Finance minister to revisit perks of PSU bank chiefs
Mahua Venkatesh, Hindustan Times, New Delhi
The finance ministry is considering a proposal to revisit the incentive structure of public sector bank chiefs and executive directors, a practice typically followed by private sector lenders.
At present, public sector bank heads earn incentives anywhere between Rs 4 lakh per annum and Rs 6 lakh over and above their salaries, depending on the performances of the respective banks.
And in a few cases, where performance exceeds expectations, the incentive payout even crosses Rs 8 lakh, sources said.
“There is a plan to revisit the structure, considering that private sector lenders have a completely different remuneration pattern and it is important to at least do something at a time when banks are playing an important role in the overall development of the country,” a source familiar with the development said.
The finer points of the scheme are yet to be decided.
Bank chiefs have to provide a statement of intent to the government outlining their goals for the year at the beginning of every fiscal. Performances are measured based on achievements vis-a-vis the statement of intent.
The government has also indicated that it could rope in private sector executives to fill in the top slot. Meanwhile, public sector lenders are also looking to adopt several measures including providing performance-linked incentives, out-of-turn promotions, assignments of special projects, fancy postings to retain talent at a time when competition is getting hotter in the banking space.
State-run banks are facing a huge talent crunch. State Bank of India chairperson Arundhati Bhattacharya recently pointed out that public sector bank employees are poorly paid compared to their private sector counterparts.
Public Sector Banks and Corruption --Written long ago By Danendra Jain
If bank management in any bank is really interested to reduce corruption they should start the process of purification from the top and demonstrate their strong will to serve the interest of honest and loyal workers. For this purpose
1. They should revisit the files of all EDs. General Managers and Deputy General Manager and all charge sheeted officers but now sitting at top posts and try to find out their misdeed which they executed during their past service of say ten years and why they were not punished and who are those officers who were made scapegoat to save top officers.
2. They should assess the status of all advances made by them during their posting at branches to know whether they are still standard or written off or treated as Non Performing Assets (NPA).it will make clear that only those officers who were expert in earning through bad lending are now sitted at top posts.
3. They should assess the status of all goods and services purchased through suppliers and contractors and ascertain whether higher amount were paid for them and whether quality was equivalent to what was expected for the amount paid.
4. They should find out the name of officers who have been transferred to other states and remote villages in the state because they were not yes-man of controlling regional head. They should find out the name of Deputy General Managers or AGMs or Regional head or Circle Head or Zonal Head who transferred the services of subordinates to remote and critical places even violating the existing transfer policy in the name of exigencies of bank’s services. They should punish such top executives and demonstrate that they are really supporter of good workers.
5. They should find out the name of officers who have not been considered for promotions even in twenty to thirty years and his juniors have been given one after other promotions. They should sanction seniority based promotion to all those who have been ignored and demonstrate their strong will to give justice to all. Of course those officers who do not work upto the justifiable expectation of the management should be given an opportunity to improve and then demoted for non performance. But in any case management can deprive any officer of his legitimate right to get an opportunity to get promotion in time and serve in a better way.
6. They should find out the reason why a few officers are frequently transferred from one corner to the other whereas many officers have been allowed to work in a particular area for twenty to thirty years in continuation.
7. They should find out the name of charge sheeted officers who have been promoted and also name of highly talented honest and good officers of unblemished good record of performance who have been willfully ignored by members of Interview panel in promotion process. They should find out why appeals of such aggrieved officers were not looked into seriously and acted upon. Guilty member of interview panel or HR department should be booked to task for their mischievous acts and simultaneously officers who have always been neglected should be elevated to higher grade or scale for which they deserve.
8. They should punish those executives who made bad advances and still promoted by higher bosses only because they shared their ill earned money with bosses. They should assess the growth in assets of such corrupt officials and confiscate the property if found really disproportionate to their annual income.
9. They should inquire why direct recruitment of inexperienced and incapable officers from campus at higher salary package in higher scale is preferred by top bankers ignoring existing talented and experienced good officers. Are top bankers not realizing bribe in cash in lieu of recruitment? Are existing officers in lower scales really incapable? Are inexperienced officers recruited in higher scale creating frustration and demotivation in already existing lot of officers? Are newly recruited inexperienced officers causing loss to banks due to their poor exposures in branches? Are CRE recruited for marketing retail loan successful and as per expectation of the bank? If there is something wrong in the system will anyone punish CEO and ED who executed such faulty policy of direct recruitment as CRE or Credit Manager which is bound to cause lifelong loss and which is bound to create negativity in existing workforce?
10. Will anyone take on oath and confirm that only non performers were transferred from one office or one branch to other? Or transfers and promotions are sold now a days?
I am therefore of strong view that policy of whistle blower will not be a success until management of bank demonstrate their good intention by their actions. When top officials are corrupt, of bad track record and whose image is not good one honest and really good worker at junior level cannot dream of leading a peaceful and respectful life with the help f his honesty or his performance.
Under such circumstances it is not incorrect to say “Dishonesty is the best policy”
However If there is a will there is a way. If some wants to ensure administrative honesty , he or she can do so after much sacrifice. Unfortunately such devoted persons in India are very rare.
It is therefore easy that everyone preaches the sermon but do not follow the same in practice. In our country honest people are rather afraid of going to even police station or knock the doors of judiciary because they know that Thana people or court people torture complainers and join hands with the person against whom charges are leveled. People of India know very well that CBI or other preventive departments who are supposed to act against corrupt person are in fact puppet in the hands of powerful ministers ruling the country or a state.
It is easy to frame attractive and good policies but difficult to execute the same until people holding the responsible and powerful post and people sitting in the top offices have the strong will to put the desired policy into action.
I am therefore not astonished that policy of whistle blower announced by government of India and introduced by bank management did not yield any response and did not precipitate any fruits of recognition from field level workers.
If any policy fails to produces desired result it also cast aspersions on the will and intention of policy makers. It is therefore justified to say that rulers of the bank as also that of the country are really originators of corrupt practices and policies to reduce corruption and improve vigilance awareness are framed for framing purpose.
There is a proverb in Hindi “Hanthi ke dant khne ke kuch aur hote hai aur dikhane ke kuch aur “
Central government announced policy of protection to whistle blowers to improve vigilance administration long back. It is remarkable to say here that whistle blowers are those working staff who secretly report to CVC about the corrupt practice such as bribe based lending or commission based contractual work or purchase of goods and services of his higher authority or his colleague. According to this policy Central Vigilance Commission (CVC) is authorized to receive written complaints for disclosure of any allegation of corruption, misuse of office, abuse of power and recommend appropriate action.
Every Public Sector undertakings including banks also announced similar policy advising staff not to be silent spectator of corrupt practice in the office or branch they work. Inspite of such policy announcement and subsequent reminding circulars for the same there is no actual response from staff working all over India. It is an open secret that cancer of corruption is all pervasive and widely rampant in all offices and branches.Still honest staff thinks it wise to be silent spectator of all unhealthy and unjustifiable actions of powerful persons inspite of the fact that bank management tried to convince whistleblowers by saying that staff can submit such complaints of allegation of corruption in writing in a sealed cover directly to CVC without any fear of repercussion. Bank management has also announced incentive scheme for such whistle blower to make it an effective tool to prevent corrupt activities going on in Public Sector Banks..
Corruption as a matter of fact includes not only giving bribe or commission. Even bribe giving or taking is very much secret and it is shared by many persons in the system. Corruption has got wide dimension. It leaves no evidence behind it until a plan is trapped to catch the culprit red handed.
Higher management in a bank of office or powerful officers in general can indulge in various other types of corrupt practice which induce and inculcate unhealthy practices in offices and branches they control. Whimsical posting, whimsical promotions of yes-man and flatterers superseding so many talented workers and arbitrary transfer by higher authorities are carried out without any hindrances from any corner. Higher authorities can do so by using powers of discretion given to them in promotion policy by way of interview and in transfer policy by showing exigencies of bank’s work or by declaring a good worker as Non Performer.. ‘
Any officer who creates impediments in the path of corrupt bosses in earning bribe and commission or in getting golden gifts or in getting red carpet welcome in five star hotels from his yes men serving in branches and offices under him is very easily removed .
Any worker specially an officer who is a considered would- be whistle blower, a prospective complainer of evil works of executives, he or she may be transferred to such a critical place that his or her family life and social life becomes hell.
Bank management has power to make an officer as Branch Manager (apparently incentive but practically a punishment) and post him to such a remote place that he cannot visualize even peaceful living of his or her family.
Such honest and talented officers are transferred from one corner to other extremely far located other corner even violating normal transfer policy. Such honest officers will not be sanctioned leave when they desire. Even slightest mistakes of such honest and prospective whistle blowers are viewed seriously by corrupt team of officers in controlling offices and they are rebuked , humiliated before a gathering and what not until they feel isolated, frustrated and attain a position of depression.
On the contrary officers who are yes-man and flatterers of corrupt bosses, who earn bribe and share with bosses, who extend five star welcome to bosses, who on the excuse of inauguration or a function call the bosses and offer costly gifts are given choice posting , quickest promotion and given whatsoever they desire.
Actions of almost all executives demonstrates that they like those officers who earn money and gifts through lending or purchase of goods and service and honestly share with bosses called as executives. Rather such corrupt team of executives award junior level corrupt officers not only by giving them cream posting and unusual and abnormal promotion but also praising them before the mass gathering.
Obviously policy of incentives for whistle blowers introduced by corrupt team of executives sitting in top posts becomes a laughing stock for ground level honest officers.
Bank management has such weapons in their hand they can punish whistle blowers in many ways which will look like promotion and up gradation in post but in fact they which will slowly kill ego of whistle blowers or honest workers , attack on his respectability and disturb his peaceful living.
Particularly in banks, it is very much common that junior officers are made Branch Manager, Chief Managers or promoted to higher scale and seniors are forced to work under him. Scale II officers are made Branch Manager of scale III or scale IV branches whereas scale IV are made to work in scale II or scale II branches .
Flatterers are kept posted in home town or metros or big towns or at place of his choice for years together on some plea or the other and they are given quickest jump in career superseding a lot of other hard workers whereas prospective whistle blowers are posted in far remote villages for year and years and always rejected in promotion processes.
There is in fact no scope of justice for such aggrieved officers because controlling offices are full of flatterers and yes-men Not only this, such aggrieved and victimized officer cannot seek and expect justice from court of law because in our country even court cases are not decided in twenty to thirty years.
To add fuel to fire bank management can spend lacs and crores of rupees on valued advocates for winning the case filed by aggrieved worker or at least postponing the decision on cases of corruption raised by juniors whereas a poor officer who is victimized and who is met with injustice cannot afford a simple advocate to plead for his case for one or two decades. There are many such instances when honest officers are willfully harassed by his seniors. There are many instances when junior but honest officers complains against senior to top offices but such complaint are either not attended or attended after so much delay that actual culprit is retired, expired or leave the bank. There are many such instances where actual culprit s awarded with promotions whereas other juniors working around him is made scapegoat.
Such type of flattery culture and an environment which induces corruption is prevalent not only in banks but also in other offices of the government.
Chief Minister of state gets success in earning wealth worth hundreds of crores of rupees only through IAS officers working under him. As soon as Chief Minister of a state assumes his office his first and foremost task is to remove officers and worker from his office who may create problem in earning money and replace them with team of blind supporters of corrupt practices initiated or promoted by him.
Mr. A. Raja, ex- telecom minister could succeed in arbitrary decision and cause loss of lacs of crores of rupees to Indian government only with the help of team of flatterers or one can say with the support of a gang of looters and with the blessings of his colleagues in the cabinet.
Mr. Kalamadi could succeed in spending Rs.70000 crores of rupees despite the fact that initial budget for Commonwealth Games was not even seven hundred crores. Now even various inquiries set by the government will not result in trapping of actual culprit because such culprit has so many Godfathers. During the course of time all evidences will be eliminated, witnesses will be removed from the path or motivated to say in tune with what the ministers speak. Moreover goods and services purchased at many times higher rate than prevailing rate can no more be produced for verification. Tenders allotted to corrupt contractors at much higher rate can no longer be reversed or questioned after the task is already completed. Obviously entire exercise of searching the culprit will prove futile as usually happens in the country.
After 24 years of investigation in Bofors scam and after spending hundreds of crores of rupees government of India discarded the exercise and Rajiv Gandhi was exonerated using political power.
Mr. Ashok Chauhan CM of Maharashtra was not alone is misuse of power in allotting flats to kith and kins of MPs and MLA of the state in Adarsh Society.
Mr. Raja allowed sale of 2G spectrum on 2002 rates whereas Mr. Kalamadi purchased goods and services at cost hundred times of it was budgeted in 2002.This is called tactful and cleaver manipulation of office decisions. This is the punch of corruption prevailing in the country.
Every where there is talk of corruption in the system but no remedy is visible to anyone. There are very few dare devil persons like Subramanium Swamy who raises the voice against the system but ultimately such person are also cornered and punished by the corrupt system.
This is why policy of whistle blowers gets no response from any corner of the country. Scams after scam are exposed, but government never try to catch and punish the master mind behind the same and neither try to understand the actual fault of the system and frame such policy which can nip the actual culprit in the bud and punish the actual guilty in time . Unfortunately such culprits are generally top ranked officers and ministers in the government to whom perpetrators of corruption do not want to be punished.
Click Here AND Read --Reward For Public Sector Bank Employees
Click Here To Read Difference Between Perception Of Employees of Public Sector And Private Sector Bank Employees
Incentive Plan Suggested For Bank Employees By UPA Government
Reserve Bank of India ,Finance Minister and Ministry of Finance have been making various experiments with public sector banks to improve the health of public sector banks . FM has been suggesting various ways and changing policies frequently on constitution of bank boards or appointments of Chiefs of the bank.
But in my opinion, Ministry of Finance as well as Reserve Bank of India are far away and totally ignorant of how to improve the real health of PS banks. Either they do not know the art of curing banks or they do not want to do so as a strategy to use banks to serve political interests. They are rather adding fuel to fire and causing more damage to already sick bank. They are suggesting all such steps to improve the health of banks which have played key role in making banks sick .They used to say that the will not interfere in functioning of banks but they continue to interfere.
In my view , GOI or RBI cannot ignore control on banks , not because they are key owner of banks but because of the fact that banks were nationalised to save common men from exploiter money lenders. GOI will have to interfere in functioning of banks when bank officials misuse powers delegated to them.
Government have to use banks for poverty alleviation programme, for creation of employment opportunities, for giving various financial help to poor people, for extending credit to priority and neglected sector ,for helping weaker sections of the society , for extending credit for growth of infrastructure , power sector and so on. As such it is the duty of Ministry of finance that banks wholeheartedly execute the policies of lending and policy on interest rate in true spirit, uniformly without any discrimination. GOI will have to learn to punish officials who are corrupt, who exhibit negligence and who are ill motivated in taking decisions.
Unfortunately GOI has completely failed to keep watch on individuals working in banks as bank's Chief . Until GOI punish erring officials , they cannot inculcate good practices in banks. And for this , politicians will also have to be honest, sincere and transparent in their actions.
It is sad that they failed to stop rising corruption in recruitment, promotion and posting. They failed to punish top officials of banks who misused merit oriented promotion policies for self interest .
They failed to stop and punish top bankers who used power of posting to create a culture of bribery and flattery in banks .
They failed to stop top officers of banks recruiting from campus their own kith and kin in the name of talent.
They failed to stop bribe led lending done by bank officials.
They failed to stop exploitation of banks by corrupt politicians.
They failed to punish bank officials and administrative officials who have been found to be indulged in corrupt practices for self interest and who have failed to take appropriate step in protecting of bank assets and taking suitable steps against erring borrowers and erring officials.
They failed to punish officers, judges, advocates, legal experts, district magistrates, superintendent of police, BDOs, associated with courts and administrative offices who for serving their self interest and for earning bribe and commission continue to postpone actions for years and decades on cases pertaining to recovery of loans from defaulters.
It is they who damaged the repayment culture in banks by suggesting loan waiver culture.
It is they who forced banks to distribute loans like charity by organising Loan Melas and Credit Camps.
It is they who suggest bankers to restructure loans if borrowers face genuine difficulties in repayment of loans . But they fail to stop misuse of such relaxation by corrupt bankers to hide bad loans sanctioned by them or their friends in higher posts to earn illegal money either in cash or in kind.
In brief one can say without any hesitation that it is RBI and GOI in particular and politicians in general who have caused all sickness in government banks and it is they who have extended all helps to private bank.
Politicians are more concerned with their vote banks and their fate in elections. They can sell the banks as pervious FMs sold to enrich their vote banks. They appoint Directors or ED or CMD in banks as per their whims and fancies and thus oblige their fellow leaders in the political party which rule the country or a state.
When post of ED or CMD is sold , these ED and CMDs use the same culture for promoting an officer from one scale to other. When they give bribe directly or indirectly for getting cream post , they apply the same tool to earn wealth not only in recruitment and promotions but also in lending and in awarding any contract for supply of goods and services. They use the power to earn money in writing off of loans and in sacrificing good money to please bad borrowers.
And to add fuel to fire, auditors, inspectors, vigilance officials ,inquiry officials etc who are supposed to take action against erring officials are also chosen from gang of corrupt officials and thus they help corrupt officers more and earn money in saving corrupt officers from punishment.
There is no remedy when protectors become destructors. The great writer Munsi Prem Chand told long ago that "Jab rakshak hi bhakshak ban jaye to vinash nishchit hai" . It means to say that when protectors and regulators of banks become damagers , no power on earth can save banks from disasters.
None of the policies are bad in banks . It is never a question of rules or policies which has hurt bank. It is always the people who have hurt the bank more because it is people who are supposed to execute them in true spirit more often than not, use the rule and policies or twist the rule to earn illegal money , to earn name and fame and to get out of turn promotion .
Fixation of target for credit growth is not bad but it becomes bad when people do so under pressure or with ulterior motive to get undue benefits .
Campus recruitment is not bad if really talented people are recruited. Problem arises and get aggravated only when in the name of talent , weak candidates are given chance to earn illegal money or to give favour to kith and kin f friends and relatives.
Arun Jaitley to Meet PSU Bank Chiefs -Indian Express-11 March 2015
NEW DELHI: Finance Minister Arun Jaitley will meet the heads of public sector banks (PSBs) on Wednesday to review their performance, particularly with regard to passing on the Reserve Bank of India's recent interest rate cuts to borrowers.
"During the meeting, the finance minister will review the public sector banks' performance with regard to overall credit growth," a finance ministry release said on Tuesday.
"The finance minister will also review the performance of PSBs and financial institutions (FIIs) with regard to the new projects and proposals, stalled projects and possible remedial measures among others," it added.
Jaitley will also review the banks' performance in their handling of non-performing assets (NPAs) or bad loans, the ministry said.
The RBI has cut the repo rate at which it lends to commercial banks by 0.5 percent in the last two months, but the banks have not followed up on that yet by reducing their lending rates.
Last week, the RBI reduced the repo rate from 7.75 percent to 7.5 percent. This was the second rate cut after January 15, when the central bank had also cut the rate by a similar 25 basis points.
At Wednesday's meeting, Jaitley would also review the progress made on decisions taken at the two-day Gyan Sangam bankers retreat held in Jamuary in Pune.
The meeting would review various key financial sector issues such as credit offtake in the economy, priority sector lending, and progress made under the Pradhan Mantri Jan Dhan Yojana (PMJDY).
Prime Minister Narendra Modi last year launched the PMJDY scheme for promoting financial inclusion. A record 13.6 crore bank accounts have been opened under the scheme.
Bank Board Bureau to consist of experts, one FinMin representative-Indian Express
As the government tries to professionalise the management of public sector banks, the proposed Bank Board Bureau that would be responsible for appointments at state-run lenders will consist of former bankers and experts along with a single finance ministry representative. The proposed agency would also guide banks on mergers and consolidations.
“The idea is that the government as owner should not directly be supervising the work of banks. So it is an arm’s length kind of mechanism. The Bank Board Bureau will work as search committee or appointments board and will consist of professionals with only one government representative,” said Hasmukh Adhia, secretary, department of financial services. According to the plan being finalised, the proposed Board would have six members with at least three former bankers, two professionals and secretary, department of financial services as the government representative. “The chairman also will be an ex-banker,” Adhia told The Indian Express.
This would be a shift from the existing system where in appointments for top jobs at public sector banks are made through an appointments committee led by the Reserve Bank of India Governor.
However, appointments for the posts of managing director and CEO at five state run lenders — Punjab National Bank, Bank of Baroda, Bank of India, Canara Bank and IDBI Bank for which the finance ministry has already advertised would be done through existing system.
“By then the Bank Board Bureau will not be set up. It will take some time,” said Adhia. Finance minister Arun Jaitley had in the Budget 2015-16 announced setting up of Bank Board Bureau that would improve governance of public sector lenders.
“The Bureau will search and select heads of public sector banks and help them in developing differentiated strategies and capital raising plans through innovative financial methods and instruments,” he had announced on February 28. In its second phase, “once it develops credibility, it can start looking into the strategies of various banks, they can give guidance to banks if they require,” Adhia said. Recommended by the PJ Nayak committee on improving corporate governance in banks, plans to set up the bureau was also discussed at the finance ministry and bankers’ retreat at Pune in January this year.
Will the new RBI rules on bank loans prove to be a lender bender? -Economic Times
Like many things that happen only in India, for years Indian banks have been following a practice that lenders in other countries don't. They rejig loans of troubled borrowers — charging them lower interest, allowing them a longer repayment time — to save the loan from turning bad and protect the bank bottomline.
The beauty of the arrangement is that banks have to provide very little — meaning, they have to set aside a smaller amount — for such "restructured loans" as compared to the much higher provisioning specified for bad loans, better known as non-performing assets, or NPAs.
After April, banks can no longer resort to this comfortable book-keeping. Since there will be no difference between NPAs and restructured assets, banks will have to set aside 15% of restructured loans as provisions as against 5% they do now.
The annoyance among bankers, who have been under the spotlight for mounting bad loans, is understandable: higher provisioning means lower earnings, and, the quality of their loan book will look worse than what appears now. The fear is that if growth fails to take off, there won't be too many other earning avenues to make up for the loss.
The new rule owes its origin to reforms that followed Manmohan Singh's first budget. On April 27, 1992, the Reserve Bank of India (RBI) asked banks to treat all restructured loans as problem loans, thus attracting higher provisions. The idea, back then, was to be be in line with international best practices.
A decade later, when large financial institutions like ICICI and IDBI were planning to become banks, these lenders lobbied for a change. They argued that many projects were stuck due to external factors like delays in clearance from various state and central authorities and even promoters who were willing to service loans were unable to pay as cash generation had been delayed by time and cost overruns.
Around the same time, enviroental issues in special economic zones had cropped up and land acquisition for several projects hit a roadblock. Faced with these ground realities, RBI agreed to change the norm. According to the revised rule, restructured norms were no longer classified as problem loans. In one shot, provisions on such loans fell to 2% from 10% (that applied to NPAs then). RBI coined a new basket for such loans: "restructured standard assets".
POSTPONING THE PROBLEM
The rule relaxation however, came with some guidance. "Banks," the new rules said, "can undertake restructuring if in their opinion the bottleneck in achieving regular commercial production was of temporary nature, not indicative of any long-term impairment of the unit's economic viability and if the unit was likely to achieve cash break-even if some time was allowed."
Soon many banks, desperate to show improved balance sheets, began to ignore the advice. Between March 2002 and 2013, banks' loan book grew by 779% to Rs 59,89,182 crore while the portfolio of restructured loans grew by 3,087% to Rs 3,13,003 crore.
Analysts say a predominant number of loans were restructured without looking into merit. Due diligence was slack and often project viability was not scrutinised. Indeed, RBI, in its annual inspection of banks, observed "banks lacked clarity" while restructuring advances. The regulator feared 25-30% of the restructuring would fail to turn around. Questions were raised in RBI on whether banks had the cushion to absorb the shock if some of loans sank.
When the share of restructured loans overtook that of problem loans, RBI stepped in. Addressing the media, RBI governor Raghuram Rajan recently said, "It's important we clean up bank balance sheets and show what they actually contain. That will enhance confidence in bank balance sheets and enable banks to raise the much needed fresh capital. In order to build confidence in bank balance sheets, we have to come to an end of forbearance It is to call a spade a spade."
It was an open secret that many loans were restructured simply to postpone the problem. Troubled promoters with high leverage and ambitious projects were given a long rope. By chipping in as little as 2% of restructured debt as extra equity from promoters, these borrowers bagged concessions on interest rates and one to two years of repayment holiday.
In 2013, RBI brought back the old rule of the '90s. It spelt out that the moment a loan was restr ..
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Nine Executive Directors appointed to various public sector banks-Hindu Business Line :--11.03.2015
The Centre has elevated as many as nine general managers to the post of executive directors in various public sector banks (PSBs).
The nine general managers who have been appointed as executive directors are
Ravindra Marathe ( from Bank of Baroda to Bank of India);
K.V.R. Moorthy (Bank of Baroda);
Harideesh Kumar ( from Vijaya Bank to Canara Bank);
Kharat Kishore Piraji (Bank of Baroda to Union Bank);
N.K.Sahoo (from Canara Bank to Allahabad Bank);
Ravishankar Pandey (from Union Bank to Syndicate Bank);
Rishab Lodha ( from Union Bank to Central Bank of India);
Pawan Kumar Bajaj (from Bank of India to Indian Overseas Bank);
and Charan Singh (Bank of India).
A panel headed by the Reserve Bank of India Governor Raghuram Rajan had interviewed 35 candidates on December 25 last year in New Delhi.
Interestingly, all the 33 General managers who had appeared for the interviews a year ago, again attended the interview in December also.
More pressure on banks to cut interest rates
Hindu Business Line
After 50 basis points cut in the policy rates, banks are expected to lower their base rate soon. This issue among others was discussed in a review meeting between the Finance Ministry and Bank Chiefs. The meeting was chaired by the Finance Minister Arun Jaitley and attended by the Minister of State for Finance Jayant Sinha among others.
“With regard to cut in base rate by banks let’s wait and see how that plays out. We have a very competitive financial services industry and we will see once certain banks starts to take action we will see how it unfolds,” Sinha told reporters after the meeting. The RBI cut policy rates twice by 25 basis points each first in January and the latest one on a day after budget.
However, only two public sector banks, United Bank of India and Union Bank of India cut the base rate in January while only State Bank of Travancore has lowered the base rate now.
Banks have indicated that they will take a call next month. Sinha also said that during the meeting the Government tried to understand where the banks stood on this and the banks pointed out what they have already done. “As far as retail loans are concerned they have already brought down rates a fair bit,” he said.
The meeting reviewed performance of all the 27 public sector banks for quarter ending December 27 besides budget announcements. “Obviously we discussed capital raising plans, what we have agreed to do is that we will get into those in more detail with each individual bank. You must understand that there are 27 public sector banks at this meeting...each banks situation is different, Each bank for instance has different shareholding from the government, has different sort of valuation multiples, price to book etc,” he said.
Both, the Finance Ministry and Banks discussed the NPA (non performing assets or bad debts) issue plus the situation in stalled projects. “There are a variety of measures that we are planning to undertake as far as stalled projects are concerned. And also we are thinking about the ways in which resolution of the NPA situation can be done more speedily,” he said.
Talking about consolidation, he said that the Government’s approach, after ‘Gyan Sangam’ ( a meeting between the PM and Banks in Pune in January), has been to find whether consolidation or good or any of its alternative. “So that's really what banks are working on now as to figure out for each of them individually what are in fact best strategies for them,” he said.
Man poses as bank official, cheats store owner of Rs 25K-Times of India
CHENNAI: Police have launched a search for a conman who posed as a bank official and swindled Rs 25,000 from the owner of a provision store in Velachery on Tuesday.
Police said the conman on Tuesday afternoon made a telephone call to the provision store owner, Selvarajan, a resident of Ram Nagar in Velachery, who required change for his transactions. Claiming to be an official at a bank in the neighbourhood, he asked Selvarajan to send one of his employees to the bank. He promised to provide Rs 24,000 in change for a commission of Rs 1,000.
"The cheat claimed that he was going out to meet one of his customers and told Selvarajan to instruct his employee to meet him just outside the bank," a police officer said.
Selvarajan sent one of his workers, Murugan, to the bank with Rs 25,000 in notes of large denomination and asked him to collect coins worth Rs 24,000 in exchange. In a police complaint Selvarajan lodged later, he said the conman was waiting for Murugan near the bank. He intercepted Murugan, took the cash from him and gave him two gunny bags in which he said was Rs 24,000 in coins.
"The shop owner realised that the conman had cheated him only when Murugan returned and he opened the gunny bags," the officer said. "He found stones and sand in the bags instead of coins."
Selvarajan called up the bank and inquired about the person who offered to give him change but bank officials denied that anyone matching his description worked in that branch.
The Velachery police registered a case on Selvarajan's complaint and have launched a search for the conman. They gathered security camera footage from the bank in an attempt to identity the culprit. Investigators also questioned Murugan about the sequence of events and got a detailed description of the cheat.
"The conman is likely to have studied Selvarajan's practice of exchanging cash for coins at the bank," the officer said. "He called the shop owner on his land line and cheated him without them even meeting."
Ensure high standard in outsourced services: RBI to banks -Economic Times
MUMBAI: The RBI today asked banks to ensure high standard of care while outsourcing financial services and directed them to put in place a robust system of internal audit of all such activities.
"Banks have been advised to take steps to ensure that the service provider employs the same high standard of care in performing the services as would be employed by the banks, if the activities were conducted within the banks and not outsourced," the RBI said in a notification.
Reiterating its stance, the central bank said that outsourcing of any activity by the bank does not diminish its obligations and those of its Board and senior management who have the ultimate responsibility for the outsourced activity.
"Banks should not engage in outsourcing that would result in their internal control, business conduct or reputation being compromised or weakened," the RBI further said.
The central bank said instances of non adherence with the guidelines have been observed
with regard to sub-contracting by the primary outsourced vendors and the engagement of sub-contractors by the outsourced service providers without the prior consent of the bank.
In certain cases, like outsourcing of cash management, banks should ensure that reconciliation of transactions between the bank and the service provider are carried out in a timely manner, the notification said.
The RBI also asked banks to put in place a robust system
of internal audit of all outsourced activities which should also be monitored by the Audit Committee of the Board of the bank.
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Sick PSU banks can put you in trouble, IMF warns India
Report points out corporate vulnerability indicators remain elevated-Business Standard
A further weakening in balance sheets of banks and companies might pose a risk to the nascent economic recovery, the International Monetary Fund’s (IMF) staff report on India has said.
In the past few years, there has been a sharp deterioration in the asset quality of banks, especially the public-sector ones, which account for three quarters of assets in India’s banking system. Part of this deterioration, the report points out, is because of the banking system’s high exposure to infrastructure projects, many of which continue to face regulatory and legal hurdles.
The report estimates public-sector banks’ (PSBs’) non-performing assets (NPAs) in 2013-14 at 4.7 per cent of total advances. This is higher than the NPAs of the entire banking system which rose to 4.1 per cent in the year. Further, at 7.2 per cent as of March 2014, PSBs’ restructured loans are estimated to be significantly higher than the entire banking system’s 5.9 per cent. This has resulted in a sharp slowdown in credit outflow to industry.
Further, a deterioration in corporate balance sheets has limited the space with industry for fresh investments. The report points out that corporate vulnerability indicators remain elevated, with the share of loss-making companies and those with leverage ratios over two increasing to 22.9 per cent and 31.4 per cent, respectively, over the previous year.
So, to kick-start the investment cycle, the Fund sees improving banks’ asset quality and maintaining financial stability as key. The report recommends strengthening regulation for banks’ credit quality classification; increasing provisioning, particularly for all types of restructured assets; and bolstering capital buffers at PSBs which is critical to ensuring banks are able to support the economic recovery.
But here lies the problem. According to the Fund’s analysis, if the government were to provide the full amount of capital required by banks, it would cost between 1.2 per cent and 1.7 per cent of the country’s estimated gross domestic product in 2018-19. Given its limited fiscal space, however, the government is unlikely to be able to provide the required capital. While many had earlier hoped the Budget for 2015-16 would provide some clarity on this issue, there was no announcement on lowering of government stake in PSBs and allowing these banks to directly raise capital from the markets.
Among other measures the report proposes for improving banks’ debt-recovery mechanism by providing incentives for swiftly dealing with delinquent borrowers and promoters, measures to enhance the corporate bond market in India, and reworking the financial regulatory architecture on the basis of the recommendations of the Financial Sector Legislative Reform Commission (FSLRC). The Budget has announced some measures in line with these recommendations. It has proposed a new bankruptcy law likely to help in debt recovery, and a public debt management agency likely to help create a more vibrant bond market, besides giving indications on introduction of the Indian Financial Code.