More new banks soon!

Last decade saw a host of new commercial banks. Some continue to be leading banks and some like the Global Trust bank faded away.

We were watching all the major development and credit institutions becoming commercial banks in the late 90s and early 2000. Among them were the development finance institution IDBI and the credit corporation ICICI.

While IDBI was instrumental in building National Stock Exchange of India (NSE), the National Securities Depository Services Ltd (NSDL) among a few others, ICICI was an initiative of the World Bank. These institutions changed roles to become commercial institutions as IDBI Bank and ICICI Bank to become premier banks later.

For this decade, a few more have lined up to become banks. RBI is likely to bring out the draft guidelines for new banking licences soon.

In the race are IL&FS, IDFC, IFCI, Reliance Capital, IndiaBulls, Religare and Aditya Birla Financial Services.

To quote from The Hindu Business Line:

At present, India has 26 public sector banks, seven new private sector banks, 15 old private sector banks, 31 foreign banks, 86 regional rural banks, four local area banks, 1,721 urban cooperative banks, 31 state cooperative banks and 371 district central cooperative banks.

The safer bet is again the bank deposits

When it comes to know about the realities of life, the human beings think beyond their purses. The philosophical head pops up and stabilises the ever-demanding wishes to save, rather possess money and assets.

The natural calamities in Japan have once again reminded the human race to limit their adventurous investment strategies and made them know the level of the ground to set their feet on.

Another reason to have a second look at the bank deposits is the sudden hike in Repo and reverse Repo rates by the RBI.

The Financial Express says:

While going for the hike in rates, RBI pointed out that the risk to inflation remains clearly on the upside arising from domestic fuel prices and higher manufactured non-food products. In fact, in the past one year, private and public sector banks have hiked deposit rates by over 150 basis points across various tenures, and investors are finding it profitable to invest in schemes with short maturity period of less than 180 days.

So what do the people do who have just invested a few weeks ago and missed the opportunity of revised and increased rates?

One option is extend the term of your deposit so that you enjoy the interest rate applicable at the time of extension becomes the new interest of your deposit.

With the fully automated condition, this may be a lot more easy for the bank staff to do. But, in those times of manual entries, calculations and extensions, it was a nightmare for most of the staff and the officer checking the calculation used to find it risky!

And the deposit receipt with all alterations in  dates, rate of interest with the signatures authenticating the revisions used to look like a fake document for a lay man!

Times have changed, but the interest for the Bank deposits by the public keeps coming bank. The trust remains with banks finally.

 

 

Canara Bank’s new Chairman wants ‘a bit more’ international presence

In an interview to The Hindu Business Line, Canara Bank’s new Chairman tells about the challenges, strengths, opportunities he feels and looks forward to at the bank.

Yes, the bank’s USP is customer service. I have known the bank from outside as a very personalised bank. I have served the bank with customer service in mind. I have seen my superiors always spoke about ‘Customer first’ at every small and big meetings.

A military pensioner was as important as a corporate client. An illiterate received a similar treatment as that of a professional. It was all till the automation, in my opinion. Now, I still bank with this bank, but look at the staff at the counters and the persons in charge of the branches with pity, seeing them stare at the machines rather than smiling at the men!

Notwithstanding my opinion about the bank of the present days, the interview with the Chairman of the bank is quite interesting and informative. For the new entrants there is a short course on Net Interest Margin (NIM) in the interview.

NIM is also reflective of the types of economies. In developing countries, NIMs are bound to be higher, and in forward economies, it will be lower. Economy is also slated to grow by 8.5-9 per cent. When this happens, there will be demand for money. The price could be slightly higher, in which case, of course, there is no problem for the banking industry.

Read the full interview online here….

Banks too shy away from Mutual Funds…

Anything that is beyond a limit is dangerous. It is an old saying. It applies to even banks investing in various options!

The ‘big monitor’ of funds employed and invested by banks has advised the banks to ‘to put internal limits on their exposure to mutual funds’.

Why such a measure?

Obviously, the funds are blocked in investments, rather fluctuating investment and are not available for the main purpose banks function – to lend.

Once upon a time, the banks solely depended on deploying the funds in loans, major industrial and infrastructure projects, etc. They were investments, at the same time, were considered helping the development of the nation. A project finance cell in a bank dealt with the National Highways, Toll bridges, railway line conversion projects and other major industrial projects. The long term lending in such projects helped the banks in deploying the funds in a more constructive way.

Now, with the focus on returns and the promises to the investors of higher returns have made the banks to turn towards the stock market linked options. This curtails the commercial and infrastructural lendings.

From the pages of Financial Express:

The move from the RBI came after a consistent increase was seen in mutual funds holdings of commercial banks over the past few months. As credit off-take weakened due to the impact of the last year’s economic crisis, banks parked funds in mutual funds.

More reading here…

 

One bank’s culture is other’s pit

Rolling stones do gather mass these days. Frequent rollers gain much more.

That’s the reason people roll out of one particular workplace to another. That reason of getting a fatter packet. That reason of a year’s experience is considered great by the other workplace, especially banks. Any experience in banking is good for the next job!

So, if experience helps, how does the culture affects one’s opportunities?

Here is it..

HDFC Bank’s HR Head Mandeep Maitra, opens a Pandora’s box!

Talking about a large-scale exodus of staff from ICICI Bank to HDFC Bank, the latter’s HR Head Mandeep Maitra said in a recent interview to a magazine: “Of course, the first thing I ask is ‘how many of you are from ICICI Bank? I do not want that culture out here.”

Taking exception to the comment, ICICI Bank has issued a notice to Maitra at her residence address, while asking her to tender a private apology to it.

Of course, a ‘bad’ culture spreads faster than a ‘good’ culture. This is true to any industry, not just banking.
Instead of asking a question as to where did the candidate come from, the best option is to lead by example. That’s what the great leaders have done in the past!