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Officers' CauseOfficers' CauseOfficers' CauseOfficers' CauseOfficers' CauseFEBRUFEBRUFEBRUFEBRUFEBRUARARARARARY -Y -Y -Y -Y - 2015 2015 2015 2015 2015

Vol. 35 No.2 BANGALORE Single Copy : RS. 4/- FEBRUARY - 2015

2NATION FIRST, ORGANISATION NEXT, INDIVIDUAL LAST

MUSHROOMING OF BANKING

he Reserve Bank of India at the instanceof the Government of India, when decided

to allow the new private sector banks to operate,received a large number of applications fromthe industrial as well as from corporate housesfor permission to establish the new privatesector banks. However, the RBI wascircumspect in processing the applicationsreceived from a large number aspirants mainlyfrom the major industrial houses and restrictedthe number only to a couple of new banks,thereby frustrating the attempts of severalapplicants including some of the major NBFC’swho were already operating in the financialsector.

The present decision of the Reserve Bank ofIndia to grant license to the new Small Banksand Payment Banks comes in the wake of thelarge scale disappointment amongst thecorporate lobby who have failed to secure thelicense for opening of the new Private Banks.RBI adopted a rigid stand while scrutinizing theapplication for the license for opening new privatebanks. To-day, there are multiple banks tolook after the requirement of the masses inhandling their banking requirements apart fromhundreds of NBFC’s, who are already in the

field of financing of housing, automobiles, goldloans etc., along with a large number of RegionalRural Banks, Private Sector Banks, ( old as wellas new), millions and millions of credit co-operative societies and the Credit co-operativebanks who are being monitored and regulatedwith a lot more difficulties by the Reserve Bankof India.

The Indian Banking system has come a long way.The Nationalization of Banks from the clutchesof the private bankers in the year 1969 was agreat step to make available the financialresources of the country for the use of themillions and millions of masses who are livingbelow the poverty line and to enable them topursue economic activities not only in agriculturalbut in other allied activities as well. This calledfor the rapid expansion programme by theGovernment and the Public Sector Banks, with amissionary zeal and bring down the ratio ofbranch net work to per capita to the manageablelevel. In a series of measures that followedafter the Nationalization of Banks by theGovernment in the year 1969 and 1980 sawthe emergence of the Public Sector Banks asone of the powerful instrument in the hands ofthe Government in pushing through their economic

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EditorialEditorialEditorialEditorialEditorial

SUCCESS AWAITS AT THE DOOR WHERE DILIGENCE IS

Officers' Cause, February - 2015 3

he events of the year 2014 has now becomehistory and through the current events we are

once again going to create history. The year alsosaw a wave of renaissance in the country with thepeople electing a single political, party at the centrewith clear majority, thereby ending an ara of threedecades of coalition politics, that was prevelant inthe country.

With the promises of Achha din, the newly elected

government at the centre is expected to bring invarious economic reforms to make the countryeconomically powerful. The inflation led to pricerise consequent to which the common man wasstruggling to meet both ends together. When theyear 2014 can be called the year of promises theyear 2015 should be a year of expectations. Theprevious year also saw various ups and downs inthe country the few events of which are given hereunder.

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agenda of improving the plight of the commonman in the country. Not satisfied, with thisprogress the Government of India decided toopen yet another channel for ensuring the reachof the finance to the rural and interior parts ofthe country by setting up 193 Regional RuralBanks all over the country. The whole worldhas appreciated the contribution of these RuralBanks in ameliorating the economic condition ofthe poorer section of the society by providingcheaper and easier credit for their economicactivities. During these period the corporateworld had never bothered about serving thecommon man in the financial sector. Having sensedthe tremendous opportunities that are availableamongst the middle and upper middle class, theyhave now hankering for quick and techno savyservices and accordingly exerting tremendouspressure on the Government and the ReserveBank of India to make quick bucks by using thesurplus funds that are available with them, inthe banking system and demanding license towork as Payment Bankers or as Small Banks.

The present decision to allow some of the cashrich corporate houses and others to take up theresponsibilities of payment bank and also theinitiative to grant license to the smaller banksby RBI, comes when there are stringentmeasures to curb the collapse of the privatebanks while ensuring that there is a reasonablestake of the owners in the banks under thePublic Sector as well as Private Sector. TheReserve Bank should have fully leveraged thealready available resources for the purpose of

fulfilling the payments and collections etc.,rather introducing another channel for themushrooming of the financial institutions whowould be outside the net of regulatorymechanism. We are one of the few countrieswho can boast huge net work of ATM’s that arenot fully utilized by the banking system. Moreliberal approach towards the utilization of thetechnology already available in ATM net workwould definitely take care of the so calledpurpose of going for the payment banks and alsothe smaller banks. The RBI should study theexperience of the alternative channels that havealready been introduced in the banking systemin the name of the Business Correspondences,etc., before embarking upon new concepts toensure the safety of the money of the commonman. Today, the Indian Banking System has itsown reputation for the strict governance regimeand the failure of the banks and loss of depositsof the masses is also negligible in comparisonwith the colossal collapse of the smaller banksin US during the great recession that they hadfaced in the last decade or so. There is a needto strengthen the existing financial institutionsrather thinking of new channels for the purposeprofitable use of cash rich companies resources.They should be encouraged to use these surplusfor the industrial investment rather enteringinto the financial sector which is so sensitiveand any failure on the part of these paymentbanks as well as new banks that the RBI isconsidering allowing operations may spoil thereputation of the Indian Banking system in theinternational scenario.

2015-A YEAR OF RE KINDLED HOPE

ARISE, AWAKE, STOP NOT TILL THE GOAL IS REACHED

4 Officers' Cause, February - 2015

Jan Dhan Yojana - As part of their economicreforms government introduced Jan Dhan Yojana aunique scheme, to take banking to every nook andcornor of the country. So far the banks, havesurpassed the target set by the government andopened 10 crores account up to December 14 end.As on date 11.50 crores Accounts have beenopened, setting a record in the Gunnies books ofworld record. The growing NPAs in the banks havebeen a serious concern not only to the governmentbut also to the economy as well. The fact is thatNPAs in the bank is not due to the smaller andmedium loan portfolio but mainly from thecorporate sector.

Salary revision The salary revision is due since1.11.2012 All the talks with IBA proved to be afailure. Government seems to have taken a lukewarm attitude towards this. The work force hasalready struck work on many occasions to conveytheir frustration over the matter. The struggle is tobe continued till they achieve their goal.

Swachh Bharat Gandhiji dreamt a Swatch Bharatwhich was not only to free India from the colonialrule but also to make India clean and developed.Now the government at the centre decided toimplement the scheme from 2nd October 2014 incommomoration of the birth anniversary ofMahatma Gandhiji as their dream project. It ishearting to note that this project has created anawareness among the people of the country, for aclean and healthy India.

Judicial activisam – when the executive andlegislature fail, the hope of the society is thejudiciary. Many of the scams that took place in recenttimes would not have seen the light of the day butfor the judicial intervention. The criminalization ofpolitics found in recent times had also led tointervention of judiciary in our electrol process. Thecourt has accordingly struck down section 8(4) ofthe Representation of People Act that allowed theconvicted law makers from contestingelection.Court also asked Election Commission tomake provision in the voting machine to allow thevoters to reject the unworthy candidate with pressbutton as None of the Above (NOTA)

Andhra Pradesh divided – A bill dividing AndhraPradesh to have a separate state Telengana was

passed amidst pandemonium and resistance amongmany MP from unified Andra Pradesh due toeconomic inequalities between the region. The billgot assent from the President on 1.3.2014.

National disaster – The state of Jammu andKashmir state witnessed incessant rain duringSeptember 2014 with the resultant swollen rivers,canals, water ways, flash flood, land slid, taking tollof hundreds of human lives, live stock andproperties. Buildings have been fallen like nine pins,highways, roads and villages have been washedoff, lakhs of people rendered homeless. All due tourbanisation, modernization consequent to whichcanals, waterways lakes and forests wereencroached and shrank.

Mangalyan – with Mars Orbiter Mission (MOM)also named as Magalyaan, India created history.India become the first nation to reach Mars in itsmaiden attempt to explore the uncertaininty in Mars.The feat is a shining exemple of what we are capableof as a nation. India also made the cheapest everdeep space journey at a frugal budget of Rs.450crores and become first ever Asian Nation to reachMars.

Nobal Prize - Amid the border tension betweenIndia and Pakistan the Norwegion Nobel Committeeawarded 2014 peace Prize jointly to be sharedbetween 60 years old Shri. Kailash Satyarthi fromIndia and the 17 year old Ms Malala YousafzaI fromPakisatan the youngest ever at an appropriate time.While the former tried to rehabilitate the youngchildren who are facing exploitation and bondedlabour after providing education the later fought forthe right of education for girls and worked for theirfreedom.

Bhart Ratna - Country bestowed the highest civilianaward ‘Bharat Ratna’ to the former Prime MinisterShri. Atal Bihari Vajpayee for his contribution ofgood governance to the country and late (Shri)Maden Mohan Malaviya freedom fighter andeducationist . Earlier in the year Bhart Ratna wasawarded to the renowed scientist Professor CNRRao and the ace crecketer Shri. Sachin Tandulkar.

National losses - The year saw loss of eminentpersonalites like Justice V.R. Krishna Iyer, retiredjurist of Supreme Court. U.R. Anantha Murty the

Officers' Cause, February - 2015 5WORK IS WORSHIP , DO YOUR DUTY

educationist, Kuswant Sing, writer, M. V. Kamath,the journalist, U. Srinivas the exponent of mandolin.

Year 2015 - The political change at the nationallevel, looks like that the country is getting itseconomy back on rail. It is the endeavour of thepresent government to give thrust to industrialgrowth as part of improving economy Governmenthad already started extending Indias images abroadwith Make in India, campaign. It is to attract investorsand make the country a global manufacturing hub,with right social and political environment. Thecampaign also is aimed at Gandhijis dream ofSwaraj and promotion of local industries. What theinvestor whether foreign or local expects is the rightpolitical climate, good working atmosphere andreturn of their investment. Government is alsoexpected to provide all factors of production such as

land, labour, raw meterial, power and water withouthindrance. Though India has got high level ofhuman resources second to China, 70 percent ofsuch workforce require skill development trainingto improve the productivity. The announcement ofmaking smart cities across the nation whilepreventing migration of prople to already congestedcitis, it can also promote industrial growth andeconomy.

The economic reforms as announced by thegovernment are being appreciated by theinternational business community. According to IMF,India is poised to become a great economy by thecurrent fiscal year. With the beginning of the year2015 the country also expects a vibrant India withthe Achha din to come as promised by theGovernment.

Text of AIBOC Circular No.2015/08 dated 20thJanuary, 2015 of AIBOC.

QUOTE:

Please refer to our earlier circulars, whereby, weinformed you that Sub-Committees formed todiscuss peripheral issues covered in the Charter ofDemands will be held simultaneously with the WageRevision demands. Accordingly, Sub-Committeemeetings of the Officers and Workmen were heldon 14th January, 2015 and 19th January, 2015. AUFBU meeting was also held in the evening of 19thJanuary, 2015 at Mumbai to take stock of the presentsituation and to decide modalities and actionprogrammes with regard to the proposed four daysstrike from 21st January, 2015 to 24th January, 2015.The Convenor of the UFBU has issued a CircularNo. UFBU/2015/44 dated 19.01.2015 detailing,therein, the developments of the above twomeetings, text of which is appended here below:

“IBA ASSURES EXPEDITIOUS WAGE SETTLEMENTFOUR DAYS’ STRIKE FROM 21ST TO 24TH

JANUARY 2015 PUT ON HOLD

In our previous Circular, we have informed thatwhile agreeing for formation of Sub-Committees forother issues relating to wage revision, we had

suggested for holding of Meetings of Sub-Committees immediately without any loss of time.Accordingly, IBA called for Sub-Committeemeetings on 14th January 2015 to discuss on issuesrelating to demands of Officers as per charter ofdemands and on 19th January 2015 to discuss onHealth Insurance in lieu of Reimbursement ofhospitalisation expenses and issues relating toWorkmen employees as per charter of demands.

Health Insurance Scheme:

Members are aware that our charter containsdemands for improvements in existing MedicalScheme and extension of 100% reimbursementfacility for family members. IBA proposed forintroduction of Medical Health Insurance Schemeand provide for wider coverage.

In this background a Sub-Committee Meetingheaded by Shri Arun Tiwari, Union Bank of Indiarepresenting the IBA and all the Nine GeneralSecretaries representing constituent Unions/Associations of UFBU was held on the 19th January2015. After thorough deliberations, UFBU pointedout the loose ends to be tied up and suggested forfurther improvements in the scheme. IBA assuredto take up the issues with the concerned and haveanother round of discussions.

MEETINGS OF THE SUB-COMMITTEES ON SERVICECONDITIONS WITH IBA MEETING OF THE UFBU HELD

ON 19TH JANUARY, 2015 AT MUMBAI

WWWWWage Rage Rage Rage Rage Revisionevisionevisionevisionevision

LET CUSTOMER SERVICE BE OUR MOTTO


Meetings On Service Conditions of Officers’ AndWorkmen:

In the meetings held separately on 14th and 19thJanuary 2015 with Officers Organisations andWorkmen Unions respectively, the issues relatingto Disciplinary Matters of Officers, RegulatedWorking Hours, 5-Day banking and Improvementsin Leave Rules were discussed. Further discussionsare to be continued.

IBA also assured that they would further pursue thematter with Government and deliberate in theManaging Committee Meeting of IBA to be held onthe 31st January 2015 with all sincerity and holddiscussions with us in the first week of February2015 to improve the offer further to reach finality.

UFBU Meeting Held on 19th January 2015:

In this background, the representatives ofconstituent unions of UFBU met in Mumbai on 19thJanuary 2015. Extensive and comprehensivediscussions were held to review in detail thedevelopments on the Wage Revision front startingfrom the Conciliation held by the Chief LabourCommissioner (Central) in New Delhi on 5thJanuary2015, followed by the Negotiations with IBA

on 6th and 7th January 2015 and also the Sub-Committee meetings held thereafter.

It was unanimously opined that the IBA had toimprove their offer from 11% to 12.5% because ofthe strenuous efforts of UFBU through strike actions/decisions. The meeting also attributed the creditfor the change in the adamant stance of IBA to allthe members who made the strike a total successthrough their enthusiastic participation.

In the background of the assurance given by IBAtowards expeditious wage settlement and alsoconsidering the positive developments since theconciliation meeting held on 5th January 2015, itwas unanimously decided by the UFBU to put onhold the Four days’ continuous strike from 21st to24th January 2015. It was further decided tovigorously pursue the issues relating to regulatedworking hours for officers and 5-day banking alongwith satisfactory increase in offer from 12.5% of payslip components. It was also decided to revive thestrike action if there is no satisfactory outcome inthe next meeting and go ahead with 4/5 days’ strikein the month of February 2015. Comrades, theunited and determined struggle of all Officers andWorkmen alone would bring success in achievingour goals and target.

TTTTText of AIBOC Circular No.2015/04 dated 15thext of AIBOC Circular No.2015/04 dated 15thext of AIBOC Circular No.2015/04 dated 15thext of AIBOC Circular No.2015/04 dated 15thext of AIBOC Circular No.2015/04 dated 15thJanuarJanuarJanuarJanuarJanuaryyyyy, 2015 contents of which are self-explicit., 2015 contents of which are self-explicit., 2015 contents of which are self-explicit., 2015 contents of which are self-explicit., 2015 contents of which are self-explicit.

QUOTE:QUOTE:QUOTE:QUOTE:QUOTE:

As you are aware, as a parallel to monetary benefitsand as a part of charter of demands, Officers’Organisations have been consistently demanding for

1.1.1.1.1. Comprehensive Accountability policyComprehensive Accountability policyComprehensive Accountability policyComprehensive Accountability policyComprehensive Accountability policy.....2.2.2.2.2. Five days banking.Five days banking.Five days banking.Five days banking.Five days banking.3.3.3.3.3. Regulated working hours.Regulated working hours.Regulated working hours.Regulated working hours.Regulated working hours.

As all the three agenda are pertinent and relevant toofficers alone, we have been insisting the IBA to bringsome common guideline to the sector as these arebeing handled at the whims and fancy of each bankand the absence of such common guidelines ishurting the officers very badly, more specifically inthe cases related to disciplinary matters.

Thus, in the last meeting with IBA held on 7th

January 2015, while it was decided to discuss furtheron the wage costs beyond 12.50%, it was alsodecided to arrive at a consensus on these threeissues too through a subcommittee formed exclusivelyfor the said purpose.

As you will agree that these three issues are verymuch dear to officers because of being the factorsaffecting the working condition and life style ofofficers’ community besides wage increase, theofficers’ organisations have decided to approach theIBA with an elaborately prepared Perception paperon all the three issues.

Accordingly, the subcommittee met on 14th Januaryat 2.00 p.m. at IBA office, Mumbai.

Comprehensive Accountability PComprehensive Accountability PComprehensive Accountability PComprehensive Accountability PComprehensive Accountability Policyolicyolicyolicyolicy.....

In the current scenario, the Banks - a highly sensitivesector - are essential for economic progress andsustenance but carrying out the business has become

MEETING OF THE SUBCOMMITTEE ON SALARY REVISION

BE TRUTHFUL, BE FEARLESS


highly risky and there would be a reflection of seriousramifications in case of little deviation/ failure.

Nevertheless, it is the basic duty of the officers inthe banking sector to carry on with the businesscontinuously despite the presence of so manydemotivating factors encountered in making creditdecisions in order to keep the Industry vibrating.

Among various risks involved in carrying out the dayto day functions of the Bank, the credit risk isconsidered the major risk which impacts theperformance of the Bank in a big way.

As we all are aware that, though the Creditdispensation function is inherently risky, we, the bankofficers are expected to effectively discharge ourresponsibilities without having any insulation orprotective gear. In this regard, the M.S. Vermacommittee, during 1999, has given a call forreintroduction of credit culture as the fear of staffaccountability has “killed” initiative for fresh business.In the same tone the Kapoor committee on assessingcredit, observed as follows-

“While fixing accountability, a line should be drawnto separate malafide decisions from normal bonafidecredit decisions in order to keep the morale of theemployees high”. It further says “to instil confidencein the staff and encourage them to make decisionsincluding some bonfide mistakes there is a need toevolve a system in Public Sector Banks in assessingthe performance of each Officer in taking creditdecisions.” Even Khandelwal committee also advisesthe Public Sector Banks to put in a place a staffaccountability policy.

Everybody will accept that while mistakes mayhappen, an atmosphere of fear of being subjectedto investigation at some later date and the associatedstigma is not conducive for efficient and informeddecision making.

Under today’s dynamic situation that drives everynerve in expanding banking business, with the youngand comparatively lesser experienced supervisoryworkforce in the operations side, it is very muchrequired to devise a comprehensive policy with anobjective to erase the fear of accountability from theminds of Officers.

Such policies must Such policies must Such policies must Such policies must Such policies must have following few ingredientshave following few ingredientshave following few ingredientshave following few ingredientshave following few ingredients - - - - -

1. The essence of the policy should be able to

motivate the credit decision makingcapability of the Officers.

2. The tools of the policy should be able todifferentiate the malafide intentions fromthe bonafide decisions.

3. It should be able to differentiate the variousroles in credit decision making process andaccountability may be fixed accordingly.

4. The process of investigation should behandled by the persons from the operationalarea.

5. The job of fixing accountability should notbe vested with one individual but it may behandled by a committee consisting ofexperienced persons involved in such decisionmaking process.

6. There should be a specific time frame withinwhich the accountability, if at all, should befixed on any individual.

7. The punishments should be proportionateand should be codified.

8. There should be specific guidelines indeciding the vigilance angle.

9. There cannot be multiple punishments andthe punishments should not deter anybodyin pursuing career elevations.

10. Disciplinary issues if any should be concludedwell before the retirement date and thereshould not be any post retirementharassment for the officers.

11. There should be a specific time frame fordisposing the appeal and review petitions.

Many operation level issues were brought fordiscussion and there was a mutual understandingto pursue the issue further keeping the essence ofabove calendared items as a guideline.

REGULREGULREGULREGULREGULAAAAATED WORKING HOURS:TED WORKING HOURS:TED WORKING HOURS:TED WORKING HOURS:TED WORKING HOURS:

The entire discussion was on the essence of followingfew points

1. It has been the demand of officers from1966.

OUR LIFE IS WHAT OUR THOUGHTS MAKE IT 7 Officers' Cause, February - 2015

2. VRS and subsequent restriction on freshrecruitment till 2009 added huge pressureon officers in view of the disproportionatebut positive growth witnessed by theindustry vertically in business andhorizontally in staff strength.

3. Restriction on recruitment increased theaverage age of the officers in the branch,certainly having impact on the reflex.

4. Introduction and increase of ATMs,e-lounges, POS, Business Correspondentsand Internet banking failed to reduce theresponsibility of the supervisors and indeedadded the workload as they have to monitorthese alternate channels too.

5. Various verticals introduced in the sectorhas absorbed the little relief available dueto computerisation to the supervisorystrength.

6. With the introduction of improvised systemlike Cheque truncation, RBI introducedreduction in holidays and enhanced burdento the officers.

7. Additional responsibilities due to schemeslike ‘JAN DHAN YOJANA’ and tax collectionadded additional work load to officers.

8. Thousands of branches are manned bysingle officer bearing all the amount ofpressure.

9. Officers’ presence in the branches from 9to 9 is a common sight.

10. Many incidences of robbery and attack byinsurgents during the extended hours.

11. An international labour convention, to whichIndia is a signatory, also requires theintroduction of regulated working hours.

12. In USA, it is 33 hours, in Australia it is 35hours, it is 30 hrs in France and Netherlandsstipulates 27 hours working in 5 days.

13. Working after 6 pm is banned in France andin some countries people work beyond 8hours are ineligible to get insurance cover.

14. Unregulated working hours results in

fatigue and the resultant is reduction inefficiency leading to low productivity.

15. A study by the American journal ofEpidemiology observed the poor performancein the people working 55 hours a week whencompared to those working 40 hours a week.

16. All the Govt. offices and offices of privatesector are under regulated working hours.

17. RBI has introduced the regulated workinghours on 12th July 2012 along with flexibletiming vide their circular no. G.28/240/04.01.14/2012-2013.

18. IDBI introduced the regulated working hoursin 2009.

19. With 75 percentage of the workforce below33 years in a few years, the introduction ofregulated working hours will certainly enthusethem and will increase the efficiency &productivity.

After hearing our presentation, there was a welcomereaction from the IBA side and they acknowledgedthe fact that the officers are sitting late and agreedto examine the issue to bring a possible solution.

FIVE DFIVE DFIVE DFIVE DFIVE DAAAAAYS WEEK:YS WEEK:YS WEEK:YS WEEK:YS WEEK:

The discussion was based on the following argumentsand facts put forth by us in support of demand:

1. Central Govt. Employees work for five days.

2. Majority of State Govt. employees work forfive days.

3. RBI works for five days.

4. IT sector works for five days with sole aimto retain and recoup the energy despite theirnature of work having the scope to workcontinuously.

5. No financial institution, internationally,work on Saturdays.

6. Currently about 50% of the workforce arerecruited after 2009 and the remaining tooeither will be recruited now onwards or will bepromoted from out of the beyond 2009

LET US BUILD A STRONG AND SELF RELIANT INDIA


recruits. To keep the youths in resonancewith international standards so as to retainthem in the Industry, five days a week isrequired.

7. As per RBI report 62% of the transactionsare done through alternate channels andthe percentage is on increase.

8. No. of ATMs as on Oct. 2014 is 173697.

9. About 2.5lac business correspondents aredischarging the banking related jobs outsidethe bank premises.

10. About 11,11,576 POS (point of sales)terminals are available all through the days.

11. About 1,99,54,598 credit cards and44,16,11,701 debit cards are in activeoperation as on Oct. 2014 as all 11 croresaccounts opened under JAN DHANYOJANA are issued with debit cards.

12. There are 3.50 crores mobile banking usersand 9.40 crores transactions during financialyear ended March, 2014.

13. All banks are in the process of opening selfservice kiosks wherein the facilities for passbook printing, coin vending, cash withdrawaland deposit through the machines areavailable.

14. The cheque truncation system is workingefficiently and funds clearance is possibleon line instead of waiting for 14 days.

15. Recently the MOS Sri Jitendra Prasad inParliament and Sri Ajith Seth, CabinetSecretary informed that the Govt. does nothave any intention to propose any changein the existing 5days a week.

16. It will have very effective impact in the govt.proposal of cutting expenditure to 10% fromthe current level

17. In a recent interview to Business today, whilerecording the reasons for the success ofHDFC bank, the Chairman admitted thattoday 85% of the transactions by customerstakes place through non branch channels.The mobile and Internet banking channelcontributes almost 55%.

18. He further stated that HDFC bank alreadycreated 75% of the work involved in digitalbanking which would be implemented shortly,whereby everything you do physically will bedone virtually.

19. Other obvious benefits are,

1. Reduced fuel costs,2. Increased productivity,3. Improved job satisfaction morale,4. Saving the scarce National power and energy

resources,5. Improved work life balance,6. Reduced traffic congestion and pollution.

Almost all countries/economies adopt 5 days a weekincluding U K, USA, Russia, Japan, Chile, China,Columbia, Europe, France, Hungary, Ireland, Italy,Austria, Bulgaria, Czech Republic, Denmark, Estonia,Finland, Latvia, Poland, Portugal, Romania, Spain.Sweden, Mexico, Mongolia, Newzeland etc. Afterthorough deliberations, there was a positive signal ofacknowledging the seriousness of the issue and it wasdecided to pursue the issue further.

OTHER ISSUES:OTHER ISSUES:OTHER ISSUES:OTHER ISSUES:OTHER ISSUES:

Though the above said three items were listed fordiscussion we also brought following issues fordiscussions which are concerning the working classand Bank employees in general and officers inparticular in view of the challenges in front of theBanking Industry:

1. As Honourable Prime Minister told in the ‘GyanSangam’, Indian Public Sector Banks areholding beyond 70% of the banking businessand to sustain the pace and business is ourbiggest challenge in the current scenario andsufficient manpower and infrastructure mustbe provided in the Banking Industry.

2. To meet the challenges like slump ineconomy resulting in lesser credit growth,increasing trend in NPAs, reduction in NIM,unprecedented technological advancement inthe Industry, a big shift in customers’ need,challenges to be posed by possible increasein the presence of Foreign Banks & NewPrivate Banks and even the Payment Banks, amotivated, well groomed, intellectually strongtech savvy youths are required.

DUTY FIRST, RIGHT NEXT


3. As per the Industry estimate the virtualbanking is not only the mode of futurebanking but it would be the better methodto reduce the cost. It is expected that about85% of the banking transactions will betaking place through non branch channelsand mobile & Internet banking shall becrossing more than 50% of the bankingtransactions.

4. Digital Banking will be the key to successand almost 85% of the banking transactionsare going to be through Digital banking.

5. When all the alternative channels of bankingare fully geared up and the Digital bankingwill be the order of the day, the Industrywould tend to become totally Officercentred. Even Khandelwal Committeerecommended for 50% direct recruit officers,perhaps may be based on the above saidexpectation. On getting the embargo onrecruitment lifted in 2009, the Banks startedrecruiting the officers in a big way from thenon.

Currently about 50% of the Officers in theIndustry are in the age group of below 30years. Out of the remaining 50% about 30%of the Officers will be replaced by theOfficers recruited after 2009 or by theOfficers to be promoted from out of theemployees recruited after 2009.

However, in another 5 years about 75% ofthe Bank Officers would be in the age bandup to 35 years and they will be holding thepositions of Scale I, II & III having a majorrole in the operation side of the Banking.

Thus it is expected that many youngsters,perhaps without much exposure in thebranch banking, may be heading thebranches. This mass presence of educatedyouth may over a period result in stagnationat the top which may lead to frustration. Itis also a fact that more than 1/3rd of theyoung Officers are girls.

6. Unlike in the past, all the Officers and eventhe employees recruited after 2009 areprofessional/technical/Post Graduates withhuge amount of aspirations.

Thus the sector is at the compulsion of revisiting allits policies related to promotion and monetarybenefits in order to keep the most talented Indianyouth to be drawn towards the Banking Industry andretain them too.

A few suggestions in this regard which were given toIBA are as under:

1. Creation of crèche facilities to facilitate thewomen employees in all big cities and towns.

2. Bringing Comprehensive Accountability policyto instil confidence in decision making

3. Stipulation of 3 years rural or semi urbanservice, to be completed before becomingscale IV.

4. Automatic elevation to next scale up to scaleIII on completion of specified years of activeservice in the respective scales.

5. Preference in admission for Bank officers’wards in the Central Schools/KV schools.

6. Construction of hospitals by IBA all over thecountry in the lines of ESI and Railway byearmarking certain portion of the gross/netincome of the Banking sector.

There was a positive reception for the above listedsuggestions too.

Comrades, you must have perceived from the abovethat there is a constant and consistent effort on ourpart in pursuing every issue concerning the officerswith an ultimate objective to improve the workingcondition and atmosphere besides increasing thewages which is very much important to officers whoare always working under continuous pressure.

Unity is the Mantra and if it is chanted and practicedby everybody in unison, its reverberations will be fillingthe atmosphere and its resonance will wake up anygiant.

We are nearing the victory post and concentration &compilation of every nerve will bring the successnearer to us despite lot of constraints, hurdles andresistance.

NEVER BEND BEFORE THE INSOLENT MIGHT


SBI LAUNCHES ‘SBI QUICK’

mt. Arundhati Bhattacharya, Chairman, State Bankof India (SBI), launched “SBI Quick”, a

simple and quick way to get balance or mini statementof account through mobile phone. The serviceinvolves a one –time registration through SMS.

Thereafter, a customer can send SMS or give a missedcall on a mobile number to get the balance in theaccount or mini statement containing the past fivetransactions. Information is sent by the bank throughSMS.

WILFUL DEFAULTER

he Economic Survey 2014 has observed that during2012-13, the deteriorating asset quality of the

banking sector emerged as a major concern, with grossNPAs of banks registering a sharp increase. Its fourfoldincrease in non performing advances over last two yearsis a major dent on the profitability of banks. Total netprofit of all Public Sector Banks (PSBs), including SBI, fellsharply, by 26.8 percent to INR 37,017 crore for fiscalended March 2014 over the previous year.

The gross NPA ratio of all the banks at the aggregatelevel stood at 3.6 percent at end-March 2013 up from3.1 percent at end-March 2012. The bad loans of Pubswere at 4.1 percent in March 2014 compared with 2.09percent in 2008-09. The gross NPA increased by almostfour times from March 2010 (INR 59,972 crore) to March2014 (INR 2,04,249 crore). AIBEA (All India BankEmployees Association) has claimed that the top 50defaulters account for INR 40258 Crore from PSBs (SBI,IDBI and Foreign Banks not included).

The two important reasons for a loan account turninginto non performing asset may be due to:

(a) Reasons beyond the control of the bank and / orthe borrower.

(b) Wilful default

Reasons beyond the control of the bank and / orthe borrower

Owing to changes in various government policies,economic conditions, labour unrest, non availability ofpower, raw material and market for finished goods, delayin implementation of projects, overruns, non recoveryfrom debtors, etc there may be defaults / delays in paymentof the dues by the borrower. Frequent changes in rate ofinterest and restrictions on release of funds to certainsectors after commencement of disbursement may resultin extra burden on hose borrowers who work on smallprofit margins. In such circumstances, the advances arerestructured or rephased winch provide reliefs such aspostponement of installments, concession in interest rates,

providing zero interest funds for shorter periods,providing additional credit facilities, etc.

Wilful default

wilful default has been defined by Reserve Bank of India(RBI) as under:

A ‘wilful default ‘ would be deemed to have occurred ifany of de following events is noted:-

(a) The unit has defaulted in meeting its payment /repayment obligations to the lender even whenit has the capacity to honour the said obligations.

(b) The unit has defaulted in meeting its payment /repayment obligations to the lender and has notutilised the finance from the lender for thespecific purposes for which finance was availedof but has diverted the funds for other purposes.

(c) The unit has defaulted in meeting its payment /repayment obligations to the lender and hassiphoned off the funds so that the funds havenot been utilized for the specific purpose forwhich finance was availed of, nor are the fundsavailable with the unit in the form of otherassets.

(d) The unit has defaulted in meeting its payment /repayment obligations to the lender and has alsodisposed off or removed the movable fixedassets or immovable property.

(e) Investment in other companies by way ofacquiring equities / debt instruments withoutapproval of lenders;

(f) Shortfall in deployment of funds vis-a- vis theamounts disbursed / drawn and the differencenot being accounted for.

While dealing with wilful default of a single borrowingcompany in a Group, the banks / FIs should consider the

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track record of the individual company, with referenceto its repayment performance to its lenders. However,in cases where a letter of comfort and / or the guaranteesfurnished by the companies within the Group on behalfof the wilfully defaulting units are not honoured wheninvoked by the banks / FIs, such Group companies shouldalso be reckoned as wilful defaulters

The onerous is on the financial institution to prove thatthe barrower is a wilful defaulter in terms of abovedefinition given by RBI. Banks need to be very careful indesignating a borrower wilful defaulter because theborrower may initiate legal action against the bank fordesignating him wilful as it will have major adversepersonal and professional implications to him. ReserveBank therefore warns that the identification of the wilfuldefault should be made keeping in view the track recordof the borrowers and should not be decided on thebasis of isolated transactions / incidents.

The decision taken on classification of wilful defaultershould be well documented and supported by requisiteevidence. The decision should clearly spell out the reasonsfor which the borrower has been declared as will fuldefaulter vis-a-vis RBI guidelines and the same is conveyedin writing to the borrower before any classification ismade. Final declaration as ‘wilful defaulter ‘ should bemade after a view is taken by the Committee on therepresentation made by the borrower and theborrower should be suitably advised.

Documentary evidences should always be kept on record.Banks / FIs should submit the quarterly list of wilfuldefaulters where suits have not been filed in the case ofaccounts where outstanding amount isI INR 25 lace andabove to RBI on quarterly basis upto September 2014and thereafter to CIBIL.

As per the information collected by CIBIL the details ofSuit Filed accounts over INR 25 lacs and treated as willful default are as under. The number and amount involvedof wilful defaulters are on the rise, nationalised bankspredominantly showing a two fold increase in the amountinvolved.

Penal measures

The RBI has permitted the banks to initiate the followingmeasures against the wilful defaulter:

1) No additional facilities should be sanctioned

2) Filing a criminal complaint.

3) Initiating legal action against the borrowers andguarantors.

4) Efforts may be made to change the managementpersonnel. This may also include appointing bankofficials as nominee directors.

5) Formal complaint with ICAI may be lodged if thecompany’s auditors were negligent and deficientin conducting audit and / or maintain, report theaccounts.

6) The Internal Auditors should adequately look intoaspects of wilful defaulters while conductinginternal audit / inspection of their offices /branches and periodical reviews on cases ofwilful defaults should be submitted to the AuditCommittee of the bank

Measures to contain wilful default

The following measures need to be initiated by banksto contain the growing wilful defaulters:

(a) Due diligence should be carried out beforeconsidering the credit proposal. While financialstatements fairly indicate financial strength of thecompany, men behind the wheel need to bescrutinised properly. The age old parameters,three C’s (Capital, Character, Competence) needto be properly evaluated.

(b) Project reports submitted by the borrowershould be scrutinised properly as to the suitabilityand requirement. Credit requirements should beassessed properly.

(c) Credit officers should have continuous scrutinyof the accounts on regular basis. The turnoverreflected in the account statements should betallied with financial statements submitted by theborrower.

(d) Obtention of periodical stock statements andscrutiny thereof is a prerequisite to have a goodcontrol of the borrowal accounts.

(e) Regular inspections need to be carried out and they should be stringent and productive andshould not be conducted in casual manner.

(f) Stock Audit / Inspections from qualified CAsshould be carried out periodically.

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(g) Audit observations of internal auditors /external auditors should be taken up seriouslyand followed up for complete rectification

(h) Banks should segregate the wilful defaulters’portfolio from the regular loan book and shouldbe dealt with by a separate cell / departmentconsisting of legal personnel.

(i) Government / Reserve Bank may considersetting up a separate judicial system to deal withcases of wilful default and such identified judiciaryshould be given proper inputs of bankingtransactions through training programmesarranged by RBI / IBA or such professional body.

(j) Wilful defaulters are mostly men of means butthey delay / deny payment to lenders. DebtRecovery Agencies should be engaged to recovermonies from them.

(k) Tax concessions / subsidies / grants etc given tosuch borrowing units should be called back andconcerned regulatory authorities should alsoinitiate steps to recover the amounts.

l) The role of independent directors / auditorsof the company need also to be examined and

SEBI / ICAI may come out with stringent guidelineson their role in while conducting the business ofthe willful defaulted.

(m) Public should be made aware of such borrowersthrough paper / media publications.

(n) Immediate action to recover the dues throughsale of collaterals by invoking provisions underSARFESAI need to be initiated as soon as the wilfuldefault has been identified.

(o) Various political parties should be stopped frommaking any declarations regarding loan wavers.Such announcements will have adverse impact onrecovery and refrain capable borrowers alsorepaying the loans.

Stringent measures are needed to be initiated to containthe raising trend of wilful defaulters as people are alwaysdriven by examples and they will set a bad example foreven good borrowers to repay the debts.

A bad apple spoils the entire basket of apples if the sameis not separated in time.

PTS Murthy

Source: The Indian Banker,Oct.2014

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