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 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.

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….

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…

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!

But, why is this situation?

Ever since the farm debt waiver was announced in the last budget, there have been debates on the profitability of PSBs. But the Finance Minister P. Chidambaram was seen reiterating that ‘the farm loan waiver will strengthen banking‘

Again on the recent inflationary trend, the loans have become costlier and the banks have lost out on the retail and small lending where the recovery has been fairly on time. The low-cost deposits with the banks are sliding down, as number of people with surplus money on hand coming down fast. A small businessman has to close down his low cost deposits on the first attempt and then go for loans as the interest rates on loans have gone up badly.

The Business Line analyses why and how the banking stocks have hit the low. Read it here.

With all the issues from the vegetables in the market and the stocks in the international market zeroing in on inflation, it is now time that inflation is brought under control. The government need not plan much for the elections if this trend is arrested as the voters will give the government 100% rating and bring them back for sure.

Any financial bites begin with Mumbai normally. Strangely FC chose Hyderabad and Bangalore for their first release of the financial daily. And more surprisingly Chennai came next.

From last week the daily toed up with International Herald Tribune and the Mumbai edition will have a four page pull out of IHT, says the press release.

The Financial daily has its e-version here.

It was in the 1980s, the recruitment in the Public sector Banks was in bulk numbers. Though SSLC was the minimum qualification for a clerical job in a Bank, the examination conducted by the Banking Service Recruitment Board (BSRB) was of a little higher standard that mostly the graduates are students in their final year of graduation could only make it to the next level.

The boom in the youngsters’ ratio in the employees cadre increased the enrollment for the CAIIB exams conducted by the then Indian Institute of Bankers, now Indian Institute of Banking and Finance.
the main reasons were :

1. The fresh-out-of college kids could crack the exams easily.
2. The increment in basic pay the Banks granted for completing every stage of the exam (One increment for CAIIB Part 1 and two increments for Part 2)
3. The quick climbing up to the next cadre. Those who completed both parts of CAIIB were eligible to appear for the Officer’s exams two years before their other colleagues could do so)

The CAIIB exams have evolved now to online as JAIIB and CAIIB. Still with a commitment to make the employees better learned crowd.

The idea of B-School graduates and F-Schools have come in much later.
The CFA program by the ICFAI was popular among the bank officers, though the course fee was a bit higher than these officers could shell out for a certification. Later, the label of this program came under dispute with CFA Institute.

Then came a time when banks started hiring top-brand B-School grads. The pay packet however was not to the expectation of the MBAs. So these grads quit quickly to be in their choice of businesses.

But, now, why blame it on the course module saying that it is not a B School certification but a F-School certification is what would go with the Banks. In my opinion, the need of the hour is the adaptability of an individual to the changing trends in the Banking scenario. And the traditional CAIIB, which is an on-the-job learning and training for the bankers is what will go with the need of the banks. The course is designed to elaborate and learn more on what the bankers do on a daily basis at their work place.
But this course should also evolve with the changing times and generations.

The operation is yet to take place and we still keep reading that these two countries plan to open the branches.
Blame it on . . .?

Managing the giant size, its operations?
Managing the enormous human resources?
Or framing the policies and updating them periodically?

Actually, none of these is difficult. With the automation, managing any kind of assets and resources is just at the click of a button. Even the MIS need not be physically presented to the management. They can read the reports online when they are prepared.

But handling the heights could pose a touchy problem – about the missing human touch!

“If the keyword is trust, PSBs are way ahead. If the keyword is growth, it’s private banks. Once manned by humans, banks, if Capgemini’s 2006 Retail Banking Report is to be believed, “are losing the human touch”. Technology, which was supposed to make things easier for us, has morphed into a new monster that bites us, bleeds us, irritates us and creates delicious profits for investors.”

We enjoyed interacting with people from different walks of life. At a town like Vellore in Tamil Nadu, where the well-known Christian Medical College is situated, we happened to meet the ‘patients’ from different states, medical representatives from various companies – small and big and doctors, their family. Some used to share the story, some were happy to speak in their mother tongue if the staff knew their language. Good wishes were exchanged.

If you have not read this previous post, you should do it now.I consider those moments very memorable ones in life!