TAKING
BANKING ACTIVITY TO IDIOTIC LENGTHS
What is ‘Banking’?
As per Section 5(b) of Banking Regulation
Act, 1949, ‘banking’ means the accepting, for the purpose of lending or
investment, of deposits of money from the public, repayable on demand or otherwise
and withdrawable by cheque, draft, order or otherwise.
Here the core words are ‘accepting
deposits, lending and investment’.
But how banking is interpreted today?
Many economists and seasoned bankers themselves believe all financial
services are banking and shall be undertaken by a bank without any hesitation.
It is totally a wrong perception.
Because of this wrong perception only, selling of gold, mutual funds,
insurance policies and other financial services like investment banking,
portfolio management, selling of financial and forex derivatives etc. have
nowadays been considered an integral part of banking. Due to these, the banks have lost their prime
focus and started deviating from their core banking activity of accepting
deposits and lending.
All financial transactions are not banking
Many bureaucrats in Ministry of Finance, top officials of RBI and CMDs
and EDs of banks are under the mistaken notion that any monetary transaction
may be included in banking service and banks may engage themselves in such
activities, provided they are legal and profit making. Everyone including the banks failed to see
the distinction between finance and banking. In due course, the banks who must
be the guardians and catalysts of an economy have started playing the role of a
servant of all others in the society.
While it is true that every financial transaction between two parties
can be captured by a bank and reflected in its accounts books, the banks shall
never aspire to initiate or receive each monetary transaction by themselves,
even if instructed by others.
When both the parties to a money transaction remain mere witnesses, one
bank executes it on behalf of its client and there is another bank to complete
the other part of the same transaction. By doing this, the banks shoulder the
risks of someone else. By passing on the
risks, responsibilities, concerns and potential losses to the banks, the real
parties are merrily engaged in some other useful and leisurely activity. This is the point where the banks have drifted from their
course.
Today, the emphasis is on fee based income
Now, we see banks selling gold, insurance policies, mutual funds,
collection of government taxes etc. on one extreme. On the other extreme, we also see banks
engaged in selling of Tirupati Laddus, collection of school and college fees, undertaking
ECS transactions for recovery of dues of private financial institutions, distribution
of interest and dividends paid by the companies, payment of salaries to staff
of government departments, educational institutions and private companies and
payment of various types of pension to the beneficiaries, distribution of subsidies,
aids and grants from the central and state governments and other unrelated
activities like overseeing election duty and the like. The latter category of tasks do not fetch any
income or gains.
On the contrary, they demand a lot of time and energy of the bank staff.
Many of these functions have cleverly been thrust upon
banks by others and the banks themselves voluntarily took up some of them.
Bank managements do not unduly bother
themselves about the impact of such activities on the precious human resources
Banks are made very happy by the pittance they receive in the form of
fees, commission, incentives etc. But,
compared to the amount of such fees, commission or incentive received, the cost
of human resources wasted on these jobs is enormous and irrecoverable. Such routine activities do not offer any
scope for creativity and self-accomplishment.
There is total drudgery in most of these activities and the bank staff
are exposed to fatigue, boredom and continuous stress. Even in their personal life outside their
bank (assuming they have time for a
personal life in reality), these staff become dull, monotonous, drab and
absent-minded.
Banks have made themselves cheap
In an anxiety to play as many roles as possible, banks have failed in
their prime role. Omnipresence itself has become the ‘Achilles’ heel’ of the banks in
India. Precisely due to this reason,
bank staff have been reduced to nothing in today’s society. They are no longer precious, respected and
envied. They have become so cheap, weak,
vulnerable and defenceless that whosoever wants to insult and harm them can do
so with total impunity. They have become
an easy and soft target for every segment of the society. Alas, there is no unity among the bank staff
today unlike in the past. I don’t expect
militancy, but unity and solidarity are necessary.
There is neither recognition nor sympathy
Because of the faulty course chosen by their managements, bank staff have
to bear the brunt of the dissatisfied customers, superiors, regulatory bodies
and law enforcing agencies. The media is
also very unkind to them, because of the false notion that all bank employees
well paid.
When I was the Branch Manager of my bank at Ooty, I used to carry a brief
case to the office every day and bring it back when I return home at the
night. There was a lady in the
neighouring house. One day, she asked my
wife: “I have been observing that your husband carries brief case to the bank
every day and promptly brings it back on his return. What does he keep inside the brief case? Does he bring home bundles of currency notes,
everyday?”
Why I am quoting here is, even educated people in the society think that
we bankers always roll in money! Only
God knows that it is only a banker who has the largest amount of debts!
Written by - V Subramanian
Banks, NBFCs lose Rs 1.43 lakh cr worth
market value in Q4--Economic Times
NEW DELHI: Witnessing a sharp value erosion in their scrips during the last quarter of the current fiscal, about 50 listed banks and NBFCs of the country have lost nearly Rs 1.43 lakh crore in their market capitalisation in this period.
The estimated 14 per cent percentage loss in the market value of banking and non-banking financial companies (NBFCs) is much higher than the overall plunge of less than eight per cent across the stock market between January and March 2013.
While two days are still left in the current fiscal, the stock markets would now resume trading in the next financial year on April 1, as the next two days are trading holdings.
An analysis of stock movements of about 50 listed banks and NBFCs during the current quarter shows that their cumulative market cap has plunged by Rs 1,43,682 crore since January 1, 2013 to end the fiscal at Rs 10,44,400 crore.
The biggest loser among these has been state-run banking major SBI with a loss of over Rs 23,000 crore in the current quarter, followed by private lenders HDFC BankBSE 1.58 % and ICICI Bank with losses of over Rs 13,000 crore and Rs 12,000 crore, respectively.
Incidentally, this three-month period saw many significant developments regarding the banking and NBFC sectors. While RBI came out with its final guidelines for grant of new banking licenses, a sting operation also claimed major lapses regarding the money laundering controls at three leading private banks.
Besides, financial difficulties came to the fore at some of the NBFCs, including those in the business of gold loans. Also, a number of NBFCs expressed interest in applying for new bank licenses, directly or through their groups.
All the public sector banks and NBFCs together lost more than Rs 85,000 crore of market value, followed by a loss of over Rs 33,000 crore by the private banks and Rs 25,000 crore for the private sector NBFCs, during the last quarter.
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