Govt asks public sector banks to finalise next wage revision before 1 November

In a communication to CEOs and MDs of the state-owned banks, the finance ministry advised them to initiate the steps for smooth conclusion of next wage revision

New Delhi, April 9 (PTI): The finance ministry has asked the heads of public sector banks (PSBs) to finalise the modalities for timely implementation of the next pay revision from November.

There are 21 public sector banks, post merger of six lenders with State Bank of India (SBI), in the country. They together employ about 8 lakh people.

In a communication to CEOs and MDs of the state-owned banks, the ministry advised them to initiate the steps for smooth conclusion of next wage revision of the employee within the time-frame. “However, it is seen that several banks are yet to proceed in the matter,” it said, requesting the PSBs to “look into the matter and conclude the next wage revision prior to the effective date of 1 November 2017”.

The wage revision of public sector bank employees takes place every five year. The last revision was effected in November 2012. In the last wage negotiation between PSU banks employee unions and bank management, Indian Banks’ Association (IBA) had settled at 15% hike. Recently, Banks Board Bureau chief Vinod Rai had made a case that the compensation package across the board of public sector banks needs to be improved.

“Maybe, we are not able to do much with the fixed part of compensation package but (with) variable part we are hopeful that in the next financial year (2017-18), we will be able to introduce a far more attractive package which do have bonuses, ESOPs and other performance linked incentives as part of the package,” he had said. Rai has also suggested that managing directors of the public sector banks should be appointed for minimum 6 years.

Coming soon: Far more attractive compensation package for public sector bank employees

Attractive pay packages: PSU bank Employees to get

higher bonus, ESOPs, says Bank Board Bureau Chief

New Delhi, January 5 (IANS): Public sector banks (PSBs) will have far more attractive pay packages with increased bonus, Employee Stock Option Plans (ESOPs) and other performances-linked variables in 2017-18, Bank Board Bureau Chairman Vinod Rai said on Thursday.

"By next fiscal we are looking at a far more attractive package for public sector banks with bonus, ESOPs, performance linked variables -- monetary or non-monetary benefits to make it more attractive for professionals to enter PSBs," Rai said here at the 97th Associated Chambers of Commerce and Industry of India (Assocham) Foundation Day. "We may not be able to change the fixed income but we are looking at making the variable part of the package more attractive," he added.

The compenation package of the PSBs needs to be improved in some way, he added. Rai said that the government is also looking at appointing full-time director or executive director in the PSBs, apart from the post of chairman and managing director (CMD). The executive director or director post is being thought of so that he can be held accountable for the decisions taken at the bank, he said. "Those people will be appointed who have at least six or more years of service remaining," Rai said.

The Bank Board Bureau is also working upon the proposal of formation of the government stake in the PSBs into a holding company, which will be run by professionals and will make selections of directors and CMDs for the bank. "Over a period of time, the PSBs may go into mergers," he added. In order to manage the non-performing assets (NPAs) of the banks, Rai said that he was looking at a scenario wherein the banks are run by boards, who take the risk of decision-making.

"We are trying to collate people who will be willing to join the boards of PSBs. Effort is to ensure that the banks are indeed run by boards comprising of professionals," he said. He also spoke of formation of an oversight committee for both private and public sector banks which will help the banks resolve their bad loan cases. "The attempt is to provide an oversight committee of two people to whom cases will be sent to resolve the processes. The case then has to come back to the board because ultimately the bank has to take the decision," he said.

"This is to provide comfort to the banks," he added. Calling for certain degree of transparency in decision making, he said that every organisation should be able to withstand the test of scrutiny. "We are going to be in an audit from all strata of society. All governments and corporates should be able to withstand that audit," he added.

SBI tops ATM expansion in non-metros: Assocham

Mumbai, September 19: Country's largest lender State Bank of India (SBI) is more aggressive in expanding its ATM (automated teller machine) network in the non-metro and semi-urban centres as compared to its peers, according to a study by Assocham. "Unlike other banks, the State Bank of India (SBI) is expanding its ATM network in non-metro and semi-urban centres, faster than expansion in the metros," the study based on the recent Reserve Bank data said. As compared to the 5,783 ATMs in metro cities, SBI has 7,511 and 6,419 ATMs in non-metro urban areas and semi-urban areas, respectively, the Assocham statement said.
SBI's peer in the state-run banks space, Punjab National Bank is the only other bank which has more ATMs in non-metro cities than the metros, it said. The objective of financial inclusion can be better achieved by the usage of technological interventions, including ATMs, and public sector banks have an important role to play in the objective, Assocham Secretary General D S Rawat was quoted as saying.
Overall, the private sector banks, led by Axis Bank have gone about expanding their network through ATMs in a much more aggressive way than their public sector peers.  Be it, ICICI Bank, Axis Bank or HDFC their bias and preference for ATMs is for the metro cities, followed by tier two cities.Among the private sector banks, Axis Bank has the largest (10337) ATM network, followed by HDFC Bank with 9709 such machines and ICICI Bank - 9366 ATMs.
Excepting the SBI, the other banks have to go a long way before achieving the financial inclusion in the semi-urban and rural areas.
“The Finance Ministry is rightly very keen of achieving the financial inclusion of a large number of people in rural areas.  This can best be achieved by leveraging of technology and use mobile telephony and ATMs. Somehow, the public sector banks will have to take a lead in these areas. Even their brick and mortar branch network is wider in the rural and semi-urban areas than the private sector banks,” ASSOCHAM Secretary General D S Rawat said.
He said while a good beginning has been made, pooling of technology resources like the ATMs should be encouraged so that optimum use can be made to the advantage of the people. The ASSOCHAM quoted honourable Finance Minister Mr P Chidamabaram who recently noted how even the trade has not been fully brought into the banking network.
“As was pointed out by the Finance Minister, today traders are not able to deposit their cash of sales proceeds at night in any bank. In the process, they have to keep it either in the shop premises or at home taking the risks of theft and other insecurity issues. We must have technology-driven day and night banking so that a wider section of the informal economy is brought into the banking network,” Mr Rawat said. While the RBI has been expressing concerns over regulatory issues over the mobile banking, sooner or later different technology platforms have to converge and the regulators need to equip themselves to deal with new challenges and opportunities.
The ASSOCHAM said a large number of Indians still remain outside the banking network.  It is because of lack of the organized banking that the gullible people in semi urban and rural areas fall prey to unscrupulous money-lenders. “The institutions of micro-finance did make a good beginning. However, because of certain corporate governance issues, the entire experiment has become rather overshadowed by controversies. The use of technology to reach out to the bottom of the pyramid promises a lot of scope,” the ASSOCHAM Secretary General said.

ICICI, HDFC Bank follow SBI; revise FD rates by up to 0.5 pc

Mumbai, September 12: Private sector banks like ICICI Bank and HDFC Bank on Wednesday reduced interest rates on fixed deposits by atleast 50 basis point. The reduction in deposit rates comes at a time when the economy is slowing down and credit pick up is slack. One basis point is equal to one hundredth of a percentage. Last week, State Bank of India had reduced interest rate on deposits by as much as 100 basis points across maturities to maintain profitability after lowering lending rates.

 

ICICI Bank has cut rates across maturities ranging from 91 days to less than five years. It now offers a maximum 8.75 per cent interest on retail term deposits compared to 9.25 per cent earlier. In the shorter tenure ranging between seven days to 45 days, however, the bank has increased rate by 50-75 basis points. A reduction in statutory reserve ratio, the amount of funds to be held in government bonds, by a percentage point is also help the banks lend Rs 15,000 crore more to corporate or retail customers. Deposits grew 14.1% year on year against RBI's projection of 16%.

 

Pratip Chaudari, chairman State Bank of India had said, “As of now, we are surplus in deposit for SBI. The challenge is more on pushing credit.” Also, the cut in SLR is providing some comfort. This is helping banks in meeting the credit demand, which is climbing marginally. Recent RBI data shows that credit has grown 16.7% year on year.

 

‘We could see the private players now reduce lending rates to get competitive as many public sector banks like State Bank of India and Andhra Bank have cut rates on select retail products,’ said a banking analyst with a domestic brokerage. ICICI Bank is also doing this to maintain a healthy margin of over 3%, he added.

LIC's 11% SBI stake makes RBI see red

The banking regulator is unhappy with the Life Insurance Corporation (LIC) of India holding more than 10 per cent stake in State Bank of India, the country’s largest lender. LIC stake in SBI was 11.05 per cent, as on June 30.
The Reserve Bank of India (RBI) has conveyed its discomfort to the bank’s management, according to a top SBI official. “These are two big institutions. RBI is not comfortable with two large institutions having a cosy relationship,” the official said.
A top RBI official also confirmed the development. “Any institution that wants to have more than five per cent stake in a bank needs to have our prior approval, even if the stake is acquired from the secondary market,” the RBI official said. “We don’t want the banking sector to have too much capital from volatile sources,” he added.
The move comes at a time when LIC has increased stake in public sector banks by purchasing shares both from the secondary market and through direct equity infusion via preferential allotment. The cash-strapped government had asked LIC to infuse equity into public sector banks so that these lenders could have eight per cent tier-I capital. LIC had infused close to Rs 8,000 crore in several public sector banks such as Punjab National Bank, Bank of Baroda, Union Bank of India, Dena Bank, and Central Bank of India, among others, in the last financial year. LIC’s stake in SBI, however, has been acquired from the secondary market.
Interestingly, the insurance regulator is also unhappy with LIC for its more than 10 per cent stake in several public sector banks, as such a move breaches the single company cap norm. Concerned over the concentration risk, the Insurance Regulatory and Development Authority (Irda) has sought details of LIC’s investment in banks. Nearly 26 per cent of LIC’s equity investment is in banks, while nearly 39 per cent of its equity exposure is in stocks of public sector units.
According to the Insurance Act, equity exposure in a single entity is capped at 10 per cent. Thus, LIC can invest up to 10 per cent of the capital employed by the investee company, or 10 per cent of the fund size in a corporate entity, whichever is lower. The capital employed includes share capital, free reserves and debentures or bonds.
As on March 31, 2011, LIC’s investment corpus stood at nearly Rs 11 lakh crore, of which 20 per cent, or Rs 2.2 lakh crore, was equity. Of that, investments in state-run stocks stood at Rs 85,031 crore, while exposure in banks stood at nearly Rs 59,586 crore.

No pressure from government to cut rates: Pratip Chaudhuri

Mumbai, September 7: In an interview with ET Now, Pratip Chaudhuri, chairman, SBI, talks about the rationale behind their decision to cut rates as well as credit growth targets and the expected NPA levels in Q2. Edited excerpts:
ET Now: Take us through the rationale behind your decision to cut deposit rate.
Pratip Chaudhuri: Yes. Our deposit growth has been very robust from April 1 to August 31. The deposits have grown by Rs 75,000 crore and the loan growth, including commercial paper, has been only Rs 30,000 crore. Therefore, we thought we will try to restrict and moderate our deposit growth.
ET Now: Are PSU banks cutting rates under pressure from the government even though SBI has been the first to do so?
Pratip Chaudhuri: We don't cut rates because of pressure from the government. PSU banks decide their rates on their own. But while deciding the rate, one has to look at the market and the relative positioning of the bank. We adjust the rate looking at the demand. For example, in our case, we reduced the car and home loan rates thinking that the reduction would allow growth in the loan book for cars and homes.
ET Now: But many banks have revised their credit growth targets in light of low demand. Is there is a similar thought at SBI as well?
Pratip Chaudhuri: These targets are not our own. The targets are largely determined and shaped by the volumes you see. It is very easy to move the credit growth target up, but where are the deposits? Similarly, if you get more deposits and there is not enough traction in the credit market, then you have to calibrate it down. Therefore, it is always a function of demand and supply. And I do not think the individual target-settings by banks are anyway meaningful.
ET Now: What kind of loan growth are you seeing and sectors will drive this demand?
Pratip Chaudhuri: For our bank, the biggest contributor has been the construction sector, particularly the contracting firms and companies which are doing work for state government agencies. Next are the electrical machinery and the power sector which are selling their produce to the distribution companies. These have been the two biggest sectors.
There was some worry on the iron and steel front because there were problems as far as iron ore mining and availability of iron ore is concerned. The iron ore mining situation is becoming slightly better. Therefore, we expect the steel sector's raw material availability to rise and their finances to improve as well.
ET Now: Tell us about your asset quality, especially in terms of the power, iron and steel sectors. Which sectors are likely to be the biggest contributors to your NPA situation?
Pratip Chaudhuri: The levels can be known with some degree of accuracy only by the 20th or 25th of the month following the quarter, but we are working hard to control these levels.
ET Now: What kind of NPA levels are you expecting in Q2?
Pratip Chaudhuri: Restructuring pipeline is not very different from the delinquent pipeline. Therefore, for companies that are under stress but have real value asset and want to borrow against that, we are considering extending the tenure of the loans or making available more loans.
ET Now: What is the extent of restructuring that you are expecting in the second quarter? Tell us what the pipeline is looking like.
Pratip Chaudhuri: Under the SBI Act, the minimum government holding has to be 51%. Therefore, I do not think it is right for me to comment because the government's holding percentage has to be determined by the government. I can only tell you that the government has left no stone unturned in capitalising the public sector banks. Last year, they pumped in about Rs 15,000 to 20,000 crore of equity to keep the pubic sector banks well capitalised.
Therefore, I do not think anybody should doubt the commitment and ability of the government to keep the banks well capitalised. But at the same time it is important that the banks generate sufficiently large internal surpluses.

Retirements will create 1.8 lakh vacancies in public sector banks

The banking industry will need to hire 9-11 lakh employees over the next five years, according to a report by Boston Consulting Group.

The report, which includes a survey of about 14,000 customers, 50,000 bank employees and analysis of data obtained from about 35 banks in the country, said about half of the hiring will be due to attrition.

The banking sector is expected to grow at approximately 20 per cent over the next decade and will need major induction of talent, a significant part of which is to replace vacancies arising due to retirements in public sector banks. At the current rate of attrition, the industry will need to hire over four lakh more people.

“We will hire around 6,000 this year,” said Pratip Chaudhari, Chairman, State Bank of India.

Retirements in public sector banks will continue to increase and peak by 2017. In total, 1.8 lakh employees will retire and will be replaced. Depending upon the productivity growth, the industry will need 2.5-4.5 lakh additional people for growth in business.

Saurabh Tripathi, Partner & Director, BCG, said: “Public sector banks will have to double the current intake of employees to meet the talent needs of future.”

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.

Public Sector Banks, including SBI set out on a talent drive

 "Public sector banks in the country face a tremendous 
challenge with respect to talent and leadership skill availability.
Estimates put the manpower shortfall at four to five lakh."

 

Bangalore & Kolkata, August 30: Public sector banks (PSBs) including Punjab National Bank, IDBI, State Bank of India and Bank of India are altering their talent strategies to focus on performance and employee engagement. The banks are also lining up incentives such as paid holidays abroad, leadership and training programmes at top b-schools.

 

"Public sector banks in the country face a tremendous challenge with respect to talent and leadership skill availability. Estimates put the manpower shortfall at four to five lakh," said Padmaja Alaganandan, executive director - consulting at PwC Consulting. Bridging the shortfall requires focus on fast-tracking high potential talent, she added.

 

The increased focus on performance has resulted in top business schools like IIMs witnessing an increase in executive management programmes taken up by banks to understand leadership, strategy, customer orientation and employee engagement. "Although the numbers of PSBs (around 2 per cent) are small when compared to other sectors, we have seen a more active interest in open programme participation this year," says Alex Manappurathu, chief programme officer (executive education), IIM-Bangalore.

 

At IIM-Bangalore, SBI, Bank of India, State Bank of Travancore, Canara Bank, Andhra Bank, Syndicate Bank, Karnataka Bank are among the public sector banks that have participated in open/custom programmes in the last three years, catering to the GMs and DGMs.

 

SBI has effected a complete overhaul of its talent assessment and engagement programmes. There is a new appraisal system. Senior managers will now have a performance review twice a year. The bank has tied up with Harvard Business School for online training programmes for its senior management. "We are now recruiting aggressively. These engagement methods will help us retain our employees and get more to join us," said a senior SBI HR executive who did not wish to be named.

 

Another bank that plans to provide global exposure to its employees is Punjab National Bank that has tied up with a business School in Singapore to train their middle and senior management on leadership skills. Last year, the bank started a grievance portal for employees called "Samadhaan" through which an employee can mail problems related to promotions, or managerial hiccups to the chairman directly.

 

"For junior and middle management, our salaries match the private banks and our attrition is not high," said Sushma Bali, GM-HR for PNB. Nonetheless, the bank is overhauling its employee engagement and performance management processes.

Clerical cadre prone to higher attrition

Mangalore/Coimbatore, August 26: Banks put out impressive recruitment figures in their annual reports. But have you ever thought about the attrition rate in these banks? Shocking but true, in some cases, almost half of those who joined had left within a year.

The clerical cadre has been witnessing high attrition, especially in banks with a regional focus. Bank unions say the attrition rate is nearly 30 per cent in both the officer and clerical cadres.

D N Prakash, President of Corporation Bank Officers’ Organisation, said that the attrition level in the clerical cadre was as high as 45 per cent in a bank at one point of time.

Ask for the reasons, and you get several of them.

According to Prakash, some banks have branches only in particular geographical locations, unlike big public sector banks such as State Bank that have branches across the country. Some of the South-based banks have less presence in the northern region, but most of the new recruits in these banks are from the North. The banks find it difficult to place the new employees in States of their choice. This is one of the reasons why most of them don’t stick on for more than a year.

P R Karanth, Joint Secretary of AIBEA, says that someone who joins bank ‘A’ in the clerical cadre usually gets a good offer from bank ‘B’ in the officer cadre after two-three years. Even if the banks impose any bond during their appointment, they are ready to pay and leave.

To address this, K S Bhat, Secretary of the Syndicate Bank Staff Association, said that weightage should be given to those who work in bank ‘A’ while filling vacancies in the officer cadre.

He said a person from clerical cadre had passed IBPS with 167 marks in his bank. But the cut-off for officers’ cadre was 168 marks. But he got an officers job in bank ‘B’, where he matched the cut-off marks.

Some relaxation for the existing staff would have helped his bank to retain him. “In this process, we lost a clerical staffer and a person with two years’ experience,” he said.

Bhat said that in some States a lower division clerk in a government office gets a better salary than a bank clerk. Compared to banks, the workload and risks in some government offices are lower.

About 10 lakh bank employees to go on strike on 22-23 August

New Delhi, August 21: Around 10 lakh bank employees and officers working in 27 public sector banks including State Bank of India (SBI) and 12 old generation private sector banks and eight foreign banks will resort to two days nationwide strike on 22nd and 23rd August, says United Forum of Bank Unions (UFBU). UFBU is the umbrella organisation of five employee unions and four officer unions of state-run banks in the country.
The Chief Labour Commissioner has called the bank union on 21st August for a conciliation meeting on strike notice, the statement added. The UFBU said it is against the proposed banking sector reforms, unilateral imposition of the Khandelwal committee report and want appointment on compassionate ground.
"The banking reform measures are retrograde but the government is still pursing the same and hence our protest," the statement said.
The Banking Laws Amendment Bill, 2011, which is before Parliament, contains provisions such as raising of shareholders' voting rights from 10% to 26% in private banks and suppression of bank boards.
There are about 87,000 branches of public sector banks across the country. The state-owned lenders control about 75% banking business.
UFBU is opposed to recommendations of the Khandelwal Committee which was appointed by Central Government to suggest changes in Human Resource policies in the banks. Here are the points raised by the UFBU...

1. From 1950s, we have common wages and service conditions.  Now, this committee has recommended Bank specific wage structure based on profitability, productivity etc.
2. All these years we have uniform wage and service conditions.  Now, the committee wants introduction of fixed and variable pay concept.  A portion of wage will be fixed and balance will vary according to performance.  This is impracticable in the banking sector and will result in division of employees and promote sycophancy.
3. The committee has also recommended that settlements with unions on transfer of employees to be reviewed and to give free hand to the managements to transfer employees from place to place.
4. The Committee has suggested 50% of officer vacancies should be filled directly from the market instead of promoting clerks.  This will seriously affect the career of employees.
5. The report says that minimum qualification for appointing a clerk should be graduation.  All these years, matriculates are eligible to join the Banks.  Now, lakhs and lakhs of such unemployed youth will be deprived the opportunity.
6. Similarly, so far, the qualification to join the banks as peon / class IV employee is 8th Standard failed.  The committee says that it should be matriculation.  This is also absurd.
7. The Report says that Banks should not make any appointments in the urban areas but workload in the banks warrants the same.
8. The committee has suggested outsourcing of all the regular bank jobs which is unfair labour practice.

"All these measures are anti-employee and anti-trade union and they are targeted to attack collective bargaining. Further overlooking the settlement the Government is giving unilateral guidelines on various service conditions. UFBU is opposed to such unilateralism," the bank unions have said.
UFBU would held massive rallies in all district places and cities across the country.  Nine unions, All India Bank Employees Association (AIBEA), All India Bank Officers Confederation (AIBOC), National Confederation Of Bank Employees (NCBE), All India Bank Officers Association (AIBOA), Bank Employees Federation Of India (BEFI), Indian National Bank Employees Federation (INBEF), Indian National Bank Officers Congress (INBOC), National Organisation Of Bank Workers (NOBW) and National Organisation Of Bank Officers (NOBO) have given the call for strike under the UBFU umbrella.

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.

Number of ATMs to double; will also accept deposits

NEW DELHI: The government today said banks have been asked to upgrade their ATMs to double-up as cash collecting machines as well to mobilise Rs 11 lakh crore lying as cash with people.
Also, the public sector banks have been asked to double the number of ATMs from about 63,000 in the next two years, Finance Minister P Chidambaram told reporters after reviewing working of state-owned banks and financial institutions.
"People must take to banking ... Something like Rs 11 lakh crore lies as cash in hands of people. That Rs 11 lakh crore money should not lie in hands of people, it should lie in banks," he said.
He said more people will take to banking if there are more branches and facility to draw money whenever needed and put it back into banks when they do not require it.
"Now banks have been advised to quickly upgrade their ATMs to not only cash disbursing machines, but also cash accepting machines.
"Banks should also intensify door-step banking, in bazaars, markets to collect the daily collection of shops in order to mobilise the savings of the people," the minister added.
He further said that public sector banks have about 63,000 ATMs in different parts of the country.
"The goal is to double it in two years. I am confident they will achieve it," he added.
He said upgrading ATMs to cash collecting machines will help in channelising a large part of cash lying with public in the banking system.
"Ideal banking is that money should remain in bank and I can withdraw it when I want....So the ideal is (that) all money should be in the bank," he said when asked what part of Rs 11 lakh crore should be in banks and with public.

Make it easy for students to get education loans, bankers told

New Delhi, Aug 18:  Finance Minister P. Chidambaram has come to the rescue of students facing difficulty in getting education loans. Henceforth, a bank manager will be penalised for “wilful rejection” of eligible education loan applications.
At the same time, it has been decided that students securing admission under management quota will also be eligible for education loans. However, they will get loans only if they meet various criteria such as the minimum required marks, etc.  These steps are part of a new set of education loan guidelines to be issued soon.  They were discussed in a meeting called by the Finance Minister to review the performance of public sector banks.
Addressing the media after the meeting, Chidambaram said, “Bank loan is a right of students meeting all the parameters. That is why each of the applications should be received and acknowledged.”  He announced that officers receiving applications cannot reject them — only a person who is at least one level senior to the receiving officer can do so. Even then, there should be a proper reason given for rejection of the application, he said.

Pulls up bankers’ body
Banking body Indian Banks Association (IBA) has already issued a circular regarding model education loan scheme. This has attracted the ire of the Minister. He showed his displeasure by asking the IBA to issue a revised circular incorporating various changes discussed and agreed upon. He also announced that the Cabinet will consider the creation of a Credit Guarantee Fund in a fortnight. This fund was announced in the Budget this year. This scheme aims to ensure better flow of credit to deserving students.

Bad loans
Talking about Non Performing Assets (NPAs), Chidambaram allayed fears by saying that the rise in NPAs was “not alarming.” Banks are also making adequate provisions for bad debt, he said. During the first three months of the current financial year (April-June), gross NPAs (as a percentage of gross advances) of public sector banks went up to 3.51 per cent from 2.57 per cent. Net NPAs have registered a 1.72 per cent rise, as against the 1.14 per cent rise in the same period of the previous year.

NPAs and bad loans have returned to haunt banks

Mumbai, August 11: India‘s biggest bank, SBI, announced quarterly results earlier this week and the share price tanked. While the bank announced a big jump in net profit, its non-performing assets also rose sharply, confirming that weak growth and slowdown in key sectors such as power and steel were continuing to hit banks.

The fortunes of banks are now more closely entwined with that of big business than before. Loans to top corporate groups account for a significant chunk of all debt. Weak growth, both in India and globally, means the bad loan problem, never far from the agenda, has returned to haunt India‘s banks. And predictably once again, the brunt will be borne by the public sector banks.

SBI‘s non-performing loans, which are a bellwether for the entire sector, were Rs 20,324 crore or 2.22% of total loans (after provisions) for the latest quarter. That might not seem much, but that number was 1.6% a year ago. Many analysts expect worse to come over the next few quarters as corporate India, hit hard by slowing domestic and global growth, feels the pinch.

Sector-specific problems such as the difficulties faced by power plants in gaining access to fuel will also play a significant role since a big chunk of non-performing assets are expected to come from infrastructure. The fortunes of India‘s banks are now more tightly entwined with that of a few big corporate groups which now make up a significant chunk of total loans.

Not all these loans have turned bad, but if slow growth and infrastructure problems remain, then expect a large chunk of these loans to weigh significantly on banks’ books.

ET presents data on the exposure of Indian banks to the biggest corporate groups, based on a report by investment bank Credit Suisse.

They now account for 13% of total loans, up from just 6% five years ago. Indian banks are now reliant for their financial health on a small group of top borrowers….

According to Credit Suisse, “all banks appear to have high exposure to the same select few groups”. Also, most of the investments by these groups are in the same set of sectors – especially power and metals.

These 10 groups account for 70% of private sector power capacity likely to come up by 2016-17.

Government asks state-owned banks to ensure one account per family

In a communication to the public sector banks, the Department of Financial Services in Finance Ministry has asked them to use the latest voter list as a reference for verifying that every household has a bank account.

The banks have been asked that the families must have one account in a bank on Core Banking Solution and having NEFT facility.

Now it has asked the SLBC Convenor banks to provide it with state-wise information on the number of households and the number of saving bank accounts by the 5th of every month.

It further said that since many households would have more than one savings bank account, the “number of saving bank accounts should be over 100 per cent of the number of households, preferably 125-140 per cent”.

As per 2011 census, about 58.7 per cent households had reported availing of banking facilities. Out of the 24.69 crore households, 14.48 crore reported availing banking services. Nearly 10 crore households were not availing the services.

Under Swabhimaan scheme of the government, over 3.25 crore bank accounts in rural areas were opened.

For financial inclusion of the excluded and to facilitate the electronic benefit transfer that banks were advised to ensure opening of one bank account per family.

“Latest voter list of the area concerned may be taken as a reference for verifying that every house hold has a bank account,” the Department said.

Bank staff threaten two-day strike

The All India Bank Employees’ Association (AIBEA), which represents the employees of the public-sector banks, has threatened to go on a two-day strike from August 22, against the government’s proposed Banking Bill, closure of rural branches and other set of banking sector reforms.
In a circular to the members, C H Venkatachalam, general secretary, AIBEA, said “the attacks are increasing and the IBA/government are indifferent to our demands. Hence UFBU has given the call to revive the agitation and struggle programmes. Further, the government is also proposing to amend the banking laws during the current session of Parliament. UFBU has therefore, decided that they should be ready for instant protest strike in such an eventuality”.
“…a bipartite meeting between the IBA and UFBU on July 24, 2012 was held as per the advice of the Deputy CLC. While we have explained all our demands to the IBA in detail and emphasised the need for an amicable solution to the issues, the IBA has remained
unresponsive till date. In view of this, as decided in UFBU meeting held after our discussions with the IBA, we have served the strike notice on IBA,” read the circular.
The main issues include settlement of pending demands, stopping arbitary guidelines of human resource issues, stopping unilateral implementation of Khandelwal Committee Recommendations, a freeze on outsourcing of bank jobs, a hold over banking sector reforms and non-closure of rural branches.
 “It is also learnt that in the ensuing monsoon session of Parliament, the government is proposing to get the Banking Law Amendment Bill passed. The proposed amendments to the Banking Regulations Act and Bank Nationalisation Act are unwarranted and aimed at further de-regulating and liberalising the banking sector with increasing voting rights for foreign and corporate investors, etc. Hence, as decided in our last meeting, all our unions and members are ready for an instant strike if the government would suddenly bring the Bill for consideration by Parliament,” said Venkatachalam.

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.

State Bank to hire 7,740 clerks for Associate Banks

Hyderabad, July 25: State Bank will be recruiting 7,740 clerks to work in its associate banks. According to a notification hosted on SBI's portal, the online registration of applications will begin on July 30 and will continue till August 13, 2012. The written examination is likely to be conducted in two phases on October 7 and 14, 2012.
A clerk in SBI would earn approximately Rs 14,200 a month. A first division in intermediate or a degree from a recognised university is the minimum educational qualification required to apply. Mr C S  Vepa, Director of National School of Banking, a coaching institute for bank-jobs, says that the notification should bring cheer to job-aspirants as the number of vacancies was higher than last year.
Last year, the banking behemoth hired a little over 6,000 clerks. Further, SBI is the only bank now which conducts its own state-wide competitive examination for recruitment. Other public sector banks are using scores obtained by candidates in a common written examination being conducted by the Institute for Banking Personnel Selection for short-listing candidates for interview.