Public sector bank autonomy: Only lip service so far-Business Standard-11.01.2015
Unless the government gives up control, functional autonomy at state-owned banks will remain a mirage
Much has been talked about minimal government interference in public sector banks in the past few days, especially during the two-day bankers’ retreat organised last week by the finance ministry.
Finance Minister Arun Jaitley and Prime Minister Narendra Modi's assurances of zero interference was followed up by a press release by the finance ministry saying that government banks can take commercial decisions without any fear or favour.
But one example shows how much autonomy this government is really willing to give to the banks: Bank chairpersons and executive directors were asked to travel in a luxury bus from Mumbai to Pune for the retreat, particularly those based in Mumbai. And government officials actually asked some of the bank officials if they indeed came together in a bus!
Such lip service to bank’s’ autonomy is nothing new. The finance minister of the previous regime had also said roughly the same thing. P Chidambaram, after assuming charge for the second time as finance minister during the UPA regime, had said the UPA government would not unnecessarily interfere in the day-to-day affairs of the banks, and any advisory, if at all required, would be sent only after his approval.
Chidambaram’s statement came in the aftermath of the then financial services secretary sending letters to chief executive of public sector banks on regular basis which included directives on deposit and lending rates.
While Chidambaram maintained his promise to some extent, the ministry under him also instructed banks on different issues, pushing educational loans and lower interest rate for senior citizens, to name a few.
This government is not different. Here are two reasons why:
Jan Dhan targets: Banks have been given targets to open accounts under the Prime Minister’s Jan Dhan Yojana. The objective may be noble, but shouldn’t it be banks who should decide how far they can go, which is a function of parameters like work force, rural reach, business plan etc. The Reserve Bank of India has also asked for fostering financial inclusion in the country. But it has not set any targets. Instead, banks have been asked to give their financial inclusion plan.
Appointment of chief executive: Is the appointment of a chief executive not a commercial decision? For private sector entities, it is one of the most important business decisions, where the board decides such an appointment. The government, as the majority owner of the banks, appoints the chairman and managing directors and executive directors. The eligibility criteria are also set by the government.
As long as the government does not reduce its controlling stake the banks, autonomy will continue to be no more than sound bites. That is what bankers have recommended during the two day retreat. This was what the PJ Nayak committee – which was set up to improve governance in banks – has also recommended, along with a three phase transition process to reduce the government’s stake below 51%.
http://www.business-standard.com/article/opinion/public-sector-bank-autonomy-only-lip-service-so-far-115010800191_1.html
RBI asks banks to chart cash course-The Telegraph
Calcutta, Jan. 10,, 2015: The Reserve Bank of India (RBI) has asked public sector banks to consider alternative routes to raise capital to comply with the Basel-III norms over the next five years.
RBI deputy governor R. Gandhi today cautioned that the decision of the government to gradually bring down its holding in state-owned banks might not be enough to meet their tier-1 capital requirements.
"Recently, it has been reported that the government is contemplating scaling down its holdings in public sector banks to 52 per cent. Definitely, this gives an elbow room, but this may not be sufficient to fully meet the capital needs of public sector banks under Basel-III norms since the projections are based on the minimum requirement," Gandhi said at an interactive session of the Bengal Chamber of Commerce and Industry here today.
Public sector banks are estimated to require around Rs 4.5 lakh crore in tier-1 capital, including Rs 2.4 lakh crore of equity capital.
Gandhi said public sector banks should consider options such as differential voting rights share capital, employee stock options and long-term bonds to raise capital.
The PSU banks are likely to have the freedom to choose the instrument with the government looking to grant them more autonomy.
Gandhi further said public sector banks, like their private peers, needed to participate more in the financial markets.
"The public sector banks need to engage proactively, especially in derivative instruments, for hedging risks," he said, adding that they need to develop robust and well-established treasury operations.
The government has infused Rs 58,600 crore in state-run banks in the last four fiscal years and plans to provide another Rs 11,200 crore in 2014-15 (April-March).
The capital infusion has been mostly through preferential allotment of equity by the banks.
Gandhi also said public banks need to diversify their credit portfolio to balance the risks.
The current credit composition is more skewed in favour of industry and infrastructure, while retail lending needs to be stepped up.
Appraisal revamp
The RBI deputy governor said PSU banks needed to revamp their performance appraisal system for better utilisation of talent.
"At present, the PAS (performance appraisal system) makes no meaningful distinction between individuals for identifying or deploying talent, skill and/or specialisation; nor does it guide the determining compensation," Gandhi said.
His comments come a week after Prime Minister Narendra Modi's government convened a two-day meeting of public sector bankers to suggest a road map for reforms.
On mergers, Gandhi said they should be considered solely by the banks on various factors and not be imposed from outside, like the government.
"If any merger is found to be commercially viable, it will be a strong one."
Stating that non-banking finance companies should not be considered as competitors to banks, Gandhi said these entities had a higher risk appetite than banks and could apply for small finance bank licence from the regulator.
PSU banks must revamp how employees are assessed: RBI deputy governor-By Sujay Dhar-LiveMint
Gandhi said there was a need to look at the holding company structure for PSU banks to improve financial stability
Kolkata: India’s state-owned banks need to revamp the process by which they determine employees’ performance for better utilisation of talent, a deputy governor of the central bank said on Saturday.
“Currently, the PAS (performance appraisal system) makes no meaningful distinction between individuals for identifying or deploying talent, skill and/or specialisation; nor does it guide determining compensation,” said Reserve Bank of India (RBI) deputy governor R.Gandhi speaking at an industry event in the eastern Indian city of Kolkata.
His comments come a week after Prime Minister Narendra Modi’s government convened a two-day meeting of c to suggest a roadmap for reforms.
More than two dozen state banks have been constrained by a pile of bad loans and governance issues, and political interference and union opposition have thwarted major reforms in the industry for years.
Gandhi said there was a need to look at the holding company structure for state own banks to improve financial stability and to reduce state’s banks dependence on the government for capital adequacy needs.
Gandhi referred to the P.J Nayak committee report released last year that suggested the formation of a “Bank Investment Company” to take control of the government’s holding in state owned banks.
However, he added there were “deeper ramifications” of the report’s recommendations and the issue must be looked at “from multiple dimensions including that of the financial stability perspective.”
He also asked for consideration of the recommendations by the Shyamala Gopinath committee, which in 2011 had suggested that all finance companies should be converted to a new “financial holding company (FHC)” to improve stability and oversight
http://www.livemint.com/Industry/LGpYFB8Zbmk5F4vuY2BjmN/PSU-banks-must-revamp-how-employees-are-assessed-RBI-deputy.html
PSU Bank Staff Among Lowest Paid in State -Indian Express
KOCHI: It may be hard to believe, but a daily wage labourer earns more than a PSU bank clerk earns in Kerala. In fact, the starting salary of PSU bank employees is lower than even a primary school teacher, going by a presentation made by the All-India Bank Officers Confederation (AIBOC), at the wage negotiations. As per the AIBOC comparison, a bank clerk gets a starting salary of Rs 15,000 per month, which is much lower than the salaries of the other similar white-collar employees, including Central Government officers, college lecturers and even primary school teachers. A primary school teacher earns Rs 31,000 per month, same as what a bank officer earns. A Central Government employee enjoys a starting salary of Rs 52,000 per month. But, the top earner is the college lecturer, at Rs 56,000 per month.
AIBOC also noted that a daily wage labourer gets Rs 750, which is higher than the Rs 500/day a PSU bank clerk gets. Pressing home their demand for wage hike, the unions pointed out that the operating profit of PSU banks for the fiscal 2013-14 stood at Rs 1,27,000 crore. If the wage hike demand is met, the total outgo would only be about Rs 6,000 crore for 10 lakh PSU bank employees.
But, when it comes to writing off loans, especially corporate loans, the banks are quite liberal. According to the AIBOC, the PSU banks have written off Rs 34,409 crore worth loans in 2013-14. Following talks with the Indian Banks Association, which upped the hike offer by 1.5 per cent to 12.5 per cent, the bank unions have deferred the one-day nationwide strike planned for Wednesday.
The talks are expected to continue on Wednesday. The bank unions are also planning a complete shutdown of the banking industry from January 21 to 24. The unions have threatened to go on an indefinite strike from March 16, if demands are not met.
Link Indian Express
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My Comment of above news :-While Average Salary Rise Every Year is estimated to by 10 to 15 per cent in most of Indian companies and in organised sector and When IT sector is giving 25 to 100 per cent rise in salary and in bonus to its employees, Indian Bank Association (IBA) is not Ready to give a Rise of 25% to Bank staff after a gap of five years.
How can They think of any improvement in work culture in banks and how can they dream of good health of banks? In my view , health of PS can never improve without real change in mind-set of top officials.
Government gave full freedom to bank management in the year 1991 in the name of reformation and amazingly after 24 years of so called reformation , GOI is again promising freedom to bank to cure ailing bank. They perhaps consider the root cause of sickness as medicine to cure sickness.
This is why they cannot dream of improvement in banks ,until they change the contents of bottle. Concept and culture of 'Old wine in new bottle' can give temporary relief to RBI and GOI but cannot help in real improvement of health of banks.
IBA says that Banks are not having financial capacity to pay higher salary to its staff and due to rise in stressed assets. Do they think that bank staff are responsible for rise in bad debts?
If yes they should publish the name of bank employees who caused rise in bad debts.
If no, they should not punish bank staff for loss caused by fallacy in policy, fault of politicians, inefficiency of administrative and legal machineries in recovering money from defaulters of banks and finally caused by corrupt top officials of banks, RBI and GOI who granted high value of loan for political gain, for achievement of imposed target and for getting bribe in cash or in kind.-Danendra Jain
2015 to see turnaround in salary; 10.5% hike for Indians: Report-Business Standard
According to HayGroup's 2015 salary forecast, salaries across the globe are set to rise by an average 5.4% in 2015
A turnaround is expected globally during 2015 in terms of salary, with companies in India likely to dole out an average pay hike of 10.5%, says a report.
According to HayGroup's 2015 salary forecast, salaries across the globe are set to rise by an average 5.4% in 2015 as compared with 5.2% last year.
"This year we are seeing a big turnaround when salary rises are compared with predicted inflation rates," a Haygroup report said, adding that "in some emerging markets -- the boom area of the last ten years -- real wages are falling".
Among Asian economies, India is expected to see a salary rise of 10.5%, followed by Indonesia at 10%, China (8%), Philippines (7.5%), Malaysia (6.4%), Thailand (6%), Korea (5%), Singapore (4.4%) and Hong Kong (4%).
According to the report, real pay (after taking inflation into account) is now rising in many European markets with previously struggling economies such as Greece and Ireland showing signs of recovery with small real rises.
The slowdown in Russia, Brazil and Ukraine was mirrored with real wage cuts, while high inflation erodes salaries in Latin American countries such as Venezuela and Argentina.
While the Latin America regional average stood at 9.7%, Africa regional average at 6.9%, Asia regional average was 6.8%, middle east (5.6%), Europe (3.1%) and North America (2.8%).
Haygroup further noted that salaries are still rising in some Asian markets as the war for talent continues and globally Asia is likely to see the highest growth in real salaries in 2015.
The pay database was drawn from 16 million people in 24,000 organisations to show predicted salary increases forecast for 2015. We have compared them to inflation forecast data from Economist, October 2014.
http://www.business-standard.com/article/pti-stories/2015-to-see-turnaround-in-salary-10-5-hike-for-indians-report-114121200362_1.html
10 Lakh New Jobs, Up To 40% Salary Hike Seen In 2015-NDTV
It may be a bumper new year for the job market, with India Inc planning to create close to 10 lakh new jobs and dole out pay hikes of up to 40 per cent for best performers in 2015.
The average salary increments may also be higher in the range of 15-20 per cent, as against 10-12 per cent across various sectors during 2014. New-age sectors like e-commerce are likely to see relatively higher pay hikes.
With GDP growth rate being pegged at near 5.5 per cent, after sub-five per cent growth in recent past, businesses across sectors are expected to grow, experts said, and this should result in a strong job market rally as well.
Human resource experts believe, that job market in 2015 is going to be in a strong hiring mode and companies are preparing themselves for aggressive recruitments across the board.
In addition, there are expectations that a large number of global players would come to set shop in India, thus creating a lot of job opportunities at leadership and other levels.
According to a new survey by recruitment platform MyHiringClub.com, the year 2015 is coming with positive vibes for job seekers and expecting to create 9.5 lakh new jobs in different sectors, with IT & ITeS and FMCG sectors leading the chart.
"2015 is sending very positive vibes for creating new jobs in every sector. This year freshers are able to get more opportunities compared to last three years especially in e-commerce, banking & financial sectors, IT & ITeS and retail sectors," MyHiringClub.com CEO Rajesh Kumar said.
http://profit.ndtv.com/news/careers/article-10-lakh-new-jobs-up-to-40-salary-hike-seen-in-2015-721023
With regards to salary, HR experts said the average hike for some sectors can be in high single digits, but top performers can expect pay rise in the range of 20-40 per cent in 2015.
"... We see a rise of 20 per cent to 40 per cent in salaries for high quality talent. The same is driven by very high insatiable demand of high quality talent with high end skills," Himanshu Aggarwal, CEO and Co-founder Aspiring Minds, an employability assessment company said.
According to global management consultants like HayGroup and Aon Hewitt, Indian companies are likely to offer average pay hikes of 10-18 per cent in 2015, which could be the second best in Asia after Vietnam.
Sudeshna Datta, executive vice president and co-founder, Absolutdata Analytics, a data analytics services provider, believes in the year 2015 employers would get innovative with their compensation structures, they would attract, reward and retain high-performers massively by designing creative programmes like employee stock options, fringe benefits, deferred payments, hefty bonuses etc.
According to technology hiring platform Talview.com, it and pharma would continue the upswing mode.
Sectors like engineering and consulting would also pick up if the new government delivers on its promises. Regulations would play a major role in further expansion in emerging sectors like e-commerce and Internet.