ALL INDIA

ALLAHABAD BANK

OFFICERS’ ASSOCIATION

FOR PRIVATE CIRCULATION ONLY

VOL. : 18

N0. : 02

FEBRUARY 2018

EDITORIAL BOARD

CHAIRMAN

EDITOR

MEMBERS

:

:

:

BISWARANJAN RAY

P. ANAND

ALL STATE SECRETARIES

AINBOFOFFICIAL PUBLICATION OF

EDITORIAL…

PRESS RELEASE BY AIBOC DATED 22.02.2018STOP THE BLAME GAME- LET RBI & FINANCE MINISTRY OWN RESPONSIBILTY

“Much is talked and written about scams in the Banking sector after the Nirav Modi Scam in PNB. Why RBI, Finance Ministry, CVC and others wake up only when a major scam surfaces ? Why we are not analyzing the failure of the system? What is the role of the Govt and its policies which cause system failures and scams? There have been Harshad Mehta Scam, Ketan Parekh Scam, and the NPA scam (not declared as scam by the Govt or RBI) due to misuse of the loopholes in the system. In this case, when a Buyer’s Credit is available for importers why at all RBI introduce Letter of Undertaking which is not in vogue among foreign banks? What was the necessity for RBI to encourage imports by helping the borrower to get cheaper credit abroad instead of helping Indian Banks to increase them credits which would give better taxes for the country ?

It is a well known fact that the SWIFT has been used for frauds from the nineties and there are many reported hacks of SWIFT . Why RBI and the Govt did not intervene to correct the system?

What happened to Supervision and Audit? Why RBI failed in supervision? Is it because RBI has been busy with other things like demonetization ? They are still counting the notes ever after a year! Has RBI lost its autonomy ? In what way the Chief Economic Advisor has improved the economy? He is talking about Privatization ? Does he want to handover the Banks which have been looted by the Corporates to them so that they can loot more? We need better banking, better reporting, better supervision and better technology in aid of these. What we need is to ignore the cry to privatize PSBs, as if ownership uniquely determines ethics and efficiency. The popular chestnut is that PSB are structurally vulnerable to poor governance, resulting in the run-up in NPAs. Data, yet again, militate against the hypothesis.

While there might be cases of fraudulent behaviour, they are not the overwhelming cause for the accretion of NPAs in PSB. Second, cases of governance breakdowns are not a monopoly of PSB— globally and in India, many privately- owned banks have been regularly identified with such errors of omission and commissions. Global regulatory fines on banks run into many billions of dollars every year.

The Economic Survey 2016-17 studied the causes of the large NPA build-up in PSB. A very large part of it can be attributed to a growth- induced credit bubble, followed by macroeconomic and regulatory issues that burst the bubble rudely. Corruption and malfeasance were not identified as a key variable. In 2008, a raft of European and American banks, all privately owned, had to be bailed out by governments. The list of institutions bailed out included some of the best known brands in the business. The financial crisis of 2007 -08 was the result not of public sector sloth and corruption but of private sector greed and poor regulation.

Lehman Brothers went belly up, without any state ownership. Royal Bank of Scotland and Barclays avoided collapse by taking government equity. It is not ownership but the quality of regulation, reporting and management that determine banking efficiency. Closer home, privately- owned Global Trust Bank and Bank of Rajasthan had to be rescued with state support. The reason for the above is quite simple —banking isn’t the same as soaps, or steel, or hotels. In India, the political economy circumscribes the quality of regulation and internal control policies at banks. It is important to appreciate this while fixing responsibility for the bad loans and large frauds at public sector banks. The TARP or Troubled Assets Reconstruction Program strategy of the US government to bail out US banks in 2008 cost approximately $800 billion. How much has the Government of India spent, over the years, on PSB bailouts? How does it compare with the rest of the world?

Contrary to the popular narrative, Indian banks (predominantly PSB) have required very little bailouts over the years, compared to the rest of the world. Both in terms of direct fiscal costs as well as indirect costs to the economy, banking bailouts in India have been quite modest in terms of their impact. An IMF Working Paper on Systemic Banking Crisis, covering all banking and sovereign crises between 1970 and 2011 brings out the data starkly. The average fiscal cost of bank bailouts across the world was 6.8% of GDP between 1970 and 2011. For emerging economies, the cost was 10% of GDP. For India, in the same period, bank bailouts cost far less than 1% of GDP, a negligible amount. The current PSB recapitalisation plan announced by the government, amounting to Rs 2.11 lakh crore over two year s, would account for less than 0.5% of current year GDP, and less than 0.25% annualized for two years. Further, India’s bank bailouts have extracted far less cost out of the Indian economy than bank stress situations elsewhere.

Despite a sticky systemic NPA issue with PSB for five years, we have had no run on a bank, no stress in the money markets and limited impact on growth. While there are many reasons for this, a big reason has been state ownership of the banking system. It has meant that bank liabilities have implicit sovereign guarantee, which maintained confidence of the markets in the banking system. The country is struggling with mounting unemployment. The Banks have money but they are scared of lending. They are investing the funds in safe bonds where they are losing interest. Net result is that the Economy is not growing. Employment is not increasing. What is needed is to have a relook at the policies. It is high time to redirect credit towards Agriculture, Horticulture, Food Processing, small and cottage industries which will increase employment.11643 borrowers in the country have availed 38% of the total loans given by Banking Sector as on March 2016. Just 12 NPA A/cs have an outstanding of Rs.250000Cr. 84% of the NPAs belong to Corporates. Every year banks are writing off thousands of crores for this corporates which is the biggest scam. FICCI and Assocham should ask them members to be honest and repay the loans instead of demanding privatization.

RBI is not willing to publish the list of NPA borrowers. The RBI is the one which introduced CDR, SDR, S4, AQR and PCA. None of them have helped the Banks but they have helped the Corporates to loot. With the revised norms the Banks will have to declare Rs.2 lakh crores more as NPAs and provide 50% provision for them. This is going to make all the Banks in the country to become red. This will lead to a financial crisis like the US crisis of 2008. The Govt. may announce a Financial Emergency and handover Banks to the Corporates. This will be a danger to Democracy itself.

What is needed is reversal of the Economic policies, credit policies and NPA norms and bring in transparency. Why accounts with security should be provided 100% provision for NPA in two years?

Why the present Govt. has not appointed officer Directors and Employee Directors, in the boards of the Banks, which are mandated by law? They have scant regards for law itself. Why Banks are forced into other activities like Aadhar Linkage, Aadhar enrolment, selling pension scheme of Govt, Cross Selling which often is mis-selling? These are major reasons for weakening supervision. Why the MD of PNB was sent to Allahabad Bank and why another person was appointed as MD of Punjab National Bank? What is Mr. Vinod Rai doing in BBB?

Rather than fixing accountability from the top why 18000 transfer orders were issued in a hurry? The CVC guideline can be implemented in a phased manner. It could have been implemented after annual closing. Who is responsible for the mid academic disruptions to the education of children of the employees? Why RBI is still hesitant to Publish List of Defaulters and allow them to run away from the country?

Why the Prime Minister takes with him the businessman on foreign tours who are known for misuse of the system/ Why the same set of businessmen get contracts abroad?

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Why these businessmen are show cased abroad and why they are selected by the PMO & Finance Ministry instead of Industry Associations which was the practice earlier? Three important steps are needed immediately to save the banking sector and the economy.

One : Publish the names of defaulters of the Banks and ask banks to write to the home Ministry to make entry in the passports of the Board of Directors of these Companies “Emigration Clearance Required” so that they don’t run away like Vijay Mallaya, Jatin Mehta, Nirav Modi and Mehul Choksi.

Two : Have a relook at the NPA norms. Why all accounts which have a default of 30 days be declared as NPA? Why not look at the reasons, scope for recovery, security etc. ?

Three : Appoint Officer Directors, Employee Directors and Nominee Directors immediately and allow them to play a watchdog role. Remove RBI Executives and Finance Ministry Officials from the Boards of Banks as they are Supervisors and they can’t supervise themselves. It’s time for a wakeup call.”

GENERAL SECRETARY, AIBOC

NEW OD SCHEME FOR PROBATIONERS

Following the constant efforts, by the Association, the Bank vide HOIC No. 15502 dated 15.02.2018 extended the Over Draft loan facility to those under Probation as follows : Officers Rs.200000 Clerical Rs.100000CRESCENDO, while thanking the concerned authorities in this regard, strongly insists for extending some additional facility to Officers / Employees, who invested in ESPS, while outstretching their means, by raising some short term hand loans from close relatives or by diverting their hard earned savings earmarked for certain other impending needs, viz., Housing /Marriage /Education /Hospitalization, etc.. -----------------------------------------------------------------------------------------------------------------------------

CLASSIFICATION OF BRANCHES AS ON 01.01.2018----------------------------------------------------------------------------------------------------------------------------- AS ON HOIC DATE SC-I SC-II SC-III SC-IV SC-V SC-VI /VII TOTAL 01.04.2012 11859 (24.04.2012) 146 864 1122 289 90 4 1 2516 01.04.2013 12372 (01.04.2013) 266 902 1068 313 91 3 0 2643 01.04.2014 13034 (30.04.2014) 280 992 1144 235 103 3 0 2757 01.01.2015 13524 (22.01.2015) 389 816 1432 287 120 7 0 3051 01.01.2016 14150 (15.02.2016) 462 909 1381 314 111 6 0 3183 01.01.2017 14819 (25.01.2017) 340 926 1467 384 122 6 0 324401.01.2018 15486 05.02.2018 590 829 1463 283 77 5 0 3247

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EMPLOYEE SHARE PURCHASE SCHEME

E & O E(In Lacs)GRAND TOTAL

-----------------------------------------------------------------------------------------------------------------------------CATEGORY OFFERED APPLIED /FUNDED PERCENTAGE NO. AMOUNT NO. AMOUNT NO. AMOUNT-----------------------------------------------------------------------------------------------------------------------------SUB STAFF 4037 72635604 3221 495.31 79.79 68.19CLERICAL 6351 428216175 5351 3059.29 84.25 71.44

10388 500851779 8572 3554.6 82.52 70.97

JMGS-I 7057 894538263 6672 7765.80 94.54 86.81MMGS-II 3190 473188650 3068 4427.86 96.18 93.58MMGS-III 2464 531632640 2389 4998.50 96.96 94.02

12711 1899359553 12129 17192.16 95.42 90.52

SMGS-IV 779 210096300 767 2041.45 98.46 97.17SMGS-V 192 59549760 189 582.15 98.44 97.76TEGS-VI 63 19879587 63 198.80 100 100TEGS-VII 19 6200403 19 62.00 100 100ED 2 706614 2 7.07 100 100MD & CEO 1 356004 1 3.56 100 100

24155 269.70 Cr. 21742 23641.78 90.01 87.66

CRESCENDO conveys heartfelt appreciation to the Members of the Association for their splendid commitment and dedication, despite financial constraints in ensuring such good show in the ESPS.

The above Norms which were revised earlier, vide HOIC No. 10404 dated 07.03.2009 ; vide HOIC No. 13034 dated 30.04.2014 & vide HOIC No. 14150 dated 15.02.2016, have now been revised vide HOIC No. 15486 dated 05.02.2018, as under :

2009-2014 REVISED (2014) REVISED(2016) REVISED(2018) HOIC 10404 HOIC 13034 HOIC 14150 HOIC 15486

Small Up to 5 NO CHANGE Up to 7.5 Up to 15 Medium 5-25 5 - 30 7.5-30 15-40

Avg.Adv. 5 Large 25 -75 30 -100 30-100 40-100

Avg.Adv. 8 Avg.Adv. 12 Very Large 75-225 100 -250 100-250 100-300

Avg. Adv. 15 Avg. Adv. 20 Avg.Adv. 25 Avg.Adv. 40 Except Large 225 -3750 250 -4000 250-4000 300-4000

Avg. Adv. 45 Avg. Adv. 50 Avg.Adv. 60 Avg.Adv. 100 Extra Except Above 3750 Above 4000 NO CHANGE NO CHANGE

Thus it can be appreciated that the vacancies for the ensuing Promotion process are expected to be reduced / constant and mostly the Promotions may take place against the retirements only. Also the Management has been resorting to these amendments unilaterally and without taking the majority Association in to confidence which is a serious issue concerning the Association, as Promotion is one of the important welfare measures as far as the Officers are concerned. Also keeping in view the terms of TAP / PCA, big ticket advances and also big ticket Deposits are a clear luxury in the Bank and the average business growth of the Branches / Bank can not be expected to keep pace with the above upward revision of the criteria for the Classification of the Branches.

BANK DECLARES LOSS FOR THE DECEMBER QUARTER : RS. 1264 CRORES

9M 2016 9M 2017 9M 2016 9M 2017DEPOSITS 209339 211086 ADVANCES 152583 161792AGGT. DEPOSIT 207470 209237 LARGE INDUSRTY 43444 39701BULK DEPOSIT 22519 4164 MSME 28879 31567SAVINGS 79322 83575 AGRI. & ALLIED 26785 27264 CURRENT 12111 10882 RETAIL ADV. 16473 19847TERM DEPOSIT 116036 114781 OTHER ADV. 37002 43411INT. INCOME 13288 12582 INT. EXPENSES 9362 8738NON INT.INCOME 1911 2210 OTHER OPR. EXP. 1288 1345STAFF COST 1748 1394 PROVISIONS 3226 4480OPR. PROFIT 2801 3315 NETT PROFIT (-) 425 (-) 1165Thus it is evident from the above that the vital parameters, viz., Retail Advances, Reduction in Bulk Deposits, Retail term, MSME, Reduction in Advances to Large Industries, NFNI, Operating Profit, etc.. are quite encouraging, indicating that the Branches are by and large contributing to the prosperity of the Bank. BRANCH - NO. INCUMBENT FEB.2017 MAR.2017 FEB.2018 Y-Y VARIATIONJMGS-I 462 5801 6290 8036 + 2235MMGS-II 909 33804 34945 37967 + 4163 MMGS-III 1374 106379 109172 114807 + 8428 SMGS-IV 312 67549 68805 70931 + 3382 SMGS-V 110 86202 90685 85385 (-) 817TEGS-VI 5 20502 25420 13294 (-) 7208HONGKONG 1 13266 14325 14812 + 1546 OTHERS 75 322 399 960 + 638

3248 333825 350041 346192 + 12367

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The above Business details as per Branch incumbency levels, indicate that due to 115 Branches, the performance of other 3133 Branches is pulled down and the resultant pressures are shifted to the Branches headed by MMGS-II & III mainly. On the other hand, the Branches headed by AGM / DGM are facing the issue of lack of suitable manpower to deal with the big ticket business.

(In Rupees Crores)

BUSINESS IN RUPEES CRORES

ZONAL MANAGEMENT RELATIONS COMMITTEE MEETINGS BAHRAICH : The Zonal Level MRC Meeting was held at ZO, Bahraich on 01.02.2018 in which the Association was represented by the General Secretary, AIABOA, Com. Abhilakshit Kaushal, the State President, UP-Central, Com. Ram Nath Shukla, the State Secretary and the Zonal Representatives, Com. V K Gupta, the Zonal President & Com. Ashsish Gupta, the Zonal Secretary. The Management was represented by Sri Mukesh Gaur, the Zonal Head and others. The General Secretary also had interaction with the Officers, who assembled from nearby Branches in large numbers.

KANPUR : There was Zonal MRC Meeting at ZO, Kanpur on 02.02.2018 in which the Association was represented by the General Secretary, AIABOA, the State President, UP-South, Com. Rajesh Srivastava, the State Secretary & the DGS, AIABOA, Com. Siddhanath & the Zonal representatives. The Management was represented by Sri Ashok Patnaik, the DGM and other Officials.

HAMIRPUR : On 03.02.2018, there was Zonal MRC Meeting at ZO, Hamirpur in which the Association was represented by the General Secretary, AIABOA, the State President & the State Secretary, UP-South, and the Zonal Secretary, Hamirpur, Com. Sunil Kumar Yadav. The Management was represented by Sri Rajesh, the Zonal Head and other Officials. There was overwhelming response to the Leaders from the Members of the Zone, who provided a grand reception. The media persons were also present in good numbers. The Unity among the Officers towards the Association as well as the Bank can be evident from the fact that the recent ranking of the Hamirpur Zone has been at the top.

ALLAHABAD : The Zonal MRC Meeting was held at ZO, Allahabad on 05.02.2018, in which the Association was represented by the General Secretary, AIABOA. Com. M.P.Singh, the State Secretary, UP-East & the Vice President, AIABOA, Com. Ram Nath Shukla, State Secretary, UP-Central and the Zonal representatives. The Management was represented by Sri Harimohan, the DGM and other Officials.

LUCKNOW : The ZMRC Meeting was held at ZO, Lucknow on 06.02.2018, in which the Association was represented by the General Secretary, AIABOA. Com. Ram Nath Shukla, the State Secretary, UP-Central, Com. Anjani Pande, the Deputy State Secretary & Com. Namit Sharma, the Zonal Secretary, Lucknow. The Management was represented by Sri P. K. Arora, the DGM, Sri D S Reddy, the AGM, ZO & other Officials.

KOLKATA METRO : The ZMRC was held at ZO, Kolkata Metro on 22.02.2018, in which the Association was represented by Com. Biswaranjan Ray, the President, AIABOA & the State Secretary, WB State, Com. Anand Rao, the General Secretary, Com. Debashish Mitra, the Zonal President & Com. Amitab Mallik, the Zonal Secretary. The Management was represented by Sri P S Chakrabarty, the DGM & others.

FAMILY DAY AT CHENNAIThe Tamilnadu / Puducherry /Kerala State unit organized a Family Get-together at Jade Beach Resorts, Country Club, Chennai on 18.02.2018, in which more than 35 families participated. The entire day was enjoyed by the Members with their families, which should have provided much needed relief and recuperation from the daily chores of the Banking activities. Such outings may be planned by other State units also, which further cement the bonding between the Members, under the proud banner of AIABOA.

CRESCENDO records appreciation for the State unit, led by Com. Suresh and Com. Rajan.

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ACADEMIC ACTIVITIES OF STATE UNITS

Tamilnadu / Puducherry / Kerala State unit known for its academic activities aimed at enriching the Members, conducted a One day work shop on Balance Sheet Analyses at AIBOC Bhavan, Ernakulam on 11.02.2018, for the benefit of the Members from Kerala State, which was attended and addressed by the General Secretary, AIABOA. The faculty mainly included Sri T.L.Sudhindar, the DGM, Chennai. The State President, Com. K Suresh and the State Secretary, Com. MSK Rajan deserve appreciation for their consistent efforts.

AP / Telangana State unit has been organizing exclusive sessions at all the important Centres of the Zone, viz., Vijayawada (on 04.02.2018), Visakhapatnam (on 10.02.2018, which was attended and addressed, by the General Secretary, AIABOA) ; Tirupati (on 18.02.2018), Warangal (on 24.02.2018) & Hyderabad (on 25.02.2018 which was addressed by the FGM, Sri N N Saha) on Documentation & DeVA mechanism. The sessions were handled by the Officials looking after DeVA at ZO, Hyderabad and FGMO, Hyderabad and Com. PJV Anand Pani, the State Secretary. The State President, Com. S Mahender Reddy & Com. Anand Pani, the State Secretary deserve appreciation for their efforts.

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GENERAL MEETING AT AHMEDABAD

The above was held at Hotel Royal Highness, Ahmedabad on 24.02.2018 which was presided by Com. Abhishek Srivastava, the State President, Gujarat. The Meeting was attended by Com. Biswaranjan Ray, the President, AIBAOA, Com. P Anand Rao, the General Secretary & Com. Ram Nath Shukla, the State Secretary, UP-Central & the Assistant General Secretary, AIABOA. The DGM, Ahmedabad, Sri Shyamshankar was the Chief Guest for the occasion. The Meeting was attended by large number of Members including Lady Members, from many parts of the State. The State Secretary, Gujarat and the Deputy General Secretary, AIABOA, Com. Advait Malhotra and Com. Rakesh Pandey, the Deputy State Secretary had also occupied the dais. The State President while welcoming the dignitaries gave a brief account of the Membership in the State and also the activities of the State unit.

The DGM congratulated the work force of the Zone for their commendable performance in the recently concluded Mission of Housing loans. He recollected his old association with the Officers’ Trade union movement and also the sacrifices of the earlier leaders. He urged on the House to appreciate that every benefit, being enjoyed by the Officers today owes to the relentless efforts of the Officers’ Association. He expressed his confidence that the Officers under the banner of the AIABOA will continue to strive hard for the prosperity of the Bank.

The President, AIABOA shared with the House the latest prevailing situation at the Industry and also at the Bank in detail and urged on the Members to maintain unity under the banner of AIABOA / AIBOC. He explained in detail the issues related to the ESPS and also the genuine problems of many Members in raising the finances for investment in ESPS. He appreciated the Members for attending the Meeting in such large numbers which provides lot of inspiration to the leaders.

Com. R.N. Shukla shared with the Members how much the leadership has to struggle in order to ensure the comforts of the Members. He explained how the political situation in the Country adds pressure on the Bankers. He urged on the Members to continue to concentrate on Retail business of the Bank.

The General Secretary, AIABOA shared with the House the priorities of the Association viz., Ensuring timely completion of Promotion process and the Transfer exercise this year by May, 2018, Amendments in Transfer Policy with regard to the Circle concept, Avoiding unnecessary Late sitting at Branches / Offices which saves crores of Rupees for the Bank besides ensuring proper health care for the Officers, Review of Staff Housing Loan scheme, Repatriations. etc.. He shared with the House that the recent amendment in Promotion policy in allocation of 5 marks for the Branch exposure for promotions from JMGS-I to MMGS-II & from MMGS-II to MMGS-III, was solely due to the untiring efforts of the Association. He appreciated the young leadership of the Gujarat State and wished them every success.

Com. Rakesh Pandey, the Deputy State Secretary who also spoke on the occasion thanked the Central Leaders for their visit and assured them the Gujarat State unit will be in the forefront in implementing the action programmes of the UFBU / AIBOC / AIABOA.

In the afternoon session, the members actively interacted with the Central leaders on many relevant issues concerning the Bank and the Officers.

CO-OPTIONSOn 18.02.2018, the State Committee of Bihar during its Meeting held at Begusarai, co-opted Com. Sanjay Lath, Bhagalpur, as the State President in place of (Late) Com. Ravindrakumar. Other Co-options are:1 Abhinavkumar, ZO, Bhagalpur as Assistant State Secretary2 Tripurari Prrasad, Lakhisarai Branch, as Organizing Secretary

3 Dharmendra Jha, Muzaffarpur 4. Pramodkuma Singh, Bhagalpur University5. Mithilesh Kumar, CRBB, Patna 6. Ranjit Kumar, Muradpur, Patna7. Lal Babu Gupta, Khanwa (Patna zone) 8. Subodhkumar, Mahua (Muzaffarpur Zone)CRESCENDO congratulates tha above and wishes them a successful tenure.

VISIT TO COM. K P RAI AT ALLAHABADThe General Secretary, AIABOA, Com. P Anand Rao, along with Com. M P Singh, the State Secretary, UP-East & the Vice President, AIABOA and Com. Dinesh Choubey, the Zonal Secretary, Allahabad, paid a courtesy visit on 04.02.2018, to Com. K.P.Rai, the Founder General Secretary of the AIABOA and the Officer Director on Bank’s Board who retired from the Bank in the year 1998. Com. Rai who was instrumental in grooming the General Secretary during the period 1984-92 at Patna, wished the Association every success in its endeavours.

COMMITTEE MEMBERS :

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“I wish to draw your attention on the happenings in the Banking industry that when the CBI, ED were busy searching Mr.Nirav Modi’s business establishments, all the stake holder representatives in the Banking field busily looking for reasons to shirk their responsibility, media and public are actively slapping the entire blame on the bankers, innocent bank officers are keeping their fingers crossed wondering on their futures, the HR wings of the Banking industry busily involved in transferring the officers and employees, unminding its immediate negative impact on the business during the last month of the financial year, with the sole objective complying the CVC directives.

If the fraud in PNB has shattered the morale of Bank officers and employees, the CVC direction on transfer has shattered confidence level which ultimately questions the very existence of the Banking sector.

Sir, In this regard I wish to present the following few facts for your kind information and needy action.

1. The Public Sector Banks are in existence for the last 100+ years and have developed a time tested promotion and transfer policies which are strictly being followed as ritual every year in the banking industry.2. In fact, when an All India Civil Service Officer is allotted to a particular state at the entry level itself to spend his entire remaining service in the particular state, it is only the bank officer who is subjected to All India transfers in every cadre and has to be branded as All India service officer in true sense.3. The Government interference in suggesting the compulsory rural service, branch service and job rotation and similar stipulations linked with the promotion have, every year, resulted in large scale transfers throughout the country.4. GHOSH committee recommendations on transfer and monitoring its strict implementation by the controllers by way of getting the confirmation from the corporate office of the Public Sector Banks (PSBs) every year gives ample testimony to the fact that the transfers and job rotation are strictly followed by the PSBs.5. It is pertinent to mention that if any officer is retained in any place / position and more particularly, in the administrative units, it may either be due to his/ her specialised qualification or Bank must have needed him on certain special administrative reasons.6. Transferring the experienced officers at crucial areas such as Treasury operations, Risk management, Accounting and Credit Management at this time of the year would have a vital impact. Reserve Bank of India, had earlier advised banks that officers should have requisite certification / qualification before being posted in the above functional areas considering the importance of these areas in banking.7. The promotion and transfer process generally commences after the financial year is over and completed before the first quarter i.e.June in almost all the public sector banks. As such effecting transfers now and then undertaking the process immediately in another two months in a full fledged manner will hamper the functioning of the banks for 3 - 4 months. This will result in heavy work load as well increased costs while the banks are facing tougher times.8. It is indeed paining to mention that the CVC direction to transfer all the officers and employees immediately as if we were following faulty policies so far has totally demoralised the lakhs of innocent and committed officer. This, we apprehend, may cause more damage to the Bank, than the current exercise of transferring the officers.9. It is further paining the lakhs of young officers joined in the Banking system, that while the army men are not blamed for the Bofors scam and the employees in the telecom sector are not blamed in the 2G scam, it is always the innocent bank officers and employees at the field level who are becoming the victims and made to shoulder the entire blame, in the unfortunate event of any fraud happening in the banks. 10. The bankers are primarily dealing in credit which possesses inherent risk. We the Bank officers are expected to work in an unknown place, deal with unknown customers and to take credit decisions on an unknown activity that too based on the future projections.11. I wish to recall the Honourable Finance Minister’s statement as quoted in the press today, “ Banking system functions based on trust, which is inherent in the lender and creditor relationship. ’Not so ethical’ section of business think they do not need to pay loans. Such stray cases throw up important questions and it is incumbent on the state to chase such people to the last possible stage and make sure that the country and honest tax payers are not cheated”.

AINBOF LETTER NO. 004 DATED 21.02.2018 TO CHIEF VIGILANCE COMMISSIONER

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12. But on contra, for the fraud happened in one branch of one bank which involved few officers, the entire work force of the banking industry is being chased throughout the country.13. We the trade unions never supported the guilty and it is always our demand to expose the culprits. but it should not end up in placing the entire workforce in bad light. Also these transfers cannot be branded a good governance and HR policy, by any standard.14. Sir, in the midst of so many unanswered questions so far likea) The role of board members representing the Government, RBI, Govt. nominees and share holders.b) The role of CVO present in every bank.c) The role of RBI audit and other audits carried out in the bank.

We the committed workforce, undertake to continue our mission of building up our business despite the unprecedented onslaught unleashed on the Banking fraternity. We request your good selves to amend the direction on the transfers to defer the relief till 31st March 2018 so as to facilitate us to work uninterruptedly during these crucial months for improving the business and achieving the set targets.”

Sd/- MANIMARAN G V GENERAL SECRETARY

GENERAL MEETINGS IN UTTARPRADESHThe General Secretary, AIABOA had undertaken extensive organizational tour of UP State, as follows : GONDA : There was a General Meeting on 01.02.2018 at Sharma Hotel, Gonda during the evening Hours which was attended by record number of Members virtually from all the places of the Zone. The Meeting was presided by the State President, UP-Central, Com Abhilakshit Kaushal and graced by the State Secretary, Com. Ram Nath Shukla, Com. Raman Yadav, the State Vice President, Com. Abhay Kumar Ranjan, the Zonal President, Gonda, Com. Tarun Shuka, the Zonal Secretary & others. There Meeting which continued till late hours witnessed lively interactions.

KANPUR : There was a General Meeting of the Officers posted in and around Kanpur at Hotel Celebration, Kanpur on 03.02.2018 which was attended by large number of Members, including many lady Comrades. The Meeting which was presided by the State President, UP- South, Com. Rajesh Srivastava, was addressed by the State Secretary, Com. Siddhanath, the State Vice President, Com. M M Pandey, the Zonal President, Kanpur, Com, Koushalendra Pandey, the Zonal Secretary, Com. Kuldip Singh, Com. P. K. Dixit, Ex-Vice President, AIABOA & the Ex-State Secretary, UP-South and others. The General Secretary apprised he House about the latest situation at the Industry level and at the Bank level. He urged on the Members to implement all the Action Programmes of the UFBU /AIBOC /AIABOA, meticulously.

ALLAHABAD : On 04.02.2018, there was a General Meeting of the Officers, posted in and around Allahabad at Civil Lines, Allahabad, which was attended by the General Secretary, AIABOA, Com. M P Singh, the State Secretary, UP-East & the Vice President, AIABOA, Com. G.S.Sonker, the CEC Member, Com. Ajay Srivastava, the Zonal President, Allahabad, Com. Dinesh Choubey, the Zonal Secretary, Allahabad, Com. Vijay Yadav, the Zonal Secretary, Varanasi, Com. Amit Singh, the Zonal Secretary, Mirzapur & others. There was lively interaction with the Members covering all the relevant issues concerning the Bank and the Officers.

LUCKNOW : There was a General Meeting of the Local Officers on 06.02.2018 at Hotel India Awadh, Lucknow. The Meeting was attended by many Members posted in and around Lucknow. The Meeting was addressed by the General Secretary, AIABOA, who apprised the Members about the ongoing developments at every level. He shared with the House the issues that have been taken up by the Association on priority basis. The State Vice Presidents, Com. Rakesh Baboo, Com. Raman Yadav, Com. Ashok Srivastava, the State Secretary, Com. Ram Nath Shukla, Com R.K.Das, the Asstt. State Secretary, UP-Central, Com. Namith Sharma, the Zonal Secretary, Lucknow and others had also spoken on the occasion.

FAMILY DAY AT MUMBAI

The MS-I State unit organized Family Day on 24.02.2018 at Swagat resort, Virar, in which more than 100 Members had taken active part.

CRESCENDO congratulates the Members of the MS-I Unit posted at Mumbai for the above initiative under the leadership of Com. Jeevan, the State President and Com. Pooja, the State Secretary.

CAN BANKING RECOVER ?We need stricter adherence to sound banking rules and more transparency from public and private players

The bank frauds involving Punjab National Bank (PNB) and the companies associated with businessmen Nirav Modi and Mehul Choksi as well as the Rotomac case couldn’t have come at a worse time. The Indian banking system is already reeling under the pressure of growing NPAs, or non-performing assets (less politely known as loans that are not going to be repaid), which will touch nearly Rs. 10 lakh crore by March this year. This does not include the Rs. 6 lakh crore already written-off. This has already caused a slowdown in disbursal of bank credit, in turn affecting productive investment.

Failure at many levelsWhat has been revealed so far could be only the tip of the iceberg. The sheer ease with which fraudulent practices have been carried out and the length of time over which they continued suggest that the rot is much deeper. Other banks could have provided large loans without due diligence, which other companies then received without intent to repay; this means that many more loans gone bad could soon surface. These revelations can not bode well for the ruling party or for a Prime Minister who had promised to be the nation’s “chowkidar” to prevent any such loot. But let us step away from the politics. It is now clear that the scams are fundamentally and overwhelmingly a failure of regulation.

This failure has occurred at many levels. At the level of the bank, it is impossible to believe that only a handful of employees (the current fall guys) have been implicated. Senior management and auditors did not track these problematic transactions for years. The Reserve Bank of India (RBI) did not monitor banks properly and created opacity with new financial instruments. The Finance Ministry failed in its oversight and regulation. And successive Central governments, including the present one, did and have not done anything to address the obvious problems that were festering, and made them even worse.

Using LoUsThe PNB scam relied on the existence of an unusual financial instrument, the letter of undertaking (LoU). This is a bank guarantee that enables a bank’s customer to raise short-term credit from another Indian bank’s foreign branch. It has to be another Indian bank, because the LoU as a form of underwriting other borrowing does not exist in other countries and is not even recognised by foreign banks. It was created by the RBI as an additional incentive to importers who could then avail of cheaper credit abroad, even though import credits already exist.

These LoUs — which are equivalent to providing credit and should be recorded as contingent liabilities — were not so recorded. When loans are not repaid — in this case vast amounts borrowed from other banks based on these LoUs were apparently siphoned off to shell companies controlled by the Modi-Choksi combine — the buck stops with the issuing bank. What was intended to be trade credit was misused, with no record and monitoring of the spending from those loans. There is talk of sums in excess of Rs. 20,000 crore being involved in this case as these businessmen were alleged to be so influential that they were even able to game the SWIFT system for foreign exchange transactions.

This case involves pure criminal fraud, but there is a thin line between fraud and the many large defaults that plague the system. Commercial bank lending is massively skewed: according to the RBI, in March 2016, 11,643 borrowers accounted for 38% of all bank loans; large corporate borrowers had the overwhelming share (84%) of bad loans. Just 12 large outstanding NPA accounted for as much as Rs. 250,000 crore.

The issue of crony capitalism that was much criticised during the United Progressive Alliance government is alive and well under this government. Finance is one of the many ways in which concessions and advantages are distributed. Some favoured companies are not declared wilful defaulters even when the government’s own investigating agencies find that they are diverting funds. Those declared as wilful defaulters are neither punished nor prevented from leaving the country. In fact their names are not even made public, so they can continue to access loans from other banks. Some insolvent companies are made to sell their assets which are then purchased at throwaway prices by relatives or associates of the defaulting owners. Despite claims to the contrary, shell companies held by influential people continue to enable the siphoning of assets and money laundering in various forms.

Privatization no answerMany analysts within and outside government have responded to these scams by pointing the finger at public sector banks, claiming that they are more vulnerable to influence peddling and crony capitalism. The current mess has also become an excuse to demand the privatization of state-held banks. This completely misses the point since privatization would actually make things much worse for Indian banking.

The key issue is one of poor regulation and not ownership. Indeed, the reason why the current scam has not led to a widespread run on the PNB and other banks is precisely because of the sovereign guarantee that, despite everything, still generates trust in the public banking system.

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Poorly regulated private banks are even more prone to scams and failure as the financial sector is rife with information asymmetries and market imperfections. Private profit orientation generates incentives for managements to exploit loopholes in the rules and engage in risky behaviour, as examples by U.S. and European bank behaviour leading to the great financial crisis of 2008-09 show. The bailouts they then require tend to be even more expensive for the public exchequer because bank runs have to be prevented.

In India, in the decade before the nationalization of banks in 1969, there was an average of more than 35 private bank failures every year. After the liberalizing reforms of the 1990s, the collapse of the private Global Trust Bank and Centurion Bank (among others) resulted in mergers, with the losses being borne by public sector banks. Private banks such as Axis and ICICI also face large NPAs, often with the same companies that are defaulting on public banks. Kotak Mahindra Bank and several others have been found guilty of providing unsecured loans and ever-greening, practices that the PNB is now accused of. In fact, because of the opacity of banking practices, public banks are actually easier to regulate.

So why has banking regulation in India failed to this extent? It is not only mala fide intent and corruption but also an overall approach to economic policy. The RBI may have been too occupied in counting old currency notes and dealing with the other damaging consequences of Demonetization to pay enough attention to its real job — of bank regulation. But more significantly, this government, like the previous one, has created incentives for all banks to privilege large high-profile corporate borrowers and be relatively lax on their repayment in the mistaken belief that this would encourage sustained income growth. This context makes it easy for some players to game the system.

Recovering from this will require stricter adherence to sound banking rules and more transparency and accountability from both public and private players. But most of all, these would apply to the regulators themselves and the government that frames all this.

[COURTESY : Jayati Ghosh, The Hindu, dated 26.02.2018]

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THE CRISIS IN INDIAN BANKING !

“ It’s time banks returned to their core functions of accepting deposits and extending advances”As news reports of scams pour in one after the other, it is becoming clear that credit administration in India’s public sector banks is a near-sham. Recently, when quarterly results were being published, there was a virtual competition among the PSBs in declaring losses, or at least a decline in profits. All banks were unanimous in explaining their losses as additional provisioning for bad loans. It will not be over-stretching things to conclude that bank advances consist of only two components, namely, identified NPAs (Non Performing Assets) and those yet to be identified. This situation leads us to ask one basic question, whether our PSBs are really equipped to handle advances. Except for some computer program-driven retail loans with factory-type outputs, a majority of the banks today do not venture into MSME or corporate loans. And those that do, burn their fingers. Then there are mandatory farmers’ loans and education loans, which are always under the shadow of a write-off threat. Ingenious banks fill their agricultural loan targets with gold loans.

Why is this the state of affairs? Exposure to working on advances is not an absolute criterion for a bank officer for his or her career advancement. Smart and risk-averse officers skip their assignment in credit-related work at the operational levels and find their way directly up to the top. Thus, knowledge of the business of credit becomes a casualty from top to bottom.

Banks genuinely expect their staff members to be mediocre and obliging rather than skilled and informed. Think of the disparate areas our bank manager is supposed to lay his or her hands on. KYC, Insurance, Aadhar, Mutual Funds, Demat, PMJDY, Subsidies, Financial Inclusion, Alternate Channels, Scholarships, Pension Payments… the list is endless. To cap it all, Demonetization has taken its toll. All these areas come with targets and deadlines.

Items like mutual funds and insurance are lucrative for the staffer as they offer handsome commissions. Of late, top management has started compelling operational staff to concentrate on non-banking areas such as mutual funds and insurance as the commission spread is top-heavy. Offers such as foreign vacations for the top brass of banks are made by some insurance/mutual fund companies in addition to paying commissions. Needless to add, this type of compulsions imposed on operational staff, more often than not lead to mis-selling.

Consequently their time is wasted on handling complaints and litigation. It is high time a study is made of the benefits to the bank from such lines of business. Definitely individual benefits to bank staff will outweigh the benefits (even losses) that accrue to the bank.

Back on the subject, the thrust areas of banking — deposits and advances — have been relegated to the back-burner. No effort is made to garner quality advances as there is no incentive to do so. With desk-level officers ill-equipped to handle advances, the genuine customer is driven from pillar to post to get a loan. At last the decision is protruded to such a level that non-sanction will cause complaints. So an unwilling sanction is accorded and the amount is disbursed. From there on, the loan travels its route to becoming an NPA due to lack of follow-up from the banker’s side and the lack of understanding from the borrower’s side. This is the case of small advances.

The story of medium advances (say Rs. 1 crore and above) is no better. It is a peculiar character-stic of PSBs that their internal communication system is one-sided, that is, going from top to bottom. To bring in professionalism and objectivity, many banks have formed credit committees where these loans are discussed. Here, whatever nonsense the senior-most (position-wise) member says will prevail. Junior members never utter a word of dissent. The committee system provides a false sense of security for its members as accountability gets diluted. Prudent and time-tested lending norms are violated in the guise of business considerations. When the sanction letter reaches the branches, they disburse the loan without adhering to sanctioning conditions. With the borrower’s indulgence and the banker’s apathy, sooner or later the loan turns into an NPA.

Those seeking large advances invariably reach the bank with political clout. They corner the banker to get the loans on their own terms and the bankers relent. Ultimately even their own terms are violated. The factors contributing to the present dilemma are not far to seek. Indiscriminate selection of borrowers, inadequacies in loan processing, flawed follow-up mechanism, auditors’ negligence, the ineffectiveness of the judiciary, political appeasement and, above all, dissolute societal standards, deepen the crisis.

Analyzing the reasons for this deep-rooted malaise, one can come to the conclusion that the country has to live with it. But certainly the intensity can be reduced and the damage minimized. Some of the needed measures can be summarized thus:

1. Back to Basics : PSBs should shred the idea of becoming financial supermarkets, get away from incentive-centric insurance and mutual fund businesses, and get into the core areas of deposits and advances. Governments also should allow the banks to concentrate on the core business.

2. Specialization : It should be recognized that handling advances requires specialized skill. Each area of advances, namely, identification, processing, sanction, documentation, disbursement, maintenance, and recovery, should reclaim its sanctity. Loan Processing Cells functioning in some of the banks should be strengthened. Having hands-on experience in credit-handling should be a prerequisite for promotion to top management posts.

3. Credit Committees : Entrusting the sanction of loans to committees is a good idea, but a committee of ‘yes-men’ will defeat the purpose. The composition of credit committees should be reviewed. In a senior-junior combination, the voice of the senior will prevail, even if the junior is right. It is suggested that the credit committee at each centre shall be headed by the seniormost official of the bank at the centre. Other members can be a retired official who had sufficient credit exposure, and a chartered accountant. This will ensure proper vetting of the proposal and an objective and dispassionate evaluation.

4. Role of lawyers : After sanction and documentation, the documents should be vetted by the bank’s panel lawyer, who should certify that all sanctioning conditions have been met and the documents are in order and the loan is ready for disbursement. This should be a precondition for the first disbursement. This measure will check bankers’ tendency to disburse the loan in order to meet their targets. Stringent punishment for violating these norms should be put in place.

5. Early identification of NPAs : It is a reality that banks delay identification of NPAs, as the promotion prospects of the officials concerned are adversely affected. It is the defaulters who take advantage of the situation. The process has to be reversed. Early identification of NPAs and timely and effective initiation of recovery measures should be duly rewarded.

[COURTESY : T Muraleemohan, The Hindu, dated 25.02.2018]

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FIFTH WORKING COMMITTEE MEETING - IMPORTANT DECISIONS

The Working Committee of the AIABOA which met at Ahmedabad on 25.02.2018 decided on certain important issues as follows :

1 The House while recording appreciation to the Members for their wholehearted support to the ESPS, despite having several financial constraints, urged on the Management to acknowledge all these great efforts and also to come to the rescue of the Employees / Officers who invested good amount either from their savings earmarked for certain other compelling expenses or borrowed from their close relatives, through a suitable loan product.

2 The House unanimously decided to guide and counsel the Members to avoid unnecessary Late Sitting at Branches / Offices from April 2018 on wards which will save Crores of Rupees of waste expenditure for the Bank and also ensure proper health for the Officers.

3 The House unanimously resolved to resist all the violations of the OSR provision, viz., Leave, Joining Time, Timely release of Increments, including Stagnation, Officiating Pay, Transfer TE Bills, 150 % of HRA, Silver Jubilee Award, etc.. and to resort to prompt organizational recourses wherever and whenever necessary.

4 The House expressed serious concern over the tendency of the Management in ignoring the majority Officers’ Association, while deciding on the issues pertinent to the Bank and the Officers.

5 The House recorded appreciation for the positive efforts, by the Branches particularly those headed by JMGS-I ; MMGS-II & III and SMGS-IV, ensuring that there is positive performance in all the important parameters of the Bank as on 31.12.2017.

6 The House resolved to bring out certain important publications from the Association covering mainly, the following areas :

a Conduct Rules b Disciplinary & Appeal Regulations c Officers’ Service Regulations

d Documentation e Balance Sheet / Ratio Analyses

The House also decided to standardize the Study Material for the Work shops, being organized by many State Units, aimed at enriching the Officers particularly the youngsters with the nitty gritty of the Credit related issues, viz., Appraisal, Documentation, etc.. The House further assured the Smaller State units in this regard.

7 The House unanimously decided to organize one Defence work shop aimed at preparing the future Defence Team of the Association with the help of NATURE, Bengaluru. Each State unit is requested to identify 2 or 3 suitable Members having right kind of attitude and aptitude to take up the responsibility of the Defence job.

8 The House further resolved to organize Cadre Development programmes at Decentralized locations for which each State unit is requested to identify 6-10 activists preferably youngsters.

9 The House after threadbare discussion resolved to prefer Litigation in certain long pending issues related to Disciplined Orders under Regulation 4(f) and 4(g) and authorized the President and the General Secretary for the purpose in consultation with the other Prime Office bearers.

10 The House appealed to all the State units to commence the home work for the ensuing Transfer season, so that the Organizational preparedness of the Association is ensured by the time the process starts. In the mean time, the House urged on all the concerned to complete the task of the Circle level MRC Meetings wherever due within the first half of the March, 2018.

CO-OPTIONS : Com. Nishikant Sheet, the Permanent Invitee from West Bengal, has been unanimously co-opted as the EC Member in place of Com. Dipak Dasgupta, who retired on 31.01.2018. Com. Sanjay Banerjee, has been made the Permanent Invitee in place of Com. Nishikant Sheet. The Fifth CEC Meeting shall be held at Bhopal on 30.06.2018, coinciding with the retirement of Com. RK Jodhani, the Vice President, AIABOA and the Sixth WC Meeting will be held at Chandigarh on 10.09.2018 (to be confirmed by the State unit)

The House provided a rousing standing ovation to Com. MSK Rajan and Com. Jitendra Mishra who are retiring from the Bank on 30.06.2018. The Vote of Thanks has been proposed by Com. MSK Rajan. He recalled his long association with the Officers’ Trade union movement right from his days of Satna and Patna and thanked all the Members for their cooperation all these long years. He thanked the Host unit for their excellent arrangements and wished the young leadership every thing the best.