National Bank is a highly successful organization that has been able to maintain its success in a rapidly changing environment through an incremental adjustment process. During the 1990s, changes occurred in the environment of Indian financial institutions.
These included rapid deregulation of the financial services sector by the Indian government. The critical moves involved were the partial convertibility of the rupee, foreign institutional investors'(Fll) participation in the financial market in India, foreign equity participation, and for¬eign direct investments (FDIs) in the Indian industry (including banking). As a result, a number of foreign-owned banks started operating in India.
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Apart from growing with diversification, the bank also acquired some regional banks to consolidate its market position.
Change in National Bank has been a process of constant adjustment. Continuous change is embedded in its corporate philosophy. In all change processes, the bank adopts the partner-ship concept. The idea behind this is to let the process of change evolve, rather than to impose it. With the rapid growth in its product mix, the bank had to increase its workforce, creating the increasing problem of coordination in a collegial/partnership system. In a collegial/partner¬ship system, product heads are hardly required to report to the CEO, as every unit runs like an independent business unit. To deal with the increase in size and the complexity of operations, the bank had to create additional structures, systems, and controls, much against the collegial/ partnership system. However, fresh recruitment of professionals was not adaptable to the col¬legial culture. Although an attempt was made to frame strategies for well-articulated goals and objectives, an internalized collegial culture of collaboration was in direct conflict with the same. The management at National Bank then focused on creating autonomous profit centres, achieving cross-functional synergies. More emphasis was laid on systematic communication across the profit centres to supplement the effort of coordination. Unfortunately, various strate¬gies like adopting a consultative style of management, forming more executive committees to take participative decisions, and an open-plan office could not yield any result.