Bulletin Issue 15 - 29
Bulletin Issue 15 - 29
Bulletin Issue 15 - 29
29/08/2015
Staff Training College | admin
Banking Bulletin
Issue AN E-C OMPILATION
(For Private OF
Circulation only) BANKING
No.15/29 ARTICLES
Index
BANKING & FINANCE.................................................................................................................................... 3
RBI ASKS GOVT TO SPEED UP REFORMS IN BANKING SYSTEM.......................................................................................3
STATE-RUN BANKS IN TROUBLE AS CURRENT & SAVINGS ACCOUNTS TAKE A DIP...............................................................5
ECONOMY & POLICY..................................................................................................................................... 7
WHERE IS THE RUPEE HEADED?............................................................................................................................ 7
INDIA SHOULD TURN CRISIS IN GLOBAL TRADE INTO OPPORTUNITY..............................................................................10
MISCELLANEOUS........................................................................................................................................ 13
‘MISSING MIDDLE’: HR CHALLENGE PLAGUES PUBLIC SECTOR BANKS...........................................................................13
Saturday, August 29, 2015 Page 2 of 32
Bank of India Staff Training College, Chennai Issue No.15/29
Phone: 044-28132731, 28130896, 28133815 e- mail Id: stcchennai@bankofindia.co.in (For Private Circulation Only)
The Reserve Bank of India (RBI) on Thursday warned the Government that
any delay in reform of the banking system in the country would lead to
greater risk in the economy. “The current stress in the banking system
suggests that the real economy will not wait for the banking system, and a
slow pace of reform could lead to greater, rather than lower risk residing
“Financial sector reforms need to move on many fronts,” said Dr. Rajan,
shots in the dark, subjecting the economy to great uncertainty and risk.”
the scope of reforms while always limiting the uncertainty they create.
The Chinese term this ‘Crossing the river by feeling the stones’. It is an
While talking on financial sector, Dr. Rajan said that “we need to increase
The most appropriate institutions will prevail when the competitive arena
wherever possible, especially those that are biased towards some form of
Dr. Rajan also stressed the need for more participation in the country’s
hitherto excluded populations into the financial fold. “It is these ideas
charge on loans, but more importantly, on how much they pay their
to keep cost of funds. The most important component of this is the so-
called CASA, where CA stands for current account and SA, for
savings account.
These deposits are called low-cost since banks do not pay any interest on
shows that state-run banks are not only plagued by bad loans, but also
slidingCASA.
most with 77% share followed by SME and trusts. A report by Nomura
says CASA growth has moderated from 20% onCAGR in fiscal 2008.
Changes in incremental current account and savings account share are the
most notable. Over the past two years, private banks accounted for 60%
stock market with the Sensex losing 2 per cent in the last two sessions
It is the rupee that will bear the brunt if the Federal Reserve begins
moving higher, dollar will move up as money starts moving into US treasury
expectation that the Fed could then start selling the long-term securities
This will result in money from global emerging market debt moving to US
bonds, applying pressure on the currency. But the rout this time is not
One, forex reserves are currently at a healthy $353 billion, up from the
low of $275 billion hit in June 2013. The central bank has been buying
debt at 71 per cent, while not too good, is not too much of a worry.
Two, in 2013, India’s current account deficit was spinning out of control.
It stood at 5 per cent of GDP in June 2013 due to increase in gold imports
and high cost of crude imports. But thanks to initial curbs on gold imports
and decline in crude oil prices, CAD has now been reined in at 1.36. India is
one of the few countries with positive real yield above 3.9 per cent. This
countries such as China (2 per cent), Indonesia (1.5), and Malaysia (0.9)
and so on.
With India being a net commodity importer, the fall in commodity prices
exporting nations whose growth for 2016 has been pegged back by the
IMF.
India is, therefore, set to emerge as the country with the highest
economic growth in the next couple of years. This superior growth will
However, these factors have resulted in the rupee being overvalued with
On the charts
The rupee is appearing weak, having declined below 65 recently. But the
phase that can make the currency move in the range of 58 and 68.
There is immediate support in the zone between 65 and 66. A halt there
can make the rupee move between 58 and 66 over the next year or two.
If the previous life-time low at 68.8 hit in August 2013 is re-tested in this
But it needs to be noted that the retraction from the 68 level was swift in
2013. After hitting the intra-week low of 68.6, the currency closed at
This low can hold in this correction too. Else, the next support zone is
Even as China is trying to boost its exports and perk up its slowing
Industrial Policy and Promotion (DIPP) secretary Amitabh Kant has said
protect its core industries from a possible surge of cheap items from
Stating that the MII initiative has an export thrust, he said it is about
Excerpts:
anti-dumping duty and (better) standards. The Indian industry will also
have to play a role in doing proper research and informing the government
on instances of dumping.
Won’t such measures affect user industries that may be benefiting from
cheaper imports?
the same downstream industries (in India) that are benefiting now, will
suffer severely. So we need to define and protect our core industries, and
What is your view on the opinion of some experts that perhaps this is not
a conducive time for the MII initiative, given the excess capacity in India
The question contradicts the ground reality. Since the MII launch, FDI
inflow into India is up by 48% when FDI across the world has fallen by
including from Foxconn,Xiaomi, JCB, IKEA, Boeing, GE, Daimler and Ford
optimistic and accelerate our growth. It won’t be as easy as it was for the
What is your view on his ‘Make for India’ statement, especially now that
I have great respect for the governor. He is a fine economist. But nobody
manufactures only for the domestic market. Daimler has put up a plant in
domestic market but are using their production to export across the
world. Volvo is exporting buses to Europe from India. Hyundai, which came
share in global merchandise exports is just 1.7%. India should treat this
slowdown in global trade and its poor export performance as a crisis and
turn it into an opportunity to enhance its share in the global market. India
must produce to global size and scale and connect to global markets. India
must realise that if it doesn’t continue to export, it will perish. Export and
won’t grow. We must push for exports so manufacturing grows in the long
‘Make In India’ or ‘Make For India’. We have to make in India for the
world.
MISCELLANEOUS
Faced with the difficulty of paying competitive salaries, the State Bank of
that even if they had gone to some other bank, their propensity to change
would be quite high. So, even if they get five-six years with SBI or SBI
“We are trying to get specialists, such as legal experts and chartered
“We are trying to see whether our subsidiaries can recruit people and
depute them to us. So, it’s a mixture of things we are doing but it’s a
Hiring constraints
PSBs have been facing a human capital challenge for a while now, following
the 1.5 lakh mid-level managers. They are due to retire over the next
top that there are challenges in not only mid-management but even at the
top level, since you are pushing people up too fast,” said Anil Khandelwal,
He said the challenges are not merely quantitative but qualitative and can
“There needs to be rigour in the promotion process and not merely filling
up of vacancies,” he added.
Strategic importance
In July, RBI Deputy Governor R Gandhi had also pointed out that PSBs are
“While this can bring fresh perspectives on various issues, it is also a fact
Also, expressing anxiety that new private banks may increase the
government.
“More worrisome is that as these new players come in, they have much
recruit the locals. But for us, to recruit for the North-East, we have an
The SBI chief further said that up to scale-3, PSBs are quite competitive
in terms of salaries, but the problem occurs when it comes to scale-4 and
scale-5.
At the higher scales — after scale six (deputy general manager level) —
the salaries tend to stagnate. This makes it easy for private banks to woo
Echoing the sentiments, RBI Governor Raghuram Rajan said the banking
from campuses of specific talents that we want, are the issues we have to
deal with...”
“I think one question to ask is what will be the cost to increase the
know.
make the top management committed to the bank over a longer period.
While some would be well-prepared with their investments, there are many
who may not have planned it. Whatever be the case, one must understand
Plan ahead
For most of us, tax planning comes as an after-thought, but it should not
be that way. If you have paid all your taxes, maintain the momentum and
keep yourself organised next year too. Planning things in advance has its
own advantages, or else it will be the same old story — running around,
trying to salvage tax breaks, investing into plans that may not be fit for
situations, setting goals and devising plans to achieve those goals are
on your mortgage could shed 7 years off your 30-year tenure. A Rs 500
months of emergency savings. Once you have a plan in place, stick to it,
If you got a good refund last year, you must try adjust your taxes
deducted at source (TDS). TDS is the tax your employer deducts from
your salary. Inform your employer about your financial situations, so that
the employer can deduct only those taxes you are liable for. The money,
thus, saved can be invested to earn compounding returns. One must deploy
all online resources available. There are software that can help plan your
investments to achieve maximum tax breaks. One must also consult the
withholdings.
Filing returns can be a tedious task at times. Taxes are summary of your
annual earnings, the house you bought, job you took or new family member.
As you go through these milestones, make sure you are prepared to take
maximum tax benefits at the end of the year. There are a lot of online
tools/apps available that will help you compile a list of documents needed
From the current fiscal, income tax department has introduced Electronic
Verification Code (EVC) that will make obsolete the need to send a signed
There are plenty of options online to e-file returns. If your case is not a
can do it yourself, take control and e-file your returns online and without
any hassle. A few things that you need to keep in mind while choosing
service providers include cost, features and incentives. Most online service
providers claim to offer self e-filing for free, which is not true, so make
The software must be simple so that one can do it without any external
help. Compare the service providers, send them e-mails if there are
questions, follow them on social media to see what others say about
State Bank of India, the country's largest lender with 213,000 employees,
middle and senior management. All employees above the deputy general
appraisal, which is of 100 marks, if they clear all the mandated modules.
Training via e-modules has been made mandatory for SBI officers.
Apart from the 40 modules that Harvard prepared, SBI internally has
developed 500 e-modules for its staff, which all employees, including
The lender has beefed up its training activity in the past couple of years
and closed the training gap, which was as high as 55.45 per cent at the end
of March 2013. The gap narrowed to 2.45 per cent by the end of March
2015. SBI Chairman Arundhati Bhattacharya had recently said that the
bank would use technology extensively to match skills with roles. Talent
management and capacity building have been key areas of the bank's
unit, and its training apparatus at present consists of five apex training
institutes and 48 learning centres. The government and the Reserve Bank
of India (RBI) have been nudging banks to improve the quality of human
resources.
unveiled by the finance ministry last week, has included skill development
banks.
These are called key performance indicators or KPI. The finance ministry
said human resource management would have five per cent weight in KPI.
The bank's business per employee has increased from Rs 7.04 crore to Rs
12.34 crore between FY11 and FY15. Profit per employee also increased
The eastern region, which has some of the most unbanked areas in the
banking licence a year after getting a provisional licence from the Reserve
Bank of India (RBI) last April, is all set to unfurl its banking operations on
The bank, which plans to open 600 branches initially, will mark its
footprint across 27 States through 501 branches on its launch day. Over a
“We are planning to have 35 per cent of our branch network in places
unassuming Managing Director of the new bank and the Founder of the
BFS, a micro finance institution (MFI), started its journey in 2001 when
Mr. Ghosh quit his job to set up an institution through which he hoped to
help the poor. He embarked with just three members from a small place
less than a decade and half, Bandhan branched out through a 2,022-strong
network in 22 States and Union Territories although the east and the
On the way, it picked up awards and accolades and had as its lenders
almost the entire Indian banking industry — public and private as well as
“My aim was to not only help build livelihoods...but help foster holistic
development”, says Mr. Ghosh. Thus, the organisation also set up an arm to
It got IFC and SIDBI as equity investors as an MFI. As a bank, that list
Bandhan, which along with IDFC, created ripples when it bagged the
behind, got down to its job in right earnest to launch its banking services.
partner. It has also begun training its existing staff, many of whom are
likely to be recruited in the new bank. It will have two divisions — micro
the regions poor financial inclusion. The Saradha group, which raised only
about Rs.2,500 crore, is only the tip of the iceberg. It was felt that
financial inclusion was the only way to combat this phenomenon. The
industry watchdog the RBI, may have had just this in mind when it
Bandhan aims to address this problem and hopes to carry along with, its
new crop of depositors to become one of the country’s top three banks in
10 years. Its existing client-base, who have already begun collecting bank-
INFORMATION TECHNOLOGY
The new payments banks, once become operational, are expected to make
people less dependent on cash and thus going forward mobile phone will
cheque-book, which will take care most of basic banking needs such as
However, mobile financial services technology holds the key to the success
“In the long run mobile phone will eventually evolve into a full-fledged
virtual bank branch and ATM. When the mobile financial services
transactions would take place using mobile wallet,” said Jatinder Ahuja,
Head of India and South West Asia Business, Amdocs which provides
With a mobile wallet, one can buy things, pay for online and off line
All these provide the biggest opportunity for mobile banking in anywhere
in the world. “India is not one but two markets — one which is un-banked
which is growing middle class with rising incomes who want convenience and
are increasingly using their mobile phones for payments, accessing banking
The other key challenge is the lack of matured ecosystem and an effective
ecosystem partners need to ensure that the agents make money on their
this, consumers are concerned about data security, ease of use and
HEALTH
There is something about the idea, at least in the recent past, that
being the eternal student that I am, I decided to take a short course on
inspiring woman who has now taught thousands of people to meditate over
the last ten years. Her years of teaching and her own research have shown
one’s own ability to bounce back from difficult situations and allow things
“When you are the most stressed out,” she says, “that’s when you should
So for all of you type As out there whose brains are buzzing and you’re
thinking, “I don’t have time to read about meditation,” I know where you
are coming from… because I am one of them. So I will cut to the chase.
Here is the quick and dirty of what I learned about meditation to get
started:
Mindfulness and meditation are often uttered in the same breath but
moment.
By being mindful, we are able to enjoy the moment and enjoy our life
experiences more fully by not worrying about our future vacation plans
when our thoughts wander and then coming back to our initial focus.
When we are self-aware we are more able to change our thoughts about
own mind about how your friends were talking sh*t about you behind
your back the other day? You know what I’m talking about. When we
Timer. This will allow you to set a timer for the duration of your
meditation.
Find a cushion to sit on and ensure your knees are at the same height
as, or lower than, your hips. If you don’t have a cushion, you can also sit
If you sit cross-legged, try not to stack your ankles which can cut off
circulation.
Relax and roll your shoulder blades down your back and close your eyes.
“Attitude is everything.”
Have no expectations.
Be an observer.
Don’t expect a ‘blank mind’ but notice the moments when your mind
Here is an example of how NOT to meditate below. This was me, a couple
view is alright, my knees are above my hips, and my ankles are stacked!
LET US LEARN……..