Wednesday, June 30, 2010

SBI as Maharatna?

Khandelwal Committee Report

Hitherto there was a practice of declaring the best performing PSUs as Navaratna or Mini-Ratnas for long years.  Today, it is interesting to read the above news clipping that a Committee headed by Mr A K Khandelwal, former CMD of Bank of Baroda recommends that SBI be awarded the status of Maharatna and other PSBs be also graded as Navaratna or Mini-Ratnas looking into their performance.  It is time that such honours be declared and the Leaders be decorated with titles even in the Banking industry in India.

The Committee also recommended about autonomy to banks in recruitment, performance appraisals, appointment of an exclusive ED for HRD, ESOP scheme in Banks, etc which was submitted to the Secretary of Financial Services Department of Government of India.  We need wait and watch for the res;ponses now.

Tuesday, June 29, 2010

Interest Rate War again?

In the pre-reforms era, it was a regulated, administered and directed regime.  RBI used to fix up the interest rates - be it for deposits or advances and advise the bankers (public, private or foreign) to follow.  All the lending also was at the directions of the regulator or government and the banks has almost least opportunity to choose their customers. Come reforms, out of the several changes introduced, deregulation of interest rates on deposits (except Savings Bank a/cs) and loans (above Rs. 2 lacs and DRI scheme loans) have been left to the market forces and banks were given free hand to decide and earn profits.  Simultaneously several other accounting changes like shift from accrual basis of interest calculation to actual method were introduced.  In the process, a competitive scenario set in and there was a level playing field in the industry.

A new concept called Prime Lending Rate (later Benchmark Prime Lending Rate) mechanism was introduced.  Banks were closely revieing the market conditions, their own Assets and Liabilities in the Balance Sheet on almost daily basis and offer new products and services as also price them very scientifically. This year, there is again a departure in the Interest Rate mechanism.  A Committee recommended to bring in Base Rate of Interest policy in place of BPLR.  Any bank, in order to earn profits and sustain, has to recover its cost of funds (deposits and borrowings), administrative expenses and allow for a decent profit margin (Net Interest Margin) and then fix its lending rates.  They have obligation to comply with the 40% Priority Sector Lending to Agriculture and Small & Medium Industries / business too.  Similar offer to be given to Exporters and others.  So, they have got to follow differential pricing catering to different types of customers in their portfolio. 

SBI announced its Base Rate at 7.5%. Other banks were waiting but hoping to fix this rate at around at least 8 to 8.5% pa.  Syndicate Bank, PNB and some more are likely to announce their rates today because the effective date for Base Rate implementation is July 01, 2010 (it was already postponed from April 01, 2010).  It is likely that a scenario of interest rate was is going to emerge in the coming fortnight because every bank would like to comfort its borrowing customers as also the depositors.  RBI Monetary Policy review is going to be held on July 27, 2010.  Inflation is at double digits.  Banks' profits can not be squeezed with a trend of increasing Non Performing Assets in general.  We need to wait and watch the happenings now.

Friday, June 25, 2010

And now, m-Banking

Mobile Banking in India

It is a commendable development that m-banking is not merely confined to metro and urban customers but is being taken to rural areas too and would supplement the efforts of better communication and financial inclusion efforts by the banking system.  The initiatives taken by the TRAI, Government of India and Reserve Bank of India in this direction are highly appreciated.  Please click here for more details :

Thursday, June 24, 2010

Faceless Banking!

Faceless Banking

Yet another term in Banking, but not entirely new.  Eversince the banking industry has taken to technology in a big way to modernise its services and extend more efficient services, computerisation has come in a handy way.  At least in the last three decades, several Committees have gone into this aspect (like Rangarajan Committee, Padmanabhan Committee, etc) it was rather a very slow transition from manual to computerised environment for back and front office operations.  The amount of time and money invested to bring in this facility, was stupendous.  The Trade Unions in the banking system opposed mechanisation and computerisation fearing reduction in employment and career growth opportunities to its membership.  Besides, the older generation staff and executives were motivated to undergo a series of trainings in order to equip themselves to handle the new environment. 

Introduction of ATMs, Networking, Core Banking Solutions, Online Banking, remittance / payment facilities like RTGS, NEFT, etc., fecilitation of Debit and Credit Cards, have all totally transformed the customer service domain.  The Indian Banking system is today in a position to compete with the Foreign Banks in all spheres.  Yes, the Governor's caution may be with some observation and concern that the customers should not be distanced from the fundamental principle of rendering the best service be in through technology or otherwise; be it in rural or metro cities.

Wednesday, June 23, 2010

My paa the best...

Every one of us are grateful to our parents who gave us birth, love & affection, brought us up, sacrifice, groomed for what we are today and teaching us values. I am also reminded of the TV advertisement of a young girl shouting "My Daddy Strongest" for Horlicks or some product.  Having closely followed his footprints, I too feel like shouting about my father (My Paa The Best).

Yes, like many, I also rever my late father Shri Shanmukha Rao as my role model. He had a direct influence on all my accomplishments in my career.  My grand father was working in Survey Department (I never saw him). He was born on 15th August 1929, in to a lower middle class family in a remote village called Kotabommali in Srikakulam district, with four siblings - one elder sister and three younger brother. His Sister (my aunt) was married very young but due to his father's premature death, my father had to bring up his three brothers while making his own life and career.  Having started his working life at a very young age under compelling circumstances, in Education Department of Andhra (province then) in early nineteen fifties, he shifted to then State Capital - Madras to join Medical & Health Department at a junior level.  In 1956, when the new State of AP was created, he came down to the temporary Capital - Kurnool and later to Hyderabad on permanent basis in 1957.  I was less than five years old then and do not remember to have joined any organised schools due to his frequent transfers.  He was also posted in the Regional Office in Guntur for an year which I vaguely remember. Our entire family (my grand mother, father, mother, myself and my elder brother) moved in to join him then. His one brother was employed while the remaining two joined us.

My regular schooling started in 1959 when I was admitted directly to IVth Standard at the age of Six plus in Govt High School, Malakpet, Hyderabad while my brother was one class above eventhough two years older to me.  My sister Jyothi and younger brother were born in Hyderabad.  My father earned his graduate and post graduate qualifications in Hyderabad while growing in his career as Office Superintendent, Administrative Officer, Planning Officer, Asst and Deputy Director of Medical Health Services and finally retired in 1989 as Secretary to the newly created Vydya Vidhana Parishath.  He was sincere, honest, upright and hard working Official and earned name for himself.  He was also a very helpful gentleman to all those who knew him; and also worked for the upliftment of our community - Sistakaranam - also called with title of Patnaiks in Andhra Pradesh by being the Secretary of the Association in Hyderabad for long years.  We used to witness his working late nights with his Office files with efficient administrative skills.  He was a very simple person with humble habits.  He suffered with BP and Diabetis and finally expired on 30th June, 1990.  He never enjoyed the benefits of his hard work or superannuation benefits.  He sacrificed his life for family.

He used to be a source of strength and support to a large family including brothers and sisters from his and our mother's side.  His encouragement pushed me to short-circuit my graduate studies (B.Sc) in the final year in 1970-71 to join Andhra Bank, Central Office, Hyderabad through a merit exam. But, within six months time, in October I quit Andhra Bank and shifted to State Bank of India in November 1971 where I grew up to a level of Chief Manager by 1990 with four merit promotions.  I started my working career at a tender age of 18 plus (like him); but continued to pursue further studies by joining VV Evening College, Hyderabad for my B.Com in 1972 which I passed with merit (4th rank) in 1975.  Simultaneously I completed Part-I of CAIIB too. I pursued my M.Com again in PG Centre (Nizam College) during 1975-77 and also completed with merit (6th Rank).  I had the fortune of working in Hyderabad / Secunderabad, Vizag, Vijayawada / Krishna Dist, Anantapur, and Local Head Office during training period of 1977-79.  Later, I worked in the positions like Accountant / Field Officer / Branch Manager in Warangal Dist and Masulipatnam branches.  I moved to RO-Hyderabad for six months in 1984 and then went to Central Office, Mumbai where I worked up to November 1992.  After serving as Chief Manager of Sangareddy branch, I quit the bank as one of the youngest pensioners at the age of 40 plus.  That is a different story which took me to a manufacturing company, Vysya Bank Leasing Subsidiary in Bangalore and then to Academics in 1999.

It is nearing twenty years that I miss him deeply that I do not get the motivation or guidance or confidence that I can achieve much more than what I feel. He died even within one year from his retirement.  He was a strong force for me to inspire and to appear for any professional or competitive examination and win laurels.  His absence created a wide gap and vaccum in my life. For about ten years after his death, I was observing fast on all the Wednesdays and also walk up the Tirupati Hills paying tributes to him.  If only he had lived for at least another ten years, my career and life would have been entirely different.  I owe a sincere apology to my father for the serious mistakes I committed in his absence particular in the year 1993.  I wish that I would pay a reasonable penalty and would rectify the mistakes to bring honours to him and my family in the years ahead.  That would be the only way I would solace myself and pay him my respects sooner than later.

Tuesday, June 22, 2010

Corrupt Banking System?

I heard, read and wrote about various types of banking in India and abroad; I wrote one or two pieces in this blog on ABCD of Banking and recently on Green Banking too.  Only today, I came across a clipping in and a clipping on Corrupt Banking System. Not an Indian, of course!

Please visit: Corrupt Banking System

Monday, June 21, 2010

Rural Banking and Nachiket Mor

Nachiket Mor and Rural Banking

Yes, we the Indians should be proud of persons like Dr Nachiket Mor while Bangla Desh boasts of its Nobel Laureate, Dr Muhammad Yunus and his Grameen efforts. Nachiket is a Doctorate in Finance from Wharton and was a rising star in the new generation bank - ICICI Bank.  He was to succeed Mr KV Kamath as CEO, but opted to move out to join the ICICI Foundation and work for Micro Finance and Rural Development.  I am sure he would certainly revolutionise rural banking through his sincere efforts.  The above article details his humble work ICICI Foundation, IFMR Trust and Kshetriya (Regional) Grameena (Rural) Financial Services.  With such sincere and dedicated persons around, Financial Inclusion is assured.

BoR merger with ICICI Bank

Bank of Rajasthan Merger with ICICI Bank

The news about their marriage has been hitting headlines for past one month.  Both these banks keep appearing in news, most of the times for wrong reasons.  ICICI Bank is one of the leading New Generation Banks promoted by the country's premier Development Financial Institution for Industrial Development - ICICI which was formed in as early as 1955 for arranging foreign loans to private sector.  It was lead for long years by illustrous experts like Mr S Nadkarni and Mr N Vaghul.  It was during the reforms era in early nineties that ICICI Bank was promoted and headed by Mr KV Kamath, who was mentored by Mr Vaghul. The bank entered the banking scene with high technology, competitive products and services and aggressive marketing.  For once, I referred it as Indian Made Foreign Bank.  It took over Bank of Madura to increase its regional and southern presence.  Under the Universal Banking mechanism, there was a first reverse merger between ICICI Bank and ICICI in 2002.  Its business policies were some times scary.

Bank of Rajasthan's governance was never healthy in last decade and over.  Serious legal problems used crop up with its top management personnel.  Lastest was that of a Deputy Managing Director being pulled up by none other than the regulator, Reserve Bank of India.  For whatever reasons, the latest news is that these two banks will be merged.  But, today's news is that the Staff Unions of BoR are opposing the move.  Further, legal issues cropped up for holding of EGM of BoR for the purpose of its merger with ICICI Bank in Kolkata courts.  It is expected that both the managements would be prudent in pursuing this decision and follow all the compliances and due deligence requirements.  They should not be resorting to meddling with the Share prices in the market prior to the merger.  All efforts should be made for a clean and smooth end to the marriage.  The transactions should be as transparent as possible to set a healthy situation in future.

Sunday, June 20, 2010

Grameen Bank : Barefoot Bankers?

Banker to the Poor : the story of the Grameen Bank, authored by Dr Muhammad Yunus (b. 1940) with Alan Jolis (an American Journalist) is in fact an excellent autobiography of the Winner of the 2006 Nobel Peace Prize.  An Economics Professor of University responding to the poverty-sticken rural women in Jobra Village near Chittagong, initially through voluntary group of his students for social service and subsequently engaging Barefoot Bankers travelling to rural side is unique of its kind. Yunus was educated in Chittagong, was awarded a Fulbright Scholarship and received his Ph.D. from Vanderbilt University, Tennessee, USA.

What started in a small humble way in 1976 in a village in the backward third world country gained momentum in years thereafter and caught up the world over.  Bangladesh was earlier known as East Bengal (West Bengal is a State in India now) and part of India till 1947 under British Rule.  When India got its independence, Pakistan was created simultaneously, but interestingly as two parts located in West and East of India. These two parts were comprising predominantly of Muslim population. It was in 1970-71, there was civil war for liberation and with the help and support of India, a new tiny country was born in 1971 called Bangladesh.  However, the politican environment was always similar to Pakistan with struggle for power between civilian and military governments very frequently.  In the process, welfare of the poor was neglected.  There emerges a Social Entrepreneur and savour of the masses, Dr Muhammad Yunus in mid-seventies, primarily to stave the Bangladesh's terrible 1974 famine, with a very innovative movement called Grameen, later turned to be  Grameen Bank of Bangladesh

The story of Grameen does not end with a bank in Bangladesh.  The movement of micro creditwas extended to nearly sixty countries world over including USA.  Grameen Bank is a billion-pound business acknowledged by world leaders and the World Bank asa a fundamental weapon in the fight against poverty. During the course of his struggle to mobilise funds and people power, Dr Yunus had to encounter several odds from the citizen, religious men, politicians, bureaucrats, Government and the World Bank too. 

Grameen Bank today is not a single entity but a conglomorate.  Its group consists of four for-profit organisations and thirteen not-for-ptofit units.  These for profit units are 1. Grameen Bank - Credit for the poor (1983) 2.Gonoshasthaya Grameen Textile - Hand-loom fabric processing plant (1995) 3. Grameen Cybernet - Internet Service Provider (1996) 4. Grameen Phone - National Cellular Telephone Company (1996).  The 13 Not-for-Profit units are 1. Grameen Trust - Technical and Financial Support for Replication of Grameen approach worldwide (1989) 2. Grameen Agricultural Foundation - To promote agricultural technology, improve yield, initiate diversification for export (1991) 3. Grameen Uddog - Production, Marketing and Export of Handwoven Fabrics, i.e.,Grameen Check (1994) 4. Grameen Fund - A Social Venture Fund for New Entrepreneurs (1994) 5. Grameen Fisheries Foundation - to bring idle ponds into high-yielding pisiculture (1994) 6. Grameen Telecom - providing Cellular Phone and Telecom Services in Rural Areas (1995) 7. Grameen Shamogree - Marketing of Grameen Products (1996) 8. Grameen Shakti - for Research and Marketing of Solar and Wind Energy on a Commercial Basis (1996) 9. Grameen Kalyan - Welfare Programmes for Grameen Members and Staff (1996) 10. Grameen Shikka - Educational Programmes (1997) 11. Grameen Communications - Nationwide network for Internet, Data Processing Services (1997) 12. Grameen Knitwear Ltd - Export-Oriented Knitwear Factory (1997)  and 13. Grameen Securities Management Ltd - A Merchang Banking Fund and Portfolio Management Company (1998).

Having read the book, I felt mind boggling that one individual runs so many activities and organisations in a small country always with problems of poverty, famine, floods and political turmoils.  He is a parallel Government for the Poor and a role model for Academicians, Politicians, Bureacrats, Leaders, Businessmen, Religious Gurus, Social Philanthrophists, and what not?  But, one thing but puzzles and baffles me, that he made a very minimum reference to India.   After all, he was a born Indian in 1940, grew up in East Pakistan, rose to an intellectual in USA and came back to Bangladesh (a new born tiny Asian country since 1971.

India adopted rural development and banking in a extensive way eversince its independence in 1947.  It tried Cooperative Banking system, turned Imperial Bank to State Bank of India with focus on rural banking in 1955, nationalised 14 and 6 Commercial Banks in 1969 and 1980, adopted Lead Banking System in 1969, started exclusive and specialised Regional Rural Banks in 1975 and experimented Local Area Banks in 1995 and so on.  Indian Banking System had Integrated Rural Development Program, created DRDAs and SFDAs for poverty alleviation in rural areas.  NABARD and SIDBI are the apex bodies catering to Agriculture and Small & Medium Entreprises under the Priority Credit System in banks.  Micro Finance Institutions are all over in the country dedicated to lending to the poor.  Some of the prominent MFIs are SEWA, SKS, BASIX, Bandhan, Spandana, etc.  Financial Inclusion is given highest priority by RBI and NABARD in the last five years.  Of course, there is no comparison between Bangladesh and India - in their size, history, culture, civilisation, geography (though they are neighbours), size of population, political system, etc.  Yet in one of the Chapters, Yunus makes a passing reference that alongwith several other Asian, African, American and European Countries having adopted his Grameen Model, India is also one of them!

Green Banking....

Green Banking by IndusInd Bank Ltd.

I had earlier listed out A, B, C, D Banking including about 30 types of Banking.  Recently, I have been reading about some more new concepts in banking.  One of them is Green Banking.  The others of course are Privilege Banking, Smart Banking, Village Banking, etc.

There have been interesting developments in ATMs.  Usually, we go to ATM with our Card only to withdraw money or check balance / get a mini-statement.  There are several other facilities, of course, which we rarely utilise.  While some banks post a Security Guard at ATMs and some others get the ATMs insured.  Very few banks provide the facility of Drop Box and Help Telephones at the ATMs.  These days to closely monitor the visitors, some banks instal cameras in the ATMs.  Recent innovation in ATMs was to facilitate the rural and illiterate customers by providing Biometric ATMs.  These value adds certainly enhance Customer Service all 24 x 7 hours.  Thanks to technology and connectivity, we have on-site and off-site ATMs.  RBI also had arranged for customers of any bank to use any ATMs anywhere....

On December 18, 2009 IndusInd Bank Ltd., inaugurated Mumbai's first Solar-powered ATM as part of its Green Office Campaign - Hum aur Hariyali.  Great service indeed.  IndusInd Bank's new Solar-ATM opened at its Opera House branch, replaces the use of Conventional Energy for 8 hours per day with eco-friendly and renewable solar energy.  The uniqueness of this solar ATM is the ability to store and transmit power on demand (in case of power failure) or need (time basis). It is also cost-effective compared to regular power based ATMs.  This is first of its kind in India and revolutionary concept in Green Banking.

SBI and Green Banking initiative

On the other hand, State Bank of India has become the country's first bank to venture into generation of green power by installing windmills  for captive use in Coimbatore, Tamil Nadu.  Please click on the title for more information on this topic.

Green Bank in Google and on Youtube

Those who are interested to know more are advised to search in Google or watch on Youtube.

Monday, June 14, 2010

Friendship and Networking

Long years back, I remember to have read about 'Real Friends' who are very few and rare while "false ones" like autumn leaves are found everywhere.  I am not going to be sentimental or philosophical to write about my views on friendship but share or recall the experiences I have had over decades with friends in my life.

As stated above, real friends are very chosen few.  The test of their true friendship comes clear more in times of our difficulties.  These persons are with you in good and bad days without any expectations. They are prepared for any sacrifice and help you. They are the people with whom you can multiply joys, successes and achievements and also divide sorrows and disappointments in life.  A friend could be a partner, a father or mother, a sibling or a cousin if not a mere fellow in your school or college or at work place.

Last week was full of thrill and excitement for me.  I travelled to Hyderabad on Official work but landed amidst a selected number of old friends.  One was as old a friend as over fifty years in my school and now occupying a very influential position in Government, Somayajulu.  He immediately came to extend support to my work which was a big relief to me.  Another friend, MG Gopal, was an year senior to me in my post-graduation during 1975-77 and is a now senior IAS, who also spontaneously offered to guide me in my task. Three others I had lunch with were from my former employer SBI - (Jaganmohan, Hanumantha Rao and Yerram Raju) all friends for over three decades and now in different key positions in three Organisations.  Yet another, Krishna Rao,  was leaving for USA after attaining superannuation and joining his two children. I also re-connected with Dr Prabhati Pati at ASCI, Hyderabad who was with TAPMI in 1999.

Off to Bhubaneswar for a two day trip, I stayed with Mr Ravi Prasad of IMMT.  He took me all around the new City which I visited last seventeen years back.  I also reminisced my marriage there in 1983 where he was also one of the guests from my Father in law's side.  It was an occasion to meet Dr Subrat Sahu of IPMG-Ahmedabad who was on a holiday with family at his home town and visit his parents too.  Another old ex-colleague I caught up was Dr Biresh Sahoo of XIMB.  He felt extremely happy to recall his stint in TAPMI during 2002-5 from where he proceeded to Tokyo, Japan for his post doctoral research work.

I returned to Manipal on Saturday (12th June) only to receive two more friends - Sampath Kumar and Dharam Pal - both from Hyderabad again - one had come alongwith his daughter Manasa for her admission in MIT,  and the other on a holiday to experience and enjoy monsoon in the western ghats.  The later was also in SBI for over a decade (1983-96)and currently Managing Director of a Technology company in Hyderabad. He knows only my name but recalled my past in the Bank.  I had good reminiscences of those varied postings in my career.  Late night on the same day, Mr Y Purandar got hold of my mobile number through sincere efforts at BSNL and my friend Chengal Reddy and spoke to me at length after a gap of eighteen years.  Purandar was my school mate between 1959 and 1967 in Malakpet High School while studying together from 4th to 11th standard. He was a topper of the class and friendly.  He went on to study Engineering and voluntarily retired as DGM in ECIL; later joined academics in 1999 (just like me) and is currently a Director of an Institute in Hyderabad.  His family also is well settled.  I am longing to see him.

And the next day, I get a call from Mr Kajal Kumar Chatterjee (Dada) of Mumbai.  He retired from SBI service over a decade back and we were colleagues in the Central Office between 1984 and 1993. He was also remembering and reminiscing our Mumbai days recalling a few names like Vakil, Godse, Rajagopal, Varada Krishnamachari, Dike and Dr K Srinivasa Rao - all of SBI.  We always shared our thoughts during our working together and maintain friendship irrespective of some differences in views or approaches in life.  We may have difference in age, position or educational qualifications.  But Friendship is always ultimate.

Today's generation has the advantage of technology.  They can easily track friends, colleagues, class mates with the help of social networking sites.  In our days, we carefully used to keep track through letters, telephone numbers and visiting cards.  Whatever be the mode, one should always continue true friendship.

Thursday, June 10, 2010

Air Travels and Passenger Care

Last two months, I was travelling by road and air to Delhi, Mumbai, Bangalore, Goa, Hyderabad and Bhubaneswar on some Official work like Admissions, Alumni meets, Workshop, promotion of eGPX 2010 work, etc.  It was interesting to beat the summer heat and work for TAPMI. I was also attending Lions Club meetings and visiting some tourist places in TN like Vellore (Golden Temple), Salem (Yercaud and Rasipuram) and so on....

Having heard and read about the May 22 air crash in Mangalore, I was saddened.  It was a very unfortunate bad landing by the Pilot (a foreigner) in the early morning.  Any amount of obituaries and enquiries cannot bring back those innocent victims or solace to their families. Management, Govt., and Staff Associations may have thousands of explanations but the fact remains that there was some serious human negligence.

When it comes to booking the passengers, these Airlines have so many procedures. Most irritating part is checking of identity by security guards and all sundry personnel.  Then the body frisking even after stripping the passenger of any types of items in pockets like keys, identity cards, mobile phones, wallets, and so on.  Even in the hand baggage, you are not allowed to carry water or milk, eatables or battery fitted gadgets, sprays or perfumes, etc. Many a times, the passengers are treated like pseudo criminals or terrorists. I was only watching some foreigners merrily taking photographs in one of the lounges. Announcements are not made to the comfort of the customers - domestic or foreign, literate or illiterate, children or adults.  They are done more like rituals with peculiar accent. Delays are never explained or rarely apologised. 

In today's information and transparent world, the customer too has a right to know who is the pilot or crew members.  What is their track record?  Do they have full knowledge of geography or topography besides of course the technology. Surprisingly, in the last fortnight or so, we have been hearing about incident after incident about mishaps in the air travel in India. As if it is not enough, train and bus accidents are also being reported quite often.  All the men (women included) or organisations providing these services should be careful and value the precious lives of their passengers. Laws should be made severe and stringent for this.