Importance Of ATM Target

18 PSU banks failed to meet target of setting ATMs-The Hindu

As part of the target, a total of 34,668 onsite ATMs were to be installed by PSU banks during the last fiscal.

Eighteen public sector banks, including SBI and PNB, failed to fulfil the target for installing ATMs during 2013-14, leaving more than over 9,300 branches without cash vending machines. As part of the target, a total of 34,668 onsite ATMs were to be installed by PSU banks during the last fiscal.

 

However, they could set up only 25,331 such machines by March 2014, thus falling short by 9,337, as per Finance Ministry data. Installation of Automatic Teller Machines (ATMs), especially by public sector lenders, has been a major priority for the government's efforts to ensure financial inclusion.

 

Pursuant to Budget 2013-14 announcement, public sector banks were required to ensure an onsite ATM in ever branch. As on March 2014, Allahabad Bank was yet to set up 1,950 ATMs, Central Bank of India 1,620, Syndicate Bank 1,085, Bank

of India 7,44, State Bank of India (SBI) 696, Indian Overseas Bank 553 and Punjab National Bank (PNB) 499. On the other hand, Bank of Baroda, Bank of Maharashtra, Canara Bank, IDBI Bank and the four associates of SBI managed to meet the targets given to them.

There are roughly about 1.4 lakh ATMs of public and private sector banks in the country. Financial inclusion aims to extend financial services to the large hitherto un-served population of the country. In addition, it strives towards a more inclusive growth by making financing available to the poor in particular.

Stop Charging Fees On ATM

Debit card annual fees: Why mostcustomers shouldn't be charged.--By Puneet Kumar Pattar-Money Life

While many appreciate the progress from ATM cards to debit cards, there are many bank customers out there who do not see any real reason for shelling out a hundred rupees every year as annual fees

The banking industry has come a long way and today we are almost at a stage where everyone has a bank account. Those of us living in cities could have two and those living in metros could have even three to five accounts. I remember reading somewhere that the upper middle class has at least six bank accounts per family. From being a privilege for the wealthy and for those working in the Government services, banking has become a basic necessity of life. In fact, most parents get a bank account in the name of their as soon as they get him/her into school. How could they not? After all, a whole bunch of bankers run around them explaining the advantages of opening a child account, how it could help the kid become responsible, how it will help in education, and so on. The moment you open a bank account, a recurring deposit in the name of the kid and a life insurance policy are up next. That's okay. After all, the world is growing.

Banks want to have their cake and eat it too. Guess what, they have been successful at it.

Over the last many years, I have been looking at the changes happening in the banking sector. After computerization of the banking industry, banking has more to do with marketing than with calculations. The computers and software take care of all the calculations and thus, the banks are now better positioned to use human resources to generate revenue. Not so long ago, a bank employee would spend majority of his time in accepting deposits and making payments across the cash counter, making him a cost centre for the bank. Modern bankers (like ICICI Bank, HDFC Bank, etc) aggressively market their products by showcasing their services like ATMs, Internet Banking, Phone Banking, etc, making them a revenue centre.

Inter-bank fund transfers through internet banking attract charges too. Internet banking was supposed to benefit the bank by reducing the cheque clearing work, thereby leaving behind a lot of time for bank employees to work on other fronts. Its a different story that phone banking, which was supposed to help customers on a toll free number, is now offered on a paid line. So, all these services that came up to help customers have helped the banks more than the customers. Of course, no one can deny the many conveniences we enjoy today. The point I want to make is that all that was free, now comes at a cost.

Even an SMS sent to customers are subject to charges now. The SMS initiative came as a measure to ensure safe banking and now it costs the customers to ensure that he banks safely. Somehow, it doesn't convince me that my bank account is not safe with the banks with this paid SMS facility.

Debit Card Annual Fees - A trap?
 

Before declaring charges for their SMS facility, the banks introduced annual fees for debitcards. This one is perhaps the most annoying charge that today's customers pay. I personally had nearly 10 debit cards on my name up till some time ago (the side effects of working in the banking and financial services industry). One fine day, I realised that I had been paying a lot of money in the name of 'Debit card annual fees'. At Rs110 per card, I had been paying almost Rs100 a month. Since I would hardly use those cards I started closing those accounts one by one and yet, I was left with five of them. I was still stuck with paying Rs500 plus taxes for no sensible reason whatsoever.

Banks benefit more in terms of time and cost than the customers

Banks came up with the idea of ATMs in order to save time for customers and more importantly, for themselves. While customers do benefit from these cards, the banks benefit far more. Imagine the bankers sitting around and processing cash withdrawals of Rs100-1,000 to thousands of customers everyday in today's world.

A large number of customers still do not extensively use cards
 

It is a well known fact that a large number of customers who possess these cards, especially the ones in rural areas or the ones in business, seldom use these cards. Sole proprietors and, to some extent, Partnership firms have cash on hand, which they use for their daily expenses and this cash is received by them in the course of daily business. Most of their withdrawals are in the form of payments to third parties by cheques or transfers. So, the card lies in their pockets or lockers and they keep paying the annual fees.

Use of debit cards for shopping is very low
 

Banks promoted debit cards saying that these cards can be used at ATMs of other banks as well as be swiped at merchant terminals. However, the number of customers using debit cards for shopping is very low. Most customers who have a credit card would prefer swiping their credit card, thereby getting more than a month's time to pay the amount, rather than swiping a debit card where the amount goes off immediately. It is only when there are some offers, discounts, cash backs, etc that customers consider swiping their debit cards.

Five transactions only 
 

The banks' promotion of debit cards quoting that these can be used to withdraw cash from any ATM doesn't appeal anymore. After all, only 5 such transactions in a month are free and the customer has to pay for the 6th transaction. However, banks have continued to offer unlimited transactions at their own ATMs even today.

Banks should bring back the ATM card
 

While adapting to technology should be encouraged, banks should also provide for such customers who do not want to use technology that doesn't help them. Its like asking a banker to learn Hadoop or Big Data, as they are the latest technologies. There are some banks who are still issuing ATM cards on request. In fact, I got an ATM card from one of the leading private sector bank on placing a request for the same.

There was absolutely no need for the bankers to do away with an ATM card and make the customers opt compulsorily for debit cards. An ATM card is a boon for those customers who do not use the ATM often or do not intend to shop with it. Banks are making big bucks with these charges but it is time they realize that they focus on tailored solutions instead of making generic products. While many appreciate the progress from ATM cards to debit cards, there are many customers out there who do not see any real reason in shelling out a hundred rupees every year. In fact, there are awkward situations when such charges result in a drop in balance, and such a drop results in a cheque bounce. Online consumer forums are full of such complaints.

Reintroducing ATM cards would be a friendly step to help customers who have too many debit cards, or those who seldom use them. Levying an annual fee on all cardholders could be legally permissible but when you look at it from the ethical or customer service perspective, it may not fly well with customers. Although, abolition of the annual fees in totality would be more of a dream for customers.

Link Money Life

Work Culture In Banks

PM’s call to improve work culture extends to banking sector-Hindu Business Line

K RAM KUMAR

Must submit ‘action taken report’ within five days

MUMBAI, JUNE 9:  

Prime Minister Narendra Modi’s fiat to Central ministries and departments to ensure “improved work culture and work environment” has been extended to all financial sector regulators, chiefs of public sector banks, financial institutions and public sector insurance companies.

Initiate immediate action

In a communication issued on Monday to the above-mentioned entities, the Finance Ministry said they are required to initiate immediate action to improve work culture and work environment in all their offices, branches, premises or “any other spaces” in their organisation.

However, the ministry has given the regulators and financial intermediaries only five days to submit their ‘action taken report’ (by June 13), so that the Cabinet Secretary can be apprised of the action taken.

As part of this exercise, the ministry wants the workspace cleared and spruced up and filed/papers neatly stacked so that a positive work environment is created.

The financial sector regulators and financial intermediaries are required to identify forms that are in vogue and shorten them to one page.

They should also encourage online submission of information and eventually universalise it.

Decision-making

For quick turnaround in decisions, the ministry said decision-making layers should be whittled down to a maximum of four.

Calling for collaborative decision-making and frequent consultations between various verticals in an organisation, the ministry underscored that the entire organisation should work as a team, with every level being encouraged to provide inputs and value-addition.

The regulators as well as the financial intermediaries have been asked to ensure effective and timely resolution of public grievances.

In the case of financial sector regulators, the ministry wants them to identify at least 10 rules or processes and even archaic laws, which are redundant and not lead to any loss of efficiency, so that they can be repealed.

There are five financial sector regulators — Reserve Bank of India, Securities and Exchange Board of India, Insurance Regulatory and Development Authority, Pension Fund Regulatory and Development Authority, and Forward Markets Commission — in the country.

Hindu Business Line

Merger Of RRBs (Regional Rural Banks)

FinMin puts amalgamation of regional rural banks on hold

At present, central govt, state govts and sponsor banks like SBI and PNB provide capital                          

     RRBs were set up in 1975, to create an alternative channel to the cooperative credit structure and ensure sufficient institutional credit for the rural and agriculture sectors

The Centre has put on hold further amalgamation of regional rural banks (RRBs), as these face challenges in meeting capital adequacy norms. It is expected the focus will now be on improving their performance and exploring a new class of investors to raise capital for these.

In a communiqué to the heads of public sector banks, the finance ministry said there was a need to tap other sources of capital for RRBs. No fresh proposal of amalgamation of RRBs should be taken up, it added.

Currently, the central and state governments and sponsor banks such as State Bank of India and Punjab National Bankprovide capital to RRBs — while the Centre provides 50 per cent, the state government provides 15 per cent and the sponsor bank 35 per cent. While Centre and sponsor banks have been infusing capital, state governments have been found wanting in providing their share.

A Bill to amend the RRB Act is being considered by the parliamentary standing committee on finance. The amendments are aimed at increasing the pool of investors to tap capital for RRBs.

A senior public sector official said now, the focus would be on improving the performance of RRBs, including their profitability. Further amalgamation on this front should happen only after examining the viability of the exercise, the official added.

As of March-end, 2011, the total number of RRBs stood at 82; this fell to 64 in March 2013 and 57 in March 2014.

National Bank for Agriculture and Rural Development (Nabard), the regulating body for rural banks, has said agricultural credit disbursement by RRBs has been short of the target. The low disbursal of farm credit by RRBs was due to amalgamation and capital adequacy limitations, as these banks had to maintain a capital adequacy ratio of at least nine per cent, it said, adding RRBs didn’t have any source of capital other than paid-up capital.

RRBs were set up in 1975, to create an alternative channel to the cooperative credit structure and ensure sufficient institutional credit for the rural and agriculture sectors.

RRBs have presence throughout the country. P Chidambaram during his first innings as finance minister under United Progressive Alliance (UPA) took steps including recapitalization, and restructuring to improve the functioning and financial health. It was also meant to attain economies of scale and ensure better managerial control.

Link Business Standard

Banks Provide More Services At ATM

More services on anvil at non-home ATMs-Business Standard-10th June 2014

Union Bank, Andhra Bank, YES Bank launch cash transfer

Soon, you may be able to deposit cash or order a cheque book through an automated teller machine (ATM) of a bank, of which you are not a customer. At present, one can withdraw money, check account balance and get a mini statement from non home-bank ATMs, but no other transaction is allowed.

The National Payments Corporation of India, along with some private and public-sector banks, has embarked on a pilot project to test the feasibility if several services could be offered by non-home bank ATMs. Bankers have also sought the Reserve Bank of India’s (RBI) approval to roll out the same if the results of the pilot projects are positive.

Banks now offer services such as paying telephone bill, electricity bill, DTH recharge at the ATMs. In particular, banks have approached RBI to allow cash deposits at ATM to be made inter-operable. “Several banks have cash deposit facility at ATMs that are not inter-operable as yet. So, only the banks’ consumers can use the same. We have sought RBI’s permission to make it independent now. A request has also been sent to make bill payment also interoperable,” said an industry official who is familiar with the development.

The official added banks are also working at making features such as cheque book request, statement requests and card-to-card transfer inter-operable.

Some banks have already started cash transfer between two accounts of different banks via debit card. Currently, banks have started this feature across Union bank, Andhra Bank and YES Bank.

Aspy Engineer, president and country head (ATM management and currency chest) at YES Bank, believes making all the transactions at ATMs independent of the bank will be a game-changer. “Since the operational profitability of the ATMs has been under pressure, the idea is to increase the transactions that happen across ATM branches to boost volumes and make it profitable.”

IN A NEW AVATAR

The National Payment Corporation  of India, along with some private and public sector banks, have embarked on a pilot project to test if some additional services could be offered by non-home bank ATMs Non-home ATMs may soon provide cheque books and deposit facility At present, one can withdraw money, request a balance enquiry and a mini statement from a non-home ATM Banks now offer services like paying telephone bill, electricity bill, DTH recharge at ATMs Banks have approached RBI to allow cash deposits at ATM to be made inter-operable Some banks have already started a cash transfer between two accounts of different banks via debit card

YES Bank has also been looking at introducing several value-added services at the ATM and this includes features such as mobile number updation that can currently be done only by visiting a bank branch.

The cost of running ATMs has also shot up. After an attack on a woman customer at a Corporation Bank ATM in Bangalore last year, it was decided to strengthen security of ATMs. According to reports, banks incur Rs 4,000 crore every month on additional security requirements alone.

Monish Shah, senior director at Deloitte in India believes that introducing more such features will come a long way in improving the profitability of these channels. “ATM and such alternate channels are turning out to be the preferred channels to reach the masses and this is the channel that we are likely to see players focusing on in the near future. Therefore, such inter-operable features will be an advantage for the banks.”

Link Business Standard

Bank Make Address Proof Easier

RBI eases address proof rules for bank A/c-Hindu Business Line-9th June 14

BEENA PARMAR

MUMBAI, JUNE 9:  

Now, citizens without having permanent address proof can open a bank account by submitting only one document as current proof of address, according to the Reserve Bank of India.

Taking note of citizens who are migrant workers and transferred employees who do not possess permanent address documents, the central bank eased the Know Your customer (KYC) documentation rules.

In a notification, RBI said, “Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation. In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proof of address may be submitted to the branch within a period of six months.”

The RBI further added that in case the proof of address furnished by the customer is not the local address or address where the customer is currently residing, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer.

“No proof is required to be submitted for such address for correspondence/local address. This address may be verified by the bank through ‘positive confirmation’ such as acknowledgment of receipt of (i) letter, cheque books, ATM cards; (ii) telephonic conversation; (iii) visits; etc,” it said.

In the event of change in this address due to relocation or any other reason, customers may intimate the new address for correspondence to the bank within two weeks of such a change, RBI added.

Link Hindu Business LIne

RBI simplifies KYC norms for opening of bank account-Business today

A bank account can be opened with just one address proof, permanent or local, says a Reserve Bank of India (RBI) decision, helping migrant workers and employees with transferable jobs who at present face cumbersome procedure to access banking services.

"Henceforth, customers may submit only one documentary proof of address (either current or permanent) while opening a bank account or while undergoing periodic updation," the Reserve Bank (RBI) said in a notification on Monday. "In case the address mentioned as per 'proof of address' undergoes a change, fresh proof of address may be submitted to the branch within a period of six months," it said.

RBI was receiving representations and references from various quarters, including migrant workers, transferred employees about the problems faced by them in submitting a proof of address while opening a bank account, the notification said.

In cases where customer is not able to furnish local proof of address, the bank may take a declaration of the local address on which all correspondence will be made by the bank with the customer, it said.

"No proof is required to be submitted for such address for correspondence/local address. This address may be verified by bank through positive confirmation such as acknowledgment of receipt of letter, cheque books, ATM cards, telephonic conversation," the apex bank said.

If there is a change in address, customer may intimate the new address for correspondence to the bank within two weeks of such a change, it added.

It further asked banks to revise their KYC policy and ensure strict adherence to the revised guidelines

ICICI Number One Employer

ICICI Bank overtakes HDFC Bank as top private bank employer-Financial Express

With addition of over 10,000 jobs last fiscal, ICICI Bank has overtaken rival HDFC Bank as the biggest employer in the private banking space with more than 72,000 employees.

Incidentally, HDFC Bank saw its employee headcount decline by 900 during the fiscal ended March 31, 2014, while at least five other major private sector banks saw their workforces grow during the year.

These five lenders - ICICI Bank, Axis Bank, Kotak Mahindra Bank, IndusInd Bank and Yes Bank - saw their employee strength rise by over 20,000 in 2013-14.

HDFC Bank's headcount stood at 68,165 at the end of last fiscal, while that of ICICI Bank grew by 10,161 to 72,226 employees. In 2012-13, HDFC Bank was the largest employer among private banks with 69,065 employees, as against ICICI Bank's 62,065 staff.

ICICI Bank has also recorded higher total income and profits than HDFC Bank in the latest fiscal year.

HDFC Bank posted total income Rs 50,852 crore and net profit Rs 8,743 crore for the year ended March 31, 2014. On stand-alone basis, HDFC Bank's net profit for the year stood at Rs 8,478 crore, while total income was Rs 49,055 crore.
In comparison, ICICI Bank's consolidated total income was Rs 79,563 crore and net profit at Rs 11,041 crore. It recorded total income of Rs 54,606 crore and net profit of Rs 9,810 crore on stand-alone basis.

An analysis of staff details provided by various banks in their respective annual reports shows that hiring activities picked up in the banking sector during 2013-14, as the total job addition by top five banks rose to close to 22,000, from about 15,000 employees added in the previous year.
The staff expenses have also increased for these banks, owing to increased staff strength. At the same time, the productivity ratios -- measured in terms of profit per employee and business per employee have also improved for most of these banks.

Even for HDFC Bank, profit per employee rose from Rs 10 lakh to Rs 12 lakh in 2013-14, while business per employee was up at Rs 8.9 crore (as against Rs 7.5 crore in previous year).
For ICICI Bank, profit per employee has remained nearly flat at Rs 14 lakh, while business per employee rose marginally to Rs 7.47 crore. However, it is Yes Bank which has maintained better productivity ratios than its bigger rivals.

ICICI Bank added the maximum number of employees to its payrolls (10,161 net addition), while Axis Bank saw its headcount rise by 4,519 to 42,420 employees. IndusInd Bank's headcount rose by 4,088 to 15,590 employees, while Kotak Mahindra Bank saw its headcount rise by 2,586 to 16,086.
Yes Bank's staff count rose to 8,798 employees as on March 31, 2014 with a net addition of 1,774 people.

Link Financial Express

RBI Is Expected To Do

The task ahead for Reserve Bank-LiveMint 9th June 2014

With elections over and a stable government in place, things that can be expected from RBI include focus on financial inclusion, infrastructure, debt market, governance at PSU banks

Tamal Bandyopadhyay

The change in the language of the Reserve Bank of India’s (RBI) second bi-monthly policy review last week is unmistakable. The stance has become softer and the central bank’s concerns for sagging growth are pronounced. A stable government, in place after three decades, can play a critical role in containing inflation and pushing for economic growth by appreciating the importance of fiscal consolidation. RBI governor Raghuram Rajan has met both Prime Minister Narendra Modi and finance minister Arun Jaitley ahead of the policy review. I don’t know what transpired at these meetings but with elections over and a stable government in place in the world’s largest democracy, I would expect the following things from RBI over the next few months.

First, the Indian central bank in right earnest may now start working on opening a window for differentiated bank licences. In Asia’s third largest economy, where only 35% of the adult population has access to formal banking services, the debate has all along been on whether we need a few large banks or many small banks. RBI seems to have reached a conclusion that we need both. We may see the guidelines for payments banks soon and this could be followed by new norms for small banks as well as universal banks.

The payments banks can be created by converting prepaid payment issuers (PPIs). There are more than two dozen PPIs in India that provide mobile wallets or cards that customers can use to make payments with the money that is stored in them. These banks will not be into lending and their business model will evolve around liquidity and float money. I will not be surprised if we see the first set of payments banks being born next fiscal year.

Second, we may see a renewed emphasis on spreading banking services or the so-called financial inclusion. The model of banking correspondents—through which the not-so-nimble-footed public sector banks have been trying to expand their footprint in rural India—needs to be relooked and liberalized. Besides, there could be a new thrust on the use of technology to expand banking services. This can be achieved by coordination between banks and mobile network operators. This has already started in a small way and if we want to spread formal banking services deeper into the hinterland of India, the banking regulator must encourage greater coordination in this field.

Third, as infrastructure is set to emerge as one of the main focus areas of the new government, RBI is expected to create new avenues for long-term resources that can support core projects. This can be done by allowing commercial banks to float long-term bonds, say between eight and 20 years. These bonds can be exempted from the requirements of cash reserve ratio (CRR) and statutory liquidity ratio (SLR). CRR refers to the portion of deposits that banks need to keep with RBI on which they don’t earn any interest and SLR is their compulsory bond holding. Currently, CRR is pegged at 4% of a bank’s deposits and a bank needs to invest at least 23% of deposits in government bonds.

Loans to the infrastructure sector should be considered a priority but money raised through long-term bonds should not be subjected to the so-called priority sector lending norms under which banks need to give loans to agriculture and small-scale industries to the extent of 40% of their total loan book. With implicit government guarantee, such bonds can offer slightly higher interest rates than government bonds and generate liquidity for banks.

Fourth, along with this, the banking regulator, in close coordination with the capital markets regulator, should take steps to deepen the debt market to ease pressure on the banking system.

Fifth, RBI is expected to focus on governance in public sector banks and strengthening their boards. A panel set up by the central bank to review the governance of bank boards has suggested that the government—the majority owner of public sector banks—should change the governance structure at these banks, make them competitive and push up their market value. This will free the government from the burden of pumping in capital into these banks every year.

Even before the panel headed by P.J. Nayak, former Axis Bank Ltd chairman and Morgan Stanley India Co. Pvt. Ltd chief, outlined the reasons behind the inherent inefficiency of public sector banks that have been piling up bad assets, RBI had been interacting with the finance ministry to change the structure of bank boards and reform the human resources policy by giving a longer tenure to the chairmen and allowing banks to offer market-related salaries to their employees, among other things. The government may not agree to pare its stake below 51% but it can always find ways of holding the stake indirectly through a bank holding company. This will free bank employees from the shackles of investigative agencies such as the Central Bureau of Investigation and the Central Vigilance Commission, and speed up the decision-making process on the one hand and, on the other, prop up their valuation in the market.

Finally, formal inflation-targeting and the setting up of a monetary policy committee, as recommended by a panel headed by RBI deputy governor Urjit Patel, may have to wait as the current government doesn’t seem to be favourably inclined to adopt this at this point. However, RBI is expected to follow the glide path charted out by the panel—achieving 8% retail inflation by January 2015 and 6% by January 2016. Indeed, retail inflation will remain the nominal anchor for the monetary policy framework but I don’t expect the central bank to formally adopt the concept of inflation-targeting, at least in the next two years.

Tamal Bandyopadhyay keeps a close eye on everything banking from his perch as Mint’s deputy managing editor in Mumbai. He is also the author of Sahara: The Untold Story and A Bank for the Buck

Link LiveMint

Banker By Accident And Prime Minister By Accident

K C Chakrabarty – An Accidental Banker ? -
Lessons for Top Management- By Rajesh Goyal

I have come across an interesting interview of Mr K C Chakrabarty published in Business Standard (dated 30th May, 2014).   He is one of those few bankers who have remained controversial during their tenure as CMDs of PS banks and even later on as Deputy Governor of RBI.  After reading this interview, I could not resist of expressing my views on this interview and recent controversy relating to PM of India. (Click here to read the full interview: Lunch with BS : K C Chakrabarty. 

 The following article and interview must be read by every officer in banking sector as they will get the inside thoughts (e.g. his admission that now he has to now stand in queue at the airports) of top bankers after they retire.  Share it with your friends either through social media or discussions at personal level.

 One of the highlights of the above interview is his admission of the fact that “banking came to him not by design but by accident”.  It immediately reminded me of the recent book “The Accidental Prime Minister: The Making and Unmaking of Manmohan Singh”, which  is a 2014 memoir by Indian policy analyst Sanjaya Baru, who was Prime Minister Manmohan Singh's media advisor from May 2004 until August 2008.    I am sure, there is little common between two personalities i.e. Manmohan Singh and K C Chakrabarty except that both appear to have reached their positions by ACCIDENT rather than their wishes.   In the book by Baru the main focus has been on the powerless PM, and  significant power being wielded by the Congress party's president Sonia Gandhi, to whom Manmohan Singh was completely "subservient".  However, Mr Chakrabarty has never been subservient and unlike Manmohan Singh has been very vocal on various issues.

 Both of them reached to the positions where they could have done a lot more for the country / banking.    Both of them remained at the top positions for long time – Mr Singh was PM for 10 years, whereas Mr Chakbrabarty was in saddle for almost similar period as CMD of two biggest PS Banks  (BoB and PNB) and then as Deputy Governor of RBI.    Both had a chance to influence the policies of the country / banking sector which could have uplifted the poor or which could have left long term mark in the history of country / banking.  However, both these Accidental Personalities miserably failed to leave any long term marks (whenever Mr Singh will be remembered, he will be remembered for good work he did during his tenure as Finance Minister and not as PM).   Mr Singh will be remembered for failing in his mission due to his silence and not asserting his authority, whereas Mr Chakrabarty will be remembered for failing in his mission due to his outspoken habit and not taking his team along to achieve the mission of helping poor in particular and banking sector in general.   When he was CMD, he was at loggershead with most of GMs, whereas when he was DG at RBI, he was loggershead with Governor RBI.

 

In today’s India, it is not frequently that people with brilliant academic records and knowledge are able to reach the top positions.   But sometimes Accidents do happen, and such people are able to reach the top.   The moment it happens people have great hopes.   Mr Singh and Mr Chakrabarty had excellent academic records and were lucky to reach the top, but failed due to their own personality traits.   This reminds us of golden rule that one has to be balanced personality.  Now NaMo, a Tea Seller,  has reached the post of PM not by accident but his hard work and not academic brilliance.  People like Manishankar Aiyer (including Mr Manmohan Singh and Mr Chakrabarty) with education at top colleges, are finding extremely difficult to digest that a common man has reached the top post.  I hope he will prove to be much more balanced personality.



I feel the interview of Mr Chakrabarty contains many self contradictions (which some people may not agree, but I will request them to read between the lines carefully) yet I will like to quote some interesting parts which will give an insight about the thought and regrets Mr Chakrabarty has now  (He never learnt such lessons from his experience during his service).   The excerpts from interview reads:

“When he was in Bank of Baroda, he was posted for a long time in Baroda (now Vadodara), which was 1,800 km away from his adopted hometown of Varanasi, with the result that he couldn't attend the last rites of both his parents since convention dictates that the cremation must take place before sunset on the same day as the death. Then, he was shipped to Chennai from Delhi, when he became chairman of Indian Bank, and then brought back to Delhi, when he took over as chairman of Punjab National Bank (PNB), unlike many of his peers who became chairmen of banks that had their headquarters in the same city in which they were posted”.

[This shows that he regretted his posting in Delhi inspite of his being elevated to the posts of CMD with all the perks and free official visits to the place where his family was living!! It appears he wanted to be posted as CMD of a bank which had HO  either at Baroda or Varanasi ! However, during his tenure as CMD he always ensured that officers were transferred to the farthest places (except his own men).    Question arise, why even now clerks promoted to Scale I are sent 1000 kms or more away ?  What steps he took to stop such trends in banking industry?]

 Another interesting part is his admission of the fact as to how CMDs / EDs misuse their official authorities (he says he has not done so during his tenure).

 "For instance, many of my illustrious colleagues used to call for their bank board meetings in the same city where they had to attend a family wedding. I was singularly talent-less in these things,"

 Every banker is very much aware of this kind of corrupt practices, but they keep silent owing to fear of backlash from top management.    It is good that Mr Chakrabarty has admitted this fact openly in his interview.    However, the moot question remains,  What steps he took during  he tenure as DG of RBI to stop such practices?  If he has failed to bring it to light during his tenure at RBI, then how can we expect that any officer in Scale I to Scale VII can dare to raise such questions during their service?

 There is need to bring transparency in the working of the banks specially at Board level and empower the officials at the middle level to be more vocal in bringing the ills in the banking industry, or else slowly public sector banks will perish.

 

Lunch with BS: K C Chakrabarty

The accidental banker

Shyamal Majumdar & Manojit Saha 

May 30, 2014

Chakrabarty tells Shyamal Majumdar & Manojit Saha that banking came to him not by design but by accident, and that banks in India ignore the poor

Our first question was inevitable. Why, really, we ask Kamalesh Chandra Chakrabarty, did he decide to resign as Reserve Bank of India (RBI) deputy governor nearly three months before his term was slated to end on June 15 this year. To our disappointment, the answer does no justice to his public persona of a fiercely outspoken banker and regulator. "That's not for public consumption," Chakrabarty, dressed in an immaculate two-piece black suit, demurs before proceeding to provide us with details of his excellent equation with all his bosses at RBI.

We take the cue and try, quite reluctantly, to change the topic, but the vintage Chakrabarty is back in a jiffy. As we settle down at Fenix, the restaurant at the sprawling lobby of the Trident hotel at Nariman Point, he volunteers to talk "in general" about a couple of issues. First, one should leave when people miss you and not when they "start kicking you". Second, he has still not been able to figure out the exact retirement age of RBI deputy governors. Sixty-two, we say. But Chakrabarty counters that by saying four of the previous deputy governors retired on either side of 62; in fact, most got extensions beyond 62 years. He doesn't understand why there should be different retirement age for different people and why such decisions should be ad hoc or discretion-based. In fact, regarding one deputy governor, both the finance ministry and RBI wrote in the files that there is no retirement age for RBI deputy governors.

The question before him, thus, was simple. If there is no official retirement age, then he should choose when to retire since he didn't "want a bureaucrat to take that decision."

"I can't decide on the day of my death; that's God's prerogative. But in a democratic country, one has the power to decide on his retirement date," he says.

He isn't finished yet and gives us a third "issue". Never in his life has he worked for more than five years in one position since he is a firm believer of the fact that after a point, one has nothing new to offer in the same position: "I have worked for five years as deputy governor, with more or less the same portfolio... and sometimes without a portfolio." The last bit is a reference to August 2010, when he was stripped of most of his key portfolios a few days after his reported public comments on why RBI should be more aggressive in combating inflation. Chakrabarty clearly has that rare ability to laugh at his own expense. When reporters asked him to comment on an RBI policy initiative, he had famously said "Do you want me to be stripped of the Rajbhasha portfolio as well?"

Chakrabarty orders chicken clear soup and assorted baked vegetables, saying he stopped having a full meal for lunch many years ago. We make up for his frugal order by ordering rice and "railway mutton curry", prompting Chakrabarty to say wistfully that he used to have rice for breakfast as well as lunch during his childhood in a tribal area in Odisha, where his father was posted as a doctor in a missionary hospital. The only male among six siblings of immigrant parents who moved to India from then east Pakistan, he was later sent to his grandparents in Varanasi, so that he could get a decent schooling.

Even close to four years after the "punishment" by then RBI Governor D Subbarao (he subsequently regained most of his key departments), Chakrabarty remains unapologetic and says but for his outspokenness, the world would have not known that he has a different view on inflation. "In hindsight, one can say I wasn't liked for speaking the truth. But I certainly wasn't punished because less work can't be considered a punishment. If I were to be punished, I should have been given more work," he says with a big smile. In any case, he has differed with his bosses at every stage of his 42-year career. In fact, on a number of occasions, he differed with various finance ministers openly. "No one can be punished for having a difference of opinion but when a decision is taken by my superiors, it's my duty to implement it," he says.

Chakrabarty says he is extremely lucky to have had the opportunity to work in the public sector since outspoken people like him would have surely been thrown out in the private sector. In the public sector, the punishment for outspoken and no-nonsense people who refuse to indulge in lobbying is limited to either not getting a choice posting or transfers. For example, when he was in Bank of Baroda, he was posted for a long time in Baroda (now Vadodara), which was 1,800 km away from his adopted hometown of Varanasi, with the result that he couldn't attend the last rites of both his parents since convention dictates that the cremation must take place before sunset on the same day as the death. Then, he was shipped to Chennai from Delhi, when he became chairman of Indian Bank, and then brought back to Delhi, when he took over as chairman of Punjab National Bank (PNB), unlike many of his peers who became chairmen of banks that had their headquarters in the same city in which they were posted.

The lesson he learnt is that if you want to do some plain-speaking and be nobody's man, then your conduct has to be like Caesar's wife - that is beyond suspicion - and you should not seek any personal favours from anybody. "For instance, many of my illustrious colleagues used to call for their bank board meetings in the same city where they had to attend a family wedding. I was singularly talent-less in these things," Chakrabarty says, adding whenever a minister or an important politician wanted him to do something against his wishes, he used to always insist on written instructions. "Half of my problems were sorted out because of that," he adds.

He orders green tea and says banking came to him not by design but by accident. A brilliant student with a knack for numbers, Chakrabarty scored a gold medal in MSc (statistics) followed by a PhD and the inevitable teaching route at Banaras Hindu University, which lasted five years. But he didn't want to spend the rest of his life regurgitating the same lessons over and over and applied for the post of planning officer in Bank of Baroda. Despite his growing reputation as someone who is unwilling to cut corners, the promotions came fast throughout his 26-year stint at Bank of Baroda - later, he became executive director of PNB, before becoming chairman of Indian Bank and then PNB.

The valuable lesson he has learnt is that banks in India continue to ignore the poor, despite the fact that they are more bankable and more credit worthy. While his opinion about the quality of management in public sector banks is well-known ("non-performing administration" and so on), Chakrabarty says most banks are underperforming because there is no pressure of competition. That is why, he says, India needed more banks. Instead, from 1947 onwards, the number of government banks in the country has been reduced.

So what explains the four-year delay in issuing new bank licences, we ask. "Reluctance and incompetence," is the short answer.

As we wait at the lobby for his car, Chakrabarty says he hasn't decided on his future, though he is firm on not taking up a full-time role; 42 years of non-stop work have been long enough. Offers have been flowing in but he would take his own sweet time before taking up something - possibly in part-time consultancy or research. "Though I would love to spend time reading books, my wife has already started asking me to go out and keep myself occupied. After all, she is not used to seeing me at home," he jokes.

At this point, however, he is caught up in a more mundane issue: transition from an exalted existence of so many years to that of a common man's daily issues. For example, he had to go through a maze of formalities before getting a new phone connection at a temporary residence in Mumbai. "I have forgotten how to stand in queues - even at the airport, there was always someone else to take care of the formalities. But I will learn fast," he says. To make the transition easier, Chakrabarty is planning to live abroad (his son is based in the UK) for a few months where he has to do everything for himself anyway.

With a dubious legacy, "accidental prime minister" Manmohan Singh bows out-DNA

Monday, 19 May 2014 -

When it was clear that he was set for a stunning election victory last week, India's Narendra Modi sent a message that read simply "India has won": It instantly set a record as the country's most retweeted Twitter post.

And yet two days earlier the top trend on Twitter India had been #ThankYouDrManMohanSingh, a popular tribute to Manmohan Singh, who bows out after 10 years as prime minister with deep respect even if voters thrashed his party in the polls.

Singh will be remembered for the reforms he drove through as finance minister in 1991 that prised open a state-stifled economy. In his budget speech that year, he quoted Victor Hugo, saying "No power on earth can stop an idea whose time has come".

Those reforms snapped India out of a shuffling rate of growth of that time, lifted millions out of poverty and propelled the country into the league of dynamic emerging economies.
In a blizzard of commentaries examining 81-year-old Singh's legacy in recent weeks, the Oxbridge-educated economist has been praised for his intellect and personal integrity, and world leaders have reached out to wish him well in retirement.

And yet Singh's stock tumbled during his second five-year term as economic growth skidded, inflation ballooned and spectacular corruption scandals clattered like skeletons out of a cupboard. His public silence on many matters became the butt of jokes, including one which said movie theatre patrons were being asked to put their mobile phones in "Manmohan mode".
Singh struggled to fend off the perception that the real power in his government was Sonia Gandhi, leader of the Congress party and widow of former prime minister Rajiv Gandhi, whose family has ruled India for most of the time since independence from Britain in 1947.

In a book published during the election campaign, "The Accidental Prime Minister", a former media adviser said that Singh allowed his authority to be undermined by Gandhi. "You must understand one thing. I have come to terms with this," the author, Sanjaya Baru, recalled the prime minister telling him in 2009. "There cannot be two centres of power. That creates confusion. I have to accept that the party president is the centre of power. The government is answerable to the party."

Singh's spokesman dismissed the book as an incorrect interpretation of the prime minister's decade in power, but the memoirs only served to reinforce a popular perception that an extra-constitutional authority had called the shots for years.
FATHER OF REFORMS
The only prime minister since independent India's first leader to serve two full five-year terms and the first Sikh to have held the office, Singh told his final news conference that history would in the end be kind to him.

Swaminathan Aiyar, a prominent Indian journalist, said that Singh's achievements would indeed become his story. "People will forget Manmohan Singh's failings, and remember him as the father of economic reform and superfast growth," Aiyar wrote in a Times of India commentary.
Born into a poor Sikh family in a part of British-ruled India now in Pakistan, Singh studied by candlelight to win scholarships to Cambridge and Oxford, earning a doctorate with a thesis on the role of exports and free trade in India's economy.

He held the top finance and economic planning posts in India's bureaucracy for decades and was also head of the central bank before joining the cabinet in 1991. He became prime minister in 2004 when Sonia Gandhi, who led the Congress party to a surprise victory, declined the job fearing her Italian birth would be used by Hindu nationalist opponents to attack the government.

As prime minister, Singh sought to liberalise the economy further. However, he often ran into resistance from wayward allies in his coalition government and from his own left-leaning party, which prioritised welfare schemes such as a jobs programme for the rural poor.
In 2008, he stood up to his party's one-time communist allies over a civilian nuclear energy deal with the United States that took his country out of decades of diplomatic isolation over its atomic weapons programme.

Singh saw India's growth story wobble in the last years of his premiership as global economic turbulence combined with a policy paralysis at home battered the investment climate.
His second term was also overshadowed by mass protests against corruption, and he was widely criticised for apparently turning a blind eye to the graft raging around him.

Harish Khare, who served as the prime minister's media adviser from 2009 to 2012, described Singh in an article for the weekly magazine Outlook as "spectacularly unflamboyant", but credited him for making historic course corrections that brought India more social harmony, equity and regional peace.
A leader of the Bharatiya Janata Party, which routed Congress in the election, praised the outgoing prime minister for his "dignity and grace" but like many voiced doubt about his overall record. "It was the inability to speak up within his own party that may compel the historians to take a different view of the man," Arun Jaitley said in an article sent to media last week. "Only if he had stood up at the right time and disagreed he would have been regarded with still a greater honour

Link DNA

FM Meets With Trade Union Leaders

Union Finance Minister Holds Pre-Budget Consultation Meeting With the Representatives of Trade Union Groups

June 6, 2014 at 4:01pm

  
            The Union Finance Minister Shri Arun Jaitley said that skill development would be given priority so that more and more trained workers join the Indian economy. He said that the Government will give due consideration to the Ten Point Joint Charter of Demands given by the Central Trade Unions while formulating the budgetary proposals. The Finance Minister was speaking here today while interacting with the representatives of the Central Trade Unions as part of his Pre-Budget Consultation meetings.

Along with the Finance Minister, the meeting was attended by Ms. Nirmala Sitharaman, Minister of State for Finance and Corporate Affairs, Shri Ratan P. Watal, Expenditure Secretary, Shri Rajiv Takru, Revenue Secretary, Smt. Gauri Kumar, Secretary, Ministry of Labour and Employment and senior officers of the Ministry of Finance among others.


The participating Central Trade Unions gave a joint memorandum to the Finance Minister for his consideration and positive response. Some of the specific proposals contained there in are given below:


·         Take effective measures to arrest the spiraling price rise and to contain inflation; Ban speculative forward trading in commodities; universalize and strengthen the Public Distribution System(PDS); ensure proper check on hoarding; rationalize, with a view to reduce the burden on people, the tax/duty/cess on petroleum products.
·         Massive investment in the infrastructure in order to stimulate the economy for job creation. Public Sector should take the leading role in this regard. The plan and non-plan expenditure should be increased in the budget to stimulate jobs creation and guarantee consistent income to people.
·         Minimum wage linked to Consumer Price Index (CPI) must be guaranteed to all workers, taking into consideration the recommendations of the 15th Indian Labour Conference . It should not be less than Rs. 15,000/- p.m.
·         FDI should not be allowed in crucial sectors like defence production, telecommunications, railways, financial sector, retail trade, education, health and media.
·         The Public Sector Units (PSUs) played a crucial role during the year of severe contraction of private capital investment immediately following the outbreak of global financial crisis. PSUs should be strengthened and expanded. Disinvestment of shares of profit making public sector units should be stopped forthwith. Budgetary support should be given for revival of potentially viable sick CPSUs.
·         In view of huge job losses and mounting unemployment problem, the ban on recruitment in Government departments, PSUs and autonomous institutions (including recent Finance Ministry’s instruction to abolish those posts not filled for one year) should be lifted as recommended by 43rd Session of Indian Labour Conference. Condition of surrender of posts in government departments and PSUs should be scrapped and new posts be created keeping in view the new work and increased workload.
·         Proper allocation of funds be made for interim relief and 7th Pay Commission.
·         The scope of MGNREGA be extended to agriculture operations and employment for minimum period of 200 days with guaranteed statutory wage be provided, as unanimously recommended by 43rd Session of Indian Labour Conference.
·         The massive workforce engaged in ICDS, Mid Day Meal Scheme, Vidya volunteers, guest teachers, Siksha Mitra, the workers engaged in the Accredited Social Health Activities (ASHA) and other schemes be regularized. No to privatization of centrally funded schemes. Universalization of ICDS be done as per Supreme Court directions by making adequate budgetary allocations.
·         Steps be taken for removal of all restrictive provisions based on poverty line in respect of eligibility coverage of the schemes under the Unorganized Workers Social Security Act 2008 and allocation of adequate resources for the National Fund for Unorganised Workers to provide for social security to all unorganised workers including the contract/casual and migrant workers in line with the recommendations of the Parliamentary Standing Committee on Labour and also the 43rd Session of Indian Labour Conference. The word BPL redefined and redistributed at the earliest.
·         Remunerative prices should be ensured for agricultural produce and Government investment, public investment in agriculture sector must be substantially augmented as a proportion of GDP and total budgetary expenditure. It should also be ensured that benefits of the increase reach the small, marginal and medium cultivators only.
·         Budgetary provision should be made for providing essential services including housing, public transport, sanitation, water, schools, crèche, health care etc, to workers in the new emerging industrial areas. Working women’s Hostels should be set-up where there is a concentration of women workers.
·         Requisite budgetary support for addressing crisis in traditional sectors like jute, textiles, plantation, handloom, carpet and coir etc.
·         Budgetary provision for elementary education should be increased, particularly in the context of the implementation of the ‘Right to Education’ as this is the most effective tool to combat child labour.
·         The system of computation of Consumer Price Index (CPI) should be reviewed as the present index is causing heavy financial loss to the workers.
·         Income tax exemption ceiling for the salaried persons should be raised to Rs. 5.00 lakh per annum and fringe benefits like housing, medical and educational facilities and running allowances should be exempted from income tax net in totality.
·         Threshold limit of 20 employees in EPF Scheme be brought down to 10 as recommended by CBT-EPF. Pension benefits under the EPS unilaterally withdrawn by the Government should be restored. Government and employers contribution be increased to allow sustainability of Employees Pension Scheme and for provision of minimum pension of Rs. 3000/- p.m.
·         New Pension Scheme be withdrawn and newly recruited employees of Central And State Governments on or after 1.1.2004 be covered under Old Pension Scheme;
·         Demand for Dearness Allowance merger by Central Government and PSU employees be accepted and adequate allocation of fund for this be made in the budget.
·         All interests and social security of the domestic workers to be statutorily protected on the lines of ILO Convention on domestic workers.
·         The Cess management of the construction workers is the responsibility of the Finance Ministry under the Act and the several irregularities found in collection of cess be rectified as well as their proper utilization must be ensured.

In regard to resource mobilization, the Trade Unions have emphasized on the following:

·         A progressive taxation system should be put in place to ensure taxing the rich and the affluent sections who have the capacity to pay at a higher degree. The corporate service sector, traders, wholesale business, private hospitals and institutions etc should be brought under broader and higher tax net. Increase taxes on luxury goods and reduce indirect taxes on essential commodities.
·         Concrete steps must be taken to recover huge accumulated unpaid tax arrears which has already crossed more than Rs. 5.00 lakh crore on direct and corporate tax account alone, and has been increasing at a geometric proportion. Such huge tax evasion over and above the liberal tax concessions already given in the last two budgets should not be allowed to continue.
·         We welcome the constitution of SIT for black money and urge for speedy action.
·         Effective measures should be taken to unearth huge accumulation of black money in the economy including the huge unaccounted money in tax heavens abroad and within the country. Provisions be made to bring back the illicit flows from India which are at present more than twice the current external debt of US $ 230 billion. This money should be directed towards providing social security.
·         Concrete measures be expedited for recovering the NPAs of the banking system from the willfully defaulting corporate and business houses. By making provision in Banking Regulations Act, CMDs and executives to be made accountable for creation of NPAs.
·         Tax on long term capital gains to be introduced, so also higher taxes on the security transactions to be levied.
·         The rate of wealth tax, corporate tax, gift tax etc to be expanded and enhanced.
·         ITES, outsourcing sector, educational institutions and health services etc run on commercial basis should be brought under the Service Tax net.
·         Small saving instruments under postal and other agencies be encouraged by incentivizing commission agents of these scheme.

Other suggestions include holding of post budget consultations with the representatives of Central Trade Unions, need for directional change in policies such as stopping of mindless deregulation, encourage entrepreneurship to tackle problem of unemployment, more spending on education and skill development, removal of ceiling on gratuity, bonus and pension etc of workers and following the principle of “Same work, same wages” among others.

Representatives of different Central Trade Union groups who participated in today’s meeting included Shri B.N. Rai, Bhartiya Mazdoor Sangh (BMS), Shri Chandra Prakash Singh, Indian National Trade Union Congress (INTUC), Shri Shanta Kumar, INTUC, Ms Amarjeet Kaur, Indian National Trade Union Congress (INTUC), Shri D.L. Sachdeva, Indian National Trade Union Congress (INTUC), Shri Sharad Rao, Hind Mazdoor Sabha (HMS), Shri Harbhajan Singh Sidhu, Hind Mazdoor Sabha (HMS),  Shri Swadesh Devroye, Centre of Indian Trade Unions (CITU), Shri Tapan Sen, MP (RS), Centre of Indian Trade Unions (CITU), Shri Dilip Bhattacharya, All India United Trade Union Centre (AIUTUC), Shri Sankar Saha, All India United Trade Union Centre (AIUTUC), Shri Sheo Prasad Tiwari, Trade Union Coordination Centre (TUCC), Shri V.Suburaman, Labour Progressive Federation (LPF), Shri M. Shanmugum, LPF, Shri Prechandan, United Trade Union Congress (UTUC), Shri Abni Roy, United Trade Union Congress (UTUC) and Dr. Virat Jaiswal, National Front of Indian Trade Unions among others.


*****

The Union Minister for Finance, Corporate Affairs and Defence, Shri Arun Jaitley holding pre-Budget consultations with Trade Union Groups in connection with the forthcoming Union Budget 2014-15, in New Delhi on June 06, 2014. The Minister of State for Commerce & Industry (Independent Charge), Finance and Corporate Affairs, Smt. Nirmala Sitharaman is also seen.