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Banking in India originated in the last decades of the 18th century. The
first banks were The General Bank of India which started in 1786, and the Bank of
Hindustan, both of which are now defunct. The oldest bank in existence in India is the
State Bank of India, which originated in the Bank of Calcutta in June 1806, which almost
immediately became the Bank of Bengal. This was one of the three presidency banks, the
other two being the Bank of Bombay and the Bank of Madras, all three of which were
established under charters from the British East India Company. For many years the
Presidency banks acted as quasi-central banks, as did their successors. The three banks
merged in 1921 to form the Imperial Bank of India, which, upon India's independence,
became the State Bank of India.
The American Civil War stopped the supply of cotton to Lancashire from
the Confederate States, promoters opened banks to finance trading in Indian cotton. With
large exposure to speculative ventures, most of the banks opened in India during that
period failed. The depositors lost money and lost interest in keeping deposits with banks.
Subsequently, banking in India remained the exclusive domain of Europeans for next
several decades until the beginning of the 20th century.
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HSBC established itself in Bengal in 1869. Calcutta was the most active trading port in
India, mainly due to the trade of the British Empire, and so became a banking center.
The first entirely Indian joint stock bank was the Oudh Commercial Bank,
established in 1881 in Faizabad. It failed in 1958. The next was the Punjab National
Bank, established in Lahore in 1895, which has survived to the present and is now one of
the largest banks in India.
Around the turn of the 20th Century, the Indian economy was passing
through a relative period of stability. Around five decades had elapsed since the Indian
Mutiny, and the social, industrial and other infrastructure had improved. Indians had
established small banks, most of which served particular ethnic and religious
communities.
The presidency banks dominated banking in India but there were also
some exchange banks and a number of Indian joint stock banks. All these banks operated
in different segments of the economy. The exchange banks, mostly owned by Europeans,
concentrated on financing foreign trade. Indian joint stock banks were generally under
capitalized and lacked the experience and maturity to compete with the presidency and
exchange banks. This segmentation let Lord Curzon to observe, "In respect of banking it
seems we are behind the times. We are like some old fashioned sailing ship, divided by
solid wooden bulkheads into separate and cumbersome compartments."
The period between 1906 and 1911, saw the establishment of banks inspired by the
Swadeshi movement. The Swadeshi movement inspired local businessmen and political
figures to found banks of and for the Indian community. A number of banks established
then have survived to the present such as Bank of India, Corporation Bank, Indian Bank,
Bank of Baroda, Canara Bank and Central Bank of India.
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also a leading private sector bank. Hence undivided Dakshina Kannada district is known
as "Cradle of Indian Banking".
Initially all the banks in India were private banks, which were founded in
the pre-independence era to supply to the banking needs of the people. In 1921, three
major banks i.e. Banks of Bengal, Bank of Bombay, and Bank of Madras, merged to form
Imperial Bank of India. In 1935, the Reserve Bank of India (RBI) was established and it
took over the central banking responsibilities from the Imperial Bank of India,
transferring commercial banking functions completely to IBI. In 1955, after the
declaration of first-five year plan, Imperial Bank of India was subsequently transformed
into State Bank of India (SBI).
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process they have jolted public sector banks out of complacency and forced them to
become more competitive
The guidelines for licensing of new banks in the private sector were issued
by the Reserve Bank of India (RBI) on January 22, 1993. Out of various applications
received, RBI had granted licenses to 10 banks. After a review of the experience gained
on the functioning of the new banks in the private sector, in consultation with the
Government, it has now been decided to revise the licensing guidelines.
During the First World War (1914-1918) through the end of the Second
World War (1939-1945), and two years thereafter until the independence of India were
challenging for Indian banking. The years of the First World War were turbulent, and it
took its toll with banks simply collapsing despite the Indian economy gaining indirect
boost due to war-related economic activities. At least 94 banks in India failed between
1913 and 1918 as indicated in the following table:
The First and Second World Wars acted as eclipses for the Banks in India.
Inspire of a boost in the Indian Economy, as many as 94 banks collapsed. People lost
their savings and also the interest in depositing more money in the banks. The situation
stabilized post-independence. The Reserve Bank Of India was nationalized in 1948 and
then given the power "to regulate, control, and inspect the banks in India." a year later
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In 1969, 14 largest commercial and privately owned Banks were
nationalized. Then again in 1980, six more banks were nationalized on the pretext of
controlling the credit delivery in India. A decade later the new generation IT Banks
came into being. These were UTI Bank (now Axis Bank), ICICI Bank and HDFC Bank.
The Banks in India referred to as Scheduled Commercial Banks (SCB) are categorized
into three on the basis of the government stake holding. These are:
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Banking services is one sector where a great degree of attention is being
paid to Performance Appraisal Systems. Several of the public sector banks (PSBs) have
changed their PAS or are in the process of changing them. State Bank of India has recently
adopted an open system of appraisal. Its associate banks are likely to follow the same after
detailed experiences of State Bank of India are available. Several banks also have self-
appraisal as a part of performance appraisal, although mostly such self-appraisal is more
of a communication of achievements.
Allahabad Bank has introduced a system that aims in helping officers to
identify their strengths and weaknesses and encourage improvement of performance on
the job. Indian Overseas Bank has a system in which a branch manager gives a self-
appraisal on business growth, customer service, internal administration and
training requirements in great detail. Union Bank of India has an appraisal system in
which the reporting officer is required to assess each of his appraise officers on technical
skills, human skills and conceptual skills. All these are defined for different categories of
roles and the assessment has to be made on a five-point scale. Corporation Bank, UCO
Bank, Central Bank of India, Dena Bank and Bank of Baroda has introduced similar self-
appraisal formats. Punjab National Bank has, primarily, a development-oriented appraisal
form. There are ten different formats available for ten different categories of employees.
The bank started the system with a self-appraisal by the appraise.
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appraisal system in PSBs, thus, is basically dysfunctional. The PAS, as an
important component of Performance Management System, is yet to be conceived and
made operational. But developing and implementing a PAS seems overdue and vitally
important.
Models of Performance Appraisal
In performance appraisal, a model is a guide that indicates how best
competencies could be fit into a Performance Appraisal Process. There are one-
dimensional models, mixed models and three-dimensional models. One-
dimensional model or the traditional model is based on the single factor of performance and
the entire focus is on what to be achieved. The 'How' factor of achievement is not
looked into in this type of model and is perhaps not fit for today's world of business where
short term survival and long term survival is equally important.
One Dimensional Model:
In one-dimensional model people are not aware whether an
achievement is one time and situational. Employees can adopt practices that can boost
their performance in the short run making colossal losses for the future. There are enough
examples of the loopholes of the one-dimensional model. The following is a one-
dimensional model where the key stress is on what is to be performed.
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Mixed model
The mixed model represents a more powerful and long lasting approach
to performance management than what one-dimensional objective-based approach. A
competency based' approach brings a different perspective to performance
management. It employs a wider, a more comprehensive tool to describe the performance
expected from an individual. Here, performance is defined not only in terms of what is to
be achieved but how it is to be achieved and what competencies must be utilized as is
depicted in the following model.
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The next model takes another dimension besides objectives and
competencies. The most important dimension -customer - fits in this model. The
customer is involved in setting the performance contract and on giving feedback to the
performance review.
When the whole banking industry is going for CBS, its time to make PAS IT
enabled in such a way that once submitted on-line, there will be no provision of editing or
rectification after the date of submission. The objective portion of the PAS should
generate immediate feedback and the system should be so oriented that within a specified
time of say, seven days the entire feedback should reach the appraise for developing
weak (opportunity) areas. This will reduce the criticism of bias or alteration of opinion
by the reviewer in subsequent period.
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one area leads to rating good in all areas) and thorn effect (a biased perception in
one area leading to bad rating in all areas) in appraisal system can be corrected
only through appropriate training of the rater. Appraises may also be
trained suitably for providing accurate rating in their self appraisal.
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mark on performance.
Activity Trap
Many employees/officers remain busy and active but the ultimate outcome
seldom adds to any value addition to the organization. The people who are entrapped in
activities without understanding the purpose of business are said to be in activity trap.
• Acceptable But Poor Performance Level (ABPPL): who scores 50% or above
In the competency evaluation, the following skills may be evaluated with the
bank deciding on the number of marks to be allotted on factors as under or may be altered to
suit to its specific needs and objectives.
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The typical traditional Performance Appraisal Process of the
1990s focused almost entirely on defining what is to be achieved. However, today
competency based Performance Management Schemes are plentiful and becoming the
model for the future. These mixed models assess and reward both results and
demonstration of competencies; both what employees actually deliver and how they do it.
The mixed model represents a more powerful and long lasting approach to performance
management than just an objective based approach. Competency-based approach brings
a different perspective to performance management. It uses a wider, more comprehensive
language to describe the performance expected from an employee. Performance is defined
in terms of the results and also in terms of behaviors employees use to achieve the job
results.
The Performance Appraisal System must lead to action. Appraisal for its
own sake should be abandoned. The Performance Appraisal System must not be
considered as perfect and to remain so in the long term. Appraisal should be
on parameters which are important to the organization and really needed, not which are
easy to measure. Multiple feedback system including feedback from peers, sub-
ordinates, customers may give vital clue for development.
PERFORMANCE MANAGEMENT
In the business world investment is made in machinery, equipment and
services. Quite naturally time and money is spent ensuring that they provide what their
suppliers claim. In other words the performance is constantly appraised against the results
expected.
When it comes to one of the most expensive resources companies invest
in, namely people, the job appraising performance against results is often carried out with
the same objectivity. Each individual has a role to play and management has to ensure
that the individual’s objectives translate into overall corporate objectives of the company.
Performance Management includes the performance appraisal process which in turn helps
identifying the training needs and provides a direction for career and succession planning.
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Understanding Performance Management
PERFORMANCE MANAGEMENT
CORPORATE GOALS
DETERMINE INDIVIDUAL
OBJECTIVES LINKED TO
CORPORATE GOALS
ENSURE RESPONSIBILITY AND
ACCOUNTABILITY
PERFORMANCE APPRAISAL
PERFORMANCE LINKED
INCREMENTS/ INCENTIVES/
What is Performance? REWARDS
Performance is synonymous with behavior; it is what people actually do.
Performance includes those actions that are relevant to the organizational growth and can
be measured in terms of each individual’s proficiency (level of contribution).
Effectiveness Performance refers to the evaluation of results of performance that is
beyond the influence or control of the individual.
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should be allowed to become a hurdle. This enables the managers to take correct
decisions and that too quickly.
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employee is not appraisal - this is merely a form filling exercise which achieves little in
terms of giving staff any positive guidance and motivation.
It is widely accepted that the most important factor in organization effectiveness is the
effectiveness of the individuals who make up the organization. If every individual in the
organization becomes more effective, then the organization itself will become more
effective. The task of reviewing situations and improving individual performance must
therefore be a key task for all managers.
For appraisal to be effective, which means producing results for the company, each
manager has to develop and apply the skills of appraisal
These are: -
Setting standards on the performance required, which will contribute to the
achievement of specific objectives
Analyzing any differences between the actual performance and the required
performance to establish the real cause of a shortfall rather than assume the fault
to be in the jot holder.
Interviewing having a discussion with the jobholder to verify the true cause of a
shortfall, a developing a plan of action, which will provide the performance,
required
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Appraisal can then become a way of life, not concerned simply with the
regulation of rewards and the identification of potential, but concerned with improving
the performance of the company. The benefits of appraisal in these terms are immediate
and accrue to the appraising manager, the subordinate manager/employee, and to the
company as a whole.
To begin the process, you and the employee will collaborate on the
development of performance standards. You will develop a performance plan that directs
the employee's efforts toward achieving specific results, to support organizational growth
as well as the employee's professional growth. Discuss goals and objectives throughout
the year, providing a framework to ensure employees achieve results through coaching
and mutual feedback. At the end of the rating period, you will appraise the employee's
performance against existing standards, and establish new goals together for the next
rating period.
Performance Standards
Performance expectations are the basis for appraising employee
performance. Written performance standards let we compare the employee's performance
with mutually understood expectations and minimize ambiguity in providing feedback.
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Having performance standards is not a new concept; standards exist whether or not they
are discussed or put in writing. When you observe an employee's performance, you
usually make a judgment about whether that performance is acceptable. How do you
decide what's acceptable and what's unacceptable performance? The answer to this
question is the first step in establishing written standards.
Standards identify a baseline for measuring performance. From performance standards,
supervisors can provide specific feedback describing the gap between expected and
actual performance.
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• Be expressed in terms of quantity, quality, time, cost, effect, manner of
performance, or method of doing
• Be measurable, with specified method(s) of gathering performance data and
measuring performance against standards
Expressing Standards
The terms for expressing performance standards are outlined below:
• Quantity:
• Quality:
• Timeliness:
• Effects of Effort:
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Addresses the ultimate effect to be obtained; expands statements of
effectiveness by using phrases such as: so that, in order to, or as shown by, e.g.,
establish inventory levels for storeroom so that supplies are maintained 100% of
the time.
• Manner of Performance:
Borthwick and Nolan (1996) describe the three components of performance standards:
1. Performance descriptions
These distill the content standards to identify what is essential and what is
able to be assessed. (Content standards commonly include expectations that cannot be
assessed validly or reliably, such as "develop a love of reading.") Content standards that
may run to several pages are thus reduced to a succinct set of statements of what
employee should be expected to know and be able to do.
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3. Commentaries on employee work
Definition
Types
Function
Effects
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3. Performance standards determine if an employee helps or hinders an
organization's mission. Employees who meet or exceed the standards may qualify
for promotions or raises. Those who fall short of the standards, however, may
receive demotions or work probation.
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4. Counsel workers who fail to meet the performance standards about their need to
improve. Letting employees slide will only undermine the system you have put in
place, and possibly encourage poor morale among the general workforce.
5. Establish a mentoring system between more experienced, successful employees
and newer hires. This is an excellent way to delegate managerial responsibility
while building a sense of employee-owned success; the more accountability your
employees take for the company's success, the stronger the business model.
Performance Measurements
Since one of the characteristics of a performance standard is that it can be
measured, you should identify how and where evidence about the employee's
performance will be gathered. Specifying the performance measurements when the
responsibility is assigned will help the employee keep track of his progress, as well as
helping you in the future performance discussions.
There are many effective ways to monitor and verify performance, the most common of
which are:
• Direct observation
• Specific work results (tangible evidence that can be reviewed without the
employee being present)
• Reports and records, such as attendance, safety, inventory, financial records, etc.
While the list of Major Job Duties tells the employee what is to be done,
performance standards provide the employee with specific performance expectations for
each major duty. They are the observable behaviors and actions which explain how the
job is to be done, plus the results that are expected for satisfactory job performance. They
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tell the employee what a good job looks like. The purpose of performance standards is to
communicate expectations. Some supervisors prefer to make them as specific as possible,
and some prefer to use them as talking points with the specificity defined in the
discussion. Keep in mind that good performance typically involves more than technical
expertise. You also expect certain behaviors (e.g. friendliness, helpfulness,
courteousness, punctuality, etc.) It is often these behaviors that determine whether
performance is acceptable. Performance standards are:
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o negotiation skills are such that the best value is achieved for the institution
o solutions are effective and mutually acceptable
o good client and vendor relationships are maintained
o contracts are consistent with all federal, state and university policies and
procedures
• Develops policies and/or interprets and implements all federal, state, local and
university policies, procedure and regulations
o policies are clearly written and include all necessary components
o all pre-approval steps have been followed to include necessary in-put from
concerned parties
o sufficient research is conducted to provide accurate background
knowledge necessary to the process of development and/or interpretation
o communication regarding policies is done in a timely manner to all
affected groups and in an unambiguous, customer friendly manner
• Performs management duties with accountability and authority for the strategic
direction of the department
o planning, budget, staffing, resource allocation, policy development, staff
supervision, etc.:
the unit is in compliance with governmental and university policies
and procedures
staff morale remains high
complaints about personnel, leadership and work of department are
minimal
organizational goals are achieved in timely manner
• Assists students with academic problems and/or advises students regarding degree
requirements
o works with students in a customer oriented manner
o gives accurate information
o keeps updated on requirement changes and keeps students informed
o knows and utilizes resources to resolve problems
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Example of Performance Standards for a Receptionist
• Greet customers
o opens office promptly at 8:00 a.m.
o consistently conveys friendly, helpful, professional manner
o provides accurate information
o demonstrates a customer service orientation
o secures back-up for times of absences from desk
• Answers phone
o answers with a friendly greeting
o speaks clearly and distinctly
o uses all functions of phone (hold, transfer, etc.) in knowledgeable and
customer friendly manner
o takes messages accurately and completely
• Distributes incoming and prepares outgoing mail
o sorts and date stamps incoming mail
o distributes to individual mailboxes in timely fashion
o logs in packages and notifies recipients
o prepares FEDEX and UPS documentation correctly
o takes outgoing mail to mail room in time for pick-up times
o forwards mail as needed
• Maintains files
o keeps files in organized fashion so that materials are easily located
o refiles material within 1/2 day of return
o checks out files as requested, using proper forms and "file locator tabs"
• Duplicates materials
o accurately duplicates materials within 4 hours of receipt or as requested
o collates and staples materials to assure professional appearance
o notifies staff of completed orders
o maintains machine, resolves problems and contacts service personnel as
needed
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Example of Performance Standards for Accounting Associate
• Researches information:
o review contents of time-sensitive publications, accurately summarize
funding information, and appropriately distribute in weekly email
• Processes requests for external funding:
o verifies accuracy of budgets and forms,
o secures appropriate internal signatures,
o submits to finance in an accurate and timely manner
o maintains office files so that tracking the funding process is easily
managed
• Monitors accounts and processes paperwork:
o identifies charges, verifies availability of funds and obtains proper
authorizations in accurate and timely manner
o processes expenditures within five working days
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Example of Performance Standards for a Library Services Associate
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• Makes travel arrangements and completes travel documents:
o all arrangements are made in a timely manner
o assures that all travel stays within the travel budget with exceptions
cleared by the Chair
o monitors to assure accuracy in documents
o responsible for determining all extenuating circumstances and resolving
problems
There may be a set of common standards and behaviors that are expected
from everyone. For example, all supervisors may be expected to perform similarly around
several functions, or everyone in the unit will be held to the same standards around
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teamwork, customer service, etc. In cases like this, you might want to make a list of the
common standards that apply and attach to each individual's performance management
plan.
EXAMPLES
Leadership
• communicates a vision of the future and moves self and others toward it through
shared goal setting
• influences others to accomplish/achieve desired goals
• guides others through change
• adapts style to the situation and the person
• obtains commitment and cooperation from others
• maintains open communication
• fosters an environment that encourages innovation, risk taking, ownership ,
learning and growth in others
• utilizes skills and abilities of others effectively
• delegates responsibilities appropriately
• provides an environment of motivation
• manages performance of staff
Team Orientation
Innovation/ Creativity
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• seeks and provides unique/different perspectives to opportunities
• supports risk taking and encourages innovation in others
Customer Service
Interpersonal Communication
Flexibility
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• acquires new knowledge/skills to meet changing demands
Performance Management
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