank says that it is well capitalised and has high net worth. Well Mr. Kamath, certainly your bank is doing well in financial terms but customers expect good service. The “Hum Hein Na” factor is missing in this part of your operations.

Close by on the mall road, the HDFC Bank branch is no better. Recently, Shilpa, a friend, wanted to open an institutional savings account for their society in the bank. She was surprised to find that the staff did not have proper knowledge of the product as well as the documentation required for it. An account which normally takes an hour to open in a public sector banks is yet to be opened after chasing bank officials for more then 20 days. At the time of submitting the application, the bank executives found that the board resolution was not in the format which is acceptable to the bank. However, they accepted the application with a promise that they will be able to take approvals from their Cluster Head for the same. Surprisingly, the approvals are yet to be taken in spite of chasing the bank executives almost every day.

Surprisingly, in both the cases the ray of hope came form of the much-criticised public sector institutions. Boudhayan, who finally went to United General Insurance in Shimla, had a new policy issued in one hour. All his paper work, vehicle inspection and processing of papers was done by an agent of the company who did not even charge any money from him. Shilpa got her societies’ account opened with the State Bank, again in one hour, and could put in her first cheque the same day. In both the situations the paperwork was completed and the service delivered at the branch itself. The same would have taken 15 – 20 days in a private sector institution as service delivery comes from centralised offices in Mumbai or Gurgaon.  It is due to this that the HDFC bank executives are still figuring out whether they will get approvals from their bosses or not.

An analysis of the situation shows that in public sector institutions the branch managers have lot more decision making authority. Moreover, for them the business is totally dependent of relationships and not on the process. A branch executive in a private sector institution is not confident while committing a service delivery to their clients unlike their counterparts in public sector institutions. Now that most of the public sector institutions are heavily using IT to deliver services through ATMs and online banking, the staff is lot freer to offer personal services to customers, thus increasing the whole customer experience as well as competition for the private banking and financial institutions.

The signals are ominous. Now that financial institution in the red in US stand nearly nationalized after government supported bailout, has the wheel turned full circle in India too? The answer may not be far off.

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  1. Intresting, The public sector is waking up!. yes if you want to stay in Buisness you need to be the best. In Himachal this is the case. Although the Public sector Branches are no frill, but all is deliverd. Keep up with the good Work Public sector and this time when i am back home i will definately open a Post office account for my wife and kids. At least the money will be 100% safe.

  2. Meltdown or no meltdown, Private banks in Himachal have to learn a lot from their sarkari counterparts. Initially the private banks scored over with their technological supremacy but PSU banks have caught up and are now offering better services than the private ones. HDFC bank on the Mall has one of the worst services I have come across. The bank staff is untrained especially the people manning the counters. They have no knowledge about the work they seem to be doing. My blood pressure reaches a new high every time I have to deal with this branch. Upon entering the bank is a girl making a sales pitch without introducing herself whether she is an employee of the bank and starts goading her sales talk for an insurance or a mutual fund. Just like the way you have agents coaxing you in front of the GPO. This is a big turn-off. Last Wednesday when I visted this branch, there were no pay-in slips!! One had to fill up the photocopied slips twice. Surely not the best way a private bank should function. Speaks poorely on the management how this branch is being run. The branch needs to pull up its socks and atleast train the staff properly.

    No problems with ICICI though but yes the hum hain na factor too is missing. Speaking of melt down, I am still not convinced about the “all is well with the bank” chorus being dished out by the FM and lately by King Khan. The bank seems to be concealing more than it has revealed. ICICI bank’s reputation for aggression is well known. There could be more surprises in store post Diwali. Keeping my fingers crossed! Also since the meltdown started, Union Bank and IDBI bank (both PSU) started overnight a big campaign to woo customers. Think the banks knew about the storm in advance?

    Among PSU banks, the bank which still seems to live in the golden era of PSU dadagiri is the Central Bank at Lift. Nothing has changed in this branch in the past 17 years (post liberalisation) The staff still treats its customer as jerks and no matter whatever your urgency is, the staff takes it’s damn sweet time to finish your mundane chore.

    SBI and PNB have amazingly improved their services and with their vast reach in rural Himachal are a great boon for fellow Himachalis. In my village, SBI and PNB are connected to the national servers through broadband and have a back up through V-Sat. Pretty impressive I must say!! One bank which has missed the technological revolution is the state co-operative bank. They also have a good base in rural Himachal but absence of online banking services will ultimately hamper its growth.

    Private Banks need to re-invent themselves as the technology factor has faded away. Surprisingly, NOW they need to tell their employees to smile first!!!

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