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.
Saturday, March 27, 2010
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?
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.
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.
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 (http://www.rbi.org.in/financialeducation/Basic.aspx) 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 - http://www.irdaindia.org/) 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.
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 (http://www.rbi.org.in/financialeducation/Basic.aspx) 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 - http://www.irdaindia.org/) 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.
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.
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.
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