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.
Wednesday, June 30, 2010
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%. http://www.thehindubusinessline.com/2010/06/30/stories/2010063053890100.htm 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.
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%. http://www.thehindubusinessline.com/2010/06/30/stories/2010063053890100.htm 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 : http://www.financialexpress.com/news/trai-rbi-agree-on-roles-in-rollout-of-mbanking/636301/
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 : http://www.financialexpress.com/news/trai-rbi-agree-on-roles-in-rollout-of-mbanking/636301/
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.
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.
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 http://www.brijj.com/ and http://www.youtube.com/ a clipping on Corrupt Banking System. Not an Indian, of course!
Please visit: Corrupt Banking System
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.
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.
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