Saturday, March 27, 2010

Recapitalisation of RRBs and Inclusive Growth

Reports are that GOI is thinking of implementing a latest (Dr KC Chakrabarty, Dy Governor-RBI) Committee Recommendations about infusing additional capital of Rs. 4,000 crores into the 83 RRBs to ensure that they attain at least 7% CAR. It is understood that such re-capitalisation has been going on in the previous years too with a dosage of R. 3,959 crores in 2006-07 and Rs. 1,795 crores. RRBs would be asked to open 2,000 more branches by March 2011.

The CAR for Commercial Banks is 9% now and is aimed at 12% soon. Even in their case too, capital infusion is taking place to the tune of Rs. 16,500 crores. All these banks are running for opening of ATMs and Branches in the nook and corners of the country and open Savings Accounts in order to attain cent per cent Financial Inclusion. Such opening of branches and accounts (where is the money with rural folk to save or deposit in banks?) need not necessarily lead to Inclusive Growth. On the other side, there are also reports that Banks in India have lent more than RBI targets.

Coming back to RRBs, the exercise started on October 02, 1975 (during Emergency Rule) with a pious objective of reaching out to the rural poor by setting up low-cost outfits. These 196 RRBs were covering one to two contiguous districts; sponsored by the PSBs, and their share capital was shared by Central / State Govts / Sponsor Banks. Initial manpower was deputed by the sponsor banks but the design was that eventually local rural talent would be employed at all levels with low-cost operations. Unfortunately this did not happen. Their staff are now drawing equal salaries on par with sponsors but their operations are not competitive. In the last three-four years, there has been large scale consolidation which reduced their number from 196 to 83. Point of Sales (PoS) concept is not working here. There is no localisation but they adopted Unionisation.

There have been studies on the Productivity and Profitability of RRBs. It is interesting for us to wait and see how the original objective of RRBs is achieved while pursuing Inclusive Growth. We had witnessed a miserable experience of Cooperative Banks in India since beginning. In particular, Rural Cooperatives were always linked to local politics. Irrespective of whichever type of banks are operating in rural areas, poor farmers have been resorting to committing suicides when they fail to realise crop proceeds and repay the debt obligations. Latest news was about another Urban Cooperative Bank in Belgaum in Karnataka being asked to observe RBI strictures. Where lies the fault - PSBs, Private, RRBs, Cooperative Banks and Foreign Banks - are all on the same platform. Thank God being conservative, Indian Banking System could withstand the onslaught of recent recession and global meltdown. Reports are that over 100 banks in USA were closed down in an year's time.

Reverse Reverse Reverse.................

I read an article on Banking in Business World - latest issue. It is captioned as Driving in Reverse Gear..... about RBI's recent decision to hike repo and reverse repo rates by 25 basis points about after a month of GOI's Union Budget and ahead of RBI's Monetary Policy announcement for next year. That is how our policy makers function, of course. It is not simple.

The Financial Services industry players are using some interesting jargon. Reverse Repo, Reverse Mortgage, Reverse Mergers, Reverse Book Building, and so on. In fact, what we have been experiencing in the last about two decades since 1991 is reforms which I could term as reversing of all the previous rules, norms, guidelines, policies and practices. Because it has been found that the economic environment is wanting reforms ie., to undo the previous set of rules or guidelines.

For over four decades since independence, India has been gearing up to be a democratic, socialistic republic but continuing the legacy of British rules; The elected government representatives have also been looking at America and Russia as models in certain fields. Today, we have to look at Japan, Singapore, Hongkong - China or Australia or UAE to develop new models for infrastructure development and economic growth. One thing is sure that now and then we dream of making Mumbai an International Finance Centre like Shanghai and becoming a Financial Super Power. God knows when?

If Dr is for Doctors/Doctorates, why not Br for Bankers?

All of us know that Dr is referred for Doctors or Doctorates (PhDs).  These Doctors could be Allopathy, Ayurveda, Homeopathy (BHMS), Dental Sciences, etc. They would have studied for four or five years of specialisation in medicine.  They may go for higher studies like Post Graduation viz., MS or MD or PhD too. And then, PhD in various disciplines could be from Universities in India or abroad. Now a days, PhDs are being offered online or private or distance study.  Autonomous Institutions like IIMs, NIBM and others offer Fellow Program of 3-4 years which is equivalent to Ph.Ds. (PGDM of IIMs etc is also equivalent to MBA of Universities). Of late, these Fellows are also using the suffix - Dr to avoid confusion in the Society.

I also came across the practice of Er for Engineers and Architects, Fr for Fathers (Christian Missionary), Brig. for Brigadiers, Capt for Captains, Ln for Lions, Lt for Lieutenants, Rtn for Rotarians, Wg Cdr for Wing Commanders.  Similarly, IAS, IFS, IRS, IAAS, etc are used by Civil Servants.  Interestingly, the former group of titles are by virtue of profession and later for Bureaucrats after having passing an all-India exam and joining the service.  Certainly, none of the above are ornamental but convey a position or status.

My humble suggestion is that similar facility be given to Bankers to use Br.  May be some conditions could be prescribed that one should have worked as an Officer in a Bank for at least three years or should have passed both JAIIB and CAIIB or so.  This would professionally boost the morale of Bankers as Professionals - be it in Public Sector, Private Sector, Foreign Banks or Coop or RRBs or Local Area Banks.  An Agency like IBA (Self Regulatory Organisation for Banks in India) should move this forward.

Wednesday, March 24, 2010

Entrepreneurs and Autobiographies

I was always fascinated reading only non-fiction, in particular, autobiographies of successful businessmen.  Long years back, say in 1978, it was ROOTS by Alex Haley.  Its all about how Africans were captured as slaves and taken to America who later became part of civilisation after about 12 or more generations.  And today, we have an Afro-American in Barack Obama as first non-white President of USA!

Later years, I read Lee Iacocoa (belongs to Italy but settled in USA) of Ford and Diamler-Chrysler fame.  His dabling with Automobile Industry after successful rise in Ford Company is very interesting.  Then, it was MADE IN JAPAN by Akio Morita, who was an Engineer by qualification, and after having served in Army fighting in Second World War, went on setting up SONY with astounding success story in electronics!

In the last two years, I have also read the three books of Subroto Bagchi, the Founder and currently Gardener of Mind Tree Consulting of Bangalore.  These are THE HIGH PERFORMANCE ENTREPRENEUR (2006), GO KISS THE WORLD (2008) and THE PROFESSIONAL (2009).  It is so interesting that an ordinary BA graduate from remote Orissa moving to DCM in New Delhi for a decent managerial job shifts to Bangalore for a Sales Job in Computer Hardware Industry only to become a COO in Wipro and later co-founds Mind Tree.  The entire journey is an entrepreneurial adventure worth reading.

Last year (2009), I picked up these two books by Infosys stalwarts - BETTER INDIA - BETTER WORLD by NR Narayan Murthy and IMAGINING INDIA by Nandan Nilekani.  Both these books are also prize possessions for those keen on entrepreneurship. Each have written about their middle-class lives.

I completed reading 3 chapters (out of a total of 13 plus) in SIMPLY FLY - an Autobiography of Capt GR Gopinath, the founder of Deccan Air. Another ten chapters to go..In ninety of the total of 380 pages I read so far, Gopi has moved from a village to Indian Army as a Captain after studying in a Bijapur Sainik School and IMA-Pune, taking up farming, set up Malnad Mobikes, Yagachi Tiffins, a Stock-broking firm and a Franchise of Jain Irrigation (for Agri Consultancy) before entering Airlines or Politics! Let me read more!

Today, I got my latest copy of Business World (29th Mar) with a special coverage on INDIA'S HOTTEST YOUNG ENTREPRENEURS.  This is the second year BW is carrying out such an exercise.  Having received a total of 112 entries for the contest this year, the Screening Committee consisting of 11 experts shortlisted 30 on about ten parameters.  The Jury comprising six other leading personalities like Ashok Wadhwa, Rana Kapoor, Harish Mariwala et al adjudged and named five top names as winners. Interesting!

These include (in that order) 1. Kranti Kiran Vistakula (Hyd) of DHAMA APPAREL INNOVATIONS, 2. Ratnesh Yadav & Gyanesh Pandey et al of HUSK POWER SYSTEMS (Patna), 3. Anmol Singh Jaggi a Carbonpreneur of GENSOL CONSULTANTS (from Panchkula), 4. Irfan Alam (an IIM-A Grad)  of SAMMAAN FOUNDATION from Patna and 5. Radrajeet Desai, Saurabh Kumar & Maninder Gill  of IDEACTS INNOVATIONS (from Mumbai).  This issue is again a prize collection worth possessing for all those are aspiring or dreaming to become Entrepreneurs with a strong urge or desire to get them motivated.

Financial Literacy and Customer Care

Gone are the days of Directives, Controls and Regulations.  Thanks to Financial Sector Reforms and outcome of various Customer Service Committees,  not only the players like Banks, Financial Institutions, NBFCs, Stock Exchanges, but even the regulators like RBI, SEBI, IRDA, Ombudsman etc are showing concern for Customer Care and Financial Education.  New Generation Banks like YES Bank is aggressive in the market speaking about its Knowledge Banking and Inclusive Banking products in recent times.

During eighties, there used to be advertisements for bank products and services released by Joint Publicity Committee for all the PSBs together.  Today, each and every bank is releasing colourful, information, and interactive advertisements to win the customers.  Interestingly, the Reserve Bank of India which used to be like an Iron Curtain over a decade back, is pro-customers.  One may visit their website ( to find about Financial Education they are engaged in.  RBI has uploaded adequate information in 14 Indian languages to reach the customer with banking information.  Even youngsters are also enticed with stories and colourful cartoons all about money and banking services. 

National Commodity & Derivatives Exchange Ltd., (NCDEX) also is issuing simple but colourful advertisements in bullet points regarding DOs in Commodity Trading.  How nice it is?  Insurance Regulatory and Development Authority (IRDA - has also been pro-active in caring the customers and disseminating all about Insurance industry in its advertisements in News Papers and Magazines.  LIC and General Insurance Corporations like New India, United, Oriental Insurance Companies are keeping the customers informed of the various services and benefits from time to time.  Ombudsman of Banks and Insurance Companies keep appearing in the news paper advertisements with all the facilities on offer.  Grievance Redessal appears to be on the top of the agenda of all these organisations.

Tuesday, March 23, 2010

Women Entrepreneurs of India

It is very interesting that after sixty plus years of independence, there is controversial debate on Women's Reservation Bill in the Parliament; A Woman is a mother, a sister, a wife, a daughter, a teacher, a doctor in all our lives; and what not? Women have always been contributing to the society in many ways.; I wonder why this bill took thirteen years to see the light.  In fact, I would prefer a fifty per cent reservation, since they are to be treated as equal partners.  In Indian History, one star name always referred is Rani Lakshmibai of Jhansi who fought for independence.  There are many such illustrous names to reckon.

In the field of Entrepreneurship, women have also set remarkable records. To name a few again, I would recall Ms Elaben of SEWA, Ms Kiran Mazumdar Shah of Biocon Ltd., the group of lady promoters of Lizzat Papad, Ms Ekta Kapoor - the star producer of TV serials, Ms Madhura Chatrapathy of Bangalore, Shahnaz Hussain and Vandana Luthra and so on. When I mention about Women's World Banking, many of my students and colleagues raise their eyebrows because they are not aware of such an international organisation.  If we go on discussing the details of each of these individuals, we would be convinced of their entrepreneurial talents. 

May be it is time that Government of India and respective State Governments to honour all such successful women entrepreneurs who have been working relentlessly to achieve their individual goals as also for the benefit of the less fortunate others.  They are generating employment for many others.  Let us hope that better sense would prevail on the policy makers and all such achievers are well recognised.

Business / Banking and other Laws

I studied several laws like Contract Act, Companies Act, Partnership Act, Sale of Goods Act, Stamp Act, Negotiable Instruments Act, etc., at various levels, applied to business situations during my career and currently have been teaching a Course titled Business Laws.  There have been innumerable issues in each area and cases decided by various courts at different locations and levels.  In particular, Contract Act, Transfer of Property Act, Limitation Laws etc., were clear that security documents and other papers obtained in course of business dealings or loans extended by banking system (mortgage loans, working capital loans, etc.) have certain time period of limitation.  Even a Bill of Exchange, a Promissory Note and Cheque or a Draft have all also certain life like three months or six months as defined per law.

One thing that intrigues me is that while all corporate and business dealings or transactions have specific life time, why is it not so in respect of civil or criminal acts.  Added to, even in twenty-first century world, with special agencies like Enforcement Directorate, CB-CID, CBI, etc., some chronic cases are pending for decades remaining unresolved.  Arushi Murder Case is nearing two years but no clue so far; Narendra Modi is facing charges for Riots of 2002, Sajjan Lal is being tried for 1984 riots (anti-Sikh), Bofors case remained unresolved for over twenty years, Lalu's Fodder Scam of Rs. 900 crores or so is still not cleared; Cases of disproportionate assets against Jayalalithaa or Mayawati or Mulayam Singh etc., are going on and on; Income Tax evasion cases on many businessmen, politicians or cinema stars also drag for years and so on.

Why not there be laws of limitation on these type of cases in the larger interest of public?  Strangely a day or two before, an ex-CM of a State was questioning that why not a person against whom criminal cases are pending be chosen as a candidate for Municipal Elections as along as he or she is popular with public.  It is questionable that whether he or she is popular or enforcing Dadagiri in a country which believes in Gandhigiri.

Monday, March 22, 2010

The Score-Card Says it all................ on Private Deemed Universities

My compliments to Krishna Prasad for the Article in Education Plus (supplement) of The Hindu (Mangalore) on Monday (22nd March). At a time when there have been sincere attempts being made by Kapil Sibal and Purandeswari (the two HRD Ministers at Centre) to clean up the Education portfolio, an analytical article of this kind is most welcome.  Objective Journalism is highly essential in India - thanks to RTI in place too.

The article dealt with analysis on the delivery made by fifteen Private or Deemed Universities in Karnataka.  It carried out the exercise on nine (I wrote on Power of Nine some days back in this blog, remember?) parameters viz., Consideration of the idea of a University, Performance, Compliance, Governance, Innovation in Teaching-Learning Process, Research Output, Doctoral Programs being offered, Faculty Resources.......... down to Admission Process and Award of Degrees.  For each parameter Krishna Prasad used four-way scoring with A=5, B=3, C=1 and F=0.  One observation made is that "Information given by some institutions about key parameters was inaccurate".  This is not palatable.  Universities are not like shops or factories - churning out students and degrees.  They are like temples - learning centres developing individuals with a service of Knowledge Dissemination and Research Output for long term benefit to all.

The list is not surprisingly is topped by IISc, Bangalore for its research output and excellent performance in all parameters with A scores with an aggregate of 43 out of 50.  Of course, it is a Century old Institution.  Then follow the others like NIMHANS, JNCASR, IIIT-B, MAHE (Manipal University) in B category,  with only SVYAS in C and remaining nine (again this magic number!) in F category.  The F category institutions need to be closely looked at in the larger interest of the society and posterity.

To me, the article is well timed because it would bring a sort of stock-taking on the existing Private or Deemed Universities before the Centre or State Government embarks on adding a few more such new Institutions.  For some years, there has been mushrooming of Engineering Colleges all across Karnataka, Tamil Nadu or Andhra Pradesh.  Every year, there used to be capacity under-utilisation.  We are talking high about Capacity Building.  But where are the standards? Where are world-class facilities?  Where are excellent and committed (if not knowledgeable) teachers?  Forget, sincere and willing to learn students!

Inclusive Banking!

Two years back, I was reckoning A-B-C-D.... of Banking in a brief article for Alliance's Gyandhaara.

Around that time, I used to see ads from the new kid in banking in India highlighting about Knowledge Banking.  No doubt, Knowledge Management was itself a new buzz word which was not taking place in the modern business or corporate world, let alone in our banks.  Because Indian Banking Industry has been the victim and beneficiary of all political and economic policies of the powers at Centre for decades.  Creativity or Innovation was never allowed during the so called pre-Reforms era till early nineties.....

Every thing what these banks did had to flow from Delhi or Mumbai.  Even commercial ads were not permitted to be released by all the PSBs during eighties.  IBA used to release blank ads designed by the Joint Publicity Committee for all the twenty-seven PSBs.  There was nothing that individual banks could claim or boast of as all the products, services and rates of interest were decided by the regulator - RBI ( as enunciated by GOI).  Branch expansion was dictated by the authorities without considering whether a branch is located in a cost centre or potential place for productivity and profits! Directed lending was the order of the day; not to speak of Loan Melas and Debt Waivers in the name of developmental banking.

Come reforms, and the twenty-first century with hi-tec banking all over.  Its Door-Step-Banking now extending all possible care for the Customer (was he or she neglected all the earlier years?). Then there is Knowledge Banking and recent innovation of Inclusive Banking.  But who is doing it and who is saying it shouting from the roof top?  I wrote two days back about Inclusive Growth being a hot-buzz-word irrespective whether it is practiced or not.  I am yet to understand the meaning of Inclusive Banking.

Sunday, March 21, 2010

Edupreneurs, Technopreneurs, and so on...

A few days back, I scribbled about Social Entrepreneurs which is a vast over today.

Today, I want to share thoughts about Edupreneurs.  Immediately two or more names that come to my mind. These are Satya Sai Baba, besides all his (controversial) religious and philosophical activities, ventured to set up a Private University in Puttaparthi (Andhra Pradesh, India).  We may also call him a Social Entrepreneur.  He had studied up to seventh standard in a small rural village but went on religious cum developmental mode.  There is a Hospital, Airport, Cricket Stadium, Drinking Water Project, Railway Station (all with modern facilities) and of course this University of Higher Learning. Better stop discussing controversies please.

Another is Matha Amritananda Mayi in Kerala who is a fisherwoman by background, studied up to only third standard and preaches universal peace, travels all over the world and spreads .... 'love all' concept by a hug. It is equally amazing to know that she went on setting up Medical Colleges, Engineering Colleges, Management Institutes in Kerala, Tamil Nadu, Karnataka (all in South India with modern facilities).  Yet another story of self-less contribution to human kind by spreading education (which I deem as an activity of Infrastructural development and Investment for long term prosperity of society). 

I can go on and on, of course.  Decades before this private initiative of "affordable education" was started by Dr T M A Pai of Manipal, India (fighting against the Goverment in Supreme Court too) for setting up Manipal University (formerly Manipal Aacademy of Higher Education - MAHE) beginning with a Degree College (MGM celebrated its Diamond Jubilee this March), a Medical College (and Kasturba Hospital), an Engineering College, Pharmacy College, Management Institutes, Communication Institute and so on.  Academy of General Education and Dr TMA Pai Foundation oversee a vast number of Schools, Colleges, Polytechnics and ITIs.  Besides imparting education, all these institutions encourage the local population to look for entering to or generate employment.  He was also one of the co-founders of Syndicate Bank (three more nationalised banks viz., Vijaya Bank, Corporation Bank and Canara Bank originated from the Dakshina Kannada Dist in Karnataka). Qudos!  Eradicate povery, hunger, illiteracy, theft, begging and anarchy by spreading "education to all".  These institutions are supplimenting the efforts of Governments.

We are currently witnessing the controversy of Azim Premji and Alliance Private Universities being discussed in the Karnataka Assembly.  How unfortunate that our Policy Makers violate all standard norms in enacting such bills and declare their ignorance to the public.  Higher Education being handled concurrently by Central and State Governments is hitting the headlines every day.  Centre is opening its eyes to de-recognise 44 such Private Universities (some times referred as Deemed and nicknamed by press as Doomed too) including seven from Karnataka.  And then, State Government demonstrates its power to counter such decisions.  Centre is working seriously to invite Foreign Universities and set up a National Commission for Higher Education and Research because UGC and AICTE have outlived their utility.  National Knowledge Commission (headed by Mr Sam Pitroda) and Prof Yash Pal (former Chairman-UGC and famous Space Scientist) Committee on Higher Education gave their strong views on the current state of Higher Education.

Education can not be a commercial commodity to be sold.  Posterity will not tolerate any destructive and mean approach to make education being made available by spending money.  Every student has to undergo serious training in his or her formative years in their line of interest and excel.  There are no short-cuts.  I wish that good sense will prevail among all our Elders and they will move forward with constructive ideas.

Philosophical Analysis of Life : Balance Sheet Approach


Our Birth is our Opening Balance!

Our Death is our Closing Balance!

Our Prejudiced Views are our Liabilities

Our Creative Ideas are our Assets

Heart is our Current Asset

Soul is our Fixed Asset

Brain is our Fixed Deposit

Thinking is our Current Account

Achievements are our Capital

Character & Morals, our Stock-in-Trade

Friends are our General Reserves

Values & Behavior are our Goodwill

Patience is our Interest Earned

Love is our Dividend

Children are our Bonus Issues

Education is Brands / Patents

Knowledge is our Investment

Experience is our Premium Account

The Aim is to Tally the Balance Sheet Accurately.

The Goal is to get the Best Presented Accounts Award.

(source:  a week-end email received from my friend, V Jaganmohan, Hyderabad)

Swiss Banks and Secret Bank Accounts!

The news floating around is that Swiss Banks have agreed to disclose the secret accounts and balances held. The estimated amount held aggregates to Rs. 70,00,000 crores from Indian customers! Story goes saying that India is leading among the 180 countries in holding such balances. Just before the General Elections in 2009, some leading politicians made promises and demands to reveal the figures and names; and it is strange that when Swiss Govt is willing to share all data from 1947 onwards, our Government and Opposition Leaders seem to be keeping mum, for the reasons best known to only themselves.  Suspicion is that most of these account holders (or shall we call them patrons) are Politicians, Bureaucrats and Businessmen.

Whenever a financial scam erupts on Indian soil, the first and foremost victim is the Indian Banking System.  It is a hobby for some people to go on accusing the banks and banking system for all the ills in the service industry if not the economy.  When it comes to disservice to customers - in rural or urban areas - none of the other service industries - Railways, Postal Services, Education, Hospitals, Travel & Tourism, etc are taken with the amount of seriousness with which banking system is criticised; despite the fact that these banks are rendering yeoman service in so many ways.

Interestingly, the Jharkhand Madhu Koda Scam (an ordinary illiterate labourer who rose to become Chief Minister of a new-born small State) surfaced, the role of banking system was under attack for not having properly scrutinised the credentials of individuals involved in crores of money changing hands. Neither the weanessess in administration nor loopeholes in the licence-raj are discussed in such situations.

Saturday, March 20, 2010

SBI reaches new milestones

All newspapers carried ads and news item about SBI reaching yet another milestone(s) yesterday - in opening 1,000th branch and 10,000th ATM in the current financial year in Mumbai.  Its branch strength touched 12,448 with a grand figure of over 21,000 ATMs.  In private conversations, we always used to refer SBI as a sleeping giant; a dinossaur, etc because it was a slow runner to introduce modern products and services like Credit Cards or CBS or Retail Banking products.  Now everything is reverse. Its a leader.

Two days back a Visiting Professor and Senior Consultant in a reputed international Organisation met me and was critical of SBI's  quality of service. He claimed to have been a customer of the bank for about 30 years and was speaking confidently and authentically that the bank has not improved its customer service.

Having worked in SBI between 1971 and 1993 in different capacities in various locations from a rural branch in a backward area (Warangal & Medak Districts in AP) and closely watching the progress almost on daily basis, I differed with him.  I stoutly defended the bank in its multiple initiatives be it in Customer Service or Computerisation or Branch Banking or Training to its Staff or Leader of the Banking Industry or as a leading global player including international expansions and take overs.  Besides tall claims or advertisements, numbers speak.  One is advised to visit its website to know more about the bank.  If only we are keen on its milestones, two research books on its history written by Amit Bagchi are testimony. 

SBI has always been transforming ever since it was formed by re-christening Imperial Bank of India in 1955 with a mandate to go rural. In 1971-72, it undertook re-organisation and introduced budgetary and planning system even when there was no major mechanisation or computerisation.  Again in 1981 and 1990 the bank went for re-structuring its working primarily keeping in view the Customer in its focus.  The logo was also designed in consultation with IIM-A in 1971 which cares for the customer - individual or institutional. SBI was also the first to have gone in for Long Range Planning for its business and organisational development.

"Parivartan" is a unique initiative by the present Chairman Shri OP Bhatt which made each and every employee of SBI to wake up and realise the threat or competition, the customer needs and need to retain if not increase its market share.  No doubt its size may some times its own hinderance but then in today's (twenty-first century) technology world size - big or small - does not matter.  Technology fecilitates global reach with faster and accurate service handling huge volumes.

Incidentally, the two major Customer Service Committees appointed by RBI in 1970s and 1990s were headed by Shri RK Talwar and Shri MN Goiporia who were sitting Chairmen of SBI.  The bank knows its customers, its country, its boundaries (but operates beyond), its competitors and its future. SBI, if fact, is a trend setter and leader in the banking industry in India; while RBI looks to SBI's advicefor all its policies .

It is nearly 17 years that I voluntarily quit SBI as a Chief Manager in April 1993, but am always referred by my friends and colleagues as SBI-man.  I have the emotional attachment to mySBI and I am a Pensioner, a Customer, a staunch Well-sher of the bank.  Almost everyday I speak at least to one of my ex-colleagues.  I feel proud that the bank is scaling higher and higher with many more milestones in the offing.  Long live SBI.

Thursday, March 18, 2010

Re-Capitalisation of Banks in India

Financial Sector (including Banks) Reforms at country-level and Introduction of Basel-1 & 2 norms at global level happened almost simultaneously.  All the ills of inefficient working of banks during eighties (loan melas, poor customer care, limited product range, regulated interest rates, unproductive branch expansion, trade unionism, absence of mechanisation/computerisation, lack of Risk / Asset Liability Management mechanisms, low or no competition or level playing field, etc) exposed the banking system to its heights. Capital was never considered a measure or yard-stick or parameter to judge their performance as paper-dividends were declared due to interest being calculated on even bad and doubtful debts (now called NPAs) irrationally.

Capital Adequacy Norms necessatated almost all the banks, in particular PSBs either from the Govt funds or by going public in order to meet the global standard of at least 8% CAR; with India choosing at 9%. Some how over a decade's time, all the banks have met the requirement including through infusion of funds from Govt sources.  Come Basel 2 norms, it has become essential for these banks to scale the CAR to at least 12%.  In the process it has become an annual affair that GOI has been pumping capital for the last three years.  In the recent budget too, the FM proposed to add Rs. 16,500 crores into capital of PSBs.  Instead, these banks should tighten their belts and improve their working; prune down their NPAs so that when they approach capital market, the investing public will judge their efficiency and subscribe to the issues.

Wednesday, March 17, 2010

Inclusive Growth

In the last three-four years, it has become a fashion to speak or write about Inclusive Growth in India.  Sixty years of democracy and eleven Five Year Plans yet single digit GDP and double digit inflation!  It took at least thirteen years to push the Women's Reservation Bill in Rajya Sabha, and we are eagerly waiting to see the scene in Lok Sabha.  UPA wants to present this after Union Budget and Nuclear Bill or Foreign Universities Bill are all cleared in Parliament.  All this when we had Woman Chief Ministers, Prime Minister, CEOs, Scientists, LS and Legislative Speakers, Ministers, Sportspersons, Teachers, Lawers, Social Workers, Politicians and so on.  What is inclusive growth then?  Why follow sectorial approach - be it geographical or regional, gender or caste and economic class, etc., etc., etc.

When any reforms or developmental plans are thought of, or customer service is evaluated, it is the Banking System that is targetted first.  Of course, they have been serving the countrymen in so many ways.  We have diverse varieties of Banks - Public, Private, Regional Rural, Foreign, Local Area and Cooperative Banks.  Although all these banks have been spreading into remote corners of the country even without adequate infrastructural / communication / transportation facilities in rural and semi-urban areas, Financial Inclusion has almost thrust on them in last four years.  Rural financing is easier but Rural Development is a big agenda item.

TOI reports today that globally 1.1 billion people still have no access to toilets, with India alone contributing 638 million to the figure.  Just 11 countries, that incudes India, are home to 81% of such people.  The other nations include China, Pakistan, Nepal, Bangladesh, Indonesia, Ethiopia, Nigeria, Sudan and Brazil. A WHO-UNICEF report states that India has the world no. 1 tag in this context. It is time for the GOI and the planners / policy makers to focus on such basic necessities like housing, potable drinking water, transportation, sanitation, health and veterinary services, communication, etc instead of pressuring the banks to merely open bank accounts, which they are any way doing on an on-going basis.  UPA Government should seriously review its AAM AADMI welfare policy in the remaining years of its rule and prove themselves.  SHGs and NGOs should be encouraged to work on these areas too instead of limiting to the area of financing.  It is time that the rulers think seriously also about the increasing suicides by farmers. JAI HO & CHAK DE INDIA.

New Reverse Mortgage Loan Scheme 2010

Uptil nineteen eighties, bankers in India had difficulty in explaining to motivate / encourage their customers opening joint accounts and the advantages thereof in case of death and eventual settlement of accounts to the legal heirs. Photographers were taken only from illiterate customers with thumb impressions and witnesses. Over a period, these problems were overcome and today joint accounts and nomination have become common. Currently both literate and illiterate customers are asked to submit photographs as also identity proofs (like Driving Licence, Ration Card, PAN Card, Voter Card, Electricity or Phone Bill and so on) in order to comply with the KYC (Know Your Customer) formalities.

Come nineties, the industry has undergone several reforms - be it in customer service, productivity, profitability, technology, net banking, and so on. Reverse Mortgage is one such product exclusive to the senior citizens.  Particularly, when the Indian family system is changing.... for better or worse.  Nuclear family system has set in.  Even those one or two children are getting educated in India or abroad, taking up jobs in urban/metro cities or settling abroad thus switching to modern life styles.  With sizeable earnings and comfortable life, they may or may not look back to their parents. (a la, Baaghbaan of Amithabh, Hema).  They are willing to send regular amounts for their parents sustenance.  Parents are unwilling to join the children and prefer to stay back.   But, with the rising costs of living, some times these parents are hesitating to seek support from their children. 

In such peculiar circumstances, Reverse Mortgage Loan Scheme works well to assure handsome monthly stream of income to the parents (senior citizen) by mortgaging their encumberance-free house properties.  However, it appears in last three years, the scheme has not taken off in India.  Of course, it happened in USA, UK and other countries too during eighties... Now, NHB is reviewing the scheme and offering certain modifications to make the scheme more attractive.

Monday, March 15, 2010

Developments in Indian Railways

It is interesting that a majority of Railway Ministers hail from Bengal or Bihar, for reasons best known only to the Hon.ble Prime Ministers! It was Ghani Khan Chowdhury who changed face of Malda some years back; in recent years 3 Biharis - Ram Vilas Paswan, Nithish Kumar and Lalu Prasad Yadav;  and currently Ms Mamata Didi.  Are they all serving Union Government covering the entire country or their own States?

We also had TA Pai, Jaffer Sherif, George Fernandes from Karnataka; but could or did they do enough to Karnataka? And a few names from Andhra, Maharashtra and so on?  Last week it was reported in the press that Lalu Prasad used the Special Saloons 369 times in four years - mostly to visit nook and corners in Bihar. When Railway Budget is presented, we are all eager to know only about how many new trains introduced. 

There are several thousands of unmanned railway crossings in the country, causing large numbers of accidents and deaths every day.  Is it not possible for the Minister or Government to dedicate three or four years to convert all these unmanned crossings into well protected with gates and post men to handle?  What would be the budget for such a focussed step?  Why can't it be taken on priority basis to save innocent lives.  Another peculiar news we often come across is open wells all over in which every three months some child or woman falls and dieing despite best of efforts to rescue spending lakhs of rupees.  These are the small achievements all the departments concerned should concentrate to improve the quality of life in this country.

New New Private Sector Banks

The immediate previous experience of new Private Sector Banks in 1993-95 is mixed; Times Bank, Bank of Punjab, Centurion Bank - all got merged in HDFC Bank; while Global Trust Bank failed and was forced to merge with the well run PSB - Oriental Bank of Commerce. ICICI Bank (reverse merged with parent ICICI) has been hitting headlines now and then for right or wrong reasons. UTI Bank withstood the shake up in its parent UTI and was re-named as AXIS Bank. IDBI Bank was slow starter in aggressive banking, also got reverse-merged with its parent IDBI and is actively campaigning for Retail Banking. The recent entrants Kotak Mahindra (NBFC converted) and Yes Banks are steady, compliant with all regulations and are growing in all spheres. IndusInd Bank is not being heard in a big way but okay. All these new generation banks had the advantage of starting with clean slate during reforms era; but still struggling.

Amidst this stiff competition from PSBs and old/new Private Banks, it is interesting to watch some more new Private Banks coming up. Has the Govt or RBI have in mind any big industrial houses to start these new banks? The principle of original nationalisations in 1969 and 1980 were to take banking in to grass roots level with huge branch expansion; but loan melas and debt write-offs and expansion of operations without mechanisation lead to chaos in the banking system. This was the primary cause for reforms in banking system in early nineties. Nearly twenty years are over, almost all the banks have set right their Balance Sheets, adopt ALM and Risk Management, follow Corporate Governance policies, concentrate on productivity and profitability as also keen for Financial Inclusion and Micro Credit. However, another experiment by the GOI of opening five Local Area Banks was also aborted (with one already closed) because the experience is not encouraging.  Strangely, the same Govt / RBI are making noise in last four years about Financial Inclusion!

Saturday, March 13, 2010

Power of Nine

I am neither a Mathematician nor a Numerologist.  I simply know that number nine (9) is the last or highest among the single digits.  I firmly (or may be blindly) believe in the power of nine.  It has become a habit for me to add up all the digits when I buy a bus or train ticket or get a seat allotment and so on...... Recently, when I bought a new Car, I got a number allotted - 504 (same as my flat in Premier Enclave, Manipal).

To quote a few things where nine has significance - Nava Maasa (Nine months) a mother waits to deliver a child (all of us). And then there are Nava Grahas, Nava Ratnas, Nava Dhanya, Nava Ratri (nights), Nava Randhra (in human body), and so on.....I need to study deep into this magic number called Nine.

I understand some of the influential people like Jayalalithaa and Satya Sai Baba are also strong believers of this aspect.  Recently, I came across a huge table (full page in the opening) in a book on Financial Inclusion (by Shri DT Pai) about performance of Indian Banking System from 2001 to 2009 on several parameters.

Wednesday, March 10, 2010

I know of a few names of Social Entrepreneurs. To name top three from AP I have in mind are Dr Parameswara Rao of Bhagavatula Charitable Trust in Dimli near Vizag, Dr Vikram Akula of SKS (Swayam Krushi Sangham) Microfinance fame and Dr C Sankurathri.  Dr Rao's story is very interesting and older than Dr Mohd Younus entering Microfinance through Grameen Bank in Bangladesh and winning a Nobel Prize in 2006. The profiles of each of these gentlemen are mind-boggling.  If not Nobel Prizes, Government of India can seriously think of awarding Bharat.......... (I am watching all those discussions and demands on TV about Sachin to be honoured with Bharat Ratna).  My view is that any national awards are to be given to those individuals who made a remarkable changes in the lives of millions and sacrified their own lucrative careers.

You may find a very interesting video clipping on Dr Sankurathri. Please click here:

Here is another story of an unsung, unheard and unwept hero from Andhra Pradesh. Over 25 years back, Dr Chandrasekhar Sankurathri suffered the worst loss of his family due to a heinous act of terrorism in an Aircraft in Canada. He is simply great that he is rendering yeoman services to poorer sections by providing eye care services in memory of his lost family. Government at Centre and State should immediately recognise all such individuals and honour them.

Mushrooming B-Schools in India and Pseudo Ranking Surveys

The first ranking of B-Schools in India in 2010 was carried out by Career-360 (monthly). The researcher physically visited our campus in Manipal travelling all the way from New Delhi and had first hand discussions with Students, Faculty and Staff. Their claim is that they adopted a scientific input-process-out mechanism to collect data, visit the campuses, interact with faculty and students to arrive at the rankings. The 50 Schools list is being disputed by some; while some notable players have not participated.

We have over 2,000 B-Schools - in public (Govt backed and University Depts), private or (psedo) foreign collaborated Institutes. There are multiple regulators like UGC, MHRD, AICTE, AIU, DEC, etc., and several Associations like AMDISA, AIMS, AIMS-International, etc. About 25-30 types of Entrance Exams are being conducted and Coaching Centres are flourishing day by day. In India, at least 15 to 20 such Surveys are being carried out, of late. An aspirant is getting confused. The latest entrant, interestingly, is Dun and Bradstreet, India to carry out a thorough professional exercise on all related aspects.

Hence, how will a genuine MBA-seeker get authentic ranking to freeze his choice School? Will the recuiters be able to identify good Schools from average ones? Whether age of the school or faculty (intellectual capital), location, accreditation, placement record, publications and research, physical infrastructure and ambience, library-computing facilities, student-faculty academic and other achievements, etc are all properly captured in all such ranking surveys? Do we need to have a regulator for such ranking exercises? Should it be carried out once in a year or more than once? Like Credit Rating Agencies being overseen by SEBI, do we need some intervention or governance of all these bodies/agencies? There are many such questions to be answered to take the B-School Rankings seriously, at least in Indian scene.

Tuesday, March 9, 2010

Suicides over Telangana Issue

It is very sad to read about every fortnight one innocent student committing suicide over the prolonged issue of separate Telangana State.  Suicides are generally resorted to by weak and helpless hearts.  Young and bright students should use their wisdom before taking such extreme steps.  After all, it is all politics.  Then, cause this agony to the parents, relative and friends. One can not become a Hero through these means.  Today's youth are fortunate to have modern life, technology, global scene and best ways of communications.  Views for or against any issue could be expressed through media, social net work or peaceful methods.

It was about forty years back (1969-70), this was a burning issue. About 370 young lives were sacrificed for this cause; thousands of students lost at least two precious academic years of career; Osmania University students were alleged to have resorted to mass copying in examinations later on and hence denied jobs in public sector organisations.  The situation came back to normal after Justice Jagan Mohan Reddy took over as Vice Chancellor and remedied the scene.  Where are all those politicians who were active in the agitation then?  Most of them have become MLAs, Ministers, CMs, Governors, MPs, and Industrialists to prosper.

Hyderabad continued as Capital of AP (although there was a parallel Jai Andhra agitation in 1970 and every one expected either Vizag or Vijayawada to be new capital).  A new Central University was granted; huge capital investment was made by Govt and people; Hi Tec City was developed by later CMs from Andhra, new and best Airport was built in last five years, Ramoji Film City was made a star attraction (entire Telugu Film Industry was moved from Chennai) and huge real estate market, retail market, etc established.

Migrations and Settlements are not uncommon.  How many Indians are settling in Singapore, Malaysia, Australia, New Zealand, Mauritius, USA, UK, Dubai or Kenya?  Some of them are into professions, some in to business and a few into even politics occupying high positions - be it in Fiji Islands, Mauritius, or USA.  Then, we need not blame Andhras settling in and grabbing jobs in Hyderabad.

Finally, whether there are geographic, climatic or cultural differences in two regions or not, it is debatable that whether small States have made any difference.  Take all seven states in North East; Pondicherry or Kerala; Chattisgarh, Jharkhand or Uttaranchal.  Not a big difference.  But, one thing is certain - a new Raj Bhavan, a new Secretariat and huge public expenditure.  All this is at the cost of the Tax Payer.

I would earnestly appeal to the Student Community to look back to 1969-70 and avoid such extreme steps.

MF Hussain and Indian Citizenship

There has been enough of debate about Hussain leaving India or not being requested to come back to India. If he is happy in Qatar, let him be. In a globalised world, every one has his or her choice to travel, settle down and lead his or her life. I believe Hussain knows where he stands.  Agreed, he is one of the finest painters in the world today but we do not know why he chooses certain themes and religions and paints them obscene.  As it is there have been communal riots and terrorists acts very often killing hundreds of innocent citizen.  Any amount of intelligence and security systems are not able to prevent this unfortunate anarchic happenings in India and abroad. Then, why a painter should use his brush and canvas, spending hours-days-months to paint such controversial pieces. 

Wisdom should prevail over one and all that any art work like music, dance, painting, etc are primarily for mental relaxation.  Whoever excels in these arts, must aim at global peace and harmony rather than involve and invite trouble.  No one can take to extreme in causing universal damage of either life or property let alone culture, values, religion and peace.  Latest news is that Hussain says India is his motherland.  Then, why not surrender to the law of the land?  Why not change your philosophy and thinking?

Sunday, March 7, 2010

Buy One and Take Two Syndrome!

Retail boom in last five-six years brought in stiff competition with heavy discounts; Shopping malls here, there and everywhere. Walmart was feared to be grabbing the Indian market and even then, host of retailers entered the market. Buy one and take two got multiplied to three, four, five and even six in some cases. Then came the recession to correct the mushrooming. Today being International Women's Day, it may not be appropriate to talk about women. But, I always keep wondering how these retailers could afford; making up through volumes, I suppose.

As per Indian laws or norms, a student can not pursue two courses simultaneously, an employee cannot work in two places and a man can't marry two women. In politics, they adopt a principle one man - one post. But in mythology and puranas, Ramayan and Mahabharat tell us that Shri Ram is a model - Eka Patnivrata while his father Dasaratha had three wifes! Similarly, Draupadi had five husbands in Pandavas. Whatever be the justification. Many times I can not get convinced the reasons that why Lord Venkateswara (Balaji for some) has two wives - Padmavathi and Alivelu Manga (also referred as Sridevi and Bhudevi), Lord Shiva had Ganga and Parvathi, Lord Ganesha had Siddhi and Riddhi, Sri Krishna had Rukmini and Satyabhama besides of course, Radha and innumerable Gopikas. The list may go on and on.

I got this stray thought when I am hearing about the scandals some of these Godmen are indulging in recently in Bangalore and Delhi. Why are they fooling around innocent and gullible people who have tremondous faith in religion? These self-styled sanyasis lead posh life, travel in executive class, move in imported expensive cars, maintain secretaries and offices, use furniture of exhorbitant prices and give TV shows. Besides, it is sad that some of them are involved in sex scandals. They move in the company of politicians and VIPs and neglect the Aam Aadmi.

Again, I am puzzled that many of our businesses including Bars and Restaurants, Wine Shops, etc., name them after Krishna, Rama, Anjaneya, Lakshmi, Saraswathi, etc. Interestingly, I have not come across such names from other religions. There is no law or authority to control or prevent this type of practice. I read some time back that a Pizza Company used Goddess Lakshmi's photo in its advertisements, and was later on asked to withdraw, which was complied with. We need not look for law to take care of such things, but observe self-discipline.

Saturday, March 6, 2010

Educational Loans Facility

The GOI announcement to set up a National Education Finance Corporation (NEFC) to finance entities interested in setting up educational institutions on easier terms and conditions is yet another welcome move towards reforms in higher education. About a decade ago, it was very difficult for even meritorious students to pursue higher studies in professional colleges in India in institutions of their choice for want of educational loans. GOI, RBI, IBA and other nationalised banks have made this simpler by offering loans at concessional rates of interest even for higher education abroad. The present decision to set up a separate corporation for funding promoters to start educational institutions is laudable. Kapil Sibal and his team deserve compliments to reform and bring in radical changes in the education which is more an investment for future.

Friday, March 5, 2010

Women's Day Gift

At last, after sixty three years of independence, Indian women are being considered to be part of governance in Assemblies and Parliaments @ one-third participation. Today, we have a woman President, woman Speaker of Parliament, woman UPA Chairperson at the Centre and some Chief Ministers like Shiela Dixit in Delhi, Mayawati in UP, etc. We have several achievers in professionals like Naina Lal Kidwai, Kiran Mazumdar Shah, Brinda Karat, Jayalalithaa, Renuka Chowdari, Purandeswari, Kiran Bedi, Sania Mirza, et al occupying important positions in public / corporate life, Sports, Scientific field, Academics, Research, etc. It is not a favour or a gift from the GOI or any party on the International Women's Day (March 08, 2010) that they are passing a bill to this effect. After all, woman plays many roles in each of our lives - a mother, a sister, a wife (spouse), a doctor, a lawyer, a teacher, a nurse, and so on. Strictly speaking, we should move on to considering reserving one-third not only in parliament but also in employment too. Gradually, it should be increased to fifty per cent. Whoever opposes such a progressive step, should be condemned and ignored to move forward. Enough is enough.

Base Rate of Interest by Banks

It is interesting to note that RBI has shifted the date of Banks switching to Base Rate of Interest from Benchmark Prime Lending Rate (BPLR) to a new date ie July 01 (instead of April 01, 2010). In an era of automation and networking, it should not be deifficult for the Asset Liability Management Committees (ALCO) of banks to quickly review the existing and new mechanism and effect changes from the beginning of Financial Year 2010-11. It has been a long journey for the Indian Banking System to streamline and reduce the rates of interest (both on deposits and advances) from regulated (pre-reforms) era to now de-regulated mechanism and towards single digit, easily reachable system (for customers). Today, we are also experiencing stiff competition and level playing field in all industries including banks. Customer is asserting day by day thanks to also passing of RTI Act. Economies are recovering fast globally. Finally, I may say better late than never - let RBI issue clear guidelines to all types of banks in India to switch over to new Base Rate System of Interest.