Some Suggestion For Wage Revision

By Sumit Kumar   --------On the eve of negotiations between UFBU and IBA....
Reposting my Expectation from 10th BPS/UFBU
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1. Renegotiation of merger date of DA with Basic and the same should be fixed at 01.11.2012 
2. At least 50% hike.
3. Implementation of 5 day week.
4. Payment of overtime to officers up to scale MMGS-III.
5. Abolition of the NPS system and reintroduction of assured Pension (including family pension) and EPF for the entire bankers working population
6. Remove all ceilings on payment and eligibility of perks like hospitalization, LFC, etc
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Our Govt. and society expects us to take care of our parents irrespective of the earnings of the parents in backdrop of the same 
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7. Inclusion of dependent parents irrespective of their (parents) earning for hospitalization, LFC, etc
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8. Removal of combination of 1 home LFC and 1 LFC for anywhere in India in a block of 4 years instead provide all employees two LFC for anywhere in India. In addition all employees (for employee only and no dependants) should be paid fare for travel to their home town for people posted outside their hometown
9. Adequate Recruitments in Banks to back fill all vacant positions in the bank before proceeding with bank expansion and also to provision employees for bank expansion at the time of recruitment
10. Increase the quantum of gratuity
11. Bringing in uniformity in payment of salary and perks to employees across all banks (which includes RBI, SBI and other PSU Banks)
12. Regularization and strict implementation of customer dealing hours through the use of technology (something like what we have in Railway reservation system where you cannot book ticket at the booking counter before and after specific working hours)
13. Abolition of service bond system for new recruits across all the banks. Retention of new employees should be by favorable work environment and not under pressure of any bond.
14. Provision for officers flat within 5 km from place of posting failing which any of the below as per officers choice
a. Rationalization of House lease amount (an increase of minimum 100% is expected for non-SBI banks) for accommodation
or
b. Officers should have option to opt for HRA to be paid at the rate of 50% of Basic Pay for metro cities and 40% of Basic Pay for ROI. 
or
c. In case officer do not want to live in officers flat HRA at the rate of 30% of Basic Pay to be paid to the employees.
15. Ensure timeline for implementation of 11th BPS is also incorporated in 10th BPS so that 11th BPS is implemented from the date it becomes due i.e. 01.11.2017.
16. Additional perks be paid to the banks employees for performing Govt. jobs like
a. Pension payment
b. MNREGA payment
c. Scholarship payment
d. Berojgari Bhatta payment
e. And numerous other Govt. programs
17. Bank Managers and other branch person should not be forced to sell third party products like Insurance, Mutual Fund even where Bank itself is a stake holder in the products being sold s

RUTH! DISGUSTING TRUTH!

As expressed by our Colleague Mr.Pannavalan

Day by day, we are sinking to the bottom of the society.

1. A lady cook (she has studied only up to 10th Standard) who doesn't know anything except cooking, demands a wage of Rs.3,000 per day for cooking dishes for 20 people.
2. An Electrician wants a minimum wage of Rs.1,500 per day, even if there is only a few hours work for him.
3. A Carpenter demands a minimum wage of Rs.2,500 per day (12 Hours).
4. An autorickshaw driver in a metro expects a minimum net earning of Rs.2,500 at the end of each day.
5. A Barber in a city who owns a small Saloon earns Rs.2,000 per day.
6. A Gents Tailor in a city earns a minimum of Rs.3,000 per day, if he works for 12 hours.
7. A launderer who only irons clothes gets Rs.600 per day which comprises of only 8 hours.
8. A Tea Shop owner earns a net profit of Rs.500 to Rs.3,000 per day.
9. A paanwala earns a minimum of Rs.1,500 per day.
10.A beggar in a suburban train earns Rs.1,000 per day on an average (His collection per day varies from Rs.500 to Rs.3,000).

Compare yourselves, my dear banker, with all of them. Where do you stand?

How many years you have studied? How many languages you have learnt? How many qualifications you have acquired? How many places you have gone on (management) transfer through the length and breadth of the country? How many training programs you have undergone? How many people you have trained and groomed?

How much of stress you undergo each day? How many risks you bear?

Were you able to enjoy the every sweet and interesting moment of your child(ren)? Did you find time to spend nice evenings with your spouse (when you were young)?

How many friends whom you have lost in touch with? How many festivals you have missed? How much displeasure you have earned from all your relatives, as you could not visit them at the critical moments of their life?

How many books you could not read? How many movies your could not see? How many interests and hobbies you could not pursue?

How many petty things you have lost in life? Are you able to see the orange Sun rising in the east or red Sun setting in the west? Are you able to enjoy the reflected rays of the Moon in the sea/river/ pond?

Your whole life has been wasted for your organisation. But in return, what did you get?"PEANUTS"

Bank CEO To Be More Accountable

LONGER INNINGS FOR STABILITY
* Fixed tenure of 5 years to CMDs will provide operational stability
* Bank chiefs will become more accountable and get longer time to execute ideas
* Nayak panel had also proposed 5-year term for CMDs and 3-year for EDs
* Decision not easy for FM as other PSU chiefs will also ask for 5-year term
* FinMin also considers changes in appointment procedure of whole-time directors
* It might also revise criteria for selection of non-official directors on bank boards
* Bank board reforms to improve their corporate governance

FinMin mulls fixed 5-year term for PSB chiefs-Business Standard

And, 3 years for EDs, beside changes in selection criteria for boards; proposals discussed with Finance Minister Arun Jaitley

  

The Union finance ministry is considering a proposal to provide a fixed tenure of five years to heads of public sector banks (PSBs). The aim is more operational stability and accountability.

It is also considering changes in the appointment procedure of wholetime directors and revising the criteria for selection of non-official directors on PSB boards.

“We have proposed a fixed tenure of five years for chairmen & managing directors of PSBs,” said a ministry official. The department of financial services has discussed its proposals with minister Arun Jaitley, who will decide.

The department has argued that a fixed tenure would give CMDs enough scope to strategise and take action, beside increasing their level of commitment and accountability.

The problem, though, is that heads of public sector undertakings (PSUs) in other sectors would also ask for a fixed tenure. The retirement age for all PSU executives is 60 years. So, generally, the term of a CMD varies between one year and five years.

At present, many suitable candidates are not selected because they have less than two years of residual service, after serving as executive director (ED) of a bank for at least one year. Both are minimum conditions.

The P J Nayak committee on governance changes in PSBs had also recommended a minimum five-year tenure for CMDs and a minimum three-year tenure for EDs.

The changes to bank boards are aimed at improving their corporate governance. The ministry noticed a lack of transparency in the appointment of non-official directors on PSB boards. Concerns were also raised on the appointment of shareholder and non-official directors on bank boards, as most of them were usually chartered accountants; it was felt they could use their position to influence decisions. The finance ministry wants to induct professionals from various fields on boards.

The board of a public sector lender usually comprises a CMD, up to three EDs, a nominee of the government (mostly a finance ministry official) and one nominee from the Reserve Bank of India, two employee union nominees, up to three shareholder directors and two non-official directors.

Link Business Standard

Bad HR Bad Culture Bad Asset Bad Borrower

My Opinion on formation of NAMC  or ARC or Suggestion to Government for take over of bad loans are as follows..

Clever officials of public sector banks are silent on causes of bad debts. They do not want CBI inquiry to find out whether there was any corruption involved. They want that government should take over bad loans so that they may get fresh opportunity of earning bribe and costly gifts in lieu of fresh sanction of loans. If bad loans are takeover by Government or transferred to proposed National Asset Management company or sold to ARC, this will lead to bad culture and bankers will feel exonerated from all future charges and without any hesitation indulge in more and more corruption.

It is remarkable to point out here that after the introduction of loan waiver culture by politicians like Devi Lal and VP Singh and then perpetuated and promoted by all subsequent government , borrowers have willfully and strategically become  careless in repayment of loans . Borrowers willfully delay in repayment in anticipation of loan waiver scheme by the government or settlement offer by management of bank. Borrowers with malicious intention of grabbing bank's money first turn defaulters and then pray for compromise and sacrifice.

Again it is good and desirable  to point out here that businessmen whose trade promotes black money also willfully and intentionally  evade tax payment in anticipation of Voluntary Income Disclosure scheme offer by the government.Once government start punishing tax defaulters and tax evaders , instance of tax evasion and creation of black money automatically get reduced. Once terror is pushed into the mind of evil doers , the habit of indulging in bad practices will end .

As long as government do not take stern action against erring borrowers, erring bankers , erring officials, erring businessmen , erring politicians and professionals, we may not dream of good governance and honest culture. People commit crime and wait for exoneration by manipulation. Honesty is no more a good policy. 

Dishonesy, flattery and manipulatory tactics are the tools which helps in acquisition of power, money and social status which not only helps criminals getting rid of punishment but also ultimately lead to success at the cost of really good performers .

Scam occurs in implementation of almost all schemes , all projects and all departmental works. Whenever scams are exposed, government change the name of policy , set up a committee to suggest new name of policy and finally exonerate all evil doers . Similarly bankers first created and accumulated bad loans and now when they are exposed the want government to takeover bad loans. They suggest government to absolve them from the lens of CBI and CVC.

I do not say all bad loans are due to evil intention of loan sanctioning officials .^There may be some cases of default due to genuine reasons too.  But what I mean to say that whenever there is doubt  of evil motivated loaning, there must be through investigation and if malicious intention is proved beyond doubt  , the officials must be punished to teach lesson to others and to pave way for good governance.

I have no doubt in saying that present and decade long  dirty culture rampant in banking and other government offices helps in further promotion of dirty culture. Therefore government will have to learn punishing evil doers. And once the punishment is awarded to evil doers, none will dare commit crime in future and good culture will replace bad culture for ever. I do not want to promote reign of terror but I want that good performers must be given due respect if India has to grow in real sense.

Bankers seek bad loan takeover-Hindustan Times

India’s top financial sector executives on Tuesday asked the government to set up a national behemoth that would consolidate bad loans to clean up bank balance sheets, more tax breaks to encourage household savings and sale of stakes in Life Insurance Corp (LIC) by listing it on exchanges

"There were some suggestions on setting up of 'National Asset Management Company'," financial services secretary GS Sandhu said after the pre-budget meeting with heads of banks and financial institutions with finance minister Arun Jaitley.

Bankers also asked the government to raise the exemption limit under Section 80C of the Income Tax Act from the current Rs. 1 lakh, which has remained unchanged for a decade and its real value has declined sharply.

The proposed Asset Management Company will take over large non-performing assets (NPAs) of banks and help in reviving companies ridden with bad debts.

Gross NPAs — shorthand for loans that could turn bad — of Indian banks have soared from Rs. 69,000 crore in 2009 to an estimated Rs. 2.8 lakh crore as on March 31, 2014. Between October and March, an estimated Rs. 60,000 crore of bad assets — about 15-20% of overall NPAs of banks — came up for sale, which is almost four-times of last year’s level.

"There was discussion on NPAs. There was also proposal for setting up of National Asset Management Company for improving the performance of DRTs (debt recovery tribunals) to collect loans," HSBC India country head Naina Lal Kidwai said after the two-and-half hour long meeting.

Suggestions were also made for strengthening of present SARFAESI Act (Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act) to ensure fast recovery of bad loans, she said.

Kotak Mahindra Bank managing director Uday Kotak said the government should consider listing of insurance behemoth LIC over the next few years. "Over the next few yeas the government should seriously consider listing of LIC. The kind of money government can raise by listing LIC is significant, it can fund financial needs of public sector banks as well as fiscal deficit," he said.

"This necessarily need not be in July Budget, but over the next few years. Listing of LIC may be a game changer in financial sector."

Public sector banks requested government for capital infusion and long-term instrument for financing infrastructure sector

Link HindustanTimes

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

Future Of PSU Banks

PSU Banks may face the same fate as state-run peers in telecom, aviation -ET

11th July 2013   (  Similar opinion express by me in my past blogs , links given below )

Indian banking is experiencing a tectonic shift. Holding a stick to state-run bank chairmen to revive the economy will do more harm than help the nation's cause. PSU banks may face the same fate as state-run peers in telecom and aviation. If the government does not change its way and banks don't focus on service, both may end up as losers.


Finance Minister P Chidambaram might not have directed public sector banks to reduce lending rates citing State Bank of India example if only he had had a detailed look at the deteriorating financial ratios of other banks over the past few years.

There is a transformation which is happening in the Indian banking scene where state-run companies dominate three-fourths of the market. That is the best part of the story. The disturbing factor is that barring State Bank of India, all other state-run banks are staring at a low-cost funding crunch that could change the banking landscape forever.
Corporation Bank's annual analysts' presentation for the last fiscal year tells the story. A few inches at the bottom right of page 16 in the presentation is a diagram which is hard to identify — it is hard to tell whether it is a tree or a stick. That is the space which should have indicated the percentage growth or fall of its lowcost deposits — known popularly in banking circles as CASA (current account savings account).

If 26 entities have applied to own a bank including non-banking Finance companies, the dominant thought was they could get access to CASA which will help them earn more profits.

However, what is plaguing state-run banks is exactly the opposite. Over the last few years the likes of Punjab National Bank (PNB), Bank of Baroda, Canara Ban and Corporation Bank have been losing CASA market share to nimble, technology-savvy private sector peers such as HDFC Bank and ICICI Bank.

The New Delhi-based PNB's CASA has fallen to 39% of its total deposits in 2013, from 46% in 2005, squeezing its profitability. But ICICI Bank's has risen 24% in 2005, to 41% in 2013, helping it raise its profitability.

"If you have low-cost deposits then you don't need to take as much risks on the lending side to make the same amount of profits," says Anish Tawakley, director, equity research,Barclays Capital. "If you start with a high-cost deposit base then to earn a profit you have to lend at a high rate, effectively taking on more risks. These earnings are seen as riskier."

When low-cost deposits for state-run banks in general have fallen to just about a quarter or in some cases even lower, State Bank of India has its CASA at 44.8%. Indeed, it has also improved as it is seen as a proxy for the government and, therefore, considered the safest, even though other state-run banks have similar profiles.

SBI's base rate is at 9.7%, the lowest among the lenders and PNB's is at 10.25% and Bank of India's is at 10%. These banks have since their meeting with Chidambaram reduced interest rates. But one could be sure that their profitability could be squeezed if their low-cost deposits do not rise which looks the most likely possibility.

"Eventually, banks will have to settle for lower NIMs (net interest margins)," says BA Prabhakar, chairman and managing director at Andhra Bank. "But if they can migrate from compliance to business opportunity in rural India, they have a better chance of improving CASA."

Private lenders such as HDFC Bank andAxis Bank have been gaining a higher share of low-cost deposits due to their service offerings to individuals and corporates which many state-run banks have been slow to realise.

Absorption of technology has been an important factor. Taking strides in internet banking, mobile banking, facilitating bill payments, online trading, credit card payments and electronic clearing system payments are some of the features that induce the salaried class to keep cash with private sector banks. Corporates are also lured with facilities such as cash management and portfolio management.

"Given the network and presence that PSU banks have in our country, they should at least have maintained their market share," says Vaibhav Agrawal, vice-president, research, banking, Angel Broking. "Building and maintaining a sustainable CASA profile is easier said than done as it involves significant execution challenges. With a customer-centric approach, right from the branch level, private banks have managed to gain a sizeable market share from state-owned banks." Rising bad loans, the prospect of new banks and the option of keeping surplus money with mutual fund schemes would not help public sector banks improve their positions any time soon.

Although the Reserve Bank of India has cut policy rates in the last one year, many banks have been raising fixed deposit rates. Since companies are defaulting or falling behind on payments, banks have to keep attracting new funds to maintain the assetliability mismatch.

Since low-cost funds are with private sector banks, PSUs such as Bank of Baroda, and Indian Overseas Bank have no option other than to raise rates on fixed deposits. That raises the overall cost of funds, limiting their ability to lower lending rates. Furthermore, attractive rates from liquid schemes of mutual funds are also luring corporates away from banks. "Liquid funds offer 8-9% against the current account balance of zero percent. So, more and more corporates are parking their surplus funds with mutual funds," says Andhra Bank's Prabhakar.

The prospect of lowering lending rates appears to be distant if managers just go by their cost of funds. But if the government coerces banks to do so as it did in forcing them to lend, it would weaken their finances further. For policy-makers who are looking to revive the economy, the choice may be to swallow the fact that the banking system, after years of abuse, is not in the pink of health. So, one might have to wait for the rottenness in the system to be purged before getting back to normal.

http://economictimes.indiatimes.com/news/news-by-industry/banking/finance/banking/psu-banks-may-face-the-same-fate-as-state-run-peers-in-telecom-aviation/articleshow/20995640.cms?curpg=2

My Blogs of the Past are in following links

Average Pay Per employee in Private And Government Banks

RBI DY Governor compares average pay per employee in public sector banks with that in private sector banks. 

( Please also read latest submission dated 28th March 2013 on this subject http://importantbankingnews.blogspot.in/2013/03/pubic-sector-banks-policy-of-branch.html)

In public sector banks, clerks are not given promotion in two to three decades. If clerks are promoted to officer cadre, the promotee officers continue to perform the duty of clerk or that of cashier as he or she used to do before becoming officers. Not only this, there are many scale II, scale III or scale IV officers who are constrained to perform the duty of cashier or a dispatch clerk or front line officer.

http://dkjain4970901092007.blogspot.in/2012/06/average-pay-per-employee-in-private-and.html

Public and Private Sector Banks

Reality of stimulus package is now visible; Fiscal deficit is increasing , trade deficit is increasing, current account deficit is increasing and GDP is coming down, IIP figure is coming down, rating of banks is coming down rating of country is at alarming position and so on ….Borrowing by government has been consistently increasing, public debt has reached to the level of 46 lac crores i.e. around 40% of GDP. Still government is allowing one after other subsidies to big corporates, exporters and importers. 

Total subsidies , interest relief, and tax relaxation provided per year to high profile corporate comes to the tune of ten lac crores which is at least four times more than the total of subsidies provided to common men in the name of fertiliser subsidy or fuel subsidy.How can one dream of good results for common men when the present government continues such pro rich policies in the name of reformation. 

http://dkjain497091112006.blogspot.in/2012/03/public-and-private-sector-banks.html

http://importantbankingnews.blogspot.in/2013/03/pubic-sector-banks-policy-of-branch.html

http://importantbankingnews.blogspot.in/2012/12/psu-banks-are-sick-due-to-poor.html

http://dkjain4970901092007.blogspot.in/2012/05/public-sector-banks-in-crisis.html

http://dkjain497091112006.blogspot.in/2012/05/all-is-not-in-government-banks.html

http://dkjain4970901092007.blogspot.in/2012/05/public-sector-banks-in-crisis.html

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.

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New Liquidity Ratio for Banks

RBI introduces liquidity ratios for banks-Business Standard-10th June 2014

Mandate 60% liquidity coverage ratio from Jan 1, 2015; 100% by 2019

In a move aimed at creating liquidity buffers in banks, the Reserve Bank of India (RBI) has mandated the lenders to maintain 60 per cent liquidity coverage ratio (LCR) from January 1, 2015. Also, the central bank suggested a phased manner in which the ratio will have to increase to 100 per cent by January 1, 2019. Equal quantum of increase has been suggested for every year, till 2019.

The LCR promotes short-term resilience of banks to potential liquidity disruptions by ensuring that they have sufficient high-quality liquid assets (HQLAs) to survive an acute stress scenario lasting for 30 days.

LCR is defined as the proportion of high-quality liquid assets to the total net cash outflows in the next 30 calendar days.

Typically, banks face two types of liquidity risks — funding liquidity risk and market liquidity risk. Funding liquidity risk is the one in which the bank is unable to meet expected and unexpected future cash flows and collateral needs without affecting its financial condition.

Market liquidity risk is the one when a bank cannot easily offset or eliminate a position at the prevailing market price because of inadequate market depth or market disruption.

“The LCR would be binding on banks from January 1, 2015; with a view to provide a transition time for banks, the LCR requirement would be minimum 60 per cent for the calendar year 2015, i.e. with effect from January 1, 2015 and rise in equal steps to reach 100 per cent on  January 1, 2019,” RBI said in a statement on Monday.

Banks, however, has been asked to achieve a higher ratio than the minimum prescribed above as an effort towards better liquidity risk management.

The move from the Indian banking regulator comes after the Basel Committee on Banking Supervision proposed certain reforms to strengthen capital and liquidity regulations in the aftermath of the global financial crisis of 2008.

The central bank had conducted a Quantitative Impact Study (QIS) as on December 2013 on a sample of banks to assess their preparedness for the Basel III Liquidity ratios, which indicated that the average LCR for these banks varied from 54 per cent to 507 per cent.

In the draft guidelines on liquidity risk management of banks, released on November 2012, the board of the bank has been given the overall mandate to ensure liquidity coverage.

RBI had said that the banks’ boards should develop strategy, policies and practices to manage liquidity risk in accordance with the risk tolerance and ensure that the bank maintains sufficient liquidity. The boards were  also asked to review the strategy, policies and practices at least annually

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Hope On Wage Talk

Wage Revision 12th Meeting between IBA and UFBU on 13.06.2014

IBA initiated for next wage talk on 13.06.2014 in response to UFBU major constituent AIBOC request as report received. The meeting will be held in Mumbai at 12 Noon. Before scheduled meeting UFBU constituent will meet at 10 am.

The AIBOC General Secretary Mr Harvinder Singh, General Secretary, AIBOC has written a letter to IBA requesting them to reinitiate and expedite the process for wage revision, vide their letter dated 30.05.2014.

As Sri Harvinder Singh statated in their letter “One year and seven months have passed since Officers and Workmen Organizations in the Banking Industry submitted their Charter of Demand for 10th Bipartite Settlement. The slow pace with which the negotiations are taking place cannot be appreciated by any one of us, whatever may be the reason. No meeting has taken place on the issue for the last three months. The situation is alarming and causing lot of anxiety and frustration amongst the officers and workmen in the Banking Industry which is bound to affect their productivity and efficiency. The growing disparity in the pay structure of the staff of Banking industry vis-a vis the Govt. employees and the apathy shown so far by the earlier Govt., to give a fair deal in the Xth Bipartite Settlement is really agonizing. With the new Government taking over, hopes have been raised as all sectors of the economy have already started looking up. In view of this scenario, the attrition rate in the Banking Industry, which is already starving with the competent and experienced staff, will go further high with opportunities opening out in other sectors.

The AIBOC reminded new govt that the Prime Minister of India, Sh. Narendra Modi has set out a hundred day agenda for governance. One of the main action points desired in this agenda is improving the delivery by decision making. We request you to kindly take immediate steps and initiatives to initiate the discussions on the Salary Revision, so that we in the Banking Industry also contribute towards the new goal set by our Prime Minister and set an example of good governance.

As mentioned in the letter, “We are confident that this agenda of ours will be written in the golden letters as contribution of the Banking Industry. We once again assure you to rededicate ourselves in extending our full cooperation in achievement of the agenda of social developments set forth by the Government / Bank Managements”.

It is memorable that AIBOC GS Sri Harvinder Sigh all-ready met with Sri Narendra Modi and Sri Arun Jaitely during election campaign and got positive response of both at that time.

Now it is reported by banking industry sources that in response to AIBOC letter IBA came into activity and then fixed next talk of 13.06.2014.

As per our sources IBA is thinking over addition in constituent of negotiating committee members with formation of new govt. It is expected that some more govt like minded unions may be added in UFBU then final negotiation will take place.

The news of wage talk spread over bank employees as govt positive initiative. This meeting will surely not provide any result but it will be a re-start of pending talk. The wage talk was pending after 14.03.2014.

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.”

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