Pratip Chaudhuri said lateral recruitment has to be done with a lot of care

Mumbai, September 4: State Bank of India Chairman Pratip Chaudhuri on Monday said that lateral hiring in banks had led to frustration among existing employees.
Speaking at the curtain-raiser of the Ficci Banking Conclave, Chaudhuri said, “A high degree of lateral recruitment brings disappointment and frustration to the existing cadre and they end up saying ‘what was our fault’.”
Chaudhuri said lateral recruitment has to be done with a lot of care. In addition, he said, lateral recruitment done by some banks at general manager level, except in specialist positions such as economists or law, has not worked out well.
For SBI, Chaudhuri said, there is very little lateral recruitment, and attrition is at the end of career span (after 30-35 years).
Talking about banking in rural areas, he was of the view that employees are not ready to relocate to rural areas. “Mostly what happens is that if you say that an employee is posted at Mumbai, he/she is very happy. But the day you tell them that you have to relocate to Surat or Nashik, that is when attrition happens.”
As a solution to this issue and to boost financial inclusion, Chaudhuri suggested that banks change the way they compensate people. He explained that the compensation structure of any employee was biased in favour of metros.
“I think we need to have a reverse compensation.
There should be a compensation to work in rural, semi-urban areas. In the next wage revision with the Indian Banks’ Association, this would one of the things (that would be addressed),” he added.

RBI asks banks to post bulk deposit rates on website

Mumbai, August 30: The Reserve Bank of India (RBI) has asked banks to put up bulk deposit rate on their websites, to stop banks from offering exorbitant rates to corporate depositors. According to RBI norms, no bank can offer varying rates on the same day at different locations.
According to bankers, some of the banks are offering as much as 200 basis points higher than the card rate to their corporate clients. Bulk deposits are corporate deposits that are generally Rs 1 crore and above with maturity of up to one year.
The central bank’s directive comes following the finance ministry’s effort to discourage banks’ rush for bulk and certificates of deposit, which are of high cost and adversely impact margins. The ministry had asked banks to cut down their proportion of high cost deposits (bulk deposit and certificates of deposit) to 15 per cent, with a cap of 10 per cent on bulk deposits.
About 25-30 per cent of the deposits of public sector banks are bulk in nature. The central bank and the finance ministry’s concern over exorbitant bulk deposit rate comes on the back of banks scrambling for funds during the end of the previous financial year. In March, bulk deposit rate crossed 12 per cent, higher by 100 basis points in a month. As a result, deposit growth in March swelled by Rs 3 lakh crore — one third of the deposits garnered in 2011-12.
The finance ministry and RBI had also asked the public sector banks not to bid for bulk deposits. Earlier this week, Mumbai-based public sector lender Bank of India reduced the rate on interests on bulk deposits in some tenors by 25-50 basis points.

Seek more time to repay corporate loans: SBI

Kolkata, August 29: “The other day, we received a (loan) proposal for setting up a hotel, with a repayment period of eight to nine years. I told my officers ask this gentleman to take the loan for 12-13 years...Our advice is in the future, whenever you are applying for a loan, try to negotiate for a longer repayment tenure,” said Chairman Pratip Chaudhuri.

Such advice is aimed at capping a further rise in the bank’s restructured loan portfolio. In 2011-12, SBI’s restructured loan portfolio nearly doubled to Rs 8,093 crore from Rs 4,979 crore a year earlier. In the quarter ended June, the bank restructured loans worth Rs 564 crore. At the end of June, SBI’s total restructured loan portfolio stood at Rs 36,904 crore. Of these, loans worth Rs 7,373 crore were classified as non-performing assets. The Reserve Bank of India (RBI) has proposed tough norms for loan restructuring, and if the new rules are implemented, the provision burden on the bank would rise, eroding its profitability further.

Chaudhuri added SBI would not penalise its borrowers if they wanted to pre-pay loans ahead of the repayment schedule. “In the current scenario, with the rules RBI has proposed, it is difficult to increase the tenure after the loan is sanctioned. It would increase the burden on the bank. So, we are telling our customers to negotiate for more time. If one is able to repay ahead of the schedule, it is fine — there would be no penalty for pre-payment,” he said.

However, most banks were reluctant to agree. “The repayment period is based on the projected cash flow. The schedule is fixed after making a conservative assessment of the earnings, and taking into consideration the risk factor. We have no immediate plans to deviate from this practice,” said the chairman and managing director of a Mumbai-based public sector bank, requesting anonymity.

Chakrabarty had same views on CRR as a banker: SBI chief

Mumbai, August 28: State Bank of India Chairman Pratip Chaudhuri on Tuesday took a gentle dig at the Reserve Bank of India Deputy Governor K C Chakrabarty, who had advised him yesterday to “find out some other place” if he didn’t agree with the current regulatory environment insofar as cash reserve ratio was concerned.
Speaking on the sidelines of an investor conference on Tuesday, Chaudhuri said he hadn’t read the complete media reports, but what he remembered was that Chakrabarty had the same views when he was a banker.
“What I want to say is that it’s just a view. When he (Chakrabarty) was a bank chairman, he was also of the same view (reducing the CRR),” Chaudhuri said. He made the remarks with a big smile, but the message was loud and clear.
Before joining the central bank, Chakrabarty was the chairman and managing director of Punjab National Bank and before that, of Indian Bank.
However, while speaking to NewsWire 18, Chaudhuri clarified his intention was not a complete abolition of cash reserve ratio (CRR) overnight, but to ignite a public debate on the merits of CRR. “My comments are in sync with the views of most of the bankers today,” he said.
Chaudhuri had earlier suggested that CRR should be phased out in a time bound manner or at least RBI should consider a paying an interest on it equivalent to the savings bank account rate if not the repo or the reverse repo rate.
CRR is the proportion of deposits that banks need to park with the regulator. While RBI used to pay interest on CRR funds, but that system was withdrawn a few years back. As a result, banks do not earn anything for keeping CRR with RBI but the negative carry for CRR and also SLR (statutory liquidity ratio) is considered while calculating the benchmark lending rate — the Base rate.
At present, CRR is 4.75 per cent. The central bank had reduced CRR by 125 bps to improve liquidity situation during January-February. CRR is not only used a liquidity tool but also indicates the monetary policy stance of the central bank.

Capital infusion
Regarding fund raising, Chaudhuri said SBI was in talks with the government for capital infusion and he expected the government to infuse about Rs 4,000 crore this financial year in the bank.
The government is committed to infuse capital in the PSBs and retain its stake, financial services secretary D K Mittal had told reporters on a sidelines of an event last year in Mumbai. However the Rs 8,000 crore capital infusion for SBI came only at the end of the last financial year after from the government after dilly-dallying on the issue for the whole year.
Capital adequacy ratio for the SBI at the end of the first quarter stood at 13.17 per cent.
On associate banks’ merger, Chaudhuri said that it was currently not on the priority list of the bank and he could not say if any associate bank would be merged this financial year. The SBI board has already cleared the merger of one associate bank this year.

Self-service banking gaining currency

Mumbai, August 26: Banks are increasingly launching self-service banking in the front lobby of their branches to increase customer convenience and reduce transaction time and costs.
Self-service banking in the front lobby of branches enables customers to use alternative banking channels — ATMs, phone banking, cheque deposit machine, and pass-book printer — without entering the branch, any time of the day, irrespective of whether the branch is open or closed.
The per transaction cost incurred on one customer in the physical branch is Rs 50 on an average, while e-banking costs about Rs 10 for a similar transaction.
Recently, ICICI Bank launched 25 electronic branches across 18 cities. The electronic branch, located within the brick and mortar branch, is a one-stop shop for all banking transactions. Among others, it has an interactive kiosk through which services can be accessed by swiping a debit card and provides video-conferencing with the bank’s customer care personnel.
One of the first banks to start the e-lobby facility is Mumbai-based Greater Bombay Cooperative Bank. It is offering all banking transactions to its customers through fully automated lobby banking.
Greater Bank has deployed a single machine called ‘MegaBanker’ in its lobby for 24x7 banking. Customers can use this machine, among others, to deposit cheque/cash (with real time credit to the account), withdraw cash, printing of savings and current account statements, and fake note detection. Currently, Greater Bank has lobby banking in 17 of its existing 21 branches.
Public sector lender Union Bank of India has launched ‘UnionXperience’ branches, where customers can use alternative banking channels any time of the day, irrespective of whether the branch is open or closed. It has implemented these services in 160 branches across 10 cities, with automation through self-service machines. “Today, more than 50 per cent of our transactions get done via e-banking. This saves time and costs for the bank,” said Lalit Sinha, General Manager, Alternate Delivery Channel, Union Bank of India.
A senior ICICI Bank official said the bank wants to expand its technology platform beyond ATMs and desktop devices to mobile and tablet devices.
Challenges
Replenishment of cash in the ATM machines and infrastructure are major problems, Sinha said. “Indians are more comfortable with human interface and hence the customer adaptation to alternate channels is slow,” said Narendra Behere, CEO, Greater Bank.

Soon, a bank-wide portal that will allow you to shop for best service

Customer is king Online travel portals seed the idea of a similar portal for banks Customers could compare interest rates on deposits/loans across banks at one go Figuring out which bank offers the best deal could become easy Will empower customer
Mumbai, August 20: How convenient it would be to compare at one place interest rates on deposits offered by various banks, their retail loan rates, margin amounts they require, the processing fees they charge, the add-on facilities they offer on deposits, and so on.
Extremely. The Finance Ministry also thinks so, and wants public sector banks, a la travel portals such as cleartrip, makemytrip, yatra and expedia, to explore the feasibility of setting up a bank-wide portal. These online travel portals allow travellers the convenience of comparing the fares quoted by various airlines so that they can buy the cheapest ticket plus the various add-ons such as hotel rooms and airport pick-up.
Wide choice: As things stand now, customers seeking a higher return on their investible surplus, or the cheapest home, car or personal loan, have to either go to the branches of various banks or surf their individual Web sites. No mean task as there are 26 public sector banks, including the five associate banks of State Bank of India. A more discerning customer may widen his search to the 23 private sector banks too.
Time-Saver: But with a bank-wide portal, customers can avoid the tedium of visiting the branches of various banks or surfing their Web sites, saving much time and energy. At the click of a mouse, one can compare interest rates on deposits and loans across banks, said a senior public sector bank official. “The portal could usher in transparency in banks’ dealings with customers,” he explained.
Banks will have to update their details on the portal regularly to reflect the latest position on interest rates, and any change in product features. The portal could also incorporate a feature whereby, if a customer zeroes in on a particular bank to place a deposit with or take a loan from, all he needs to do is share his contact details, so that officers from the nearest branch can contact him to complete the transaction.
Advertising: A banker said that private sector and foreign banks too may join the portal at a later stage, if it attracts enough eyeballs. The project to design, build, own and operate the portal is likely to be given to an information technology company. The company can recover the costs from advertisements placed by banks, insurance companies, mutual funds and broking firms.

ATMs may come loaded with more features

Third party service providers, which have won contracts to set up 62,000 ATMs on behalf of PSBs, are looking to incorporate special features such as multiple currency transactions.

Mumbai, August 2: Third party service providers are now seeking to incorporate special features in ATMs to meet the transaction needs of specific regions. This comes in the wake of nine service providers winning auction bids to set up a pan-India network of about 62,000 Automated Teller Machines (ATMs) on behalf of public sector banks.

Tata Communications Banking InfraSolutions (TCBIL), US-based NCR Corporation and Mphasis are some of the service providers which have won contracts to set up ATMs across States and Union Territories.

TCBIL on Wednesday announced the signing of a contract to deploy and manage nearly 14,000 ATMs across Tamil Nadu and Puducherry, West Bengal, Andaman and Nicobar, and Andhra Pradesh. These ATMs will be deployed over the next two years on behalf of 21 PSBs.



Currency converters

“We are evaluating the possibility of incorporating special features over and above the regular features in ATMs installed in tourist destinations. This, of course, will happen only after consultation with the banks,” said Sudip Kumar, President, TCBIL.

TCBIL is looking at introducing dynamic currency converters in these areas. This facility will allow customers to transact in multiple currencies. “Value-added features like airline ticketing, mobile top-ups and talking ATMs can also be installed in the ATMs if banks permit,” said Kumar. Starting October, TBCIL will roll-out ATMs according to their quarter-wise plan.

NCR has won auctions in popular tourist destinations such as Kerala and Lakshadweep, among other places. It will be deploying 7,400 ATMs (including in Bihar and Jharkhand) for 26 public sector banks in a span of two years.



Solar power

“In power-deficit rural geographies, we will install solar-powered ATMs. Nearly 15-20 per cent of the total deployment will be in this category,” said Navroze Dastur, Senior General Manager, South Asia Channel Partners and Strategic Alliance, NCR Corporation. NCR also plans to provide additional services such as utility bill and income-tax payments in multiple regional languages.

The banking space has seen considerable growth in ATMs in the last few years. Banks collectively have a network of about 90,000 ATMs at present.