Should Banking get back to basics?

V. H. Ramakrishnan, who retired as General manager from Bank of India laments about the ‘herd attitude’ among the banks.

He says,  of late all the Banks tend to do the same if one bank starts a particular service or trend, such as:

Keeping the branches open  on all seven days of the week
Off-site  ATMs
Merchant Banking subsidiaries and Mutual funds
Setting up an insurance company with foreign participation

But do all these services require highly qualified professional?

If yes, should they have a basic qualification in Engineering and a masters is Business administration? But will the pay-packet for these professionals be a hefty one? How long will these professionals stick to nationalised banks?

There are many unanswered questions. But, how are the old time managers behaving now? I mean at a time of changed challenges in the industry!

As pointed by the General Manager (Retd.,) they do not like to see the face of the customer at the branch. The computer monitors replace the real faces.

In the name of innovations in the Banking industry, there are no new methods to look at a credit proposal from a different angle. There are no experts to study the behavior of an industry in the wake of opening up of the economy. The procedure of processing any kind of credit application is the age old method of going by the ratios. The computer monitors are not looked at for the comparative study of the businesses across the countries. Instead they are used as replacement of the traditional typewriter. Now the proposals are printed on the continuous stationery instead of the Bank’s pre-printed letterhead!

It is time the banks woke up to resolve doing the ‘real’ banking like the Imperial Bank and the Canara Bank Ltd. once upon a time. When just accepting deposits and lending were the only banking activities, quite a few banks came up with a lot of innovative ideas which are still holding good.

But no bank came up with an idea of putting up a cafe or a gym. If you call those banks were conservative, the cafe idea is in no way an innovation to the banking system!

IMP. NOTE : This blog was started on Sep.17, 2005. The above post is typed and inserted into this blog from my diary entry of the even date.

Banking on a weak system?

The Joint Parliamentary Commission (JPC), at last declared that the supervisory role of Reserve Bank of India is weak and ineffective.

Talking about  the diversion of funds to stock markets by smaller and co-operative banks, the JPC report comments that a good regulator should have anticipated the diversion of funds.Though it is more than a year The Madhavpura Mercantile Co-operative Bank (MMCB)came under in a huge scam, the JPC’s pointing out the circular issued by RBI itself for formation of Audit Committees both in MMCB and City Co-operative Bank, way back in 1994 should be an eye-opener to the RBI. And that these Banks did not form the committee till they collapsed is not at all monitored!

The case of City Co-operative Bank is still worse. Even after having a glimpse of lapses in 1999, RBI issued permission to open four more branches in February 2001.

Who is the RBI trying to convince? Why should the general public who invest in small proportions in these co-operative banks be affected at the end of the day? Can there not be a full stop to licenses once the lapses are noticed?

And a final question – Is the country banking on a weak system?

IMP. NOTE : This blog was started on Sep.17, 2005. The above post is typed and inserted into this blog from my diary entry of the even date.