Why Bank Strike Is Unavoidable

Why Indefinite Strike BY Bank Staff is Now Necessary Unavoidable and Inevitable?

After 45 Years of Bank Nationalization , Bank Staff have become Slave as They were Before Nationalization

Why indefinite strike by bank employees is unavoidable?

Government understands the language of violence, disturbances in public life and destruction of public property. Bank employees in general are very much simple and devoted workers. Bank employees avoid strike for wage revision as far as possible and believe in dialogue process with IBA. But it is very much painful that clever and flatterer CMDs of banks who represent Indian Bankers Association are willfully ignoring the genuine demands of bank employees and wasted ten months time for nothing . Bank employees on the other hand have patiently tolerated the casual attitude of IBA for last ten months and waiting patiently and peacefully the positive response from IBA members and union leaders.

Wage revision of bank employees is due since November 2012 and the charter of demand was submitted to IBA and Ministry of Finance in July 2012. Government and its representative IBA has been postponing or avoiding even dialogue process for last ten months. It is sad that government understands the importance of any demand only when strikers burns the buses and trains, create road jams, blocks movement of train and what not. This has been seen in the case of strikers of other departments.

Government comes out of hibernation only when huge loss is incurred to exchequer. Ministers and the competent authority or labour commissioner have not understood the gravity of the matter, Genuinity of demand of bank employees, and seriousness of frustration among  bank staff due to delay in wage settlement  even after lapse of ten months after the charter of demand should not be taken lightly by  government of India and the IBA, Indian Banks Association an body which takes part in negotiation with banker's united forum on the issue of wage revision or other relevant demands.

Government has not tried to assess, understand and realize that workload on bank employees have multiplied during last two decades due to almost ban or regulated policy adopted by government on employment in banks during eighties and nineties, large scale removal of employees under voluntary retirement scheme VRS of the year 2000, the continuous natural retirement, dismissal and death of bank employees without fresh recruitment of at least same number of employees. On the contrary wage structure of bank employees has faced continuous erosion in pay despite relentless price rise whereas there has been continuous and disproportionate higher rises in pay of central government and state government employees.

It is known to all that there has been technological upgradation in banks to a large extent during last five to six years. It was also made possible only by the hard labour done by experienced bank employees for more than 12 hours a day. Without disturbing customer service bankers took it a challenge, accepted new technology and converted most of the bank’s branches as CBS branch.

Banks opened thousands of new branches and ATM, introduced E-Banking, Mobile banking, SMS banking, tele-banking and now engaged in serving the unbanked villagers in the name of financial inclusion. Many other customer friendly services have been added for the comfort and satisfaction of central government as well as its customers.

There has been continuous improvement in the services extended by bankers and it will not be an exaggeration to say that it is the only banks run by Government which extends services to the maximum possible satisfaction of its customers even in far flung areas and on the contrary all other department of the government or most of the PSUs have failed to please their customers. Such paradigm shift occurred only due to efficiency exhibited by bank employees without disturbing routine normal works.

After adoption of Core Banking Solution ( called as CBS), Banks has introduced several other non-banking products like Insurance, demat service, share trading, selling of mutual fund products, tax collection, old age pension payment and many other products. It is only bank employees who accept newer and newer challenges and strive hard to please customers. It is unfortunate that bank employees are still in bad taste in corridors of Ministers. During last ten years number of bank staff has come down from 800000 to 700000 whereas number of branches has almost doubled.

It has to be kept in mind that there has been continuous wage erosion of bank employees during last two decades whereas on the contrary there has been quantum jump in the salary of state and central government employees through fifth and sixth pay commission report implementation. Frustration has been increasing among bank employees due to indifferent attitude of IBA and inordinate delay in completion of Xth Bipartite Settlement..

To add fuel to fire media has tarnished the image of bank employees by creating false hype that bankers are high wage islanders. As a matter of fact wage disparity has added much discomfort to bank staff and their families .Indifferent attitude of government has widened to such a large extent that unemployed youth who join services in bank get disappointed in a year or two and constrained to leave the service and to opt for better avenues in private companies. There has been sharp change and reversal in choice and preference of job seekers. Three decades ago fresher used to prefer joining bank service than even IAS and IPS services. Present position is that even fresh graduate and post graduate prefers peon’s job in central services than joining as officer in a bank.

It is worthwhile to mention here that despite low wages and high work load it is banks which have been earning profit continuously and growing in profit year after year. On the contrary most of other businesses run by government are either showing loss or showing fall in profit or there is position of complete stagnation or on the verge of closure. Even companies like BSNL is likely to book loss to the tune of Rs10000/- crore and more. Indian airlines are running in losses in thousands of crores. All oil companies, fertilizer companies and many PSU are in losses and running on the aid and ventilator provided by Government. It is surprising that government had happily increased salary of even loss making companies by 30 to 60% through sixth pay commission on the eve of election just to enhance their vote bank and the same government thinks it fit to ignore genuine demand of 20% wage hike of bank employees on flimsy ground

Government instead of listening to banks argument in favour of their demand for at least 40% wage hike has been postponing dialogue on one plea or the other for ten months It is to kept in mind that bankers are dealing in money and any dilution in honesty, sincerity and devotion of bank employees may cause irreparable damage to intrinsic health of banks. As of now corruption in banks is undoubtedly lower than all other departments of Government and other PSUs. Exodus of quality people may be harmful to banks. It is an open secret that banks have been used by politicians to enlarge their vote banks.

I therefore submit this open letter to IBA, Ministry of Finance, RBI, Prime Minister of India and request all concerned to have a day to day basis dialogue process so that Xth Bipartite settlement is signed amicably without resorting of strike by bank employees.

If delay is not stopped by GOI and IBA in amicable settlement, I have no doubt that bank staff will lose their patience, move on indefinite strike and ultimately boycott Congress Party and UPA in forthcoming General election. Bank employees leave no stone unturned to serve the common men at lowest cost by serving even in rural areas and in critical places. They deserve better treatment for overall growth of the country, for good health of banks and for soundness of Indian economy.

If bank staffs are not given respectable wage hike without much delay, it may have large scale adverse consequences on all economic front and repercussion on social welfare schemes. Congress Party lost election due to its anti-employee and anti bankers’ policy. I am most confident BJP government will understand the gravity of the matter and force IBA to sign an agreement by sitting daily for dialogue with union leaders and agree to wage hike of at least 20%

I am very much confident that learned new Finance Minister Mr. Arun JAITLEY will take necessary steps to ensure signing of wage hike settlement and payment of arrears to bank  staff latest by 31^st October 2014 .

UFBU Writes Lovely Letter To IBA For Wage Revision

UFBU Letter to IBA

The Chief Executive, 

Indian Banks' Association, 

World Trade Centre Complex, 

Centre 1, 6th Floor, 

Cuffe Parade, MUMBAI.

Dear Sir,

TENTH BIPARTITE WAGE REVISION NEGOTIATIONS

The meeting between the Negotiating Committee of IBA and the representatives of UFBU was last held on 13th June 2014 and was inconclusive on account of contradictory views in the matter of percentage increase in wages. Despite the assurances of IBA during the conciliation meeting held on 13th January 2014 that further meetings shall be held at regular intervals, say fortnightly, to settle an early wage revision, the holding of wage negotiation meeting with us is being unduly delayed.

2. The above issue was seriously considered in the UFBU Meeting held yesterday, i.e., 15th July 2014, in Mumbai and the UFBU expressed its unhappiness over the undue delay in the wage negotiations. We, therefore, request for conduct of wage negotiation meeting at the earliest and also to ensure conduct of such meetings at frequent and specified intervals for early conclusion of wage revision settlement.

3. Please acknowledge receipt of this communication and advise us the developments in this regard.

With best regards,

Yours sincerely, 

Sd/-(M.V. MURALI) CONVENOR "

Details of (i) Meeting with IBA (ii)UFBU Meeting.....

Meeting with IBA on Charter of Demands – Disciplinary Rules/Procedures for Officer EmployeesA meeting of the Three Member Committee constituted by Indian Banks Association to look into the issue of Disciplinary Rules/ Procedures for officer employees, as demanded by us in our Charter of Demands, was held with IBA on Monday, 14th July,2014. 

We urged upon IBA the need for a thorough review of the existing Rules & Procedures. We insisted on the necessity to put an end to the prevailing undue delay in commencement and conclusion of the disciplinary cases, quantum of punishment imposed disproportionate to the offence committed, undue delay in lifting suspension, enhancing subsistence allowance payable on suspension, denial of certain facilities to officers on suspension, revoking Reg:20(3)(3) and not permitting the officer to retire, denying his rightful entitlements viz. gratuity, pension, leave encashment etc.

The IBA Team heard our submissions carefully and meaningful discussions followed. They wanted us to quote various issues raised with illustrations and submit a detailed Note to them for the consideration of the Managing Committee of IBA. We shall do so immediately. 

During the course of the meeting, we also impressed upon IBA the need to discuss our long pending demand of Regulatory Working Hours for bank officers. IBA desired an Approach Paper on this issue. We shall be submitting the same shortly. 

UFBU Meeting We also wish to inform that a meeting of the United Forum of Bank Unions was held in Mumbai on 15th July,2014, to review the developments on Wage Revision Negotiations and chalk out strategies to secure early and better Wage Revision. Details will follow.

With greetings, 

Yours sincerely, (K.K.NAIR)
GENERAL SECRETARY

TOP 35 NEWS RELATED TO

 RBI THIS YEAR----------------------
1. RBI permits NBFCs to work as Business Correspondents of banks: With a view to achieve financial inclusion, the Reserve Bank of India has allowed Non‐Banking Finance Companies to operate as Business Correspondents (BCs) of banks, permitting them to offer limited services. Banks will be allowed to work with non‐deposit taking NBFCs as BCs.Note: The RBI took into account recommendationsof Nachiket Mor Committee while reviewing the existing guidelines on the appointment of BCs.

2. RBI to consider over Payment bank as recommended by Nachiket Mor Paneli. The Reserve Bank of India will soon come up with India’s first payments bank,which will offer deposit and payment services but not provide loans.ii. This idea is in line with the recommendationsmade by the Nachiket Mor committee. The central bank sees huge potential for financial inclusion withfocus on remittances by involving payment system product.

3. Provide information to SIT on black money: RBI directs banks and FIsi. The RBI has asked all Banks and Financial Institutions (FIs) to provide information and documents sought by the Special Investigation Team (SIT) set up to uncover black money.ii. The new Government at Centre recently constituted an SIT under the chairmanship of former Justice M.B. Shah in pursuance of a July 2011 Supreme Court judgment

.4. RBI simplifies KYC norms for opening bank account: Customers need to submit only one documentary proof of address— either current or permanent — while opening a bank account or while undergoing periodic updation, the Reserve Bank of India. “In case the address mentioned as per ‘proof of address’ undergoes a change, fresh proofof address may be submitted to the branch within six months,” the RBI said ina notification to banks.No proof is required to be submitted for such address for correspondence/local address,” the RBI added.However, this address may be verified by the bank through ‘positive confirmation’ such as acknowledgment of receipt of letter, cheque books, ATM cards; telephonic conversation; and visits.

5. Australia and New Zealand Banking Group (ANZ) has received in‐principle approval from the Reserve Bank to open two new branches. The new branches will come up Gurgaon, NCR, and outer Bangalore.

6. RBI directive on foreign currency accounts: The Reserve Bank of India has directed banks to: convert credit balances in any inoperative foreign currency (FC) denominated deposit into Indian rupee if the former remains not in use for three years from the date of maturity of deposit.

7. RBI eases gold import norms; nod for select trading houses to procure from abroad : Under this scheme, an importer has to ensure that at least 20 per cent of every lot of imported gold is exclusively made available for export purpose

.8. RBI nod for bank loan tenure upto 10 years to boost export industry. In a majorboost for the export industry, the RBI has allowed banks to provide loans with tenures of up to 10 years.These loans willhelp exporters in ensuring capital flows to fulfill long‐term contracts. Existing norms allow banks to give loans for up toone year only.

9. The Reserve Bank of India said banks should make all new ATMs installed fromJuly 1, 2014 as “talking ATMs” with Braille keypads

.10. Raghuram Rajan, the Governor of the Reserve Bank of India (RBI) announced that plastic currency notes will be launched in2015 after field trials.

11. RBI panel headed by ex‐Chairman of Axis Bank, P. J. Nayak recommend for diluting govt stake in public sector banks to below 50 %. The government should cut its holding in public sector banks to under 50 per cent, a Reserve Bank of India(RBI) panel report on Tuesday said, criticising the way in which the lenders are now being governed.

12. Reserve Bank of India granted banking licences to infrastructure financing firm IDFC and microfinance institution Bandhan from among 25 applicants that included corporate heavyweights ADAG Group, Aditya Birla Group and Bajaj Group.Note: The in‐principle approval granted (to the two entities) will be valid for a period of 18 months during which the applicants have to comply with the requirements under the guidelines and fulfil the other conditions as may be stipulated by the RBI.Chandra Shekhar Ghosh: CMD of Bandhan financial servicesDr. Rajiv B. Lall: Chairman of IDFC – Infrastructure Finance Company.

13. Reserve Bank of India (RBI) issued the guidelines to allow the minors of age above 10 years to independently open and operate savings bank accounts and use other facilities like ATM and cheque books.
14. RBI extended the timeline for full implementation of Basel III norms 31 March 2019 instead of 31 March 2018

.15. RBI in consultation with Union Government on 1 April 2014 capped the Ways and Means Advances (WMA) limitsfor the first half of the new financial year 2014‐15 (April 2014‐Sep 2014) at 35000 crore rupees.Note: The interest rate on WMA/overdraftwill be based on: a) WMA: Repo Rate. b) Overdraft: Two percent above the Repo Rate

16. RBI extends date of exchanging pre‐2005 notes to Jan 1, 2015Note: The Reserve Bank has further clarified that the public can continue to freely use these notes for any transaction. RBI has said that people canunhesitatingly receive these notes in payment, as all such notes continue to remain legal tender.

17. Reserve Bank of India (RBI) hiked the trade related remittance limit from 2 lakh rupees to 5 lakh rupees per transaction with immediate effect. It also increased the number of transaction handled by exchange houses.

18. KC Chakrabarty, Deputy Governor, Reserve Bank of India, has quit three months ahead of completion of his term.

19. RBI pegged 2014‐15 GDP growth at a central estimate of 5.5 percent.

20. Economic growth for 2014‐15 expected at 5.5 pc.

21. CAD expected to come down to 2 pc of GDP in 2014‐15.

22. Retail inflation expected to be under 6pc in 2014.

23. RBI panel headed by RBI Deputy Governor Anand Sinha has recommended bringing a benchmark floating interest rate, especially for home loans. Panel also suggested Indian Banks Base Rate (IBBR).

24. The deadline for switching to new format bank cheques under the Cheque Truncation System (CTS) ended on 30 April 2014.

25. RBI scraps 26% cap on interest rate for MFIs: (RBI) removed 26 per cent cap on the interest rate that can be charged by a microfinance company to its borrowers. MFI is allowed to charge interest rate equal to 2.75 times the average of the base rates of the top five commercial banks.

26. RBI permits 4 non‐bank entities to setup white label ATMs: The Reserve Bank has issued ‘certificate of authorisation’ tofour non‐bank entities:(1) Tata Communications Payment Solutions(2) Muthoot Finance,(3) Prizm Payment Services and(4) Vakrangee Ltd. , to set up White LabelATMs (WLAs) in the country.Note: Most of the ATMs belong to banks, but the cash dispensing machines which are owned and operated by non‐banking companies are called White Label ATMs.

27. RBI permits Srei to roll out white labelATMs: Srei Infrastructure Finance is planning to start roll‐out of its while label ATMs (WLAs) between July and September starting with a pilot of 200 Tier‐III towns in Uttar Pradesh and Bihar

.28. The expert committee headed by UrjitR. Patel, Deputy Governor of the Reserve Bank of India examine the current monetary policy framework of the Reserve Bank of India (RBI) has suggested that the apex bank should adopt the new CPI (consumer price index) as the measure of the nominal anchor for policy communication. The nominal anchor or the target for inflation should be set at 4 per cent with a band of+/‐ 2 per cent around it.

29. Ex‐Chairman of Axis Bank, P. J. Nayak is the head of the expert panel to review bank boards’ governance. The panel will review the RBI's regulatory guidelines on ownership of banks and representation in their boards, among other things.

30. The Reserve Bank of India has raised the Foreign Institutional Investors, FIIs investment limit in the Power Grid Corporation to 30 per cent of its paid up capital, under the Portfolio Investment Scheme.

31. The Reserve Bank of India (RBI) has doubled the sub‐limit for foreign investment in government securities, to USD 10 billion by long‐term investors. RBI's move is aimed to attract more foreign funds. Investors like sovereign wealth funds (SWFs), multilateral agencies, insurance funds, pension fundsand foreign central banks are considered as long term investors.

32. RBI relaxes gold loan norms: The Reserve Bank of India has allowed Non‐Banking Financial Companies, NBFCs to lend up to 75 per cent of the value of gold. It was 60 per cent earlier.

33. RBI panel (headed by banker Nachiket Mor) has suggested setting up of specialised banks to cater to low income households to ensure that all citizens have bank accounts by 2016.

34. The RBI‐appointed committee on financial inclusion has recommended that the central bank should set up specialised banks called Payments Bank to provide payment services and deposit products to small businesses and low‐income households. The committee, headed by Nachiket Mor, said that since the new bank will be dealing with poor customers, such a bank must be allowed to accept a maximum deposit of not more than Rs 50,000.

35. The Reserve Bank of India (RBI) had set up a panel under executive director Deepak Mohanty to review the current system of data collection, dissemination and data management processes in the central bank and improve the existing mechanism.

Budget Proposes Ways To Kill Banks

Budget Proposal 2014 :--The Narendra Modi government will ask banks to open 200 million accounts in a year from this Independence Day.

The Sampoorn Vittiya Samaveshan Mission aims not just to open bank accounts but to provide people access to other financial services like insurance and pension.Rs 5,000: Instant overdraft for account holders completing a financial literacy programme

Some Important Links on the same issue are given below

As per provisions made in the budget and guidelines to be issued from Government of India ,Public sector banks  will have to open 20 crore accounts  and each account would be sanctioned an overdraft of Rs. 5000.00 without any discreet inquiry about credit history of the account holder cum borrower.

This way, it is quite clear that Public sector banks would end up lending Rs. 100000.00 crores (one lac crore ) to account holders and these forced borrowers will be without any credit history. Moreover, as the accounts of different PSBs are not linked, there is every possibility of account holders opening accounts in different banks and thus getting overdraft from that banks as well.

Its also reported that department of financial services has already budgeted for defaults. Government of India may subsidise banks to some extent but may not stop promotion of bad culture in lending. It will wondering in dreamland if banker or for that matter GOI expect recovery of such loans which will be considered by poor account openers as charity from GOI , not loan from bank.

 Against the above backdrop , it is my question why RBI and IBA do not come in defence of PSBs and protest against any such move which will ultimately result in creation of fresh NPAs for which all the onus will be passed on the bankers for no fault of theirs. Not only this, this year , GOI has tis year suggested a limit of Rs.5000 for all individuals , next year they may ask for increasing the overdraft limit from Rs.5000 to Rs.10000 or Rs.25000 and even more for political advantage. Poor villagers will take it a gift from GOI but banks will suffer the real loss and ultimately bank staff will suffer .

Banks are usually advised to disburse loans as Charity by organising Loan camps and when these loans become bad, same government suggest for waiver of loan or settle these bad loans by offering heavy discounts. All these acts contribute in not only escalation of bad debts but kills the repayment culture and promote bribery culture in bank staff . It is therefore desirable to name these banks as public sector Charity Bank.

Its not hidden from any one that bankers are not legally equipped to recover loans from those whose property is charged in favour of banks, the how come the banks would be able to recover an overdraft given without any credit history and security?

When Bank Management find it difficult to recover the recalcitrant borrowers and wilful defaulters even if they do possess prime and collateral security, how these poor bankers will be in a position to recover small defaulters of Rs.5000/ who have nothing to repay. Obviously such plan as mooted out in above paragraph will prove to be death bell for already ailing banks. GOI may extend some financial help this year or later, but the cannot modify the bad culture they have created and are thus creating in banks to add fuel to fire.

 Isn't it really ironical that bankers are being denied a respectable rise in salaries because of huge NPAs and simultaneously something dangerous is under process to create more NPAs?

It is politicians who build pressure for reckless and careless lending . And when the account goes bad, they do not hesitate in blaming bank officials. They build pressure for lending in agriculture and priority sector, infrastructure projects and some other time for some other projects. Banks in general are having huge volume of Non Performing Assets related to loans made for infra structure projects, to power companies, to electricity distribution companies etc ( bulk poison ) and for government sponsored schemes (slow poison
 
When bad assets increase, profitability falls and when profit falls there is erosion of capital. When this happens , government blames bankers and then GOI through IBA  shamelessly deny respectable wage hike to bank staff. It means politicians commit crime and bankers are punished for none of their fault.

How long Public sector banks s would be treated as political tool that too at the cost of  banks and bank staff?

 Why RBI is silent spectator of this mishappenings and ill-motivated proposals of the government?

Why IBA the forum of Chiefs f public sector bank  has become inactive and ineffective and why United Forum of Banks Union (UFBU) are playing in the hands of Ministers and IBA ?

If such brainless and dangerous proposals are put in force, the future of wage hike will further be jeopardised.

Are bank staff in general are also watching the situation with folded hands and praying GOD for their welfare?

Also read Following Links

Evil Culture in Banks

How to Cure Sick Banks

Are Bankers Afraid Of CBI and CVC


Banks To Open 20 crore New Accounts This Year


 

Pay Fixation For Pensioner

Should Every Branch be Audited by

 Chartered Accountant (CA) ?

Team of Auditors are building pressure on Modi government to order audit of every branch of every bank. They say that if branches are not audited, risk of these branches may increase and ultimately jeopardize the existence of bank. But the bitter truth is that majority of Auditors simply sign the balance sheet as per whims of the management of banks provided they are given red carpet welcome and offered costly gifts. This is why major chunk of NPA exists in majority of branches which are regularly audited by team of not only external auditors but also internal auditors of the bank. 

We remember the case of Satyam computers and latest example of United bank of India. There are lacs of such cases where branches of banks have suffered loss  even though auditors had certified the overall health of bank's assets and also the quality of balance sheet. In every branch, many bad accounts have been certified by auditors as good assets during last decades. Now when banks have adopted CBS technology and when government is insisting for identification of NPA through System based technology, all bad debts are slowly surfacing and disturbing sleep of top officials .Banks are facing erosion of capital and crisis of capital to meet Basel III requirement only due to sudden and systematic rise in NPA of every public sector bank and resultant fall in profits.

We have seen in recent past how majority of public sector banks intentionally and willfully avoided provisioning on terminal benefits and bad debts just to inflate profit and share value of the bank. They used to conceal bad debts in nexus with team of auditors only.

When this fraudulent activity was caught by financial experts, trade union leaders and by opponent politicians during UPA rule, government permitted banks to amortize the provision in five years .All these banks used to manage certificate of good health from team of hundreds of auditors every year.

This is why I am of strong view, that auditing of all branches at the behest of team of ICAI will be a futile exercise and add burden on the balance sheet of all banks. It will add fuel to fire because banks are already facing acute and critical sickness due to high percent of NPA

 It will not be surprising however if the leaders of ICAI manage change in rules by gifting some politicians. Auditors are clever and to please politicians they compromised with quality of Chartered Accountant. It is they who managed 28 percent pass result in CA examination compared to 2 to 3 percent pass result in preceding years. Quality of CA has faced considerable deterioration in last few years and hence they can cause much more damage than natural loss going to occur to banks without audit. 

It is auditors who teach mantras to business community how to evade tax and it is they who in nexus with IT officials impose penalty to honest tax payers without any valid reason. It is CAs who manage top officials of banks and get the work of auditing for various branches allotted to them. They share the audit fee with top officials by various ways and means of modern era which I need not enlighten elaborately.But it is open secret that auditing has become a mere formality and majority of auditors are manageable as per whims and caprices of top officials of banks as also that of private business houses.

Review bank branch audit norms: ICAI-Hindu Business Line ( read my opinion given above

NEW DELHI, JULY 2:  

The new Modi-led Government should review the existing bank branch audit norms, K Raghu, President of the Institute of Chartered Accountants of India, has said.

All bank branches in the country should be subjected to financial audit, Raghu suggested to the Finance Minister Arun Jaitley at an event here marking the chartered accountants’ day celebrations.

Currently, certain segments of the bank branches—those with advances less than ₹ 20 crore –are not subjected to an annual independent audit, Raghu said, adding that this position needs to be changed.

The UPA Government had from 2012-13 stipulated that all bank branches with advances of less than ₹ 20 crore in a financial year need not have an annual independent audit.

This decision--which led to nearly 85 percent of the bank branches going out of annual audit net-- had upset the audit profession regulator CA Institute, which sought a re-think on the same.

The advance limit for mandatory bank branch audit was earlier pegged at ₹ 6 crore for 2011-12.

From 2006 to 2010-11, the threshold limit for bank branch statutory audit was pegged at advances of ₹ 3 crore.

With the BJP gaining ‘absolute majority’ in the recent general elections, the CA Institute has renewed its attempts to get the bank branch audit norms changed.

The contention of the CA Institute members’ are that banks are guided by their overall aggregate exposure in branches with advances of below ₹ 20 crore and feel that it may not be material enough to warrant a statutory audit every year.

“They (banks) look at the aggregate picture and contend that such branches account for only say 15-16 percent of the bank’s total advances. But what they don’t realise is the risk factor. If there is increased NPA in such branches, the entire profit of a bank in a financial year could get wiped out”, a chartered accountant said.

Rather than only looking at “materiality” in terms of advances, the risk factor also needs to be considered by the banks and banking regulator, it was pointed out.

New overseas chapters

Meanwhile, the CA Institute has decided to open new chapters in Bangkok and Vancouver.

A decision to this effect was taken at a recent council meeting of the CA Institute, Raghu said.

Link Business Line

Keep Eye On Shadow Banking

'Need to keep an eye on shadow banking entities'-Business Standard

In India, shadow banking entities essentially refer to the large number of unregulated companies that act as financial intermediaries, providing credit and generating liquidity in the system

 

The Reserve Bank of India (RBI) on Thursday said there was a need to monitor "shadow banking" entities, which were perceived to be regulated by the central bank, albeit inaccurately, to eliminate ambiguities related to legal, regulatory and administrative aspects of their functioning.

In India, shadow banking entities essentially refer to the large number of unregulated companies that act as financial intermediaries providing credit and generating liquidity in the system. For instance, companies engaged in multi-level marketing, offering prize chits and money circulation schemes are currently not regulated by RBI.

"(The shadow banking sector) raises concern partly because of the public perception that they are regulated," the central bank said in its financial stability report released on Thursday.

At a time when some developed economies have initiated efforts to mitigate systemic risks posed by shadow banking activities, India has witnessed a a significant increase in the exposure of its banks to shadow banking entities.

"The motivation for regulatory reforms in the shadow banking space in developed economies, especially in the US, emanated from certain dilemmas that, on the one hand, there was a need to de-risk the overgrown complex banking industry, which inevitably needs the presence of shadow banking entities to absorb those risks and the concerns over the role of shadow banking entities in consummating the financial crisis, on the other," RBI said.

The banking regulator, however, admitted that in developing markets such as India these concerns might not be entirely valid because of the low penetration of banking services, much less complex financial markets and level of regulatory oversight exercised over shadow banking activities. In fact, some shadow banking entities have been playing an important role in supporting efforts towards financial inclusion.

But with relatively lower levels of financial awareness and the misconception that all financial activities come under some regulatory framework, shadow banking entities in the country may assume systemic importance.

Hence, the central bank feels there is a need for clarity in the regulatory framework for shadow banking entities in India. "There is a need to assess the collective size and profile of activities of the large number of non-bank financial entities functioning in the organised as well as the unorganised sector (including unincorporated entities which are outside the purview of the regulatory perimeter)," RBI said.

The banking regulator is in the process of reviewing the regulatory framework for non-banking financial companies (NBFCs), based on the recent developments in the sector and also recommendations made by the Nachiket Mor committee.

"The proposed review will cover the legislative framework of the NBFC sector, asset classification and provisioning norms for NBFCs vis-a-vis that of banks - (including the need for raising tier-I capital requirement for NBFCs), corporate governance guidelines including 'fit and proper' criteria for their directors, regulation of deposit acceptance activity, consumer protection measures, present classification scheme of NBFCs and activity of lending against shares by NBFCs," RBI said.

IBA Don't Care Wage Hike, Not Even Customers

Banks’ Top Brass Needs to Develop Customer-Friendly Sense & IBA Needs to Work Towards Their Objectives-By Rajesh Goyal (allbankingsolutions.com)

When last week in a newspaper I read the RBI dictate “No late fees on credit card dues for a month”, I thought of writing this article as on number of occasions  during my over 30 years service in PS Banks,  and even afterwards, I have been wondering why RBI has to come to the rescue of general public on such issues.
  

I feel that whenever such  a dictate is  issued by RBI, the policy makers in banks ( Public Sector as well as more Private Sector banks ), must put their head in shame that  Indian banking Regulator has to come to the rescue of general public, put an end the policies of banks which are NOT customer friendly.  Similarly the Chairman of IBA and Chief Executives  of IBA also need to feel ashamed as they failed in their duty  to meet the objectives for which IBA was established.   Let me explain why I feel  they need to be accountable in this respect.    

 

We come across frequently RBI guidelines where they issue new dictates to reign in the anti public policies,  which regulator views as to be for fleecing the customers.  Question arises who are the people responsible for bring such policies in the realm of banking circles.   Are those people are so insensitive and dumb that they can not read the pulse of the general public ?   If they are so, how come they have reached up the ladder so high ?

 

My experience is that usually such policies are initiated by Private Sector banks, but soon copied by Public Sector banks.    We all know that there exists a class of sycophants in PSBs, who are always looking for some new trends for copying.   Thus when such policies are introduced by Private Sector banks and these come to the knowledge of such sycophants, they immediately start the process of introducing the same in PSBs too, and try to take credit for so called "innovative ideas".    These sycophants will come out with comprehensive note to CMDs / EDs / GMs claiming these to be innovative ideas in the industry which will help in  increasing income of the banks.  Then they push through such policies.   The worst part is that most of PSB’s CMDs / EDs / GMs who are in the habit of encouraging sycophants,  accept these anti-customer suggestions without applying their own mind.    Once some PS Banks have implemented these,  even other reluctant banks cave in due to peer bank pressure and high profiled sycophants.

 

We have seen RBI has issued guidelines, thereby stopping banks  for charging for Not Maintaining Minimum Balance in SF Accounts,  Pre-Payment Penalty on Housing, Auto loans,  High Late Payment Fees on Credit Cards etc etc. 

Now question arises whether regulator has to waste his time in reigning banks for immoral or anti-customer policies of banks ?   Should RBI's job be not  focused on much higher level of policy making concerning the country’s economy.   However, top bank bosses force RBI to stoop to this level for micro management, purely due to anti-customer attitude of such bankers.

 

This brings me to the role of IBA.  Our great IBA is at present under lens of common bankers on account of wage revision.   I am sure majority of bankers agree that their role on this subject is negative or anti-employees.    Leaving wage revision for discussion in other articles, I would like to now as to how many times the Chairman of IBA has gone through “Objectives of IBA”?  Can he recall more than 50% of these objectives orally (Bankers will recall that they are asked in their interviews about mission and vision statements).   I am sure he will fumble.   One of the objectives of IBA is “To project a good public image of banking as a service industry and develop good public relations”. (Click here to read all 19 objectives of IBA)


When last week in a newspaper I read the RBI dictate “No late fees on credit card dues for a month”, I thought of writing this article as on number of occasions  during my over 30 years service in PS Banks,  and even afterwards, I have been wondering why RBI has to come to the rescue of general public on such issues. 
 

I feel that whenever such  a dictate is  issued by RBI, the policy makers in banks ( Public Sector as well as more Private Sector banks ), must put their head in shame that  Indian banking Regulator has to come to the rescue of general public, put an end the policies of banks which are NOT customer friendly.  Similarly the Chairman of IBA and Chief Executives  of IBA also need to feel ashamed as they failed in their duty  to meet the objectives for which IBA was established.   Let me explain why I feel  they need to be accountable in this respect.   

 

We come across frequently RBI guidelines where they issue new dictates to reign in the anti public policies,  which regulator views as to be for fleecing the customers.  Question arises who are the people responsible for bring such policies in the realm of banking circles.   Are those people are so insensitive and dumb that they can not read the pulse of the general public ?   If they are so, how come they have reached up the ladder so high ?

 

My experience is that usually such policies are initiated by Private Sector banks, but soon copied by Public Sector banks.    We all know that there exists a class of sycophants in PSBs, who are always looking for some new trends for copying.   Thus when such policies are introduced by Private Sector banks and these come to the knowledge of such sycophants, they immediately start the process of introducing the same in PSBs too, and try to take credit for so called "innovative ideas".    These sycophants will come out with comprehensive note to CMDs / EDs / GMs claiming these to be innovative ideas in the industry which will help in  increasing income of the banks.  Then they push through such policies. 

  

 

 

 The worst part is that most of PSB’s CMDs / EDs / GMs who are in the habit of encouraging sycophants,  accept these anti-customer suggestions without applying their own mind.    Once some PS Banks have implemented these,  even other reluctant banks cave in due to peer bank pressure and high profiled sycophants.

 

 

 

 

 

 

 

 

 

 

 

We have seen RBI has issued guidelines, thereby stopping banks  for charging for Not Maintaining Minimum Balance in SF Accounts,  Pre-Payment Penalty on Housing, Auto loans,  High Late Payment Fees on Credit Cards etc etc. 

Now question arises whether regulator has to waste his time in reigning banks for immoral or anti-customer policies of banks ?   Should RBI's job be not  focused on much higher level of policy making concerning the country’s economy.   However, top bank bosses force RBI to stoop to this level for micro management, purely due to anti-customer attitude of such bankers.

 

 

 

 

 

 

 

 

 

 

This brings me to the role of IBA.  Our great IBA is at present under lens of common bankers on account of wage revision.   I am sure majority of bankers agree that their role on this subject is negative or anti-employees.    Leaving wage revision for discussion in other articles, I would like to now as to how many times the Chairman of IBA has gone through “Objectives of IBA”?  Can he recall more than 50% of these objectives orally (Bankers will recall that they are asked in their interviews about mission and vision statements).   I am sure he will fumble.   One of the objectives of IBA is “To project a good public image of banking as a service industry and develop good public relations”. (Click here to read all 19 objectives of IBA)

Is IBA merely a place for parking retired bankers / benefits to serving bankers,  so that they can have easy life as they are in good books of GoI or have the right connections in Government ?  Do they not have any responsibility towards bank customers?  Can  IBA absolve itself of all the responsibilities by claiming that it being a private body (funded by banks !) considers itself above law and claims to be out of RTI Act?  It seems to be responsible to nobody as GoI or RBI too have hardly ever taken to task the IBA for not working towards their defined objectives.   
               

Whenever, RBI comes with dictates like stopping usurious charges for maintaining minimum balances or banning the pre-payment penalty on loans or credit card late fee payments, it is actually a castigation on banks in general and IBA in particular.  Does IBA not feel that such immoral charges actually damage the good public image of banking as a service industry?   If it feels so, then what action it has taken to stop banks from charging fees which have to be banned by RBI ? If they feel that banks were right, then why IBA has not the guts to protest against RBI dictates.  I am of the firm view, RBI must censure IBA for being mute spectator to such fleecing of customers by banks.  Who should compensate customers who have already been charged such immoral fees / charges / interest ?  We expect Automakers to recall the vehicles in case any deficiency is found at a later stage, but Bank management in India are above the law and nobody ever even thinks of refunding of such charges after RBI has declared these to be wrong.  Is this called Good Governess ?

 

I know some common bankers, top management, IBA may not agree with my strong views.   In such a situation, rather than cursing me for these views, they should have the guts to protest against RBI for issuing such dictates.  I wonder what would have happened to common customer if we did not have a customer friendly regulator.  Let these people, but I will speak what I feel to be correct.

 

Let me now discuss the long term impact of such policies of banks on the reputation of banks and common bankers.  Such rules may have been introduced by banks with good intentions to generate additional revenue and punish some defaulters.   However, when even a single customer has to pay (Rs 500 to Rs 1000) for unintended withdrawal from SF account or delay in credit card payments, he quotes this to 10 of his friends about the immoral and arrogant attitude of banks. Thus, the image of bank and bankers gets a big hit and you start losing public sympathy.   Thus policies should be such that these are NOT  penal in nature for honest customers or who make intended slips / delays in payment or withdrawal.  Banks can always  charge a small higher interest (say instead of 12%, let them charge 14%) but not penal fee / interest.   IBA and top management needs to understand difference between penalty and gentle reminder to follow the rules.

 

The golden rule while framing such policies is that “you should try to imagine the feelings of a person who is earning say Rs 15,000 per month (for the whole family) but forgets to deposit his dues by two or three days, and bank decides to charge Rs 1000 for the default”.   We know our Electricity Boards, BSNL / MTNL too charge for delays, but it is nominal amount of Rs 50 or so.  Thus, nobody makes a hue and cry as it is a gentle reminder to be careful in future, but banks have tried to fleece through penalties.

 

I write such articles to awaken the conscience of common banker, who has been demoralized to an extent that he either fails to take note of such things or if he notes the same,  is unable to express due to fear of being ridiculed by Circle Heads / Regional Heads / GMs in the open meetings (I too faced such issues on few occasions when I used to question such guidelines during my service days).  Therefore, bankers may not be able to take CMDs / EDs head on, yet they need to read these articles to at least remain awakened to what is actually good for banks and the country.  Bankers need to support RBI whole heartedly though banks may be losing some revenue.