Diploma in banking for promotion: One size never fits all
The B.Sc. engineers will not take a Diploma in engineering for further professional excellence because what they learnt in their bachelor degree is much more elaborate and in-depth than the diploma one. The diploma will not add any value to them. In the same way, bankers who already attained a bachelor and/or master degree in business administration and bank management will not find a diploma in banking valuable for them. However, the Bangladesh Bank very recently issued a circular which made it mandatory that all senior bank officers or their equivalent officers irrespective of their academic background must pass the two parts of diploma in banking for promotion. This has been done with a view to attaining skill, efficiency and capability of the bankers, as the circular states.
The Institute of Bankers Bangladesh (IBB) conducts the Banking Diploma Examination, Junior Associate of the Institute of Bankers, Bangladesh (JAIBB) which aims at giving basic and fundamental knowledge of banking. The Diploma Associate of the Institute of Bankers, Bangladesh (DAIBB) examination is designed to update the advanced knowledge in the field of banking and allied matters to enable better decision making by bankers.
For the JAIBB, the IBB offers basic courses which most of the senior bankers know either from their previous academic background or from their foundation level training as well as regular ongoing training programmes in their long professional career. Again, the courses offered for the DAIBB are also not beyond the knowledge of senior bankers especially those who have their degree in business administration, finance and banking, bank management. Then, there are allegations regarding the modus operandi of examination systems. In the examination hall, candidates can widely use their books as generous sources of solution to questions although it is not an open-book examination. They can talk to each other for answering questions. They can even use their cell phones while in the examination hall for external assistance. The invigilators simply overlook them. Finally, the script assessment process is also questionable. Their pass rates are very low. It is very common that bankers with major in accounting fail in their basic course although they do well in the examination. The same happens in case of finance and banking graduates. For example, a prominent banker who had both bachelor and master degrees in finance and banking sat for the examination of Management of Financial Institutions, and Lending Operation and Risk Management. The questions were within his knowledge and he answered them perfectly. But he failed in both courses.
With the traditional courses and defective evaluation methods, there is little scope of these diplomas to add value to senior bankers who have their academic degrees in business or economics and received fundamental and advanced training on banking. For instance, a banker who completed his bachelor and/or master degree in business, especially in finance and banking, learns many advanced courses needed for bank operations. They not only learn Fundamentals of Banking, they also learn many other courses like Bank Fund Management, Credit Management in Banks, Treasury Management, Foreign Exchange Management, Risk Management in Banking, Electronic Banking, Financial Technology, Corporate and Retail Banking, Islamic Economics and Banking, Central Banking, Monetary and Fiscal Policy and others. They already know the basics of these courses which they can use in their practical field of banking. Still their remains some gaps between theory and practice. But those gaps are minimised by the foundation training given to fresh bankers immediately after their recruitment. Subsequently, every bank has its own training centre for continuous training for their different levels of bankers. These trainings are conducted in order to make bankers familiar with the latest development in banking operations and risk management. Banks conduct the sessions by experienced bankers, faculty members from universities and regulators. These trainings are not a onetime package, rather continuous.
Further, bankers have to go through other trainings which are conducted mainly at Bangladesh Institute of Bank Management (BIBM) where experienced bankers as well as faculty members conduct the sessions. Banks send their officers to this institute depending on their requirements. In this institute, there is a blend of both theory and practice. Any kind of confusion in banking operations can be eliminated or minimised by interaction between trainee bankers and experienced bankers during training sessions. Moreover, for attaining advanced knowledge in banking, some banks also send their bankers for overseas banking training.
At present, in order to get promotion in most positions of private banks, bankers have to sit for a promotional examination conducted by BIBM. The courses are well structured and syllabus is comprehensive; examinations are tightly held; and evaluation is properly done. There is cut-off mark for promotion; the higher the position, the higher the cut-off marks.
Banking profession is suitable for those who have degree in business administration and bank management. The bankers with such degree should not attain other degrees for promotion which will not add value to their previous degrees. They will find it frustrating to attain diplomas in banking for promotion. What will they learn from these diplomas where they already know most contents of those courses? Likewise, many bankers with non-business academic background proved themselves to have been successful bankers. This was possible because they learnt banking operations by long experience and continuous training.
If there is any problem in the banking sector, it is due to the lack of good governance, not lack of knowledge of bankers that may be attained by the banking diplomas. High non-performing loans, lack of provisions against them, shortfall of capital and liquidity problem emerge from the lack of good governance. Political appointment of board directors and their persistent effort to get loans sanctioned without feasibility assessment, external interference in loan sanctioning, loans to politically exposed persons make the banking sector vulnerable. These are all known problems and they can be resolved if good governance which requires the independence of the Bangladesh Bank and political transparency can be established. If the bankers are given freedom in operating their banks, especially in loan sanction, they have enough knowledge and experience to keep the banking sector safe and sound.
One example will make it clear about who are running the banking sector. In 1995, in the Department of Finance and Banking of University of Dhaka, 150 students got admission. Of them, 63 students had merit positions including first, second and third in four different educational boards. A few of them joined as faculty members and most of them are working in both national and multi-national banks. It is needless to mention that they are very successful bankers now. They are knowledgeable and experienced; they know almost every aspect of banking operations. If these bankers need to go through the diplomas, it is simply a mockery. Senior bankers with strong theoretical knowledge in business, finance and banking must not face the struggle of attaining the less standard diplomas in banking for promotion.
Of course there are senior bankers who joined the banks with dubious academic qualifications. They got the job using their connections and influences. Their performance is also not at par. Such bankers might need these diplomas to enrich their theoretical knowledge. Without making it binding for all, some points may be allocated for those who have these diplomas and those points could be counted for promotion.
If the regulators really want to increase the knowledge and skills of bankers, they need to develop different modules for different ranks of bankers. The new modules should be distinct from the present ones offered by the IBB. They must include advanced techniques of bank management. In developing modules, views of all stakeholders should also be taken into consideration. Rather than fitting one size for all, different sizes - different training modules - must be used for varied levels of needs. Again, they should also not be made mandatory for all.
Md. Main Uddin, PhD is Professor & Former Chairman Department of Banking and Insurance, University of Dhaka.