banking > iba bulletin jul 2k5 onep

We have traversed through more than adecade of reforms which has provided amuch needed fillip to Indian Banking Sector.Dr.Y V Reddy, Governor, Reserve Bank ofIndia was invited to address PakistaniBankers at Karachi. His erudite address onBanking Sector Reforms in India was atreatise for scholars and policy makers inbanking in Pakistan. We are happy toreproduce his address in this issue for thebenefit of our readers.

The power of technology has fuelled achange and made an impact on theworking of banking sector. It has alsometamorphosed the marketing, pricing,designing and distribution of financialproducts and services which ultimatelyhave resulted in improving in efficiency andcost effectiveness. Mr.S C Gupta,Chairman & Managing Director, PunjabNational Bank in his article “InternetBanking – Changing Vistas of DeliveryChannel” under CEO’s perspective,highlights the importance of internetbanking which will be the most popularbanking delivery channel in days to come.

This issue is also packed with Mr.SivaramPrasad’s article on “Is ATM costEffective?” measuring the costing of ATM

operations, break-even, etc. ShriSantosh Patnaik sketches the need forM & As of Indian banks in his article“Consolidate or Perish”. Dr.R KSrivastava elucidates the rise of FIIinflows into India and its impact in hisarticle “FII inflows into India: ADilemma”. Shri P V Anantha Bhaskarwrites about how PerformanceManagement System can be used asan effective tool by banks to increaseproductivity.

The discerning readers would observe atonal change eluerging in this issue ofthe Bulletin. The new editorial team iscommitteed to make your readingvisually more interesting and content-wise more satisfying. This endeavourwould manifest itself in forthcomingissues. The readers suggestions andviews as to what changes they wouldlike to see in the Bulletin would be mostwelcome.

Happy reading,

ED

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RIA

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H N SINOR

www.iba.org.in1IBA BULLETIN

JULY 2005

contributorsco

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CEO’s PERSPECTIVE

5

Dr. Y. V. Reddy, Governor, Reserve Bank of India at theInstitute of Bankers of Pakistan, Karachi on May 18, 2005

Banking Sector Reforms in India :

An Overview

Dr. Y.V. Reddy

Mr. S.C. Gupta, Chairman & Managing Director of PubjabNational Bank, is M.Com., CAIIB and started his banking careerfrom State Bank of India in 1966.

Internet Banking – Changing Vistas

of Delivery Channel

S.C. Gupta

LEADER SPEAKS

EXPERTS VIEWS

Mr. P. Siva Rama Prasad is presently working as ChiefManager (BPR Project), State Bank of India, Mumbai. Hehas been working in State Bank of India since May 1980and has handled various assignments.

Is ATM Cost Effective?

P. Siva Rama Prasad

Mr. Anantha Bhaskar is presently working as a Managerin Development Credit Bank Ltd., Hyderabad. He is anMBA (Finance) from IGNOU, New Delhi. He is a Licentiatein Insurance.

Performance Management System in

Banks

P. V. Anantha Bhaskar

FII Inflows into India : A Dilemma

Dr. R.K. Srivastava

eEnoer - Keb[

Shri Santosh Patnaik is Officer, United Bank of India,Bhubaneshwar.

Consolidate or Perish

Santosh Patnaik

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48

FEATURES

Editorial

Major Developments in Bankingand Finance during May, 2005

Banking Scene – Indian

Banking Scene – Global

Book Reviews

IBA Seminar

Back Cover

Banking Statistics

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39-42

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IBA BULLETINJULY 2005

2

in Banking & Finance during May, 2005Major DevelopmentsMajor Policy Announcements

◗ Many amendments were

made in the Finance Bill, 2005

with respect to Banking Cash

Transaction Tax and Fringe

Benefit Tax. Some of them

include a) exemption of savings

account from cash withdrawal tax b)

raising the threshold limit of BCTT for

corporate accounts to Rs. 1 lacs c) raising

the threshold limit to non-savings

account to 25,000 for individuals and

Hindu undivided families. d) Hiking of the

IT exemption limit from Rs. 1.5 lacs to Rs.

1.85 lacs to senior citizens e) lowering the

base for valuation of all expenses, except

certain four items from 50% to 20% for

calculating FBT f ) exempting

advertisement from the FBT etc. ( ET 3/5)

◗ The RBI did not permit foreign brokerage

houses to speculate on Indian commodity

bourses, either through wholly-owned

subsidiaries or a joint venture with local

commodity brokers. All foreign cash for

speculating on domestic commodity

bourses will have to wait till a regulator

and policies are in place for the commodity

bourses. ( ET 4/5)

◗ The Cabinet made amendments to the

RBI Act, 1934 will provide flexibility to

the Central Bank to fix the cash reserve

ratio. Other measures were removal of

cap on 10 % voting right in private

banks, permission of issuance of

preference shares for banks, power to

the RBI to cancel the bank boards ,

removal of floor rates on SLR and power

to the RBI to conduct special audit on

co-operative banks. ( ET 5/5)

◗ Rajya Sabha passed the Credit

Information companies Bill, 2004. The

Bill seeks to provide legislative support

to the business of credit information

regarding credit worthiness of various

categories of customers. The legislation

seeks to overcome the absence of

adequate, comprehensive and reliable

information on borrowers and

facilitates efficient distribution of credit

to all segments of the society. ( ET 11/5)

◗ The Government had decided to close

PPF window to Hindu Undivided Families

(HUF) or an association of persons or a

body of individuals. ( ET 17/5)

◗ The mid-term appraisal of the 10th five

year plan and the reset of the targets

were approved by the cabinet. Mid-

term appraisal recommended sale of

minority stake in PSUs, opening retail

trade to FDI, reduced the growth target

to 7%, amendment of the Essential

Commodities Act, operationalisation of

Special Purpose Vehicle to finance

infrastructure projects etc. ( ET 20/5)

◗ The Employees Provident

Fund Organisation

recommended an interest

payout of 9.5% for the year

2004-05, although returns

on investments only allow

the fund to declare a deficit-less

interest rate of 8.5%. ( ET 29/5)

Major Events

◗ The RBI proposed to raise Rs. 2500 crore

through the auction of 364-day and 91-

day Government of India treasury bills

under the market stabilization scheme.

(BL 8/5)

◗ The Government introduced in the Lok

Sabha the Special Economic Zones Bill,

2005 which aims to provide minimum

regulatory intervention for such zones.

It also provides for single window

mechanism for the establishment of

SEZs. The objective of the SEZs is to

make available goods and services free

of taxes and duties, bolstered by

integrated infrastructure for export

production and a package of incentives

to attract foreign and domestic

investments for promoting export-led

growth. (BL 10/5)

◗ Small Industries

Development Bank of

India is planning to set up

a credit rating agency for

the small and medium

enterprises sector, along with Dun

and Bradstreet, Credit Information

Bureau of India Ltd and other

commercial banks ( BL 27/5)

Banking Developments

◗ The RBI permits doorstep services by

banks with its prior approval. Banks

have to formulate their own scheme for

doorstep banking and obtain RBI

permission before starting the service.

(BL 1/5)

◗ The Central Government

has decided to revamp the

Co-operative Banks with

sum of Rs. 15,000 crore. Of

which 25% (3500 crore) will be

borne by the State Governments. The

State Governments will get soft loans

from the Centre for this purpose. The

entire exercise will be undertaken in a

phased manner spread over a period of

four years. However, the state

governments would have to sign a

memorandum of agreement with the

Centre to ensure implementation of

the programme. The RBI will supervise

the overall programme. ( FE 2/5)

◗ RBI published a roadmap for the

payment and settlement system in the

country. Apart from starting

technology intensive electronic

clearing system (ECS) and electronic

funds transfer (EFT ), the proposed

National Settlement System (NSS) take

steps to convert MICR clearing into

cheque-truncation-based clearing. The

NSS will be operational by

December 05. ( BS 4/5)

3IBA BULLETINJULY 2005

◗ The RBI proposed to lower the bar for

extending the corporate debt

restructuring (CDR) scheme to

corporate entities on whom banks and

institutions have an outstanding

exposure of Rs. 10 crore or more, as

against the current norm of Rs. 20 crore

and above. ( FE 7/5)

◗ The RBI will assess the impact of Basel

II capital adequacy on banks in the

current year (2005-06) itself. It will

conduct parallel accounting in about

10 banks to get first hand estimation of

the extent of impact the banking sector

will have to bear. (BS 9/5)

◗ The RBI laid down new norms for

Megers and Acquisitions. Important

clauses are as include a) Voluntary

merger between private banks must be

approved by 2/3rds of the board

members b) Voting directors must be

signatories to existing corporate

governance covenants c) Bank must

disclose valuation details, financials and

share price movements to RBI before

the merger proposals is put to vote by

shareholders, etc ( ET 13/5)

◗ State Bank of India (SBI) and Housing

Development Finance Corporation

have divested part of their

shareholding in Credit Information

Bureau (CIBIL) in favour of a clutch of

banks, which will , as shareholders,

share credit information with the

Bureau. The aim is to keep with RBI

norms which require the Bureau to

ensure that no shareholder owns more

than 10%. ( ET 17/5)

◗ The RBI suggested mergers and

acquisition of regional rural banks,

change in sponsorship by involving

private banks, appointment of

chairman from the sector, minimum

capital requirement and a host of new

avenues of business to augment their

fee-based income. These are some of

the recommendations of the draft

report prepared by an internal working

group on RRBs released by the RBI.

(ET18/5)

◗ Banks are allowed to open foreign

currency accounts for project offices

and intermittent remittances by them.

(ET 18/5)

◗ The Reserve Bank has introduced

severe restrictions on interest

derivatives . The bank has advised to use

only rupee bench mark for interest rate

derivatives. It also put bank on MIFOR

as a benchmark for pricing domestic

interest rate derivative products within

the next six months. (ET 21/5)

◗ The RBI permitted MIFOR for inter-bank

dealings as against the earlier

guidelines. But each bank has to take

RBI’s approval on the kind of open

interest (or trading position) it can take

in MIFOR transactions. ( ET 30/5)

Banking Developments (Rs Crore)

Variations Outstanding Financial Yr

so farAs on 27/5/05 Actual %

Aggregate Deposits 1778358 58,411 3.4Investments 750144 7081 1.0Bank Credit 1144051 51960 4.8Non-Food Credit 1098324 47354 4.5Funds to Commercial 1190238 45957 3.9Sector

Market Developments and New

Products

◗ The National Commodity and

Derivatives Exchange launched the agri

composite index NCDEXAGRI. ( BL 4/5)

◗ Allahabad Bank posted a net profit of

Rs. 541.8 crore for the year ended 31st

March, 2005 as against Rs. 463.4 crore

of the previous year. ( ET 10/5)

◗ Syndicate Bank has posted a net profit of

Rs. 403 crore as against a profit of Rs.434

crore in the previous year. (FE 10/5)

◗ Bank of America will make a fresh

infusion of $175 million (Rs.767 crore)

into its Indian operations. The

additional capital inflow by BankAm

will help the bank meet RBI

requirements on single and group

borrower exposure limits. ( ET 11/5)

· The ICICI Bank had acquired a small

bank in Russia namely Investitsionno-

Kreditny Bank (IKB).( ET 20/5)

Market Developments

BSE Sensex : 6216.77 - 6715.11 ( 8.02%)Bankex : 3540.49 - 3803.40 ( 7.43%) Re/$ : Rs. 43.60 - 43.77 (-0.39%) Call Money : 4.90% -5.05% as on 31/5/05

Government Borrowing Programme

◗ The Centre has requested states todraw the market borrowingprogramme schedule for the financialyear 2005-06 as per therecommendations of the 12th FinanceCommission. ( FE 2/5) �

Prepared by Smt. Jayasree Menon


4

Banking SectorReforms in India :

An Overview

room for complacency."

Taking account of the nature of audience here and

following the example of Governor Husain, who

spoke eloquently on the banking sector reforms

in Pakistan in January this year, I have chosen to

present an overview of banking sector reforms in

India.

It is useful to very briefly recall the nature of the

Indian banking sector at the time of initiation of

financial sector reforms in India in the early 1990s.

The Indian financial system in the pre-reform

period (i.e., prior to Gulf crisis of 1991), essentially

catered to the needs of planned development in a

mixed-economy framework where the public

sector had a dominant role in economic activity.

The strategy of planned economic development

required huge development expenditure, which

was met through Government’s dominance of

ownership of banks, automatic monetization of

fiscal deficit and subjecting the banking sector to

large pre-emptions - both in terms of the statutory

holding of Government securities (statutory

liquidity ratio, or SLR) and cash reserve ratio (CRR).

Besides, there was a complex structure of

administered interest rates guided by the social

concerns, resulting in cross-subsidization. These

not only distorted the interest rate mechanism but

also adversely affected the viability and

profitability of banks by the end of 1980s. There is

perhaps an element of commonality of such a

‘repressed’ regime in the financial sector of many

banking fraternity. I would like to congratulate

Pakistan for its impressive economic performance.

Governor Husain, in his address at the Seminar on

Management of Pakistan Economy in Lahore, a few

weeks ago, had this to say about recent economic

performance of Pakistan and challenges ahead, in

his characteristically candid fashion:

"Economic growth rate has reached a solid 6 per cent

plus, inflation has been contained to 5 per cent which

has only recently started rising, exchange rate has

been stabilized, fiscal deficit has been drastically

reduced, domestic interest rates have declined

dramatically, international reserves have jumped

twelve times their 2000 level, debt ratios have fallen

significantly and investment is booming."

He further added that,

"Pakistan has achieved macroeconomic

stability, introduced structural reforms,

improved economic governance

and resumed the path for

high growth rates. But

there is no

Leader Speaks

In the currentscenario, banksare constantlypushing thefrontiers of riskmanagements.Compulsionsarising out ofincreasingcompetition, aswell as agencyproblemsbetweenmanagement,owners and otherstakeholders areinducing banksto look at neweravenues toaugmentrevenues, whiletrimming cost.Consolidation,competition andrisk managementare no doubtcritical to thefuture of bankingbut I believe thatgovernance andfinancialinclusion wouldalso emerge asthe key issues fora country likeIndia, at this stageof socio-economicdevelopment

Dr. Y. V. Reddy

Governor Ishrat Husain and

distinguished bankers,

At the outset, let me express my

gratitude to Governor Husain for

inviting me to visit Karachi and

meet with you. I consider it an

honour to be here amidst the



6

”

”

emerging market economies. It follows that

the process of reform of financial sector in

most emerging economies also has

significant commonalities while being

specific to the circumstances of each country.

A narration of the broad contours of reform

in India would be helpful in appreciating

both the commonalities and the differences

in our paths of reforms.

Contours of Banking Reforms in India

First, reform measures were initiated and

sequenced to create an enabling

environment for banks to overcome the

external constraints - these were related to

administered structure of interest rates, high

levels of pre-emption in the form of reserve

requirements, and credit allocation to certain

sectors. Sequencing of interest rate

deregulation has been an important

component of the reform process which has

imparted greater efficiency to resource

allocation. The process has been gradual and

predictated upon the instituion of

prudential regulations for the banking

system, market behaviour, financial opening

and above all the underlying

macroeconomic conditions. The interest

rates in banking system have been largely

deregulated except for certain specific

classes; these are : savings deposit accounts,

Non-Resident Indian (NRI) deposits, small

loans up to Rs. 2 lakh and export credit. The

need for continuance of these prescriptions

as well as those relating to priority sector

lending have been flagged for wider debate

in the latest annual policy of the RBI. However,

administered interest rates still prevail in

small savings schemes of the Government.

Second, as regards the policy environment

of public ownership, it must be recognised

that the lion’s share of financial

intermediation was accounted for by the

public sector during the pre-reform period.

As part of the reforms programme, initially,

there was infusion of capital by the

Government in public sector banks, which

was followed by expanding the capital base

with equity participation by the private

investors. The share of the public sector

banks in the aggregate assets of the

banking sector has come down from 90 per

cent in 1991 to around 75 per cent in 2004.

The share of wholly Government-owned

public sector banks (i.e., where no

diversification of ownership has taken place)

sharply declined from about 90 per cent to

10 per cent of aggregate assets of all

scheduled commercial banks during the

same period. Diversification of ownership

has led to greater market accountability and

improved efficiency. Since the initiation of

reforms, infusion of funds by the

Government into the public sector banks

for the purpose of recapitalisation

amounted, on a cumulative basis, to less

than one per cent of India’s GDP, a figure

much lower than that for many other

countries. Even after accounting for the

reduction in the Government's

shareholding on account of losses

set off, the current market value

of the share capital of the

Government in public

sector banks has

increased manifold

and as such what

was perceived to be

a bail-out of public

sector banks by

G o v e r n m e n t

seems to be

turning out to be

a profitable

investment for the

Government.

Third, one of the major

objectives of banking

Sequencing of interestrate deregulation has

been an importantcomponent of the

reform process whichhas imparted greaterefficiency to resource

allocation.

Addressed by Dr. Y. V. Reddy,

Governor, Reserve Bank of India at

the Institute of Bankers of Pakistan,

Karachi

on May 18, 2005


sector reforms has been to enhance

efficiency and productivity through

competition. Guidelines have been laid

down for establishment of new banks in

the private sector and the foreign banks

have been allowed more liberal entry. Since

1993, twelve new private sector banks have

been set up. As already mentioned, an

element of private shareholding in public

sector banks has been injected by enabling

a reduction in the Government

shareholding in public sector banks to 51

per cent. As a major step towards enhancing

competition in the banking sector, foreign

direct investment in the private sector banks

is now allowed up to 74 per cent, subject to

conformity with the guidelines issued from

time to time.

Fourth, consolidation in the banking sector

has been another feature of the reform

process. This also encompassed the

Development Financial Institutions (DFIs),

which have been providers of long-term

finance while the distinction between short-

term and long-term finance provider has

increasingly become blurred over time. The

complexities involved in harmonising the

role and operations of the DFIs were

examined and the RBI enabled the reverse-

merger of a large DFI with its commercial

banking subsidiary which is a major initiative

towards universal banking. Recently, another

large term-lending institution has been

converted into a bank. While guidelines for

mergers between non-banking financial

companies and banks were issued some time

ago, guidelines for mergers between private

sector banks have been issued a few days

ago. The principles underlying these

guidelines would be applicable, as

appropriate, to the public sector banks also,

subject to the provisions of the relevant

legislation.

Fifth, impressive institutional and legal

reforms have been undertaken in relation

to the banking sector. In 1994, a Board for

Financial Supervision (BFS) was constituted

comprising select members of the RBI Board

with a variety of professional expertise to

exercise 'undivided attention to supervision'.

The BFS, which generally meets once a month,

provides direction on a continuing basis on

regulatory policies including governance

issues and supervisory practices. It also

provides direction on supervisory actions

in specific cases. The BFS also ensures an

integrated approach to supervision of

commercial banks, development finance

institutions, non-banking finance

companies, urban cooperatives banks and

primary dealers. A Board for Regulation and

Supervision of Payment and Settlement

Systems (BPSS) has also been recently

constituted to prescribe policies relating to

the regulation and supervision of all types

of payment and settlement systems, set

standards for existing and future systems,

authorise the payment and settlement

systems and determine criteria for

membership to these systems. The Credit

Information Companies (Regulation) Bill,

2004 has been passed by both the Houses

of the Parliament while the Government

Securities Bills, 2004 is under process. Certain

amendments are being considered by the

Parliament to enhance Reserve Bank’s

regulatory and supervisory powers. Major

amendments relate to requirement of prior

approval of RBI for acquisition of five per

cent or more of shares of a banking company

with a view to ensure ‘fit and proper’ status

of the significant shareholders, aligning the

voting rights with the economic holding and

empowering the RBI to supersede the Board

of a banking company.

Sixth, there have been a number of measures

for enhancing the transparency and

disclosures standards. Illustratively, with a

view to enhancing further transparency, all

cases of penalty imposed by the RBI on the

banks as also directions issued on specific

matters, including those arising out of

inspection, are to be placed in the public

domain.

Seventh, while the regulatory framework

and supervisory practices have almost

converged with the best practices elsewhere

in the world, two points are noteworthy. First,

the minimum capital to risk assets ratio

(CRAR) has been kept at nine per cent i.e.,

one percentage point above the

international norm; and second, the banks

are required to maintain a separate

Investment Fluctuation Reserve (IFR) out of

profits, towards interest rate risk, at five per

cent of their investment portfolio under the

categories ‘held for trading’ and ‘available

for sale’. This was prescribed at a time when

interest rates were falling and banks were

realizing large gains out of their treasury

activities. Simultaneously, the conservative

accounting norms did not allow banks to

recognize the unrealized gains. Such

unrealized gains coupled with the creation

of IFR helped in cushioning the valuation

losses required to be booked when interest

rates in the longer tenors have moved up in

the last one year or so.

Eighth, of late, the regulatory framework in

India, in addition to prescribing prudential

guidelines and encouraging market

discipline, is increasingly focusing on

ensuring good governance through "fit and

proper" owners, directors and senior

managers of the banks. Transfer of

shareholding of five per cent and above

requires acknowledgement from the RBI and

such significant shareholders are put

through a `fit and proper' test. Banks have

also been asked to ensure that the

nominated and elected directors are

screened by a nomination committee to

satisfy `fit and proper' criteria. Directors are

also required to sign a covenant indicating

their roles and responsibilities. The RBI has

recently issued detailed guidelines on

ownership and governance in private sector

banks emphasizing diversified ownership.


8

The listed banks are also required to comply

with governance principles laid down by the

SEBI - the securities markets regulator.

Processes of Banking Reform

The processes adopted for bringing about

the reforms in India may be of some interest

to this audience. Recalling some features of

financial sector reforms in India would be in

order, before narrating the processes. First,

financial sector reform was undertaken early

in the reform-cycle in India. Second, the

financial sector was not driven by any crisis

and the reforms have not been an outcome

of multilateral aid. Third, the design and

detail of the reform were evolved by

domestic expertise, though international

experience is always kept in view. Fourth,

the Government preferred that public sector

banks manage the over-hang problems of

the past rather than cleanup the balance

sheets with support of the Government. Fifth,

it was felt that there is enough room for

growth and healthy competition for public

and private sector banks as well as foreign

and domestic banks. The twin governing

principles are non-disruptive progress and

consultative process.

In order to ensure timely and effective

implementation of the measures, RBI has

been adopting a consultative approach

before introducing policy measures. Suitable

mechanisms have been instituted to

deliberate upon various issues so that the

benefits of financial efficiency and stability

percolate to the common person and the

services of the Indian financial system can

be benchmarked against international best

standards in a transparent manner. Let me

give a brief account of these mechanisms.

First, on all important issues, working groups

are constituted or technical reports are

prepared, generally encompassing a review

of the international best practices, options

available and way forward. The group

membership may be internal or external to

the RBI or mixed. Draft reports are often

placed in public domain and final reports

take account of inputs, in particular from

industry associations and self-regulatory

organizations. The reform-measures

emanate out of such a series of reports, the

pioneering ones being: Report of the

Committee on the Financial System (Chairman:

Shri M. Narasimham), in 1991; Report of the

High Level Committee on Balance of Payments

(Chairman: Dr. C. Rangarajan) in 1992; and the

Report of the Committee on Banking Sector

Reforms (Chairman: Shri M. Narasimham) in

1998.

Second, Resource Management Discussions

meetings are held by the RBI with select

commercial banks, prior to the policy

announcements. These meetings not only

focus on perception and outlook of the

bankers on the economy, liquidity

conditions, credit flow, development of

different markets and directions of interest

rates, but also on issues relating to

developmental aspects of banking

operations.

Third, we have formed a Technical Advisory

Committee on Money, Foreign Exchange

and Government Securities Markets (TAC). It

has emerged as a key consultative

mechanism amongst the regulators and

various market players including banks. The

Committee has been crystallizing the

synergies of experts across various fields of

the financial market and thereby acting as a

facilitator for the RBI in steering reforms in

money, government securities and foreign

exchange markets.

Fourth, in order to strengthen the

consultative process in the regulatory

domain and to place such a process on a

continuing basis, the RBI has constituted a

Standing Technical Advisory Committee on

Financial Regulation on the lines similar to

the TAC. The Committee consists of experts

drawn from academia, financial markets,

banks, non-bank financial institutions and

credit rating agencies. The Committee

examines the issues referred to it and advises

the RBI on desirable regulatory framework

on an on-going basis for banks, non-bank

financial institutions and other market

participants.

Fifth, for ensuring periodic formal interaction,

amongst the regulators, there is a High Level

Co-ordination Committee on Financial and

Capital Markets (HLCCFCM) with the

Governor, RBI as the Chairman, and the Heads

of the securities market and insurance

regulators, and the Secretary of the Finance

Ministry as the members. This Co-ordination

Committee has authorised constitution of

several standing committees to ensure co-

ordination in regulatory frameworks at an

operational level.

Sixth, more recently a Standing Advisory

Committee on Urban Co-operative Banks

(UCBs) has been activated to advise on

structural, regulatory and supervisory issues

relating to UCBs and to facilitate the process

of formulating future approaches for this

sector. Similar mechanisms are being worked

out for non-banking financial companies.

Seventh, the RBI has also instituted a

mechanism of placing draft versions of

important guidelines for comments of the

public at large before finalisation of the

guidelines. To further this consultative

process and with a specific goal of making

the regulatory guidelines more user-friendly,

a Users’ Consultative Panel has been

constituted comprising the representatives

of select banks and market participants. The

panel provides feedback on regulatory

instructions at the formulation stage to

avoid any subsequent ambiguities and

operational glitches.

Eighth, an extensive and transparent

communication system has been evolved.

The annual policy statements and their mid-

term reviews communicate the RBI’s stance


on monetary policy in the immediate future

of six months to one year. Over the years,

the reports of various working groups and

committees have emerged as another plank

of two-way communication from RBI. An

important feature of the RBI’s communication

policy is almost real-time dissemination of

information through its web-site. The

auction results under Liquidity Adjustment

Facility (LAF) of the day are posted on the

web-site by 12.30 p.m the same day, while

by 2.30 p.m. the ‘reference rates’ of select

foreign currencies are also placed on the

website. By the next day morning, the press

release on money market operations is

issued. Every Saturday, by 12 noon, the

weekly statistical supplement is placed on

the web-site providing a fairly detailed,

recent data-base on the RBI and the financial

sector. All the regulatory and administrative

circulars of different Departments of the RBI

are placed on the web-site within half an

hour of their finalization.

Ninth, an important feature of the reform of

the Indian financial system has been the

intent of the authorities to align the

regulatory framework with international

best practices keeping in view the

developmental needs of the country and

domestic factors. Towards this end, a Standing

Committee on International Financial

Standards and Codes was constituted in

1999. The Standing Committee had set up

ten Advisory Groups in key areas of the

financial sector whose reports are available

on the RBI website. The recommendations

contained in these reports have either been

implemented or are in the process of

implementation. I would like to draw your

attention to two reports in particular, which

have a direct bearing on the banking system,

viz., Advisory Group on Banking Supervision

and Advisory Group on Corporate

Governance. Subsequently, in 2004, we

conducted a review of the recommendations

of the Advisory Groups and reported the

progress and agenda ahead.

What has been the Impact?

These reform measures have had major

impact on the overall efficiency and stability

of the banking system in India. The present

capital adequacy of Indian banks is

comparable to those at international level.

There has been a marked improvement in

the asset quality with the percentage of gross

non-performing assets (NPAs) to gross

advances for the banking system reduced

from 14.4 per cent in 1998 to 7.2 per cent in

2004. The reform measures have also resulted

in an improvement in the profitability of

banks. The Return on Assets (RoA) of the banks

rose from 0.4 per cent in the year 1991-92 to

1.2 per cent in 2003-04. Considering that,

globally, the RoA has been in the range 0.9 to

1.5 per cent for 2004, Indian banks are well

placed. The banking sector reforms also

emphasized the need to review the

manpower resources and rationalize the

requirements by drawing a realistic plan so

as to reduce the operating cost and improve

the profitability. During the last five years, the

business per employee for public sector

banks more than doubled to around Rs.25

million in 2004.

Continuity, Change and Context

We lay considerable emphasis on appropriate

mix between the elements of continuity and

change in the process of reform, but the

dynamic elements in the mix are determined

by the context. While there is usually a

consensus on the broad direction, relative

emphasis on various elements of the process

of reform keeps changing, depending on the

evolving circumstances. Perhaps it will be

useful to illustrate this approach to

contextualising the mix of continuity and

change.

The mid-term review in November 2003,

reviewed the progress of implementation

of various developmental as well as

regulatory measures in the banking sector

but emphasised facilitating the ease of

transactions by the common person and

strengthening the credit delivery systems,

as a response to the pressing needs of the

society and economy. The annual policy

statement of May 2004 carried forward this

focus but flagged major areas requiring

urgent attention especially in the areas of

ownership, governance, conflicts of interest

and customer-protection. Some extracts of

the policy statement may be in order:

"First, it is necessary to articulate in a

comprehensive and transparent manner the

policy in regard to ownership and

governance of both public and private sector

banks keeping in view the special nature of

banks. This will also facilitate the ongoing

shift from external regulation to internal

systems of controls and risk assessments.

Second, from a systemic point of view, inter-

relationships between activities of financial

intermediaries and areas of conflict of

interests need to be considered. Third, in

order to protect the integrity of the financial

system by reducing the likelihood of their

becoming conduits for money laundering,

terrorist financing and other unlawful

activities and also to ensure audit trail,

greater accent needs to be laid on the

adoption of an effective consolidated Know

Your Customer (KYC) system, on both assets

and liabilities, in all financial intermediaries

regulated by RBI. At the same time, it is

essential that banks do not seek intrusive

details from their customers and do not

resort to sharing of information regarding

the customer except with the written

consent of the customer. Fourth, while the

stability and efficiency imparted to the large

commercial banking system is universally

recognised, there are some segments which

warrant restructuring."

The annual policy statement for the current

year reiterates the concern for common

person, while enunciating a medium term

framework, for development of money, forex

and government securities markets; for

enhancing credit flow to agriculture and


10

small industry; for action points in

technology and payments systems; for

institutional reform in co-operative banking,

non-banking financial companies and

regional rural banks; and for ensuring

availability of quality services to all sections

of the population. The most distinguishing

feature of the policy statement relates to

the availability of banking services to the

common person, especially depositors.

The statement reiterates that depositors’

interests form the focal point of the

regulatory framework for banking in India

and elaborates the theme as follows:

"A licence to do banking business provides

the entity, the ability to accept deposits and

access to deposit insurance for small

depositors. Similarly, regulation and

supervision by RBI enables these entities to

access funds from a wider investor base and

the payment and settlement systems

provides efficient payments and funds

transfer services. All these services, which are

in the nature of public good, involve

significant costs and are being made

available only to ensure availability of

banking and payment services to the entire

population without discrimination".

The policy draws attention to the divergence

in treatment of depositors compared to

borrowers as:

" … while policies relating to credit

allocation, credit pricing and credit

restructuring should continue to receive

attention, it is inappropriate to ignore the

mandate relating to depositors’ interests.

Further, in our country, the socio-economic

profile for a typical depositor who seeks safe

avenues for his savings deserves special

attention relative to other stakeholders in

the banks".

Another significant area of concern has been

the possible exclusion of a large section of

population from the provision of services

and the Statement pleads for financial

inclusion. It states:

"There has been expansion, greater

competition and diversification of

ownership of banks leading to both

enhanced efficiency and systemic resilience

in the banking sector. However, there are

legitimate concerns in regard to the banking

practices that tend to exclude rather than

attract vast sections of population, in

particular pensioners, self-employed and

those employed in unorganised sector. While

commercial considerations are no doubt

important, the banks have been bestowed

with several privileges, especially of seeking

public deposits on a highly leveraged basis,

and consequently they should be obliged

to provide banking services to all segments

of the population, on equitable basis."

Operationally, it has been made clear that

RBI will implement policies to encourage

banks which provide extensive services

while disincentivising those which are not

responsive to the banking needs of the

community, including the underprivileged.

The quality of services rendered has also

invited attention in the current policy. I quote

further, "Liberalisation and enhanced

competition accord immense benefits, but

experience has shown that consumers’

interests are not necessarily accorded full

protection and their grievances are not

properly attended to. Several representations

are being received in regard to recent trends

of levying unreasonably high service/user

charges and enhancement of user charges

without proper and prior intimation. Taking

account of all these considerations, it has

been decided by RBI to set up an independent

Banking Codes and Standards Board of India

on the model of the mechanism in the UK in

order to ensure that comprehensive code of

conduct for fair treatment of customers are

evolved and adhered to".

It is essential to recognise that, while these

constitute contextual nuanced responses to

changing circumstances within the country, the

overwhelming compulsion to be in harmony

with global developments must be respected

and that essentially relates to Basel II.

Basel II and India

RBI’s association with the Basel Committee

on Banking Supervision dates back to 1997

as India was among the 16 non-member

countries that were consulted in the

drafting of the Basel Core Principles. Reserve

Bank of India became a member of the Core

Principles Liaison Group in 1998 and

subsequently became a member of the Core

Principles Working Group on Capital. Within

the Working Group, RBI has been actively

participating in the deliberations on the New

Accord and had the privilege to lead a group

of six major non-G-10 supervisors which

presented a proposal on a simplified

approach for Basel II to the Committee.

Commercial banks in India will start

implementing Basel II with effect from March

31, 2007. They will adopt Standardised

Approach for credit risk and Basic Indicator

Approach for operational risk, initially. After

adequate skills are developed, both at the

banks and also at supervisory levels, some

banks may be allowed to migrate to the

Internal Rating Based (IRB) Approach.

Let me briefly review the steps taken for

implementation of Basel II and the emerging

issues. The RBI had announced in its annual

policy statement in May 2004 that banks in

India should examine in depth the options

available under Basel II and draw a road-

map by end-December 2004 for migration

to Basel II and review the progress made at

quarterly intervals. The Reserve Bank

organized a two-day seminar in July 2004

mainly to sensitise the Chief Executive

Officers of banks to the opportunities and

challenges emerging from the Basel II norms.

Soon thereafter all banks were advised in

August 2004 to undertake a self-assessment

of the various risk management systems in


place, with specific reference to the three

major risks covered under the Basel II and

initiate necessary remedial measures to

update the systems to match up to the

minimum standards prescribed under the

New Framework. Banks have also been

advised to formulate and operationalise the

Capital Adequacy Assessment Process (CAAP)

within the banks as required under Pillar II of

the New Framework.

It is appropriate to list some of the other

regulatory initiatives taken by the Reserve Bank

of India, relevant for Basel II. First, we have tried

to ensure that the banks have suitable risk

management framework oriented towards their

requirements dictated by the size and

complexity of business, risk philosophy, market

perceptions and the expected level of capital.

Second, Risk Based Supervision (RBS) in 23 banks

has been introduced on a pilot basis. Third, we

have been encouraging banks to formalize their

capital adequacy assessment process (CAAP) in

alignment with their business plan and

performance budgeting system. This, together

with the adoption of RBS would aid in factoring

the Pillar II requirements under Basel II. Fourth,

we have been expanding the area of disclosures

(Pillar III), so as to have greater transparency in

the financial position and risk profile of banks.

Finally, we have tried to build capacity for

ensuring the regulator’s ability for identifying

and permitting eligible banks to adopt IRB /

Advanced Measurement approaches.

As per normal practice, and with a view to

ensuring migration to Basel II in a non-

disruptive manner, a consultative and

participative approach has been adopted for

both designing and implementing Basel II. A

Steering Committee comprising senior

officials from 14 banks (public, private and

foreign) has been constituted wherein

representation from the Indian Banks’

Association and the RBI has also been

ensured. The Steering Committee had formed

sub-groups to address specific issues. On the

basis of recommendations of the Steering

Committee, draft guidelines to the banks on

implementation of the New Capital Adequacy

Framework have been issued.

Implementation of Basel II will require more

capital for banks in India due to the fact

that operational risk is not captured under

Basel I, and the capital charge for market

risk was not prescribed until recently.

Though last year has not been a very good

year for banks, they are exploring all

avenues for meeting the capital

requirements under Basel II. The cushion

available in the system, which has a CRAR

of over 12 per cent now, is, however,

comforting.

India has four rating agencies of which three

are owned partly/wholly by international

rating agencies. Compared to developing

countries, the extent of rating penetration

has been increasing every year and a large

number of capital issues of companies has

been rated. However, since rating is of issues

and not of issuers, it is likely to result, in effect,

in application of only Basel I standards for

credit risks in respect of non-retail exposures.

While Basel II provides some scope to extend

the rating of issues to issuers, this would only

be an approximation and it would be

necessary for the system to move to rating

of issuers. Encouraging rating of issuers

would be essential in this regard. In this

context, current non-availability of

acceptable and qualitative historical data

relevant to ratings, along with the related

costs involved in building up and maintaining

the requisite database, does influence the

pace of migration to the advanced approaches

available under Basel II.

Above all, capacity building, both in banks

and the regulatory bodies is a serious

challenge, especially with regard to adoption

of the advanced approaches. We in India have

initiated supervisory capacity-building

measures to identify the gaps and to assess

as well as quantify the extent of additional

capital which may be required to be

maintained by such banks. The magnitude

of this task, which is scheduled to be

completed by December, 2006, appears

daunting since we have as many as 90

scheduled commercial banks in India.

Concluding Observations

In the current scenario, banks are constantly

pushing the frontiers of risk management.

Compulsions arising out of increasing

competition, as well as agency problems

between management, owners and other

stakeholders are inducing banks to look at

newer avenues to augment revenues, while

trimming costs. Consolidation, competition

and risk management are no doubt critical

to the future of banking but I believe that

governance and financial inclusion would

also emerge as the key issues for a country

like India, at this stage of socio-economic

development.

Once again, let me thank Governor Husain

for his kind invitation and the audience for

their patient hearing.

Thank you. �

www.iba.org.in

Internet Banking –Changing Vistas of

Delivery Channel

CEO’s Perspective

With

consolidation of

Banks and

Technology

upgradation of the

banking platform,

Internet Banking is

bound to grow

leaps and bounds

and will emerge as

the most popular

Banking delivery

channel, within

the next few years.

With greater

emphasis been

laid on e-

governance,

Internet Banking

Channel will be a

key-facilitator with

about 40-50% of

the total banking

and financial

transactions to be

done through

Internet.

S.C. Gupta

anytime banking” has made “Internet banking” as

one of the primary delivery channel available to

present day customers.

As a business tool, Internet banking is rapidly

transforming the banking and financial world and

has made banks more efficient and fast in providing

personalized services to the end users i.e. the customer.

Internet Banking has not only transformed the “ways”

of banking but also all the aspects of the finance

and commerce. Internet banking has predominantly

become a mode of e-banking in which the Internet

offering itself as a new delivery mechanism for the

banks in reaching the customer. With the advent of

Internet Banking, there is a perceptible shift in the

customer preferences for Delivery Channel.

According to a study in USA by the Pew Internet

& American Life Project, about 44 percent of

the U.S Internet Surfers - i.e. 53 million

people use online banking.

Internet Banking in India

New Generation Private

Sector Banks

n a m e l y

Internet banking involves use of

Internet as a medium of

communication for accessing and

utilizing host of banking and

financial services. The customer’s

demand for personalized service

and the concept of “Anywhere &

ICICI Bank, HDFC bank etc. were pioneers in

introducing Internet Banking in India. They had the

advantage of technology platform and did not have

legacy systems. However with the technology

transformation of Public Sector Banks in the recent

years, many banks have started offering the Internet

Banking facility to their customers.

The number of banks offering Internet banking in

India, has increased exponentially during the last 3

years. Advancements in technology used by banks,

especially centralised Core Banking Solution, and the

growth of Internet usage is propelling the growth

of Internet Banking. This is supplemented by the

wide range of services possible through Internet

Banking, anywhere - anytime at the click of the mouse,

at Customer’s convenience.

Internet Banking - New Vistas

Besides providing the routine Banking services,

Internet Banking has enhanced capabilities like

providing Online Utility Bill Presentment and

Payment Systems, Online Share Trading, Demat and

Broking Services, Online Purchases and Auctions,

Funds Management and Payment Gateways.

Customer Expectations

While Brick and Mortar Banking is expected to

continue its presence and dominance, there is a

perceptible shift in customer preference for alternate

delivery channels like Internet Banking and ATMs.

Customers prefer 24 X 7 X 365 banking services at

their convenience and a place of their choice, and it


12

”

”

While people under 40years of age prefer

online banking, oldergenerations tend to bemore hesitant towards

online banking, asmany remain stuck in

old habits

Mr. S.C. Gupta, Chairman & Managing Director of PubjabNational Bank, is M.Com., CAIIB and started his banking careerfrom State Bank of India in 1966. After brief stints at State Bankof India and Syndicate Bank, he joined Oriental Bank ofCommerce in 1972 where he made significant contributions.He was promoted as General Manager in 1994 and headedimportant portfolios like credit, international banking, creditcards, priority credit and recoveries. He was Executive Directorof Indian Overseas Bank (IOB) from December 1999 to May2001 and its CMD from May 2001 to April 2005. Under hisleadership, IOB had registered record growth in business andprofits.

He is a Director in United India Insurance Co. Ltd. and is Chairmanof the IBA’s Committee on Credit management and headed theIBA Committee on Vision - Banking 2010. Besides, he is Memberof IBA’s Managing Committee, Indian Institute of Banking andFinance, Institute for Banking Personnel Section and IBA WorkingGroup on consolidation in Indian Banking System.

should be easier for them to transact their

business. They would also prefer a single

interface which helps them in completing a

range of services. They would also prefer

confidentiality and privacy of their

transactions and accounts.

Advantages of Internet Banking for a

customer include convenience, round the

clock accessibility, instantaneous

transactions, single window view of all

accounts with drill down features, etc.

Internet Banking is a customer delight which

fulfils most of these aspirations.

Marketing Strategy of Banks

New products are evolved by the Banks, to

attract the customers towards these

alternate Delivery channels. There are also

special campaigns which give a focused

marketing thrust to increase the customer

base and usage of Internet Banking.

Incentives and Reward points are also offered

as part of these strategies.

For indian banks, there is a wide market

potential amongst Non-Resident Indians

and internet banking can be used as a

product to attract and tap this market. The

customer can be benefited by the various

funds transfer features of internet banking,

thereby facilitating instant remittances to

the beneficiaries, without the hassle of

procuring drafts, sending it by post / courier,

and follow up for its safe transit.

This will also facilitate customer growth and

potential opportunities to market their

products and services to new customer

segment.

Challenges Faced in India

➢ A majority of customers are not

computer savvy

➢ Availability of Internet Bandwidth and

connectivity is not uniform.

➢ Non availability of safe computing

facilities across the country

➢ Banks are not networked and many of

the banks still have legacy systems,

where providing Internet Banking

Solutions is not cost effective and

efficient.

➢ Customer confidence in internet

banking needs to be built.

➢ The initial cost of implementation

being high, benefits can be visible only

when we have a critical customer base

and volume of transactions. Cost of

transaction will reduce only when

customer shifts to alternate delivery

channels from the branch banking. The

cost savings in the branch banking

front will be by redeployment of

resources.

➢ Ensuring Security including privacy and

confidentiality of customer information

is a challenge.

While people under 40 years of age prefer

online banking, older generations tend to

be more hesitant towards online banking,

as many remain stuck in old habits.

While the assessment of

transaction cost vary and is

dependant on various

factors, various study

indicate that the cost of

transactions through

internet is about 1/

10th the cost of the

t r a n s a c t i o n

through the

branch.

However, this can

be realized, only

when there are

sufficient volumes

in the transactions

through the internet.



14

Advantages for Banks

Some of the advantages for popularizing

this delivery channel include reduction in

transaction cost in the long run, an effective

medium to market their products and

services, faster product deployment,

customer consolidation, cost savings,

increase in productivity and introduction of

new products targeting for specific customer

segments.

Banks have discovered the benefits of online

customers and have become more

aggressive towards not only attracting

customers but retaining the existing

customers by offering incentives for online

services, and catchy advertisements. Various

studies indicate that online banking

customers are more profitable than offline

customers - they make fewer customer

service calls and are less likely to switch

banks.

Banks have gone a step further by using

internet banking as a medium for offering

internet related products.

Security Concerns

Security fears have served as deterrents to

online banking growth. Of particular concern

are threats of pharming and phishing.

Phishing is an internet fraud, through which

innocent persons are enticed to divulge their

personal information like User Identity and

Passwords, which are later on used by

scammers in unauthorised ways.

The most common method of phishing is

sending emails claiming to be from your

bank or other financial institution which are

dealing, that already has your personal

information, and you will be asked to

confirm the details by clicking a particular

link (url) provided in this fake email. This url

will take you to a fake website which will be

similar to the genuine website, and the

information provided by the customer in

the forms provided in the fake website, will

be gathered and used for committing fraud

in their accounts / credit cards or withdraw

funds unauthorisedly from these accounts.

Pharming is another internet fraud, whereby

as many users as possible are redirected

before they reach the the legitimate online

banking websites they intend to visit and

are lead to malicious ones. The bogus sites,

to which victims are redirected without their

knowledge or consent, will likely look the

same as a genuine site. But when users enter

their login name and password, the

information is captured by criminals.

As per the latest survey, phishing and

pharming are one of the top five internet

security threats. With Online Banking

catching up with the customers, the

possibility of such threats increase.

The Anti-Phishing Working Group reports

that the number of new phishing messages

rose by an average 38 percent per month in

the last six months of 2004.

Safeguards to prevent security breaches

The Web servers can be provided with

Digital Certificates and are SSL enabled,

whereby the Customer is provided with the

authenticity of visiting our genuine website.

Customers need to be forced to change the

passwords at periodic intervals

automatically by the Internet banking

application so that the possibility of misuse

is reduced..

Some Banks have provided virtual keyboard

feature for Internet Banking Login, whereby

the customer uses mouse clicks instead of

typing using the keyborad. This minimises

the risk due to keyboard grabbing.

The possibility of providing two factor

authentication mechanisms ( some thing

what they know and what they possess, like

smart cards, I Keys, Tokens etc.) are being

contemplated, by some banks which will be

subject to feasibility of smooth integration

with the application.

Awareness needs to be created among the

users as to the risks involved and measures

to mitigate the risk.

Firewalls, Intrusion Detection Systems, Access

Control and other security mechanisms have

to be strengthened for Internet Banking.

Hosting the servers in own premises in a

controlled environment, is preferable.

Periodic audits including penetration testing,

by qualified external auditors and

vulnerablity analysis need to be undertaken,

periodically.

The Internet Banking Guidelines provided

by the Reserve Bank of India, provides for

exhaustive security measures to be

implemented by the banks offering Internet

Banking Services. There are also other

initiatives like Cert-in specifically for Financial

Sector, which will go a long way in

combating the internet threats. There is a

need to create awareness among the

customers about the risks and the measures

that have been taken to combat the threats.

Conclusion

With consolidation of Banks and Technology

upgradation of the banking platform,

Internet Banking is bound to grow leaps

and bounds and will emerge as the most

popular Banking delivery channel, within the

next few years. With greater emphasis been

laid on e-governance, Internet Banking

Channel will be a key-facilitator with about

40-50% of the total banking and financial

transactions to be done through Internet.

The vast customer base of banks in India and

the growth in technology implementation

in the coming years will see India emerging

as the country having the largest number of

users of Internet Banking in the world. �

Is ATM CostEffective?

Experts Views

Today, the overall

economic

conditions remain

challenging. The

need of the hour is

to focus on the

BASICS OF

BUSINESS. We

need to focus on

managing cost

efficiencies and on

increasing profits.

As FORTUNE

MAGAZINE rightly

pointed out, we

have learnt from

the dot com bust

that: “If it does not

make cents, it does

not make sense”

P. Siva Rama Prasad

to be summarized and compared. The term also has

no universally agreed spelling. It is written as cost

benefit, cost/benefit, or cost-benefit, for instance.

Because the term "cost benefit analysis" does not

refer to any specific approach or methodology, the

business person who is asked to produce one should

take care to find out what is expected or needed. The

term covers several varieties of business case analysis,

such as:

➢ Return on investment (ROI analysis)

➢ Financial justification

➢ Cost of ownership analysis

All of these approaches to cost benefit analysis

attempt to predict the financial impacts and other

business consequences of an action. All these

approaches have the same structural and

procedural requirements for building a

strong, successful business case. They

differ primarily in terms of:

➢ How they define "cost"

and "benefit" in

p r a c t i c a l

terms

The term Cost benefit analysis is

used frequently in business

planning and decision support

activities. However, the term itself

has no precise definition beyond

the implication that both positive

and negative impacts are going

➢ Which costs and benefits are included for

analysis

➢ Which financial metrics are important for

decision makers and planners

Technology and Its Implications

Bill Gates is said to have remarked in 1994 that banks

were “DINOSAURS”

a. Since then it is more and more believed that advances

in technology will lead to the demise of banks, atleast

in the form, as we know them today. The threat is real.

But then there are opportunities created by

technologies too. And these opportunities can be

capitalised by banks, financial services companies as

also by retail organisations. All over the world, bank’s

traditional business of taking advances and lending

out the proceeds is in terminal decline. This is being

referred to as disintermediation. In America, banks

and thrifts, building societies now have 28% of the

financial services market. This is half of what they

had 20 years ago.

b. All the rich countries, even Japan is starting to

deregulate savings products. Similar forces areat work on banks’ assets. The spread ofinformation technology and the dramaticadvances in financial theory have made itcheaper for big companies to raise money inthe capital markets than from banks. Investorson the other hand, are finding new places toinvest their cash. For example, mutual funds arespreading all over the world. All these changes,coupled with lower interest rates, have resultedin reduced margins. Regional Banks in America



16

”

”

CUTTING COST IS ONEWAY OF IMPROVINGRETURNS. This can be

achieved through

➢ Merger of Banksand/or

➢ Use of InformationTechnology (IT)

Mr. P. Siva Rama Prasad is presently working as

Chief Manager (BPR Project), State Bank of India,

Mumbai. He has been working in State Bank of

India since May 1980 and has handled various

assignments.

He is B.Com., M.Com., MBA and having

Professional Qualifications in ICWAI, CS, Diploma

in Management Accountancy, PGDPR, CAIIB and

various other Diploma Courses in Banking,

Insurance, Mutual Funds and Computers.

today have margins of LESS THAN 3%points compared to over 5.5% points in1970s.

If economies do not grow very fast andbanks’ share of financial intermediation isshrinking, i.e., their lending is not growing,banks are confronted with the problem ofhow to make money. CUTTING COST IS ONEWAY OF IMPROVING RETURNS. This can beachieved through

➢ Merger of Banks and/or➢ Use of Information Technology (IT)

The merger of Chase Manhattan, ChemicalBank, Manufacturer Hanover have resultedin saving of $ 2.5 billion a year. The numberof banks in America has fallen from 14,500in the mid 1980s to just under 8000 now.This is clearly to achieve cutting of costs.

"Reduction of Cost is Profit"

The Banks have a cost element in every riskit undertakes. These can be broadly classifiedas Controllable costs and Non-ControllableCosts. Controllable costs can further besubdivided into visible, invisible andfuturistic costs. Non-controllable costscomprise of salary / wage bills and taxes etc.

The importance of OPERATING COST in thepresent banking environment can begauged from the following statement in theMonetary and Credit Policy for the year 2000-01 announced by the RBI.

“Another factor affecting the interest ratestructure in India is the high level of non-interest operating expenses of public sectorbanks. These work out to 2.5 to 3.5 per centof total assets. The high transaction costswhich generally reflect high costs, combinedwith relatively high levels of Non-PerformingAssets (NPAs), further constrain themanoeuvrability in respect of lending rates.”

The operating cost as ratio of total assets isotherwise referred to as the intermediation cost.

Profit and thereby profitability, the ability togenerate profit, can be increased by two waysviz.

➢ Increasing the income on the one hand

and

➢ Decreasing the expenses on the other.

One of the crucial factors in maintainingprofitability of a bank is its ability to controlcost of operations. The cost to income ratioshould be kept at minimum possible levelsreducing overheads on an on-going basisbut without adversely affecting the qualityof services. Closing down of loss making ruralbranches, reducing staff costs throughadaptation of technology and improving theirproductivity etc., goes a long way in cuttingoverheads in this inflationary environment.Optimum use of modern TelecommunicationNetworks like SWIFT, e-mail, VideoConferencing, centralised bulk purchase ofstationery etc. helps in the cost cutting effortsof banks.

Automated Teller Machine – a Cost ControlDevice to the Commercial Banks

COSTING has become an area of crucialsignificance as never before in today's fastchanging banking scenario. The keydevelopments, which have resulted into

providing a place of eminence for this

discipline, are as under:

1) RBI's licensing policy has resulted

in encroachment by private(new generation)/foreignbanks in old bastions ofPublic Sector Banks(PSBs). This hasresulted intos i g n i f i c a n t l ybringing downmarket sharepercentage ofPSBs.

2)Deregulationof interestrates ands e r v i c echarges forr e m i t t a n c e s .This hasn e c e s s i t a t e defficient operating


system in banks to work under thinnermargins in a buyer's market.

3) Impact of globalisation witnessed inthe form of new products/re-engineering in processes as a result ofprogressive integration of IndianEconomy with World Economy.

4) Electronic Banking is gradually spreadingin PSBs, since the hi-tech superiority ofPrivate (new generation)/Foreign banks,has rendered PSBs services obsolete. Themammoth manpower of PSBs hasbecome their drawbacks symbolised asa significant cost centre.

5) Strategic alliances through mergers, oflate, to strengthen product deliverysystem has further sharpenedcompetition in banking sector.The Indian Commercial Banks makesits transition towards technologyoriented banking, alternate deliverychannels will assume importance forbetter Customer Service with valueaddition and effective reduction inCost of Transaction.

A large number of ATMs have already beeninstalled by the Commercial Banksthroughout the country. The utility of ATMis already gaining popularity day-by-dayamong the customers of the bank and thebenefit of such huge number of ATMs spreadover the country is being utilised by thecustomers of the Commercial Banks. TheATMs are emerging as the most useful toolto ensure “Any-Time Banking” and “Any-where Banking” or Any-Time Money.

While the benefits of ATM are immense, thecost of ATM, though has come down, is stillprohibitive. An ATM costs anywhere betweenRs.8 - 10 lakhs. If a bank has to install 100ATMs it should spend atleast Rs.8 - 10 crs.Added to this, is the maintenance cost. Today,any electronic device attracts an annualmaintenance cost of 8 to 12 % of capitalcost. Besides this, banks have to incurexpenditure on the rent for retail outlet, itsambience and on security personnel etc.

While many Public Sector Banks have goneon a big way in opening ATMs, there is aneed for sufficient examination of their

economic viability. Already there isexperience that the hits per ATM are lessthan 200 resulting in no big gain for eitherthe bank or customer. The average usage ofATMs in Europe was 3300 withdrawals permachine per month in 1999. Sweden hasreported exceptional high in hits with anaverage of 10156 withdrawals per ATM permonth. India with more population densityshould show a higher average hit per dayand this emerges as a critical factor in theoverall ATM strategy towards making thewhole business idea profitable.

With the increasing pressures on spreads,banks have no alternative but to resort tocost cutting exercise in whatever way feasible.While there is limited scope for reducing staffcosts for reasons best known to all, othertarget areas where banks can certainlyensure trimming of costs are stationery /printing, rent, telephones, electricity andother overheads etc. Faced with relentlesspressure to reduce costs, it would also benecessary to have a re-look at all theoverheads including those which pertain tomaintenance of support services which maynot be part of core business activities of theorganisation. Such analysis of costs involvedin support services may prompt to resortingto “ATM”. ATM is considered as one of theacceptable strategies for cost control.

The rationale for banks introducing ATMs inthe 1970s, telephone banking in the 1980s andnow the internet banking was to deliver theirproducts more cheaply than traditional branchnetworks, which are loaded with expensive staff.

"Lloyds TSB claim that only two peoplecontrol the banks' 4500 ATMs"

Private Sector Banks going ahead withaggressive ATM plans particularly off-site(away from branch), for wider reach withLOWER COST. They are also targeting ATMdeployment in top corporate offices or staffcolonies – not only for the salary accountsbut also for a piece of the Corporate Pie andalso to get the following benefits.

a) Reduces overheads.b) Minimises use of costly consumables

like cheque – leaves etc.

c) Can lead to increased profitability byreducing costs per transaction–imperative in an intensely competitiveenvironment.

d) With increase in number of ATM cardsand usage, transaction cost will declinesubstantially.

e) Can advertise Bank’s products onscreen – cross selling loans, insurance,credit cards, etc.

f ) Revenue earning stream–through saleof tickets, bill payments, income taxcollections etc.

At present some banks are offering only Cashwithdrawals. Banks should immediatelyprovide other facilities such as Cash deposits,Issue of Cheque books, Drafts, Stop PaymentInstruction of cheques, and transfer of fundsfrom one branch to another branch of thesame bank and other facilities alreadyavailable in ATMs. Such a step will help inoptimum utilization of the ATM therebyreducing Cost per transaction. The present &future technology comparison of ATMs are:

Today’s ATM The Future ATM

Multi-Lingual Personalization

Web Enabled Campaign Management

Bill Payment Biometrics

Mobile Recharge Biometrics

Ticketing (Railways) Ticketing (Airlines)

Third Party

Advertisement Wireless

Fund Transfer Shared Network Model

National Financial Switch of Reserve Bank ofIndia

The Institute for Development and Researchin Banking Technology (IDRBT), establishedby the Reserve Bank of India in 1996, is aninstitute catering to the banking sectorrequirements in areas of education and

training, security, technology, research and

development and consultancy.

IDRBT runs the communication backbone

of Indian Banking Sector, the INFINET (Indian

Financial NETwork).

Automated Teller Machines of all public and

private sector banks in the country will be

brought under the National Financial Switch


18

(NFS) umbrella of the Reserve Bank of India

by July, 2005.

The project, aimed at inter-connecting the

ATMs of all banks, is being implemented by

the IDRBT.

Euronet Worldwide Inc. through its Indian

arm, Euronet Services India Pvt Ltd. is

implementing the ATM connectivity project

for IDRBT. The project will enable customers

to deposit or withdraw cash from an ATM of

any other Bank. Launched officially on

August 27,2004, three banks – Corporation

Bank, Bank of Baroda and ICICI Bank – have

already joined NFS. Seven other banks are

also likely to get hooked on to the NFS by

January, 2005.

According to the IDRBT, the NFS has

assumed importance given the plans of the

banks to share ATM resources. The project is

expected to optimise costs for banks. This

project has economic advantages and offers

wider reach while helping in preventing

infrastructure duplication. Besides, when in

place, this common solution opens up a

range of electronic possibilities for banks,

corporates and consumers.

Comparative Cost Statement of Automated Teller Machine And Teller

Automated Teller Machine

Sl. No. Type of Cost Total Cost Cost per Month

01 FIXED COST:

ATM Cost

(Sales Tax differs from State to State)

Average Life – 10 Years 6,70,000

Method of Depreciation (Straight Line Method @ 10% p.a.

Depreciation per month=(Rs.67,000/12 Months) 67,000 5,583

02 Cost of Construction of ATM Room (Civil Works & Electrical Installation) -

Average Life - 10 Years 2,50,000

Depreciation @ 10% p.a. – Straight Line Method


03 Cost of Air-Conditioned, UPS, Fixtures & Furniture,

Telephone and its installation Cost 3,00,000

Depreciation @ 10% p.a. – Straight Line Method


04 Rent payable per month for ATM Room (if it hired outside the branch

premises i.e., off-site (The rent depends upon the Location, City etc.,

i.e., Rs.2,500 p.m. to Rs.8,000 p.m.) – Average Rs.5,000/- p.m. 5,000

05 Annual Maintenance Cost @ 8% per annum on

Original Cost of ATM (Rs.6,70,000 x 8%) 53,600 4,467

Per month Annual Maintenance = (Rs.53,600 / 12 Months)

Insurance premium per annum:

1. Standard and Fire Policy – Rs.95/- per lakh.

It covers:

Fire and Standard. All types of fire, natural calamities,

malicious damages, riots and strike, terrorism, earth quake,

landslide, subsidence & aircraft damages.

2. Burglary and housing breaking – Rs.1,050 per lakh – 5%

service charges extra. For Bankers 5% discount facility available.

It covers burglary, theft and house breaking of ATM risks.

(Rs.95 + Rs.1,050) x Rs.6.7 lakhs

Per month insurance charges (Rs.7,700 / 12 months) 7,672 639



07 Cost of Dish and its peripherals & installation cost 2,10,000

Average Life – 10 years

Depreciation -10% p.a. – Straight line method

Depreciation per month (Rs.21,000 / 12 months) 21,000 1,750

08 Outsource of Watch & ward for 24 hours & cleaning and

maintenance of ATM Room – per month 10,000

09 Supervising Staff average time spend for ATM cash

replenishment etc. – 2 hours per day

Average salary and allowance per supervising official is

Rs.300 x 2 hours x 30 days 18,000

10 Interest on Investment (i.e., ATM Project Cost Rs.15,00,000/-

@ 5% interest on diminishing balance method) 75,000 6,250

TOTAL FIXED COST PER MONTH 56,272

Comparative Cost Statement of Automated Teller Machine and Teller

Automated Teller Machine :


VARIABLE COST :01 Electricity charges per month 2,50002 VCR Tape and Other equipment charges p.m. 60003 Paper rolls (Both for transaction slips + Cash Journal)

on an average per month. 2,75004 Printer Ribbon Cost 2,500

TOTAL VARIABLE COST - PER MONTH 8,350TOTAL FIXED COST - PER MONTH 56,272TOTAL COST PER MONTH 64,622No. of Hits per month on an average = 200 per day x 20 days

(Average-after deducting the shut-down period of ATM,Net working problems / failures, Maintenance of ATM,Out-of Cash in ATM-in particular i.e., after continuousholidays, Replenishment period of Cash in ATM,Technical Problems etc.) = 4,000 Hits per month

Per Hit Transaction Cost (Rs.64,577 / 4000) 16.16

Note :

A. ATM Card / PIN Mailers processing charges, VSAT/SWITCH/Net Working Communication charges are not taken for arriving the per

transaction cost.

B. No. of Hits per day taken as 200 and average number of days taken per month as 20 days(after taking into account Peak & Non-peak

levels as well as shutdown etc., - Total Number of Hits per month on an average 4,000).

C. ATM/Card/PIN Mailers Processing (including Postage) per account holder Rs.65-00 (This is one time cost).


20

Conclusion

The success of cost of reduction through

the ATM depends on many factors:

➢ Right location of the ATMs

➢ Optimum population of ATMs at each

centre

➢ Provision of maximum facilities at the

ATMs

➢ Customer education

➢ Making the customer habitual of using

ATMs

Involvement, preparedness and willingness

of staff at all levels to make the program a

success.

The above analysis is not to discourage the

installation of ATM but to drive home the point

that the staff and the customer should be

educated to popularise the use of ATMs. Any

new idea is greeted with resistance world over

and ATM is no different in this regard. It is

reported that even in USA, the ATMs in the

initial stages were an unwelcome curiosity.

There is thus a dire need to increase the usage

of ATM by proper education of staff and

customer.

The average cost of installing an ATM is

Rs.12,00,000/- and a recurring cost of

Rs.12,000/- per month. For an ATM to be

viable, it is estimated that a minimum of 300

to 400 transactions should take place at the

ATM per day because ATMs are expensive.

The cost of a teller transaction presently

ranges between Rs.30-60, while a transaction

on an ATM that does about 200 transactions

per day costs Rs.15-20. The cost of an ATM

transaction could fall to even Rs.15 if the

number of transactions were higher.

To ward off the problem of poor hits and to

make the investment viable, banks enter into

shared network agreement. Under this, an

agreed fee should be paid for the transactions

of the customers performed in other bank's

ATM. For example, a cash withdrawal of one

bank done in another bank's ATM attracts a

fee of Rs.50/- to be paid to the ATM owning

bank. Similarly, the fee for balance enquiry is

Rs.10/-. In this way, banks recover the capital

cost of ATMs. The small banks that cannot

afford huge capital investment can work out

this kind of agreement. This would be

mutually beneficial both for small and big

banks. While big banks can benefit from their

strength of resources, small banks need not

commit their capital to upgrade their

technology.

All business have common interests and

competitive interests. On the operational side,

banks co-operate wherever transaction costs

can be reduced by such co-operation. The

concept of open-architecture, which requires

co-operation between competing

organisations. Where the cost involved in

setting up a new entity is high or where there is

inadequate business or multiple entities, banks

have co-operated, such as the establishment

of ARCIL. Apart from areas of co-operation such

as the above, banks are naturally competitors

in the same business and tend to compete

hard for business and profits.

Today, the overall economic conditions

remain challenging. The need of the hour is

to focus on the BASICS OF BUSINESS. We

need to focus on managing cost efficiencies

and on increasing profits. As FORTUNE

MAGAZINE rightly pointed out, we have

learnt from the dot com bust that: “If it does

not make cents, it does not make sense”

Comparative Cost Statement of Automated Teller Machine and Teller

TELLER :


VARIABLE COST :

01 Average Monthly Salary (including perks, medical benefits, LFC,

welfare costs, cost of different leaves such as P.L. C.L. Sick Leave etc.,

Terminal benefits like Gratuity, Pension etc. – for a Senior employee) 36,000

02 Officers required for supervising the various activities of Teller such as

Cash Withdrawal/ Deposit from Currency Chest, Various type of

transactions Checking etc.

(2 hours a day for 2 officers @ Rs.600 /- per day for 2 officers x 30 days) 18,000

03 Cost of Teller counter, furniture, electricity, Stationery (Receipts &

Payment Vouchers, Day books, Balancing Books, Interest application

& Internal House-keeping Maintenance etc.,) per month 6,000

TOTAL COST PER MONTH - PER TELLER 60,000

04 Average number of instruments per day handled by teller

(peak and non-peak level = 100) for 20 days = 2,000 vouchers per month Rs.30


1. Name of the Company (Vendors of ATM) :

2. Functionalities of ATM : 1)

2)

3)

4)

3. ATM Price : Actual Price Rs.

Sales Tax Rs.

(if any)

Customs

Duty etc., Rs.

(if any)

4. Depreciation (per annum) : % percentage :

Amount of

Depreciation: Rs.

(p.a.)

Expected Life of

ATM : -----

(Years)

Method of

Depreciation :

5. Annual Maintenance cost , Name of

the Company & AMC -Terms and

Conditions of the Contract :

6. Average Monthly Recurring Costs other

than the Annual Maintenance Cost :

7. Insurance Premium, Total Risk Amount,

Risks covered & Name of the

Insurance Co., :

8. Construction Cost of ATM Room :

(Civil Works)

9. Rent payable per month for

ATM Premises :

(Off-site ATMs)

10. Electricity & AC Installation Cost :

11. Electricity Installations Cost,

Life, % of Depreciation and

Depreciation Amount :

12. Electricity Charges per month

(for AC, ATM

and Electricity Installation etc.,) :

13. AC Machinery Cost , Life of

A/C Machinery,

Depreciation % and Depreciation

Amount and Method of Depreciation :

14. VCR Tape Cost :

15. VCR Tape - (Replacement period) :

16. Camera Cost

(if not included in ATM system)

its life & % of depreciation :

17. Communication Charges

(Networking charges like

SWITCH / VSAT etc) :

18. Paper Roll cost per bundle

(to generate transaction slips etc.,

& No. of slips generated

per bundle + Cash Journal

transaction paper per bundle cost

& No. of Journals generated

per bundle and suppliers its

supplier service) :

19. No. of personnel required to service

the ATM like Officer, Systems Officer

etc., hours spend per day on ATM

and their Salaries &

Allowances per hour :

20. Average Hits per day : No.

Amount

21. Cash replenishment periodicity :

22. Capacity of Cash Bins, its

denomination and Total Amount :

23. Average Number of Hits :

a) Peak Level :

b) Off - Peak Level :

24. Problems

a) Banker's Point of View :

i) Technical :

ii) Generals :

b) Customer's Point of View :

i) Technical :

ii) General :

25. Net working failures per month :

26. ATM shutdowns per month and

Shutdown cost :

27. SWITCH / VASAT Services

Cost per month (if any) :

28. Dish Antenna Installation Cost,

& Peripherals Cost,

% depreciation & and its life etc., :

29. ATM card / PIN mailers processing

charges per customer :

30. Duplicate ATM card processing

charges per customer:

31. Computer consumables like

printer Ribbon cost etc., :

32. Watch & ward Salaries & Allowances

(No. of watchmen required) :

33. Maintenance Cost of

ATM room per month :

35. UPS Cost (Exclusively for ATM) :

36. Annual Maintenance Cost (for UPS) :

38. Capital Expenditure cost

(i.e., Discounted value) :

39. Any other costs (Please specify) :

1)

2)

3)

4)

5)

Particulars Required for Arriving the"Cost - Benefit Analysis" of an automated Teller Machine

�


22

PerformanceManagement System

In Banks

“Performance

appraisal is a

personal

decision of

Management

that affects the

status of an

employee in

connection

with their

retention in the

organisation

termination,

promotion,

mobility or

transfer, salary

revision or

decrease or

imparting

training”.

P.V. Anantha Bhaskar

status of an employee. It is a basic tool for increasing

the morale and productivity of employees, ultimately

the organisational productivity. Performance

appraisal is also called “Performance review”,

performance rating, performance evaluation, employee

appraisal or evaluation and merit rating.

Performance appraisal system is implemented in all

organisations including government departments.

It assumes importance in private sector, particularly

with reference to private sector banks.

This process of rating employees is present in all

Banks both public sector and private sector. The

appraisal may be of two types.

➢ Appraisal by the management and rating

of performance of individual employees up to

the cadre of officers i.e., all the award staff

covered under this method.

➢ Self appraisal system for employees

above the cadre of award staff i.e.,

for officers, Sr. Executives

and top level

executives.

Meaning and Definition

erformance appraisal is an age old

process and a part of performance

management system. It is prevalent

in any organisation and assumes

importance in personal decisions

of management regarding the

In the system of appraisal by the management, there

is no opportunity for individual employee to report

his performance to the boss in the hierarchy, because

the individual employee will be rated by the

immediate superior and appraises his performance.

Unless this superior is impressed, the individual may

not be rated properly. This method will give scope

for nepotism and may demotivate the employee.

Demotivation ultimately will reduce the morale and

therefore his productivity, affecting the efficiency of

the organisation.

In the “Self appraisal system of performance

management” in public sector banks (PSBs) and old

private sector banks, each individual employee has

to submit a self appraisal to the immediate superior

in the prescribed format. This is reviewed by the boss

and sent to the higher ups with recommendations

for increments, promotions, rewards and incentives.

Self appraisal system is very transparent, provided

an opportunity for individual employees to reveal

their performance in writing without any

apprehensions. Reviewer, who is the immediate

superior has to initiate impartial decisions to rate

the person by inviting for a discussion and decide

the ranking before recommending to the

management of the bank.

Deputing an employee for a specific training

programme of his interest due to current job

requirement make both employer and employee

take initiative in self learning and self development.

This helps banks in increasing their productivity.

”

”

Another approach isknown as

DevelopmentalApproach, that views

the employees asindividuals. In this

approach theperformance is viewed

for future by way ofsetting goals for each

employee.

Mr. Anantha Bhaskar is presently working as a

Manager in Development Credit Bank Ltd.,

Hyderabad. He is a seasoned Banker with twenty

six years of experience in multifarious disciplines

of banking, having worked in both public and

private sector banks. He is a Fellow member of the

Institute of Company Secretaries of India, besides

a certified Associate of Indian Institute of Banking

and Finance, Mumbai. He holds a Diploma in

Financial Services awarded by IIB & F. He is law

graduate. He has specialization in Development

Banking and Rural Banking.

Mr. Bhaskar is an MBA (Finance) from IGNOU, New

Delhi. He is a Licentiate in Insurance.

Self appraisal method is more transparent,

compared to the method of appraisal by

the management itself. Appraisal by

management shall not provide an

opportunity to share the views of ranking/

rating. On the other hand appraisal of

employees up to award staff level prevalent

in old private sector banks and PSBs, by the

management will give scope to dissect the

correct personality of an individual, identify

his intrinsic strengths and weaknesses, and

his performance to play the role assigned. It

is a qualitative tool and an art of rating the

merits of an individual.

With the advent of the new private sector banks

in India an account of globalisation and

liberalisation, the entire scenario of the appraisal

systems has taken a metamorphosis change.

The banks operations are driven by high

technology, changing the role play of each

employee in all the banks. Therefore, there is an

imperative need for revolutionary changes in

the performance management systems.

Approach to Performance Appraisals

The traditional approach prevalent in the

performance appraisal system, which is also

known as organisational or overall

approach, is concerned with the overall

rating of the organisation. It takes the past

performance as a comparative factor to

appraise the merits.

Another approach is known as Developmental

Approach, that views the employees as

individuals. In this approach the

performance is viewed for future by way of

setting goals for each employee.

Purpose of Performance Appraisal

Performance appraisal system is used for

evaluating the merits for the factors

mentioned below:

➢ Promotions, transfer decisions,

changing the work assignments.

➢ Evaluating the contribution of each

individual employee to achieve the

efficiency, organisational growth and

the productivity.

➢ Rewards, incentives, fast track

promotions, increments and other

related decisions.

➢ To decide about the training and

development needs of employees

based on performance.

➢ For human resource planning.

➢ To decide about salary revision.

Developmental Approach

In the developmental approach to

performance appraisal as mentioned in the

aforesaid paragraphs, it is concerned with

the use of performance appraisal as a factor

contributing to employee motivation,

development and human resource planning.

This approach provides the employees to

indicate the direction and level of the

employees addition. It also shows the

interest of the organisation in

development of employees. This in

turn, helps in retaining the

calibre and arrest the trend

of loosing the talents to

competitors. In this

process an effective

c o m m u n i c a t i o n

channel is required

between the

employees and

management. It

provides an

opportunity to

employees to prove

themselves by good

performance.



24

The Process of Performance Appraisal

In the process of performance appraisal a

relationship is established between the

evaluator, who is the superior or manager

and evaluatee who is employee regarding

the work expected, goals to be accomplished

and how the work performed is evaluated. In

order to establish this relationship,

continuous feed back of the information

about the work expectations, modified goals

or objectives should be communicated to the

employee on a regular basis. This process will

enable the management to properly evaluate

the performance and the progress made by

the evaluatee in the work assigned. The

superior performer will be rightly rewarded,

recognised and commended for the work

done.

The employee has to submit the appraisal

form to the management in time, so that the

discussion between the reportee and the

manager will enable the completion of

appraisal process and construction of a

development plan.

The above process is already existing in

many of the Banks, particularly PSBs in India.

This process has taken a revolutionary

change in new private sector banks and

implemented with several modifications.

Performance Appraisal is more of an art than

science. It is qualitative process, conducted by

a senior and experienced decision makers, with

the use of available techniques. The appraisal

will be highly analytic and decides the merit

rating of employees on the basis of

performance.

Performance appraisal will enable the

management in identifying the strengths

and weakness of employees, intrinsic skills,

the role efficacy of the job etc. Evaluation of

performance is a formidable task of

managers. Because a bad appraisal may

badly affect the employee morale and

demonstrates, ultimately affecting the

productivity and so the organisation. The

character and credibility of an individual is

associated with his / her willingness to excel

in performance and to achieve the targeted

goals.

In a banking organisation, being a service

oriented industry the appraisee should have

the following traits to show his

performance.

➢ An Attitude for achievement.

➢ Personal responsibility for achievement

or accomplish the goals assigned.

➢ Confidence in the ability to succeed.

➢ Proactive to feedback and to

demonstrate skills at higher levels.

➢ Orientation for future career.

➢ Preference to achievement of goals

rather than monetary rewards.

The Manager, who evaluates the

performance, should also take into account

all the above aspects in the appraisal process.

Performance appraisal necessitates

continues watch and review at all stages by

the management and monitor the

employees. Integrity, frankness, creativity,

commitment, patience, leadership qualities,

risk taking attitude of the Bank employees

will enable them to excel in performance.

In the new private sector Banks like ICICI, HDFC,

Kotak Mahindra Bank, IDBI Bank, UTI Bank,

revolutionary methods of performance

management have been introduced to

evaluate the individual employees.

In these Banks unlike the old private sector

banks and PSBs, the hierarchy of workforce

is different. The lowest category among the

staff is called Junior Executive / Officer /

Junior Officer etc. Therefore, these banks

have introduced self appraisal system for

all the employees.

People’s Review Process

The system of performance appraisal in most

of these Banks is known as “Peoples Review

Process”. This process is linked to

performance review.

The important aspects of this system of

performance management system are:

➢ Setting the goals and objectives for the

review period, which are to be achieved

by the individual employee.

➢ Evaluating or appraising the

performance against the targets set for

each personnel.

➢ All rewards either monetary or non

monetary are linked to the performance

of the employee.

The peoples review process method of self

appraisal will give an opportunity to each

employee to interact with his/her immediate

superior at any point of time to express

views for the betterment of the organisation.

In this process superior performers will be

paid linked to the performance. Pay is fixed

accordingly. The employees are motivated

to take active part in achieving the goals to

gain better rewards. Higher rewards will

boost the employee morale and

productivity, ultimately enhancing the

organisational effectiveness.

Goal Setting

It is the first and foremost step in this new

performance management system. This

system covers the award staff in banks other

than sub-staff. The performance of sub-staff

will continue to be evaluated by the

management. This goal setting is done by

the employee himself in the prescribed

format, which contains the personal details

of the employee, key accountabilities of the

job entrusted, for the reporting period, the

goals set for the year and the target date by


which the set goals are to be achieved.

Normally the goal setting exercise is for the

financial year. The goals are set taking into

account the objectives and targets to be

achieved.

This goal setting exercise will be done by

the employee after discussion with the

immediate superior and agreed mutually by

both of them. From time to time the

evaluator or manager has to regularly

monitor the progress of the goals set with

the evaluatee or reviewee. An informal

discussion takes place with the reviewee

regarding the goal setting exercise by the

superiors.

Review Period

Normally, in every bank, the review period is

the financial year, say from April – March.

Goals set for the financial year would be

reviewed at the end of the year as a part of

the “Performance appraisal” exercise. The

employees covered under self appraisal

system have an opportunity to ventilate or

reveal their performance / achievements

without any reservations or inhibition. They

can also reveal the areas, where improvement

is required.

This gives the transparency to both employee

as well as reviewer. The appraiser will review

the self assessment after a discussion with

the appraisee and evaluates the

performance, award a rating after

discussions with HRD and Personnel. While

rating the performance, evaluator will share

the views of the evaluatee and record the

employees consent or dissent by obtaining

the signature as a token of having

acknowledged.

Based on this rating, management will

complete the process of rewarding,

recognition and remedial actions to be

initiated. At the same time the banks are

identifying the need for training and career

development of the employees.

The management of the bank will provide

the guidelines for each employee for

completion of the goal setting exercise.

The goal setting exercises will contain the

personal details, key account abilities, goals

and objectives set for the year.

For example: The key account abilities of a

Branch Manager in the Bank are listed as below:

➢ Ensure sound and profitable growth

through the achievement of product-

wise sales targets and to ensure quality

in service delivery.

➢ Accountable for the compliance with

all statutory/regulatory requirements.

➢ Over all supervision and business

achievements of the branch.

Likewise the key accountabilities are set for

each job depending upon the functional

designations.

Meaning of Goal

It is a statement in writing mentioning the

tasks to be performed by each employee.

The end result is measurable or quantifiable.

A goal is given in writing fixing a definite

responsibility. If it is orally conveyed, the

instruction cannot be powerful and becomes

only an idea. It will not have the force to

motivate. It lacks the power and defects the

purpose for which the goal is meant. A goal

entrusted in writing will always remind the

reviewee as well as the superior as to what

exactly is to be done during the reporting

period. Reading the goals set, again and

again regularly encourage the person for

achievement of the same.

Goals to be effective should be specific,

measurable, attainable, acceptable, realistic

in nature and tangible. These should be a

specific target date before which it is to be

achieved.

Goals should be clear and specific,

mentioned in short. The success or failure in

achieving the goal should be measurable.

Therefore, the goals should be quantified

to enable easy measurability.

In order to analyse the strengths, weakness,

opportunities and threats by an individual

himself realistic goals are to be established.

This requires knowledge management.

A targeted time frame is important for

achievement of goals by the individual

employee. The goals should be ideal that

includes short term as well as long term

goals, to be achieved in a targeted time

frame. Goals are to be clearly defined with a

specific action plan, target date for

achievement. The employee in manageable

lots for easy achievement can divide the task.

The goals set should be agreed by the

employee and his superior after having

formal discussions duly mentioning the

agreed date with signatures and should be

strictly adhered to so that the optimum

benefit is achieved out of the process

without any lacunae.

Competencies and Attributes

The appraisee in his self appraisal form

should mention his/her achievement in the

job as per role plans on the following

aspects:

➢ Professional expertise demonstrated in

his functions and knowledge in the

Banking to resolve issues relating to the

Business.


26

➢ Relationships maintained for acquiring

business initiatives taken for result

orientation.

➢ Decision making abilities displayed in

his role play.

➢ Display of sound professional

behaviour and integrity in dealing with

people at all places. Team work for

successful business.

➢ Plan strategically setting clear and

attainable goals of the Bank and

monitoring the progress.

➢ The level of analytical ability and

communication skills.

➢ Building rapport with others and

develop a network for relationships for

achieving the goals.

Private sector banks give preference to

performance over seniority. Therefore

performance appraisal system is an

indispensable tool for ranking the employee

for better productivity and organisational

growth.

After completion of the goal setting exercise

and submission of self-appraisals, the next

step is ranking the employees at the end of

the year by taking the achievement of goals

in the reporting period.

Performance rating is done by the

management depending upon the

recommendations of the managers and unit

heads.

Forced Ranking/Tiering Percentages

In the new private sector banks, the forced

ranking system of Tiering percentages

method is adopted for ranking the

employees against the performance. The

ratings are given as under:

1. Exceptional/Excellent - 10% of staff

2. Effective or Good - 25% of staff

3. Standard performance - 55% of staff

4. Needs improvement - 10% of staff

For rating purpose individual business units

are taken into consideration. For example

operations, credit department, foreign

exchange, risk management department,

corporate banking, personal business banking

etc.

Banks should initiate innovative measures,

encouraging their employees to broad base

their knowledge and upgrade their skills by

way of granting finance and for purchase

of books etc. or banking rated subjects. This

improves employee productivity.

The forced ranking percentage is distributed

by regions or zonal offices. Under this forced

ranking, if there are four employees working

in a branch and even if all the four people

have performed excellently the forced

ranking system is adopted. In this process

one will get exceptional ranking, one

effective, one standard and the fourth one

gets “Needs improvement”. This will de-

motivate the excellent performer, who gets

a lower ranking resulting in impairing his

efficiency. His/her morale is affected

ultimately his abilities and productivity.

Likewise, in various branches/unit offices of

the bank, several excellent performances will

be affected by poor ranking. This system of

forced ranking will have a serious effect and

the efficiency of the organisation and will

impair the productivity of the employees

and also the Bank. This type of distribution

of ranks is not a justified method. It affects

the morale of each employee and affects

the efficiency and de-motivates for further

performance.

Suggestions

➢ The Banks should adopt such type of

performance appraisal systems where

the employees are encouraged to

achieve the targeted goals.

➢ The forced ranking systems and the

tiering percentages should be

considered as a whole for the total work

force of the bank and not for individual

branches/units.

➢ The real performers should be ranked

suitably and rewarded correctly.

➢ The employees with least ranking i.e.,

needs improvement should be properly

trained and attention is paid to motivate

for better performance in future.

➢ An opportunity to be provided for

reconsidering the decision in ranking

depending upon the merits of the case.

➢ It is the duty of HRD in banks to bring out

revolutionary changes in appraising

system for better ranking of employees

to maintain efficiency of the organisation.

➢ Favouritism and nepotism should be

avoided in ranking and identify the

talents for proper utilisation of available

talents.

Conclusion

A performance review method adopted by

banks should aim at increasing the morale,

efficiency and productivity of each employee.

The ultimate result of the performance

review should cater to increase productivity

of the organisation. The performance review

process assumes greater importance in

banks.

Banks in order to sustain good performance

by increased productivity, HR managers

should plan to quickly implement modern

techniques in performance appraisal. Banks

should not allow the talent let go to

competitions. �

FII inflows into

India have

increased

dramtically in

recent years.

These inflows

have been

associated with

the boom of BSE

Sensex,

appreciation of

Indian rupee,

increase in

inflationary

pressures, etc.

These are key

concerns of RBI.

However, there

are some options

available in the

hands of

Government and

RBI to tackle this

situation

prudently.

Dr. R.K. Srivastava

FII Inflows into India :A Dilemma

Foreign Institutional Investor (FII) investment can take

place in a variety of ways like in shares and bonds;

long-term forex loans; and short-term forex loans.

The beneficial effects of FIIs are somewhat indirect

and not as visible as in the case of FDI. FII inflows too

help capital formation either by participating in

public offerings or by releasing the existing pool of

risk capital through the secondary markets. There is

a general fear that FIIs can reverse at any time. In the

case of Indian stock markets, currently it is hugly

influenced by FIIs. The market capitalisation of FIIs’

holdings was Rs. 214000 crore as on December 31,

2004. This is equal to 30% of the total free float market

capitalisation. Such a large FII presence can lead to

huge volatility whenever FIIs buy or sell or shuffle

their holdings. In fact, FIIs have been associated with

the current boom of BSE sensex; appreciation of

Indian rupee; increase in inflationary pressures, etc.

RBI is in its own dilemma. In case it restricts to FII

inflows, there will be wrong signal to the world’s

investment community that India’s policy regime is

weak and short-sighted. In either case if RBI does

not intervene forex market, the above cited

problems may become more complicated.

Therefore, the obvious objective of the

article is to find out pros and cons of

RBI’s main concerns relating to FII

inflows and to trace out what

are the policy options left

before RBI.

Trends and Reasons

India’s growth story is something that FIIs cannot

ignore. In fact, the global consulting firm Goldman

Sachs put out a BRIC report that paints a rosy picture

about where these four nations (Brazil, Russia, India

and China) are likely to be by the year 2050. The

report clearly sends signals to global investors that

they can bet on India. Factors such as a youthful

nation with half of its population out of one billion

falling in the prime age group of 25, the changing

income distribution profile with a broader segment

of middle class enjoying greater access to money to

spend or splurge are the key points of this report.

Therefore, in recent years a large scale of FII inflows

in Indian stock and debt markets. For instance, India

gets second highest FII inflows in emerging Asian

markets. It is just behind Korea. In 2004 (till December

10), overseas investors have pumped about $10.5

billion into Korea, while India had received $7.8 billion

during the same period. Since then FII inflows

continuously in the market and it reached to $ 8.5

billion in Indian equities in 2004. In 2005 FIIs are investing

more money in Indian equities than in South Korea

and Taiwan. According to the data sourced from Stock

Exchanges in South Korea and Taiwan, since the

beginning of calendar year till February 28, 2005 FIIs

have injected $192 million into Indian stocks.

The Morgan Stanley Capital International (MSCI)

Emerging Markets index rose 2.5% year-to-date (YTD).

In comparison, the MSCI India index remained flat. The



28

”

”

RBI Governor, Y. V.Reddy has repeatedly

voiced his concernabout the

unprecedented highforex inflows

particularly throughthe FII route, posing achallenge to forex and

monetarymanagement.

Dr. Srivastava is Reader,

Dept of Economics,

HNB Garhwal University,

Tehrigarhwal

MSCI South Korea index rose 7% while MSCI

Taiwan fell 1.9%. At the same time, India’s

weightage in the benchmark emerging

market indices managed by agencies like MSCI

and London’s FTSE, is a fraction of South Korea

and Taiwan put together. While South Korea

and Taiwan together account for around 35%

of the emerging market indices, India accounts

for only 6%. As a result, South Korea and Taiwan

have remained the biggest recipients of FII

money till 2004. It is only in 2004 that India

managed to receive the second highest inflow

when it attracted over $8.5 billion by way of FII

inflows. That is why the stock markets are

dominated by FIIs. They brought in $7 billion in

2003, $8.5 billion in 2004 and it is estimated that

FII inflows will be around $10 billion in 2005. In

recent years, FIIs have shown their interest in

the Indian debt market too. From a net figure

of minus $2.2 million in October 2004, it has

moved up to $81.9 million till December 17, 2004.

Clearly, the reason is that the returns from debt

instruments in India are better than the US.

Major Concerns

RBI Governor, Y. V. Reddy has repeatedly

voiced his concern about the unprecedented

high forex inflows particularly through the

FII route, posing a challenge to forex and

monetary management. The key concerns

of RBI are :

First, Indian stock marekts have seen a

record-breaking rally that was largely fuelled

by FII inflows. Therefore, BSE sensex has

crossed 6700 levels. Current stock market

boom though some corrections will provide

benefits primarily to foreign investors

because of their holdings. For instance, FII

presently hold more than 50% of the free

float of the top 100 companies. Current

foreign holding in several companies is even

higher-71% in Moser Bear, 66% in Satyam,

63% in HDFC and 70% in ICICI Bank.

Moreover, it is calculated in the calender year

2005 that about $10 billion FII money will

pour into India. This dollar deluge could

impact the capital market and further

strengthen rupee against dollar.

Second, FII inflows cannot be used for long-

term infrastructure projects. Cummulating

forex reserves have their own costs that the

RBI needs to bear. In fact, forex reserves

would remain idle with the RBI yielding

probably 0.5% interest on US Government

bonds. If RBI does not support to buy dollar,

rupee will appreciate further.

Third, the continuous large scale FII inflows

would perhaps increase the money supply

and inflate the price structure of the

economy. Consequently, India’s exports may

face thereat of uncompetitiveness. However,

these fears seem unfounded as India’s

exports grew by 33% in January’ 05.

Options

Current large scale FII inflows into Indian

stock and debt markets are largely driven

by appreciation of rupee against

dollar in forex market. There are

some options available in the

hands of Government and

RBI to tackle this

situation purdently.

These are :

First, the RBI can put

a cap on FII inflows.

The implications

can be far reaching.

It would be wrong

signal to the

world’s investment

community that

India’s policy regime

is weak and unstable.


Second, FDI policies can be tailored more

attractive, stable and transprent to beat FII

inflows. The major hurdles to attract FDI are

: weak infrastructure facilities, rigid labour

norms; high fiscal deficit etc.

Third, Government of India is contemplating

the idea to follow the Chinese model to use

forex reserves. The Government is expected

to create a Special Purpose Vehicle (SPV) for

making forex reserves available for

"financially viable" infrastructure projects. It

would be right action in right direction. In

any way, the returns from infrastructure

projects would be better than the returns

from US or Euro deposits where our reserves

are currently parked.

Fourth, to put an end to excessive influence

of FIIs in stock markets, the Government’s

latest moves have opened the doors for

long-term domestic money to flow into the

equity markets. These moves (for example,

allowed pension funds to invest 5% of their

corpus directly in equities, etc.) can lead to

an investment of as much as Rs. 95000 crores

in domestic equities over a period of time.

Fifth, the Government has enhanced the limit

of Equity Linked Saving Scheme (ELSS) in

which investments upto Rs. 1 lac from

Rs. 10,000 in a financial year qualify for a tax

relief under Section 80c of Income Tax Act..

This will increase the influence of Indian

investors in the domestic capital market.

If these options are put into action, the

dominance of FIIs in Indian stock and debt

markets can be efficiently minimised. �

Contribution of ArticlesOur Editorial Committee has decided to bring out articles on different topics of interest to bankers. Some

of the areas receiving focused attention of bankers in the recent past are:

• IT strategy vis-a-vis Business strategy : Issues in alignment

• Bank Scale Economies, Size and Efficiency - The Indian Experience

• Operational Restructing - Principles and practices

• Customer Relationship Management

• Social Banking : An Assessment

• Branding of Bank Services : An innovative Marketing technique.

Accordingly, the IBA Bulletin will carry articles on current topics on different aspects both in English and

Hindi languages.

Your contribution on any topic should be around 2500 words. The write-up should be crisp and concise but

certainly not at the cost of clarity. The manuscript should be sent on a floppy (MS Word) along with a hard

copy or e-mailed to [email protected]; [email protected]; [email protected]. Please also submit a

statement declaring that the material has not been published elsewhere nor has been given to any other

publisher for publication. A passport size photograph of the author together with a small write-up about

the author may be sent alongwith the article. The Association pays honorarium to authors whose articles

are published.

Consolidation

alone will give

banks the muscle,

size and scale to

act like world

class banks. We

have to think

global and act

local and seek

new markets,

new classes of

borowers

Santosh Patnaik

Consolidate orPerish

banks worldwide to look for new pastures to boost

their earnings. Consolidation in fact,has been the

defining characteristic of the banking world during

the last decade. The year 1998 witnessed more

volumes of mergers and acquisition (M & A) in the

commercial banking industry worldwide than any

other industry. More than a fourth of total mergers

and acquisition deals were involving banks –

totalling $102 billion (The Economist, March 13, 1999).

M & As however, are not a recent phenomenen; four

periods of high merger activity, known as ‘merger

waves’ occurred in the United States (1897-1904, 1916-

29, 1965-69, and 1984-89) before the current one that

began in the early 1990s. This latter wave attained

exceptional levels in terms of sheer value and

volume of transactions, and has been

instrumental in the decline of the number of

banking organizations in the U. S. - between

1980 and 1997 they dwindled from

12,333 to 7122. Simultaneously, the

proportion of banking assets

accounted for by the 100

largest banking

Globally, the banking industry is

undergoing significant metamor-

phosis,with ‘bigger the better’- being

the revealed preference of the

prime players. Disintermediation,

coupled with cut-throat

competition have literally forced

organizations went from over 50 per cent in 1980 to

nearly 75 per cent in 1997. The reasons for these

mergers were a new statutory environment that

allowed interstate ownership and branching; banks

seeking scale economies; geographical

diversifications; and increased competitive pressures.

Europe too, experienced similar M & As experiences

between 1980 and 1995, when the number of

banking establishments fell, particularly in Denmark

(-57 per cent) and France (-43 per cent).The merger of

Switzerland’s two top banks – Union Bank of

Switzerland and Swiss Bank Corporation on Dec, 08,

1997 created the world’s largest asset manager with

a fund portfolio worth almost a trillion dollar, with

assets of Swiss Fanks1320 billion ($ 912.8 billion) and

a market capitalization of $ 59 billion at Dec 03, 1997

prices and made it world’s 4th largest after HSBC,

Bank of Tokyo-Mitsubishi and Lloyds TSB Group.In

Japan,three banks - the Industrial Bank of Japan (IBJ),

Dai-Ichi Kangya Bank (DKB) and Fuji Bank announced

their intentions to merge in 1999. Some of the reasons

advanced by Japanese banks for their merger were:

the need to invest more in information technology

than one bank can afford;foreign competition; drive

for economies of scale in retail banking; and the need

to increase capital strength in the face of bad debt

crises.

A G-10 report on consolidation in financial services

which surveyed 45 experts in the area of banking

from these 10 countries revealed that exploitation

- Shri P. ChidambaramMinister of Finance


30


”

”

Mergers provideroutes for cross border

expansion;here themotivation is

increasing revenues.Banks find it easier to

acquire an existingbank with a wide

branch network thanto build their own

network from scratch.

Shri Santosh Patnaik is Officer,

United Bank of India, Bhubaneshwar.

of scale economies emerges as the single

most important motive for within industry

mergers, while enhancement of revenue

through provision of one-stop shopping for

customers emerges as the single most

important motive for mergers across

industry segments (Group of Ten

Report,2001). While an important motivation

for mergers has been the ability to

rationalize branches to cut down costs, the

potential for such cost saving depends on

the structure of a country’s banking industry.

Spain, for example, has more than five times as

many branches per citizen as America; Germany’s

ratio is twice that of America’s (The Economist,

March 13,1999). Thus,historical factors behind

branch expansion influence the possible

savings through branch rationalisation.

Mergers provide routes for cross border

expansion;here the motivation is increasing

revenues. Banks find it easier to acquire an

existing bank with a wide branch network

than to build their own network from

scratch. Mergers are also used as an exit

route for troubled banks. The Trust

Fund,established in 1995 at the height of

the banking sector crisis in

Argentina,assisted in the mergers of more

than a dozen troubled banks with healthy

banks.In sum, the growing tendency towards

mergers in banks worldwide has been

primarily driven by: intensifying

competition, need to reduce costs, enhance

size,technology upgradation, desire to

expand business into new areas, improve

shareholder’s value, and diversify large bank

loan portfolios to lessen the likelihood of

failure and harness core competencies.

Indian scenario

History reveals that mergers of banks in India

took place in the 1960s under the direction

of the apex bank. From 566 reporting

commercial banks at the end of 1951, the

number came down to 292 at the end of 1961,

to 100 at the end of 1966 and to 85 by the

end of 1969. Over the past 45 years, 34 banks

and non-banking finance companies have

been merged. Till now, most mergers that have

taken place in the banking industry have

been under coercion, e.g. Nedungadi Bank

with Punjab National Bank, Global Trust Bank

with Oriental Bank of Commerce,Benaras

State Bank with Bank of Baroda, Sikkim Bank

with Union Bank of India, and ANZ Grindlays

with Standard Chartered Bank. The notable

exceptions, of course are HDFC Bank’s take-

over of Times Bank and the merger of SCICI,

Anagram Finance, ITC Classic, Bank of Madura

and ICICI with ICICI Bank.

The Narasimham Committee on financial

sector reforms (Report II) had stressed the

need to reduce the number of public sector

banks and to create a few large banks with

large-scale operations and international

presence. This was triggered off by Finance

Minister P.Chidambaram’s speech at the IBA’s

annual general meeting in Mumbai in

August 2004, wherein he

emphasized: “Consolidation

alone will give banks the

muscle,size and scale to act

like world-class

banks.We have to

think global and act

local and seek new

markets, new

classes of

borrowers”. While

replying to a

question on the

consolidation of

Government owned

banks in the Lok

Sabha on 4th

December, 2004, he


32

remarked “Larger size entails better

management of risk. Small and weak banks

pose systemic risks with their low capital

adequacy ratio and high non-performing

assets”. Again, speaking at a banking seminar,

Chidambaram remarked “International

trends suggest that consolidation has

reduced the chances of credit risk.Tata

Motors looks and behaves like a global

company,Ranbaxy looks and behaves like a

global drug company. If Infosys, Wipro and

TCS look and behave like global companies,

Indian banks need to do the same.”

Close on heels of the Finance Minister

pitching for consolidation in the banking

sector, the RBI too, feels that M & As are

imminent. In view of favourable signals from

the Ministry of Finance and managements

of various banking institutions, a number

of leading public sector banks and new-age

private sector banks are understood to be

in the process of scouting for ‘suitable

acquisitions’, based on geographical

advantages and other business and cultural

synergies. M & A has, in fact, replaced NPA as

their buzzword. Among the private sector

banks, some of the names that have been

doing the rounds as ‘potential acquisitions’

are. Lord Krishna Bank, Lakshmi Vilas Bank,

Karur Vysya Bank, Karnataka Bank and

United Western Bank. The virtual merger of

SBI and its seven associates in the form of

technology and treasury integration has

alredy begun; legal merger requiring some

more time. Bank of Baroda is looking for

acquisition in principle, “We are looking for

acquisitions in areas where we don’t have a

very strong presence. We are very strong in

western India,but don’t have much reach in

the south, east and north. These are the areas

to which we would like to expand”, said its

Ex-CMD P. S. Shenoy. Punjab National Bank,

which took over the private sector Nedngadi

Bank, is in the process of acquiring Industrial

Finance Corporation of India(IFCI). Allahabad

Bank is looking for an acquisition down

south where its coverage is limited. “Our aim

is to gain both operational and geographical

synergy, while we finalise the consolidation

process”, says its CMD O.N. Singh. Vijaya Bank,

a southern player is looking towards the

north. Indian Bank, after its resurrection, is

quite optimistic: “If you want to grow, you

need capital …We will takeover some bank

and are looking out two or three targets at

the moment”, says its CMD M. B. N. Rao.

Oriental Bank of Commerce, which is still

digesting its wedlock with Global Trust Bank,

is likely to revive its merger plans soon.

Union Bank of India and Bank of India may

be the first to tie their nuptial knots.

Advocates of M & As are of the view that

with large cost bases and unwieldly product

and regional distinctions in the Indian

banking sector, global logic for mergers and

acquisitions also hold good in India. This,

they argue, would take care of the negative

factors such as, slow settlement of bad debts,

low profitability, poor capital adequacy

ratios and increased competition. Nimble

newcomers, armed with tight business focus

and strong consumer brands are harnessing

the power of technology to take advantage

of deregulation and liberalisation, thereby

increasing pressure on profit margins of

established banks. Analysts feel that size

matters a lot when it comes to compete for

a piece of the pie in the domestic as well as

global market. Size, brings along with it

economies of scale by bringing down the

transaction cost, build up financial strength,

capture larger portion of the growing retail

business, help expand overseas business

and secure better regional presence. The

Basel II accord which is slated to come into

effect from the end of 2006 aims to give

banks the means to weather external shocks

especially by setting minimum capital

requirement to absorb the potential impact

from a big default. The mounting pressures

on capital structure to meet these prudential

capital adequacy norms necessitates the

need for consolidation in the banking sector

which would provide Indian banks the ‘size

advantage’ that most foreign banks do

have.Recent events of collapse of banks like

Global Trust Bank, South Indian Co-operative

Bank and Maratha Mandir Co-operative

Bank pose greater need for consolidation

and ensure safer business transactions for

bank’s customers. This would also ensure

higher transparency,higher business

efficiency and higher corporate governance

standards.

Proponent of M & A argue that India is a

hugely over-banked, but under serviced

country. There are close to 100 scheduled

commercial banks, 4 non-scheduled

commercial banks, and 196 regional rural

banks. The State Bank and its 7 associates

have about 14,000 branches; 19 nationalised

banks 34,000 branches; the RRBs 14,700

branches; and foreign banks around 225

branches. If one includes the branch

network of old and new private banks,

collectively the spread could be over 68,000

branches across the country. Besides, there

are a few thousand co-operative bank

branches. Thus on an average, one bank

branch caters to 15,000 people. Amidst this

plethora, State Bank of India is the sole

entity among the top 100 banks in the

world,that too ranking a lowly 82! Even small

economies in Asia like Thailand and Taiwan

have more big banks. It is only on parameters

like the number of employees and branches

that SBI figures near the top. SBI is catering

to a population size which is three times

than that serviced by Bank of America (BOA);

SBI is reaching 90 to 100 million customers

while BOA has around 30 million customers.


But looking at the assets of these two banks,

BOA has more than a trillion dollar of assets

as against SBI’s size of $ 93.75 billion (@Rs.43.5

/ $). This, undoubtedly gives BOA a muscle

to cut costs and amplify earnings.

People Issues

To gain full merger benefits, two overlapping

organizations are compressed into one,

trimming duplicated operations which

entails redundancies at all levels. The M & A-

driven consolidation is raising important

public policy concerns,notably with respect

to employment. As witnessed recently, the

United Forum of Bank Unions have

expressed strong reservation for

consolidation within public sector banks.

One of the major issues which need to be

handled is in regard to the treatment of the

employees of the transferor bank

consequent upon the merger or acquisition.

The regulator should draw guidelines

regarding the continuance and other service

conditions applicable to the employees of

the transferor bank consequent upon

merger. Re-training of staff is another

challenge for the emerged entity. “People

issues are important,” says former deputy

governor S.S.Tarapore, “Not much debate has

taken place on what is to be done with the

branches or staffing.” He adds that mergers

in India have so far been bailouts; one ailing

bank is rescued, but it is a leg shackle for the

other.

Change as usual, is always a source of

uncertainity, tension and potential conflict.

The creation of formal,internal

communication mechanisms as early as

possible in the process is necessary to limit

the anxiety that will otherwise be fuelled by

rumour, the grapevine, or even outside news

reports. It is essential to prepare and

communicate to staff a programme of

integration so as to combat the feelings of

fear, apathy, demotivation and the classical

“victor” and “vanquished” syndromes.While M

& As are driven by financial considerations,

their success vitally depends on the

motivation of retained staff to contribute to

the achievement of merger activity. Poor

morale due to increased job insecurity of

retained staff is by far the worst human

resource problem in today’s business climate.

The survivors who are already subject to

“survivor’s syndrome”find they have to work

harder to cover staffing shortfalls,with the

consequence that increased workloads feed

the stress related to job

insecurity,undermining the very efficiency

goals that motivated the merger or

acquisition. Job insecurity may make

employees feel pressured into agreeing to

put extra effort into their jobs to demonstrate

organizational loyalty; but such working

conditions are neither sustainable nor

conducive to the achievement of corporate

objectives. M & A value extraction is impossible

without the enthusiastic cooperation of

employees.

Consumer Issues

While supporters of M & As argue that this

would facilitate synergy between the

merged organisations, generate efficiency,

increase competitiveness and provide

services at lower prices, those opposing

financial sector M & As strongly contest their

consumer gains and maintain that they only

result in employment losses and

diminishing access to services. Studies have

indeed revealed that larger financial

institutions tend to charge more and higher

fees than their smaller counterparts and

note an inverse relationship between the

sizes of financial institutions and their loan

portfolios to small businesses. Assertions

that size guarntees economies of scale

essential to compete in global markets have

similarly been disputed on the ground that

size is irrelevant to international

competitiveness.

Cultural issues

Full integration requires the best aspects of

both legacy organisations to be

incorporated into a single new company

culture focused on achieving future business

growth. The key issues that lead to failure of

bank mergers are lack of planning and failure

to manage cultural differences. It is not

necessary that two banks have the same

culture. Cultural and symbolic elements in

M & As are typically framed in terms of the

distinction between the emerging firms, thus

leading to an “us versus them” dualism. Early

emphasis on cultural assessments and

communication plans are particularly

important. According to a KPMG report, M &

A deals were 26 per cent more likely than

average to be successful if they paid

satisfactory attention to cultural issues. If not

handled properly, this can lead to an

accumulation of critical errors and

misunderstandings and ruin what, on paper

might look like a highly promising deal.

Technological Issues

Most of the banks, especially public sector

banks,have implemented technology in bits

and pieces; as such, they are at different

stages of technological implementation.

Besides, they have different core banking

solutions provided by different vendors i.e.,

I-Flex,Infosys, TCS, Wipro, etc which,may pose

challenge to the merging entities to

integrate their technology and working

platforms. Similarly, the range of software

for treasury operations is quite wide e.g.

Kondor, +Kastle,

iDEAL, ITMS etc, while the vendors are Reuters,

Unisys, Oracle, TCS, Credence, ICICI info,

Bloomberg, Synergy login and a few others.


34

Here too, software synergy becomes an issue

during mergers. If two banks with two

different technology platforms plan a merger,

hundreds of crores of rupees will go down

the drain.

Role of Regulators

Mergers should be based on the need to

attain a meaningful balance sheet size and

market share in the face of heightened

competition and driven by synergies and

locational and business-specific

complementaries. Bank consolidation/

merger process should be primarily market

driven and such proposals should come

voluntarily from the banks themselves.

Government and supervisory authorities

should only provide a conducive

environment for consolidation and

convergence through appropriate fiscal and

monetary policies supported by a sound

regulatory and supervisory framework; at the

same time ensuring that a few large

institutions do not create an oligopolistic

structure in the market.In particular,

regulators have to consider the anti-trust

aspects of merger activity.In this context the

experience of US Federal Reserve can be

useful since the US has seen more mergers

in the past two decades than any other

country. The objectives of the public policy

followed by the US Federal Reserve Bank in

cases of mergers are :

1. Ensure a safe and sound banking system;

2. Preserve benefits of competition for

consumers of financial services;

3. Meet convenience and needs of local

communities;

4. Allow the firm to evolve with the needs

of the market.

To ensure a smooth passage to the new zone,

the Government needs to amend the

Banking Regulation Act.IBA, the bankers’apex

body, which set up a committee under the

chairmanship of Mr. V. Leeladhar to look into

the intricacies of mergers and acquisitions in

the banking sector, has suggested

corporatisation to bring all banks under the

Companies Act, 1956, thereby ensuring a

common legal framework and resolving the

anamolies and lacunae in the Income Tax Act.

This would also help the government extend

tax sops to public sector banks.

Today’s highly competitive banking

world,inebriated with Darwin’s “Survival of the

Fittest” mantra has no reverence for the age-

old aphorism “Live,and Let Live”; and Indian

banks have no option,but to move slowly,

but surely from the present regime of ‘large

number of small banks’ to a ‘small number of

large banks’. The new era, certainly is going to

be one of consolidation around identifying

core competencies. "Consolidation" says

Dr. A.K. Khandelwal, CMD, Bank of Baroda,

could be in two phases. Phase I could be

between two banks, followed by the merger

of one or two additional banks to form larger

entities. This phase could also see area-

specific consolidation, followed by across-

the-country consolidation. What will mark

out the new era of consolidation from the

earlier experiences is that the future players

will be willing players.

The writing on the wall is very clear; whether

we back up or not, circumstances will force

us to consolidate or perish. �

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The IBA reserves the right to accept/reject advertisements.

Revised ECB Guidelines

Recently, the government revised the normsfor external commercial borrowings (ECBs).The last revision of these norms were done inJanuary, 2004. ECBs could now be accessedunder two routes, the automatic and approvalroute. ECB for investment in the real sector,that is industrial sector, is under the automaticroute. All cases that fall outside the purviewof the automatic route, will be decided by anempowered committee of the Reserve Bankof India. Following are the amendments madeby the government with regard to the ECBguidelines.

• Non-banking finance companies will bepermitted to go in for ECBs through theapproval route to meet fundrequirements from multilateral financialinstitutions, reputed regional financialinstitutions, official export agencies andinternational banks towards import ofinfrastructure equipment for leasing toinfrastructure projects with minimumaverage maturity of five years.

• Housing Finance Companies with strongfinancials satisfying criteria to be notifiedby the RBI , will be permitted to issueforeign currency convertible bonds underthe approval route.

• Financial institutions dealing exclusivelywith infrastructure or export finance suchas IDFC, IL&FS,Power Finance Corporation,Power Trading Corporation, IRCON, andEXIM Bank of India will be permitted togo for ECBs through the approval route.

• Banks and financial institutions that hadparticipated in the textile or steel sectorrestructuring package as approved by thegovernment are permitted to the extentof their investment in the package andthe assessment by RBI based onprudential norms. Any ECB availed for thispurpose so far is deducted from theirentitlement.

• All ECBs would be subject to specificmaximum spreads over the six monthLIBOR, for the respective currency. Theinterest spread ceiling would include rateof interest, other fees and expenses inforeign currency except commitment fee,pre-payment fee and fees payable in

Indian rupees. Moreover, the payment ofwithholding tax in Indian rupees isexcluded for calculating the all-in-cost.

• Issuance of guarantee, standby letter ofcredit, letter of undertaking or letter ofcomfort by bank, financial institutions andNBFCs relating to ECBs is not permitted.However, application for providingguarantee/ standby letter of credit orletter of comfort by banks, financialinstitutions relating to ECBs in the case ofSME will be considered on merit subjectto prudential norms.

• The prepayment of ECBs will be revisedupwards to US $ 200 million from US $ 100million, subject to minimum averagematurity of five years.

Special Economic Zones Bill – 2005

In May, 2005 the Special Economic Zones Bill2005 was passed in the Lok Sabha.The SEZ Billis expected to encourage exports and foreigndirect investment in the country. The Billprovides a single window clearance andapproval mechanism for the establishment ofSEZs, as well as production units inside thezones. The Bill contains income taxconcessions for both SEZ units and SEZdevelopers, who continue to get 100 per centincome tax exemption for 10 years in a blockperiod of 15 years. Other features of the Billinclude the following:

• Establishment of SEZ and setting up ofunits therein;

• Establishment of free trade andwarehousing zones to create world classtrade-related infrastructure to facilitateimport and export of goods, aimed atmaking India a global trading hub;

• Requirements for setting up offshorebanking units and units in InternationalFinancial Service Centre in SEZs, includingfiscal regime governing the operation ofsuch units.

• Establishment of an authority for eachSEZ set up by the Central government toimpart greater administrative autonomy.

• Designation of special courts and asingle enforcement agency to ensurespeedy trial and investigation of notifiedoffences committed in SEZs.

Simplification of Procedure for Settlementof claims in respect of deceased depositors

With a view to facilitate expeditious andhassle-free settlement of claims on the deathof a depositor, the RBI had issued thefollowing guidelines to the banks. Importantfeatures are as follows:

1. Treatment of Accounts with nominee/survivor clause

In the case of deposit accounts where thedepositor had utilized the nominationfacility and made a valid nomination orwhere the account was opened with thesurvivorship clause (“either or survivor”, or“anyone or survivor”, or “former or survivor”or “latter or survivor”), the payment of thebalance in the deposit account to thesurvivor(s)/nominee of a deceaseddeposit account holder represents a validdischarge of the bank’s liability provided:a) the bank has exercised due care andcaution in establishing the identity of thesurvivor(s)/ nominee and the fact of deathof the account holder, throughappropriate documentary evidence; b)there is no order from the competentcourt restraining the bank from makingthe payment from the account of thedeceased; and c) it has been made clearto the survivor(s) / nominee that he wouldbe receiving the payment from the bankas a trustee of the legal heirs of thedeceased depositor, i.e., such payment tohim shall not affect the right or claimwhich any person may have against thesurvivor(s) / nominee to whom thepayment is made. In the event of makingpayment to the survivor(s) / nominee ofthe deceased depositor, the banks areadvised to desist from insisting onproduction of succession certificate, letterof administration or probate, etc., orobtain any bond of indemnity or suretyfrom the survivor(s)/nominee, irrespectiveof the amount standing to the credit ofthe deceased account holder.

Banking Scene - Indian



36

2. Accounts without the survivor/nomineeclause

In case where the deceased depositor hadnot made any nomination for theaccounts other than those styled as “eitheror survivor” (such as single or jointlyoperated accounts), banks have to adopta simplified procedure for repayment tolegal heir(s) of the depositor keeping inview the imperative need to avoidinconvenience and undue hardship to thecommon person. In this context, banks arepermitted to take decision keeping in viewtheir risk management systems, fix aminimum threshold limit, for the balancein the account of the deceased depositors,up to which claims in respect of thedeceased depositors could be settledwithout insisting on production of anydocumentation other than a letter ofindemnity.

3) Premature Termination of term depositaccounts

In the case of term deposits, banks have toincorporate a clause in the account openingform itself to the effect that in the event ofthe death of the depositor, prematuretermination of term deposits would beallowed. The conditions subject to whichsuch premature withdrawal would bepermitted may also be specified in the

account opening form. Such prematurewithdrawal would not attract any penalcharge.

4) Treatment of flows in the name of thedeceased depositor

In order to avoid hardship to thesurvivor(s) / nominee of a depositaccount, banks have to obtain appropriateagreement/ authorization from thesurvivor(s)/ nominee with regard to thetreatment of pipeline flows in the nameof the deceased account holder.

5) Access to the safe deposit lockers / safecustody articles

For dealing with the requests from thenominee(s) of the deceased locker-hirer/depositors of the safe-custody articles(where such a nomination had beenmade) or by the survivor(s) of thedeceased (where the locker / safe custodyarticle was accessible under thesurvivorship clause), for access to thecontents of the locker/safe custody articleon the death of a locker hirer / depositorof the article, the banks have to adoptgenerally the foregoing approach, mutatismutandis, as indicated for the depositaccounts.

6 Time limit for settlement of claims

Banks have to settle the claims in respectof deceased depositors and releasepayments to survivor(s) / nominee(s)within a period not exceeding 15 daysfrom the date of receipt of the claimsubject to the production of proof ofdeath of the depositor and suitableidentification of the claim(s), to the bank’ssatisfaction. Banks have to report to theCustomer Service Committee of theBoard, at appropriate intervals, on anongoing basis, the details of the numberof claims received pertaining to deceaseddepositors / locker-hirers / depositors ofsafe custody article accounts and thosepending beyond the stipulated period,sighting the reasons for the delay.

Over and above these guidelines, the bankshave to provide wide publicity and guidanceto deposit account holders on the benefits ofthe nomination facility and the survivorshipclause. Further banks have to undertake acomprehensive review of their extantprocedures and also take into account theModel Operational Procedure (MOP) forsettlement of claims of the deceasedconstituents under different circumstances tobe formulated by the Indian Banks’Association. �

Compiled from various sourcesby Jayasree Menon

CD on

VIII Bipartite Settlement

for

Workmen Staff

and

Joint Note on Wage Revision

for Officers

available at Rs.300/-

Contact : Publications Department, Indian Banks’ Association, Stadium House,

6th floor, Block 3, V N Road, Mumbai 400 020.Phone : 022-22894500/22894530


The FT Global 500 is an annual snapshot of

the world’s largest companies. In this

companies are ranked by market

capitalization. The companies with a free float

of at least 15 per cent were included in

calculating this index. The S&P 500 index of

leading US companies began in 1957. After

40 years, only 74 of the original 500 companies

remained on the list. Similarly, in Britain FTSE

100 index of leading British companies

started in 1984. After 20 years, only 23 of the

original companies remained. General

Electric of the US retained its top position in

2005 also in the FT Global 500 index. Exxon

Mobil of the US dealing in Oil and gas is in

the second place followed by Microsoft.

Citigroup is in the fourth position. There are

four Indian companies namely Oil and Natural

Gas, Reliance Industries, National Thermal

Power and Infosys Technologies in the FT

Global 500 index. Those companies which

have moved with times were able to perform

well. Analysts are of the opinion that the

compromise between shareholders’ interests

and those of employees and the wider

community has made a come back in recent

years in the form of “corporate social

responsibility. (CSR).” Champions of the CSR

opine that Companies that failed to take

account of wider social issues suffered

financial damage. Many companies have

gone along with the move towards corporate

social responsibility. Some investor groups

have encouraged them by stating that

companies should behave decently towards

their staff and the wider community because

their reputations could be damaged if they

ignore it, which ultimately lead to more

damage to shareholders. Many companies are

now sending work offshore to the benefit of

shareholders and to the greater discomfort

of European employees, and US who are

losing their jobs. Competition between

companies will always result in their seeking

some advantage. Sometimes that will be a

new technology but it will often be a

reduction in costs. Those who fail to grasp this

will be lost.

Basel II impact study threatens to delay the

accord start date in the US

The result of recently completed quantitative

impact study (QIS4) of Basel II may delay its

implementation in the United States. The four

US federal banking agencies (OCC,Federal

Reserve, FDIC and OTS) have called for a delay

in publishing an important notice of

proposed rulemaking (NPR) from the summer

to the autumn this year, to allow for further

study. The agencies have stated that QIS4

implied reductions in minimum regulatory

capital far larger than expected from previous

studies. Changes in effective minimum

required capital for individual banks ranged

from a decrease of 47% to an increase of 50%.

And no US bank would qualify under the

advanced approaches to Basel II. While the US

agencies testified that the original timetable

was possible, they also indicated that they

wanted a better understanding of the QIS4,

identify variations in the stages of bank

implementation efforts ( particularly related

to data availability), and/or suggest the need

for adjustments to the Basel II framework. In

short, the US banks require more time to

assess the impact of Basel II under the new

study. If the 20 US banks expected to

participate in Basel II do not get approval, the

possibility of a delay in the Basel II could not

be overruled.

Islamic Investment Bank’s share offering

net 100 million pounds

The rise of Islamic banking has taken another

step forward with the recent successful 100

million pound share offering by European

Islamic Investment Bank (EIIB). The issue was

oversubscribed by 50 million pounds. EIIB was

incorporated in the UK in January with the

intention of becoming the first independent

Islamic investment bank in Europe, established

and managed on a wholly Sharia-compliant

basis. The founding shareholders include Gulf-

based individuals and institutions, including a

number of Islamic banks, as well as UK

individuals and companies. EIIB is planning to

submit by the end of May, 2005 an application

for authorization to the UK’s Financial Services

Authority (FSA) to conduct Islamic investment

and wholesale banking, with a focus on the

UK,Europe, the Middle East and Asia. The

proposed range of products and services

include the following Sharia-compliant

investment banking activities: Islamic treasury,

capital markets, asset management, trade

finance, correspondent banking and private

banking. The successful EIIB issue reflects the

growing demand for Islamic finance, an area

which has only been lightly tapped by

conventional banks and non-banking

institutions in Europe.

Micro Credit and Cambodia

After a dacade of civil war and a UN – brokered

peace accord in 1991, Cambodia has gradually

regained a degree of political stability. A small

private sector has grown from the ashes of

communist rule alongside a massive

international aid effort to raise living

standards for its 13.4 million people. As a

result, a foreign investment has flowed into a

few key sectors especially tourism and

garment manufacturing. One of the fastest

growing industries in microcredit lending,

Banking Scene -Global

FT Global 500 – Some facts


38

which provides loans to Cambodia’s poor and

has stimulated many successful small

businesses. Initially, many of the micro credit

institutions received foreign aid, but now they

are able to stand on their own as commercial

lenders. The combined outstanding loans by

licensed micro credit lenders grew from

roughly $15 million in 1997 to $ 64 million in

2003, according to the International Finance

Corporation (IFC). Cambodia’s largest such

lender is ACLEDA Bank, which began in 1993

as a non-governmental organization and is

now licensed as a full-fledged bank with

about 100 branches. With an average loan size

of $650, its portfolio stood at $75.4 million as

of March 2005, up from only $ 27 million at

end of 2002. ACLEDA has another distinction

as the only Cambodian lender with an

international credit rating from Moody’s

Investor Services. In 2004, the bank posted a

$2.5 million profit on $84 million in assets. One

of the reasons for the poor development of the

financial services in Cambodia was the lack of

properly structured legal systems which

prevents banks to lend without fear. The ratio

of bank deposits to GDP is less than 20% and

the total number of depositors is only 1,20,000.

The minimum capital requirement for banks

was raised in 2001 to $13 million which forced

many banks to close their operations. In the

micro credit sector, the lack of local-currency

deposits in the system is a long-term hurdle

for expansion. Most commercial banks in

Cambodia focus on servicing the country’s

closely interlocked political and business elite.

Only a handful of foreign banks are operating

in the country. May Bank and Public Bank of

Malaysia and Siam Commercial Bank of

Thailand have their operations in Cambodia.

But big players in the global scene are yet to

explore Cambodia.

Spending on Customer Relationship

Management (CRM)

Customer Relationship Management (CRM) is

more than a technology. It is a very specific

strategy that seeks to identify customers

individually and then craft sales and service

strategies that are uniquely appropriate for each

customer. CRM also seeks to interact with the

customer in a consistent manner, regardless of

the channel of communication. Tower Group

estimates that, on a global basis, IT spending on

the customer knowledge side of CRM in retail

financial services institutions will be $5.9 billion

in 2005. Of that total, just under 50% ($2.6 billion)

will be spent in the North American market and

a further $1.6 billion in the EU. It is estimated

that $ 7 million would be spend on CRM

technology by the year 2008.

Accounting Standards

From January 1st, Europe’s 7000 listed

companies adopted international financial

reporting standards (IFRs), replacing 25

different local accounting regimes with one

set of rules. The early reporters under the new

rules will be bigger companies. Smaller

companies will follow the bigger companies

at a later stage. Most inconvenienced by this

new set of accounting standards are banks,

insurers and other heavy users of financial

instruments such as derivatives, insurance

contracts and the like whose value changes

very frequently and will affect the profit

position of the concerned enterprises. Further,

the companies have very little time to adapt

to new rules and accounting standards owing

to a tussle between standard setters and

European financial industry regulators, the

affected companies and politicians. As with

any rule, companies are likely to adapt their

behaviour to get the best accounting

treatment. One of the complaints raised

against the new accounting standards is that

the new standards have led to insufficient

consistency and comparability. Now values

must be found for things that often have no

market values such as employee stock

options or most loans, so that estimates

matter more than before. Moreover,

companies have more flexibility in deciding

how to apply IFRs. This flexibility is inevitable

because IFR is principles-based rather than

highly detailed and prescriptive American

accounting standards. For all its flaws and

merits, this new standard would be accepted

by 90 countries all over the world. American

and international standard –setters have

made steady progress over many years to

close the gap between America’s rules and the

rest.

Thailand raises interest rates

Bank of Thailand, the Central Bank of Thailand

increased the benchmark interest rates to 2.5

per cent sighting maintaining economic

stability as the main goal of the government.

The tightening of the interest was started

from August. But after three further rate

increases of 25 basis points each, the central

bank took a pause from its gradual tightening

policy in April. But again it resorted to hiking

the interest rate in June. The aim of this policy

is to wipe out the negative real interest rate

in Thailand, which is being experienced by the

country for quite some time. Further, the bank

also aims to maintain stability in the economy

in the long run. �

Compiled from various sources

By Jayasree Menon

IBA BulletinFor Subscription kindly contact the Editorial Department, IBA

Tel. : 022-2217 40 40 • Fax : 022-2218 42 22


Book : Fiscal Deficit and Inflation in India

Author : Ashutosh Raravikar

Price : Rs. 385/-

Total Pages : 252

Published by : Macmillan India Ltd., New Delhi.

Not very long ago, Michael Faraday,1 the

inventor of electricity had showed proof of his

discovery to his Prime Minister. When his

Prime Minister asked him what use it was –

‘Who knows Sir’, Faraday replied, ‘one day you

might be able to tax it’2 . Any one can

understand the embarrassment of a genius

who could not elicit an encouraging word

from those around him who can hardly

foresee the future beyond a few years. At

present, no one can think of life without

electricity (taking, of course, massive, nation-

wide power cuts. With more power-cuts, the

value of electricity is realised more). The world

is replete with hundreds of such examples of

how a potentially wonderful idea of an

inventor (like train, flight, car, medicine,

ambulance etc. to name just a few) is

discouraged by the contemporaries only to

be acclaimed many decades/centuries later

by millions and utilised by billions worldwide

to alleviate human sufferings and misery.

Consider these fantastic comments (read

criticisms) : Artificial flight (aeroplane) is

impossible. Transmission of television

pictures through air is not possible due to fog

(yes, you read it right, fog). Of all the gaffes,

this one takes the cake: “Telephone has no

(read my lips: NO) commercial application”.

“A man who lives on his past income is a wise

man. He who lives on his current income is a

careless man. The man who lives off his future

income is a brainless man”, said a finance

expert. However, a government living off its

future income, others money and borrowed

time is considered to be a great government.

How may of us still remember the college

dissertation we completed, leave alone

preserving a copy of it? Many, over the years

might have forgotten the topic of their

dissertation. Not Raravikar. He took it out and

presented an ‘improved’ version to the public.

A person thinking logically is a nice contrast

to the majority, they say. Raravikar thinks

logically and thinks differently too. What is

more? He flashes out reams after reams of

evidence in his defence. The common belief

is that the fiscal deficit and rising price level

has a casual nexus between them. Raravikar

swims against the tide (born fighter?). He says

a definite, emphatic ‘no’ to the common idea

and argues convincingly as well.

This book is divided into 5 crisp Chapters. The

Chapter 1 deals with the Background. Chapter

2 discusses the Fiscal Crisis in Indian Economy

while Chapter 3 talks about the Budget

Deficits: Concepts and Trends. Chapter 4

elaborates on Budgets and Inflationary Trends

in Prices. Naturally, when the book is on ‘Fiscal

Deficit and Inflation in India’ can the

discussion on ‘A Nexus Analysis’ be far behind?

So, exactly the same is the last and final

Chapter 5. He gives a number of suggestions

in the last chapter (for which not many in India

have the time and patience). A brief

bibliography and appropriate index

completes the book. The book is slim, crisp

and pocket-novel-sized (well, almost).

The foreword is from none other than

Prof. Bhalchandra L. Mungekar, the famous

Vice-Chancellor of the famous University of

Mumbai and the foreword should be read

fully to be enjoyed. Any educated person can

read English, but only an intelligent man can

read ‘between-the-lines’. A reader of the

foreword can write another book on the

implicit wisdom of the foreword itself.

Only a few legendary organisations like

Reserve Bank of India gives so much freedom

and encourage creativity. That is why such

institutions remain distinguished. Any

organisation, which stifles creativity, faces a

natural death, not because of the external

adversaries but because of internal enemies

who are self-centred and egoistic to the core.

This is the “disease”3 which ails Indian

corporates. They choke the oxygen supplies

and the oxygen suppliers to any organisation.

The author of the book under review, working

in RBI seized the opportunity and had

authored a good book. One wishes that other

scholars too, take out, dust and publish their

dissertation and their wonderful ideas for

common good than keeping the knowledge

to themselves. Let the ‘knowledge-seekers’ of

the world unite. Let there be light and debate.

The book is recommended for all persons who

are concerned about the well being of India, the

policy makers, economists and students,

especially for those who want to walk away from

the beaten path and contribute to the mankind

in whatever way possible. For organisations,

societies and families to march ahead towards

prosperity and strength, the GOLDEN RULE of

Ted Turner of CNN can be followed: “Either lead

or follow or get out of the way”. Like the water

finding a roundabout route to cross a blockade

on its way. If lifeless water can find a solution to

an obstruction, the men who have the sixth

sense can surely find one. �

Reviewed by:Shri. K. M. Thirunavukkarasu,

Assistant General Manager,Reserve Bank of India, Mumbai.

End Notes :

1 Critics’ Gaffes, Ronald Duncan,Macdonald & Co., London and Sydney,1983. An excellent collection of severecriticisms (by detractors or due to pure,green jealousy or for other reasons) onmany famous authors, playwrights,composers, painters, scientists includingBeethoven and Shakespeare. Price :Sterling Pound 5.95, but really worthbillions and billions of dollars.

2 Italics are mine.

3 The disease, which stays in one’s ownbody, feeds from the same body anddestroys the very body it had benefitedfrom. A Tamil saying. (Verbatim in Tamillanguage : ‘Koodave irunthu kollumviyadi’).

Book Review


40

A read of the book ‘Bond and Money markets’

depicts, the author Ms. Shefali’s

understanding and control over the subject.

Even though, it is a complex subject, Ms.

Shefali dealt with it, in a manner which is easy

to read and assimilate.

With financial reforms and deregulation of

markets, rapid changes have taken place in

financial Institutions, more so, in Banking. A

new array of financial services encircling all

aspects of financial needs of the customers

have come into the picture. Dis-

intermediation has taken place and medium/

big borrowers are approaching the Debt and

Money Markets directly. In this backdrop,

understanding the Bond and Money Markets

has become a necessity for financial students,

as well as experts.

The features of Debt Securities, kinds of Bonds

besides related terms like yield, nominal yield,

current yield, STRIPS etc., are well explained

in the chapter Indian Debt Markets. This is

followed by a commentary on Central

Government Securities which is quite

interesting and throws light on various

aspects like the need to borrow through

securities by Central Government, the role of

securities in financial markets etc. The

changes occurred in Debt and Money

markets during pre and post reform period,

the relation of fiscal deficit with issuance of

securities by Government, various types of

securities like G. Secs, State Government

Securities and Agency Bonds and their

features are well explained. The role of Primary

Dealers is also clarified in a lucid manner. The

annexure given on ‘Liquidity Adjustment

Facility’ is very useful for the readers.

Treasury Bills and different methods of

auctions to sell the Treasury Bills by Reserve

Bank of India are well described, followed by

lucid explanation of State Government

Securities and RBI initiatives as debt manager

to the State Governments. The fiscal and

monetary management and the role of

Reserve Bank of India are clearly stated.

Call money markets, its features, functions and

recent changes that led to ‘Repo Market’ and

steps initiated by RBI to regulate Bank’s

operations in money markets are aptly

covered.

The Annexure 1 & 2 given to Corporate Bonds

listing Rating Symbols, SEBI guidelines for

issue of Debt Instruments are particularly

useful to financial students.

As a corollary to Corporate Bonds, the advent

of Commercial Paper and Certificate of

Deposit and their features, regulations, issue

mechanism etc., are thoroughly stated. The

distinction i.e., Commercial Paper are issued

by Corporates and Certificate of Deposit are

issued by Banks and Financial Institutions is

described in an unambiguous manner to the

benefit of financial students. Clarity of

expression is the hall mark of this book.

Ready forward contracts or Repos have been

dealt with in a step by step method, right from

Repo concept to calculation of interest, issue

of Repos, RBI guidelines etc. collaterised

borrowing and lending obligation, a newly

developed product to cater to the needs of

non-bank entities has been explained.

The coverage of the topics, Bond Market

Indices and Benchmarks, Secondary Markets

and Trading in Government Securities is

comprehensive and various aspects like NDS,

CCIL, WDM, GILT etc., have been clearly

explained.

Book : Book on Bond and Money Markets

Author : IIB &F

Publishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.

Price : Rs. 120/-

Pages : 167

The regulatory and procedural aspects

relating to Public Debt Act 1944, SEBI and

FIMMDA are thorougly described. Annexure

1 given to Chapter on Regulatory and

Procedural Aspects is very informative and

highly useful.

The Chapters on Bond Valuation, The Yield

Curve, Duration, throw light on important

aspects related to valuation of bonds,

different types of yields, interpretation of yield

curve, theories of term structure of interest

rates, characteristics of duration, types of

duration. It is indeed a complex stuff

explained in a cogent manner.

The last chapter contains valuable

information relating to Fixed Income

Derivatives. Interst Rate Swaps, Forward Rate

Agreements, benchmarks for interest rate

swap market etc., are covered in an extensive

manner.

Bond and Money Markets is a complicated

and complex subject. However, the manner

in which the author has presented the subject

matter in an easy to read and understand style

is commendable.

The author needs acclamation for the effort

to throw light on a subject that is taking its

roots in Indian Financial markets.

I strongly recommend this book to a) financial

students b) officials of Banks and Financial

Institutions who are involved in Bond and

Money Market Operations.

Priced at an affordable Rs. 120/- the content

outweigh the rate of the book. �

Reviewed by : V.S.R. MurthyGeneral Manager

Union Bank of India, Mumbai.

Book Review


Indian Institute of Banking & Finance (IIBF) has

been in the forefront of imparting quality

education of provide developing India with

knowledge rich, capable & efficient

professional in banking & finance. IIBF has

come a long way from being an Institute of

Bankers to the present level of encompassing

all banking & finance activities with a view to

provide technically sound financial

professional through perpetual education,

training and evaluation.

M/s. Taxman Publications Private Limited are

reputed publishers of books on Tax &

Corporate Laws and professional books on

finance & legal matters.

It is but natural that when two giants in their

respective fields join together, the students

& professionals alike are endowed with a

wonderful book, i.e. Mutual Fund Industry –

Products & Services.

The book is a comprehensive commentary on

‘A to Z’ of Mutual Funds, progressively

structured in 8 chapters.

Chapter-I illustrate the concept of Mutual

Fund, advantages of investing in Mutual Fund

besides explaining the benefits of a

diversified portfolio offers. The ‘Lessons from

Evans and Archer’ given as appendix 1 is

very useful piece of study.

Chapter- II contain the origin of Mutual Fund

and it’s spread to USA & UK. The evolution of

Mutual Fund in India and the formation of

AMFI is well explained. The mergers &

acquisitions that took place in Mutual Fund

Industry, have been elucidated in an

Book : Book on Mutual Fund Industry – Products & ServicesAuthor : IIB & FPublishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.Price : Rs. 145/-

interesting manner. The steps initiated by

AMFI as self-regulatory authority (SRO) and

SEBI as regulatory authority, to rationalize the

functioning of Mutual Fund Companies are

well covered to the benefit of the readers.

Chapter – III is chiefly relevant to Indian

conditions, as it contain SEBI regulations &

structure given by SEBI to Mutual Funds. The

‘Three Tier’ structure of a Mutual Fund is well

portrayed in the chapter. Important points

like AMC, Trustee qualifications, duties,

rights & obligations are clarified.

In Chapter – IV Mutual Fund products are

highlighted as an alternate investment

opportunity and various Mutual Fund

products along with prescribed fee &

expenses that are billed to the investor are

given. The process of NAV calculation is

informative & knowledge enhancing. Add

on benefit of his chapter is income received

from Mutual Fund and its treatment for Tax

purpose.

Chapter – V explains the portfolio

management and various concepts involved,

i.e. Equity Fund Management & Index Fund

Management (Active Portfolio

Management & Passive Portfolio

Management). Investment styles and

hedging are deliberated in a lucid manner.

In Chapter – VI, various ways of measuring

return methods and the basis for such

methods explained. Not losing sight of ‘Risk

Factor’, different ways of arriving at risk are

analyzed. Different techniques to measure

the risk with realized return have been

elucidated to the benefit of readers. The

importance of Tracking & Monitoring the

performance of Mutual Fund has been

highlighted. The Appendix 1 (Indices for

Benchmarking Portfolios) & Appendix 2

(CRICIL Composite Performance Ranking

Methodology) will immensely benefit are

financial experts in honing their skills.

Chapter – VII covers the model portfolio

development keeping in mind the clients

investment goals & objectives.

In Chapter – VIII the regulation to protect the

interests of the Unit Holders has been

thoroughly described. SEBI regulations in this

regard are nicely explained. Trustee roles &

limitations, obligations are detailed and

role of AMFI are once again emphasized.

Annexure 1 to 11, given at the end of the book

are particularly useful in understanding

several aspects related to Mutual Funds and

the steps taken by Regulatory Authority to

protect Investor interests.

In its entirety, the book in a priceless,

knowledge rich, user-friendly guide to Mutual

Fund Products & Services. The content and the

high quality of the book mirror the efforts put

in by Ms. Rachana Baid & the experience is

instrumental in scripting this book.

The superior quality of the substance of the

book outweigh the price (Rs. 145/-). �

Reviewed by : V.S.R. MurthyGeneral Manager

Union Bank of India , Mumbai.

Book Review


42

Book Review

In recongition of the need of the bankers to

strengthen the balance sheet and improve

the stake holders value, the Institute of

Banking and Finance. Mumbai has introduced

Diploma qualification in Bank Financial

Management. The curriculum under the

diploma combines thereoretical inputs with

hands on experience in financial decision

making with the help of computer simulation

exercise known as Bank Mod TM which might

import knowledge and confidence necessary

for the bankers for achieving the objective

before them.

This book provides a comprehensive

Book : Bank Financial ManagementAuthor : IIB & FPublishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.Price : Rs. 225/-Pages : 124

coverage and valuable insidhts into bank

financial management. The subject matter is

spread over seven modules comprising of (a)

introduction to Bank Financial management,

prepared by Shri S.N. Sawaikar, SBI (b) Interest

Rate Risk Management, prepared by

E. Madhavan and R. Raghavan, RBI (c) Credit

Risk, prepared by A.K. Trivedi, IndusInd Bank,

(d) Liquidity Management in Banks, prepared

by A.K. Gulla, SBI (e) Derivatives, prepared by

R. Raghavan, RBI (f ) Profitability of Banks,

prepared by B.C. Acharya, SBI and (g) Bank

Capital and Stock Valuation prepared by B.C.

Acharya, SBI. All authors are bank

professionals, having fundamental

understanding of various financial aspects of

business of banking and finance. However,

subjects are effectively presented with a

useful blend of theory and operations.

This book can be a stand alone study book

for bank and finance professionals. However,

it is a very useful text book for students

pursuing the Diploma programme in Bank

Financial Management. �

Reviewed by : Dr. T.K. ChakrabortyAdvisor, History Cell,

RBI, Mumbai.

INDIAN BANKINGYEAR BOOK - 2004

Indian Banking Year Book is one of our annual publications, which present an update on policy andregulatory framework with relevant database covering multifaceted aspects of banking and financialservices industry.

The Year Book is divided into three Parts. Part I contains nine chapters viz., (1) Indian Banking – An Overview, (2)Regulation and Supervision of Banks in India, (3) Financial Institutions, (4) Co-operative Banking in India – ABrief Review, (5) Indian Capital Market, (6) Non-Banking Financial Companies (NBFCs), (7) Insurance Sector, (8)Legal Reforms pertaining to Banking Sector and (9) Summaries of important Committees/Working Groups setup by Government of India/Reserve Bank of India. Part II contains relevant statistical information pertaining toIndian Banking and Part III contains profiles of IBA Members.

Year Book is prepared with the intention to provide latest information on banking and finance to various classesof readers.

This publication is priced at Rs.100/- (inclusive of postage charges). For copies, kindly contact the PublicationsDepartment, Indian Banks’ Association, Stadium House, 6th Floor, Block 3, Veer Nariman Road, Mumbai 400 020Tel. : 022-22894530 Fax : 022-2283 5638.

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ceb$eeueÙe, YeejleerÙe efjpe]Je& yeQkeâ

keâer vepe]jeW ceW Yeer Ssmes yeQkeâ

DeHevee mecceeve Kees osles

n Q ~ m e e L e n e r ,

efveOee&efjle HeæefleÙeeW

Je HeÇef›eâÙeeDeeW keâe

Heeueve ve keâjves

keâe oes<eer nesves Hej

oC[ kesâ Yeeieer

nesles nQ~

cegbyeF& efmLele Skeâ

yeQkeâ lees jeleeW-jele

Fm e e r k e â e jC e

DeHevee DeefmlelJe ner

Kee s ye w"e, Deepe

pevelee Gme yeQkeâ keâes Yeguee

yew"er nw~ Dele: HeÇefle<"e Kelce

efMe#ee : Sce.S. efnboer (mJeCe&heokeâ Øeehle), heer.SÛe.[er., (legueveelcekeâ

Yee<ee e fJe%eeve), Sce.S. (De b«e spee r), Sue.Sue.yee r.,

meer.S.DeeF&.DeeF&.yeer., [er.yeer.Sce. (DeeF&.DeeF&.yeer.), ef[hueescee

(DevegJeeo), meeefnlÙejlve, DeeF&.peer.[er., (keâuee ef[hueescee),

Got& ceW ØeJeerCelee ef[hueescee, Sce.yeer.S. (yeQefkebâie SJeb efJeòe),

meefnle 32 DevÙe ØeefMe#eCe ØeceeCe he$e/ef[hueescee Øeehle~

mebØeefle : S.meer.Sme. (SmeesefMeSš Dee@heâ kebâheveer mew›esâšêrpe

Dee@heâ Fbef[Ùee) hee"Ÿe›eâce ceW DeOÙeÙevejle~

uesKeve : 20 hegmlekeWâ efueKeer 16 ØekeâeefMele, 26 hegmlekeWâ mebÙegkeäle ¤he

mes Devetefole 1000 (Skeâ n]peej) uesKe efJeefYevve heef$ekeâeDeeW

ceW ØekeâeefMele, 10 mes DeefOekeâ heef$ekeâeDeeW kesâ Deveskeâ DebkeâeW keâe

mecheeove~

hegjmkeâej : 3 Deblejje°êrÙe, 18 je°êrÙe Je 12 jepÙemlejerÙe hegjmkeâej

Øeehle (kegâue 33 hegjmkeâej)~

”

”ØelÙeskeâ yeQkeâkeâceea keâes mJeÙeb Ùen mebkeâuhe uesvee

nesiee efkeâ Jen hetCe& peeie¤keâlee yejleles ngS

keâeÙe& keâjsiee leLee keâneR Yeer keâYeer Yeer Deveweflekeâ

uesveosve keâe helee ueieles ner Fmekesâ efJe<eÙe ceW

me#ece ØeeefOekeâejer keâes metÛevee osiee~


pegueeF& 2005

46

nesles ner yeQkeâ Yeer Kelce nes peelee nw~ meeLe ner,

Ssmes yeQkeâ ceW keâeÙe&jle DeefOekeâeefjÙeeW, keâce&ÛeeefjÙeeW

Je efveosMekeâeW keâer HeÇefle<"e Yeer efiej peeleer nw~

(Ie)meceieÇ HeÇYeeJe

Gkeäle HeÇYeeJeeW kesâ HeÌ[ves mes efkeâmeer Yeer yeQkeâ keâe

yeves jnvee Ùee Ûeuevee keâef"ve nes peelee nw leLee

Fmekeâe meceieÇ HeÇYeeJe Ùen neslee nw efkeâ yeQkeâ yebo

nesves kesâ keâieej Hej Dee peelee nw~ Ùeefo yeQkeâ yeÌ[e

nes lees yebo nesves keâer veewyele lees veneR DeeSieer

Hejvleg keâF& Je<eeX lekeâ Gmes Fmeer keâuebkeâ kesâ meeLe

jnvee nesiee pees efkeâmeer Yeer mebie"ve kesâ efueS

DeÛÚe veneR nw~

keäÙee nw keâeues Oeve keâe JewOeerkeâjCe?

GHeefjJeefCe&le HewjeieÇeHeâeW mes keâeues Oeve keâe HeefjÛeÙe lees

efceue ieÙee nesiee~ Ùen Yeer mHe<š nes ieÙee efkeâ keâeuee

Oeve jKevee meceepe Je keâevetve keâer vepe]j ceW ieuele nw Je

Ùen DeHejeOe Yeer nw~ Dele: Fme keâeues Oeve keâes meHesâo

keâjves kesâ efueS DeLee&led Fme DeJewOe Oeve keâes JewOe keâjves

kesâ efueS pees HeÇÙeeme efkeâS peeles nQ leLee pees HeÇef›eâÙeeSB

DeHeveeF& peeleer nQ GvnW ceveer ueeBeE[îe Ùee keâeues Oeve keâe

JewOeerkeâjCe keâne peelee nw~

Jemlegle:, Ùen Meyo Decesefjkeâer mebkeâuHevee mes yevee nw~

DeHejeOe mes HeÇeHle Hewmee 'ieboe' neslee nw Dele: Fmekeâer

OegueeF& (ueeBeE[îe) keâjkesâ Fmes meHesâo (mJeÛÚ) yeveevee

ner ceveer ueeBeE[îe nw~

ceveer ueeBeE[îe Deewj yeQkeâ

Jemlegle:, Deepe kesâ peceeves ceW Hewmes keâes megjef#ele jKeves

keâe meyemes efJeMJemeveerÙe Deewj Hekeäkeâe lejerkeâe yeQkeâ ner nQ,

Hejvleg yeQkeâ JewOe Oeve keâes ner mJeerkeâej keâjles nQ, DeJewOe

Oeve keâes veneR ! yeQkeâ Hetje HeefjÛeÙe ueskeâj ner ieÇenkeâ keâe

Keelee Keesueles nQ, yesveeceer Ùee Heâpeea veece mes yeQkeâ Keelee

veneR Keesue mekeâles nQ~ Hejvleg, kegâÚ DeeHejeefOekeâ leòJe

ieuele lejerkesâ mes meYeer meyetle Deewj HeÇceeCe Deeefo pegšekeâj

yeQkeâ keâer meYeer DeewHeÛeeefjkeâleeSB Hetjer keâjkesâ DeHeveer

HenÛeeve keâes ÚgHeekeâj Keelee Keesue ueW lees Jes yeQkeâ kesâ

ieÇenkeâ yeve mekeâles nQ~

Deye HeÇMve Ùen G"lee nw efkeâ yeQkeâ Ùen kewâmes Helee keâjW efkeâ

pees JÙeefkeäle Gvekesâ Heeme Hewmee pecee keâjJee jne nw Jen

Gmekeâe JewOe Oeve nw Ùee keâeuee Oeve? ÙeneR mes yeQkeâeW kesâ

efueS Ûegveewleer DeejbYe nesleer nw~ Fme keâeues Oeve kesâ JewOeerkeâjCe

ceW yeQkeâeW keâes ceeOÙece yeveeÙee peelee nw Je keâeuee Oeve Yeer

DeJewOe lejerkeâeW mes JewOe keâjkesâ yeQkeâeW ceW pecee efkeâÙee peelee

nw~

kewâmes nesleer nw ceveer ueeBeE[îe ?

ceveer ueeBeE[îe keâjves kesâ ueeKeeW lejerkesâ nQ, uesefkeâve meyemes

Deemeeve Deewj mejue lejerkeâe Ùen neslee nw efkeâ DeHejeOeer

keâeues Oeve keâes JewOe keâjves kesâ efueS keâesF& Úesše-ceesše

keâejesyeej Keesue ueslee nw pewmes keâej HeeefkeËâie, jsmlejeB,

yeej, [ebme yeej, pÙeesefle<e keâeÙee&ueÙe Ùee Deeßece Ùee

Oeeefce&keâ mLeue Deeefo~ Jemlegle:, Ùes meye efoKeeJes kesâ

efueS nesles nQ~ Fvemes Yeues ner kegâÚ Yeer DeeÙe HeÇeHle ve nes

Hejvleg efjkeâe@[& ceW DeeÙe oMee&F& peeleer nw Je Oeerjs-Oeerjs

keâeues Oeve keâes JewOe keâjles ngS yeQkeâeW ceW pecee keâjeÙee

peelee nw~ meceepe keâes Ùee yeQkeâeW keâes Ùen Helee veneR ueie

Heelee efkeâ meÛecegÛe ceW Ùen JÙeeHeej keâe Hewmee nw Ùee

DeeHejeefOekeâ ieefleefJeefOeÙeeW mes HeÇeHle keâeuee Oeve~

otmeje, lejerkeâe yeÌ[s mlej Hej neslee nw~ FmeceW DeHejeOeer

vekeâueer keâbHeveer Keesue uesles nQ~ keâcHeveer keâe keâejesyeej

ueeKeeW keâjeÌs[eW ceW neslee nw Je ÙeneR mes keâF& HeÇkeâej mes

DeeBkeâÌ[eW keâer yeepeeriejer mes keâeues Oeve keâes meHesâo yevee

keâj yeQkeâeW ceW pecee efkeâÙee peelee nw~ keâF& yeej lees yeÌ[er-

yeÌ[er keâbHeefveÙeeB Keesueves kesâ efueS pees $e+Ce efueS peeles nQ

Jen meye efoKeeJee neslee nw~ Jemlegle: Ùen $e+Ce kewâmes

keâeues Oeve keâes meHesâo keâjlee nw Ùen Deueie keâneveer nw~

keâeues Oeve keâes meHesâo yeveeves kesâ Deepekeâue keâF& veÙes

Heâecet&ues Yeer Ûeue HeÌ[s nQ~ Ùen Heâecet&ueW MesÙej yeepeej kesâ

ceeOÙece mes Ûeueles nQ~ pewmes Hegjeveer iegceveece keâcHeveer kesâ

MesÙej yengle memles ceW Kejero keâj Kego Gmes efjeEieie Deeefo

lejerkeâeW mes Ketye ye{eÙee peelee nw Deewj efHeâj yesÛe efoÙee

peelee nw~ Jemlegle: Kejeroves Jeeuee Je yesÛeves Jeeuee

Deueie-Deueie veeceeW mes Ùen keâjlee nw Hejvleg Debeflece

ueeYe Gmes efceuelee nw ÙeÅeefHe FmeceW kegâÚ Deewj IegceeJe

efHeâjeJe keâjkesâ keâeues Oeve keâes JewOe efkeâÙee peelee nw~

keâeues Oeve keâes meHesâo yeveeves keâe Deepe keâue Skeâ Deewj

jemlee Kegue DeeÙee nw~ Jen nw Devlejje<šêrÙe yeepe]ej ceW

yengcetuÙe Oeeleg keâe DeLeJee eEpeme (keâceesef[šer) keâe JÙeeHeej~

Ùen kegâÚ-kegâÚ MesÙej ceekexâš keâer lepe& Hej ner neslee nw~

efJeosMeer cegõe efJeefveceÙe ceeOÙece mes Yeer keâeues Oeve keâes

meHesâo keâjves kesâ keâeÙe& ceW Yeer mebYeeJeveeSB leueeMeer pee

jner nQ~ keâevetveer oeJe HeWÛe Je keâevetve keâer KeeefceÙeeW keâe

ueeYe G"ekeâj Yeer Skeâ je<š^ mes otmejs je<š^ ceW Hewmee Yespe

keâj Gmes JewOe keâjeves keâer HeÇef›eâÙee ceW Yeer keâF& DeHejeOeer

efmeænmle nesles nQ~ keâeues Oeve keâes JewOe yeveeves keâer

HeÇef›eâÙee Ùee Heæefle pees Yeer nes GmeceW HeÇlÙe#e Ùee Hejes#e

¤He ceW yeQkeâ Deeles ner nQ~

DeLee&led lejerkeâoe pees Yeer nes keâeues Oeve kesâ JewOeerkeâjCe ceW

yeQkeâeW keâe GHeÙeesie efkeâÙee peelee nw~ Ùen keâYeer-keâYeer

yeQkeâ mšeHeâ keâer efceueerYeiele mes neslee nw Hejvleg, DeefOekeâebMe

ceeceueeW ceW Ùen Devepeeves ceW neslee nw~ Deepe Yeer yeQkeâ

F&ceeveoejer Deewj vÙeeÙeHetCe& {bie kesâ keâece keâjves Jeeueer

mebmLee kesâ ¤He ceW DeHeveer HeÇefle<"e keâes yeveeS ngS nQ~

yeQkeâ Fme Ûegveewleer keâe meecevee kewâmes keâjW?

yeQkeâeW keâes Fme Ûegveewleer keâe meecevee keâjves kesâ efueS LeeÌs[er

mepeielee yejleveer nesieer, LeeÌs[er peeie¤keâlee mes nceW Ssmes

pebpeeue mes yeÛe mekeâles nQ~ keâneB Deewj kewâmes mepeielee

yejleW Fmekesâ efueS kegâÚ GHeeÙe veerÛes megPeeS pee jns nQ :

1. DeHeves ieÇenkeâ keâes peeveW : Keelee Keesueves mes

HetJe& Keeles Keesueves Jeeues keâer Hetjer Úeveyeerve keâjW~

keâF& yeej yeQkeâ pecee mebieÇnCe DeefYeÙeeve Je veS

Keeles Keesueves keâe DeefYeÙeeve Ûeueeles nQ, Gme

meceÙe Deefle Glmeen ceW DeHeefjefÛele Ùee Devepeeves

JÙeefkeäle kesâ HeÇefle efveÙeceeW ceW efMeefLeuelee ve yejleW~

2. Keelee Keesueves kesâ yeeo KeeleeOeejkeâ kesâ Heles Hej

[ekeâ Éeje Heesmš keâe[& Ùee He$e YespeW~ Ùeefo ieÇenkeâ

He$e ueskeâj Deelee nw lees "erkeâ nw Ùeefo He$e ueewš

DeeS Ùee ieÇenkeâ MeeKee mes mecHekeâ& ve keâjW lees

Úeveyeerve keâjW~

3. Keeles kesâ HeefjÛeeueveeW Hej ve]pej jKeW~ Keeles ceW

yeÌ[er jeefMeÙeeW keâe Deevee Ùee kewâMe Éeje ner HeÇeÙe:

pecee nesvee Ùee mebosnemHeo jeefMe mebÛeeueve nesves

Hej Keelesoej kesâ yeejs ceW DeHeÇlÙe#e ¤He mes peevekeâejer

HeÇeHle keâjW~

4. YeejleerÙe efjpe]Je& yeQkeâ Ùee efkeâmeer GefÛele efveÙeb$eCe

HeÇeefOekeâejer mes efkeâmeer JÙeefkeäle Ùee keâbHeveer DeLeJee

mebie"ve kesâ efveef<eæ keâeÙe& Ùee DeelebkeâJeeoer mebie"ve

ceW nesves keâer metÛevee efceueves Hej lelkeâeue Keeles Hej

efveÙeb$eCe HeÇeefOekeâeefjÙeeW kesâ efveoxMe kesâ Devegmeej

keâej&JeeF& keâjW~

5. HeÇefleyebefOele mebie"veeW kesâ Keeles ves KeesueW~ HeÇefleyebefOele

mebie"veeW keâer metÛeer meowJe DeÅeleve jKeW~

6. me#ece HeÇeefOekeâejer kesâ efveoxMeeW keâe efJeefOeJeled DevegHeeueve

keâjW~

7. Ùeefo $e+Ce Keelee nes Ùee JÙeeHeeefjkeâ Keelee nes lees

Ùen osKeW efkeâ Gme JÙeeHeej ceW ueies DevÙe JÙeeHeeefjÙeeW

kesâ meceeve Keeles ceW mebÛeeueve nes jne nw Ùee veneR~


pegueeF& 2005

ceevee efkeâ JÙeeHeejer keâHeÌ[s kesâ JÙeeHeej ceW ueiee nw~

keâHeÌ[s kesâ DevÙe JÙeeHeejer Ieešs ceW Ûeue jns nQ~

Gvekeâe uesveosve keâce nes, Hejvleg Fmeer JÙeJemeeÙe

ceW ueies efkeâmeer Keeles ceW efvejblej yeÌ[er jeefMeÙeeB

pecee nes jner nQ lees Keeles Hej efveiejeveer jKeW~

8. Ùeefo KeeleeOeejkeâ ves DeHevee Heâesve vecyej Ùee Helee

ieuele efoÙee nes Ùee Helee Ùee Heâesve efkeâmeer kesâ

ceeHeâ&led efoÙee nes lees Ùen mebosnemHeo neslee nw~

Dele: Ssmes Keeles Hej vepe]j jKeW~

9. efJeosMeer veeieefjkeâeW keâe Keelee Keesueves ceW DelÙeefOekeâ

meeJeOeeveer yejleW~ HeemeHeesš& Demeueer ceeBies pesjekeäme

veneR, DevÙe efJeefOekeâ DeewHeÛeeefjkeâleeSB ÂÌ{leeHetJe&keâ

efveYeeSB~ cegõe JewOeerkeâjCe keâe Ùen DelÙeefOekeâ

mebJesoveMeerue #es$e nw~

10. efJeosMeer efJeefveceÙe DeblejCe Hej keâÌ[er ve]pej jKeW~

efJeMes<e ¤He mes yeÌ[er jeefMeÙeeW kesâ ceeceues ceW mepeie

jnW~ efJeMes<e ¤He mes yeoveece je<š^eW mes DeevesJeeues

DeblejCeeW Hej meeJeOeeveer yejleW~

11. keâeuHeefvekeâ efJeosMeer keâbHeefveÙeeB mebmLeeSB : keâeues Oeve

kesâ JewOeerkeâjCe ceW keâeuHeefvekeâ efJeosMeer keâcHeefveÙeeW

mebmLeeDeeW keâer Yetefcekeâe meJee&efOekeâ nesleer nw~ Ssmeer

keâbHeefveÙeeB efmeHeâ& keâeiepeeW Hej nesleer nQ JeemleefJekeâ ¤He

ceW veneR~ Dele: Ssmeer keâbHeveer Ùee mebmLeeDeeW Éeje

mebÛeeefuele KeeleeW keâer meceer#ee keâer peeveer ÛeeefnS~

12. vekeâoer uesveosve ceW ncesMee GÛÛelece meercee mes LeeÌs[e

keâce ceW uesveosve keâjvesJeeues KeeleeW Hej vepe]j jKeW~

Ùen lees kesâJeue GoenjCe nQ~ Ssmes keâF& eEyeog nes mekeâles nQ

efpeve Hej OÙeeve efoS peeves keâer DeeJeMÙekeâlee nw~

keâeuee Oeve JewOeerkeâjCe Je YeejleerÙe keâevetve

keâeues Oeve kesâ JewOeerkeâjCe keâer yeÌ{leer mecemÙee mes efveyešves

kesâ efueS efJeMJe kesâ Deveskeâ osMeeW ves keâevetve yeveeS nQ~

Yeejle ceW Yeer ceveer ueeBeE[^ie keâer efJekeâš efmLeefle keâes

osKeles ngS meved 2002 ceW `keâeuee Oeve JewOeerkeâjCe

DeefOeefveÙece' DeefOeefveÙeefcele efkeâÙee ieÙee DeLee&led DeefOeefveÙece

yeveeÙee ieÙee~ Ùen DeefOeefveÙece ÙeÅeefHe Úesše nw Je FmeceW

kegâue 75 OeejeSB nQ~ mebef#eHle nesves Hej Yeer Ùen DeefOeefveÙece

keâeHeâer no lekeâ keâeues Oeve keâer jeskeâLeece kesâ efueS

keâejiej efmeæ ngDee nw, Hejvleg keâef"veeF& Fme yeele keâer nw

efkeâ keâeues Oeve keâes yeenj ueeves ceW meceepe keâer Deesj mes

Devegketâue menÙeesie ve efceue Heeves kesâ keâejCe Ùen keâevetve

DeYeer DeHeveer HengBÛe keâes efJemle=le veneR keâj HeeÙee nw~

Fme DeefOeefveÙece ceW keâeues Oeve keâer jeskeâLeece kesâ efueS

DeHejeOe keâer HeefjYee<eeSB, Je Ssmes DeHejeOe nsleg mepee,

kegâkeâea HeÇeJeOeeve, vÙeeÙe HeÇef›eâÙee, mecceve, peyleer DeHeerueerÙe

HeÇeJeOeeve, efJeMes<e vÙeeÙeeueÙe, Fme DeefOeefveÙece kesâ efueS

me#ece HeÇeefOekeâejer, Je efJeefJeOe HeÇeJeOeeveeW kesâ ceeOÙece mes

keâeHeâer JÙeeefHle oer ieF& nw~ meb#esHe ceW keânW lees keân mekeâles

nQ efkeâ YeejleerÙe mebmeo Éeje DeefOeefveÙeefcele Ùen keâevetve,

keâeuesOeve keâer jeskeâLeece kesâ efueS keâeHeâer HeÇYeeJekeâejer nw,

yeMelex Fmekeâe keâeÙee&vJeÙeve keâjves ceW HeÙee&Hle efve<"e nes~

yeQkeâ leLee efJeòeerÙe mebmLeeDeeW nsleg HeÇeJeOeeve

`keâeuee Oeve JewOeerkeâjCe efveJeejCe DeefOeefveÙece, 2002'

ceW keâeues Oeve kesâ JewOeerkeâjCe kesâ mebyebOe ceW mHe<š efveoxMe

efoS nQ,~ Fme DeefOeefveÙece keâe DeOÙeeÙe 4 - yeQefkebâie,

efJeòeerÙe Je efJeòe keâer ceOÙemLelee keâjves Jeeues mebmLeeveeW kesâ

oeefÙelJeeW kesâ yeejs ceW efJemleej mes yeleelee nw~ meb#eshe ceW,

nce Fve ØecegKe efyebogDeeW hej ØekeâeMe [eue jns nQ :

Oeeje 12 : keâeues Oeve kesâ JewOeerveerkeâjCe keâer jeskeâLeece

kesâ efueS meYeer yeQkeâeW, efJeòeerÙe mebmLeeDeeW Ùee efJeòeerÙe

ceOÙemLe kesâ ¤he ceW keâece keâj jns mebie"veeW kesâ efueS Ùen

DeefveJeeÙe& keâj efoÙee nw efkeâ Jes Deheves meYeer uesveosveeW keâe

GefÛele efjkeâe[& jKeW efpemeceW uesve osveeW kesâ cetuÙe Je

Gvekeâer Øeke=âefle leLee Ùen efJeJejCe Yeer nes efkeâ Jen Skeâ

uesveosve nw Ùee Skeâ ceen kesâ Deboj uesveosveeW keâer hetjer

ëe=ÇbKeuee nw~ Fmekeâe efJeJejCe jKevee nesiee leLee keâesF&

efJemebieefle heeS peeves hej mebyebefOele DeefOekeâejer keâes Fmekeâer

metÛevee osveer nesieer~ Deheves meYeer «eenkeâeW keâer henÛeeve

keâe efjkeâe@[& jKevee nesiee Je meYeer uesveosveeW kesâ efjkeâe@[&

keâce mes keâce 10 Je<e& lekeâ megjef#ele jKes peeves ÛeeefnS~

Oeeje 13 : FmeceW keâeues Oeve keâer jeskeâLeece ceW ueies

efveosMekeâ Deheveer FÛÚe mes Ùee keâneR mes efMekeâeÙele efceueves

hej mebyebefOele Keeles kesâ efJeJejCe ceebie mekeâles nQ leLee

efveosMekeâ kesâ DeeosMeeW keâe heeueve ve keâjves hej Ùee oes<eer

heeS peeves hej pegcee&vee Yeer ueiee mekeâles nQ~ Ssmeer Ûetkeâ

kesâ efueS pegcee&ves keâer jeefMe 10 npeej mes ueskeâj 1

ueeKe ®heÙes lekeâ nes mekeâleer nQ~

Oeeje 14 : kegâÚ ceeceueeW ceW yeQkeâeW Je efJeòeerÙe mebmLeeDeeW

keâes oerJeeveer Øeef›eâÙee mes Útš oer ieF& nQ~

Oeeje 15 : keWâõ mejkeâej, YeejleerÙe efjpeJe& yeQkeâ kesâ

hejeceMe& mes Fme DeefOeefveÙece kesâ ØeeJeOeeveeW keâes ueeiet

keâjves kesâ efueS Oeeje 12 keâer Ghe Oeeje (1) ceW yeleeF&

ieF& metÛevee keâes ceBieeves kesâ efueS Øeef›eâÙee Je heæefle

efveOee&efjle keâj mekeâleer nw~

Fme Øekeâej kesâ ØeeJeOeeveeW mes Ùen yeQkeâeW kesâ efueS yeeOÙekeâejer

nes peelee nw efkeâ Jes keâeues Oeve kesâ JewOeerkeâjCe keâer

jeskeâLeece Je Fmekesâ efveJeejCe ceW menÙeesie oW~

efve<keâ<e&

keâeuee Oeve meceepe, je°^ Je JÙeefkeäle, meYeer kesâ efueS

neefvekeâejkeâ nw~ Dele: Ùen ØelÙeskeâ veeieefjkeâ keâe oeefÙelJe

nw efkeâ Jen Fme meeceeefpekeâ yegjeF& keâes otj keâjves ceW

Ùeesieoeve os, Ùen mener ceeÙeveeW ceW je°^ mesJee nesieer~

yeQefkebâie leLee efJeòeerÙe leb$e je°^ keâer jkeäle JeeefnefveÙeeB nQ~

Ùeefo Demeeceeefpekeâ leòJeeW kesâ ieuele keâeÙeeX mes FmeceW

DeJejesOe Dee peeS lees Ùen je°^ kesâ DeLe&leb$e kesâ efueS

Ieelekeâ nesiee~ Dele: ØelÙeskeâ yeQkeâkeâceea keâes mJeÙeb Ùen

mebkeâuhe uesvee nesiee efkeâ Jen hetCe& peeie¤keâlee yejleles

ngS keâeÙe& keâjsiee leLee keâneR Yeer keâYeer Yeer Deveweflekeâ

uesveosve keâe helee ueieles ner Fmekesâ efJe<eÙe ceW me#ece

ØeeefOekeâejer keâes metÛevee osiee~ mener DeLeeX ceW nce leye ner

osMe kesâ mepeie veeieefjkeâ ceeves peeSBies~ �

uesKekeâeW mes DevegjesOe...

DeeFyeerS yeguesefšve kesâ efueS uesKe Yespeles meceÙe uesKe kesâ meeLe ke=âheÙee Dehevee mebef#ehle yeeÙees[eše Yeer efYepeJeeSb leeefkeâ uesKe ØekeâeefMele nesves keâer efmLeefle

ceW Gmekeâe GheÙeesie efkeâÙee pee mekesâ~


pegueeF& 2005

48

uesKe


[e@. vejsvõ heeue efmebn

Jeefj‰ ØeJekeälee, JeeefCepÙe efJeYeeie,

meent pewve keâeuespe, vepeeryeeyeeo (Gòej ØeosMe)

Deepe efkeâmeer Yeer JÙeeJemeeefÙekeâ mebmLee

keâe cegKÙe GodosMÙe Deheves ueeYeeW ceW

Gòejesòej Je=efæ keâjvee neslee nw~ JÙeÙeeW

kesâ Thej pees DeeefOekeäÙe DeLeJee yeÛele

nesleer nw, Gmes ner nce DeeÙe keâer ßesCeer

ceW jKeles nQ~ Dele: ØeeefhleÙeeW SJeb JÙeÙeeW

kesâ Deblej keâes DeefOekeâlece keâjves keâe ØeÙeeme njmecYeJe GÛÛe

mlej lekeâ yeQkeâeW keâes keâjvee ÛeeefnS~ DeeÙe yeÌ{eves kesâ efueS yeQkeâeW

keâes Deheves ueeYe ceW Je=efæ DeeJeMÙekeâ nw~ yeQkeâeW kesâ DeeÙe meÇesleeW

ceW yÙeepe, yešdše, efJeefveceÙe Deewj keâceerMeve Deeefo Meeefceue nesles

nQ~ Iešleer yÙeepe oj kesâ Ûeueles yeQkeâeW Éeje keâce ueeiele keâer

peceeDeeW keâes mJeerkeâej keâj, MeeKee mlej hej yÙeepe keâer Deefleefjkeäle

Je Deuhe Jemetueer leLee mesJee, keâceerMeve, yešdše, oueeueer mebyebOeer

ØeYeejeW keâer hetCe& Jemetueer keâj Deheveer DeeÙe ceW Je=efæ keâjveer

nesieer~ je°^erÙeke=âle yeQkeâeW ceW Deepe Yeer Ùes ojW efvepeer #es$e kesâ yeQkeâeW

SJeb efJeosMeer yeQkeâeW keâer leguevee ceW keâce nQ leLee veJeervelece metÛevee

ØeewÅeesefiekeâer kesâ Ûeueles peesefKece keâer mecYeeJeveeÙeW Yeer yeÌ{er nQ~

yeQkeâeW keâes Deheveer DeeÙe keâes efmLej yeveeÙes jKeves kesâ efueS DeeÙe

efjmeeJe kesâ ØeyebOeve hej DeefOekeâ peesj osves keâer DeeJeMÙekeâlee nQ~

DeeÙe efjmeeJe DeefOekeâeefjÙeeW, keâce&ÛeeefjÙeeW leLee heÙe&Jes#ekeâeW keâer

ueehejJeener, Goemeervelee DeLeJee Deheves oeefÙelJe hetCe& ¤he mes

Jenve ve keâjves kesâ keâejCe leLee DeeOegefvekeâ metÛevee ØeewÅeesefiekeâer

ceW hetCe& ¤he mes ØeefMeef#ele ve nesves kesâ keâejCe neslee nw pees

yeQkeâesW kesâ efueS efyeukegâue Yeer efnlekeâj veneR neslee~

DeeÙe efjmeJe keâe DeLe&

yeQkeâ Éeje efJeefYevve KeeleeW ceW

hee fjÛeeueve mebye bOee r

MeleeX kesâ Debleie&le yÙeepe, keâceerMeve, efJeefveceÙe ØeYeej, oueeueer,

Jemetueer, DeeÙe SJeb DevÙeevÙe efJeefJeOe ceoeW mes Dehesef#ele DeeÙe

keâer Gieener keâer peeleer nw~ Ùen DeeÙe kegâue ueeYe DeLeJee kegâue

DeeÙe keâe Skeâ ceòJehetCe& efnmmee yeveleer pee jner nw~ peye

efJeefYevve keâejCeeW mes Ùes Dehesef#ele DeeÙe yeQkeâeW Éeje Jemetue veneR

nes heeleer nes lees DeeÙe efjmeeJe keâer efmLeefle yeve peeleer nw Dele:

DeeÙe efjmeeJe Ssmeer OevejeefMe nw efpemekeâer Jemetueer Dehesef#ele Leer,

efkeâvleg yeQkeâ keâes Øeehle veneR nes heeÙeer~ FveceW $e+CeeW Je Deef«eceeW

hej Øeehle yÙeepe, efyeueeW hej yešdše, Yegieleeve Jemetueer kesâ KeÛe&,

[^eheäš keâer Deouee-yeoueer, jkeâce nmleeblejCe, efveJesMeeW mes Øeeefhle

leLee DeeÙe kesâ DevÙe meeOeveeW keâes Meeefceue keâjles nQ~

DeeÙe efjmeeJe kesâ keâejCe

hej mejkeâej leLee YeejleerÙe efjpeJe& yeQkeâ Éeje yeQkeâeW keâes Gvekesâ

keâes<eeW, DeeÙe kesâ meeOeveeW, vekeâoer pecee SJeb $e+Ce, Glheeokeâlee,

mesJeeDeeW Deewj ueeYeØeolee kesâ mebyebOe ceW meceÙe-meceÙe efoMee

efveoxMe peejer efkeâS peeles jnles nQ~ efkeâvleg, Fve meyekesâ yeeJepeto,

yeQkeâ MeeKeeDeeW ceW Fve efveoxMeeW keâe keâce&ÛeeefjÙeeW Éeje hetje

heeueve megefveefMÛele venerR efkeâÙee peelee Deewj DeeÙe kesâ efjmeeJe keâer

efmLeefle yeve peeleer nw~ Ùeefo hetjs yeQefkebâie GÅeesie keâes osKee peeÙes

lees ØeefleJe<e& keâjesÌ[eW ®heÙee DeeÙe efjmeeJe kesâ ¤he ceW efvekeâue

peelee nw~ DeeÙe efjmeeJe ceW kegâÚ yeQkeâkeâceea peeveyetPekeâj Yeer

Meeefceue heeÙes peeles nQ~ Ùeefo efveÙeb$ekeâ GheÙegkeäle otjoefMe&lee keâes

DeheveeÙes lees DeeÙe efjmeeJe keâes keâeheâer no lekeâ jeskeâe pee mekeâlee

nw~ efheÚues kegâÚ Je<eeX ceW, YeejleerÙe yeQkeâeW ceW Yeer DeeÙe efjmeeJe

keâer IešveeÙeW osKeves Deewj megveves keâes efceueer nQ~ kegâÚ yeQkeâeW ceW

nesves Jeeues DeeÙe efjmeeJe kesâ neomeeW ves Fme efJe<eÙe keâes meeceefÙekeâ

Deewj cegKej yevee efoÙee nw Dele: DeeÙe efjmeeJe kesâ Fme keâesÌ{ keâes

efJejece efoÙee peevee Deepe keâer cenleer DeeJeMÙekeâlee nw~ DeeÙe

Ùeefo efveÙeb$ekeâ GheÙegkeäle

otjoefMe&lee keâes DeheveeÙes

lees DeeÙe efjmeeJe keâes

keâeheâer no lekeâ jeskeâe pee

mekeâlee nw~ efheÚues kegâÚ

Je<eeX ceW, YeejleerÙe yeQkeâeW ceW

Yeer DeeÙe efjmeeJe keâer

IešveeÙeW osKeves Deewj

megveves keâes efceueer nQ~ kegâÚ

yeQkeâeW ceW nesves Jeeues DeeÙe

efjmeeJe kesâ neomeeW ves Fme

efJe<eÙe keâes meeceefÙekeâ Deewj

cegKej yevee efoÙee nw Dele:

DeeÙe efjmeeJe kesâ Fme

keâesÌ{ keâes efJejece efoÙee

peevee Deepe keâer cenleer

DeeJeMÙekeâlee nw~


pegueeF& 2005

efjmeeJe kesâ ØecegKe keâejCe efvecveefueefKele nes mekeâles nQ :

� yeQkeâeW Éeje mesJee SJeb efvejer#eCe ØeYeej keâes mener

cee$ee ceW Jemetue ve keâj heevee~

� yeQkeâeW Éeje yÙeepe, yešdše, keâceerMeve SJeb efJeefveceÙe

ØeYeej keâes hegjeveer DeLeJee keâce ojeW hej Jemetue

keâjvee~

� peceejeefMeÙeeW hej osÙe yÙeepe keâe DeefOekeâ oj hej

Yegieleeve keâjvee~

� yeQkeâeW Éeje efveOee&efjle JÙeÙe, GheÙegkeäle meceÙe

Devlejeue hej KeeleeW ceW yÙeepe ve ueieevee leLee

yÙeepe keâer ieCevee Ûe›eâJe=efæ ¤he ceW ve keâjvee~

� yeQkeâeW Éeje yÙeepe keâer ieCevee keâjles meceÙe mener

ie gCeveheâue leLee Ùee sie keâe ve keâjvee~

heefjCeecemJe¤he peceeDeeW hej DeefOekeâ yÙeepe keâe

Yegieleeve keâjvee leLee $e+CeeW hej yÙeepe keâer keâce

Jemetueer keâjvee~

� yeQkeâkeâefce&ÙeeW Éeje DeeOegefvekeâ metÛevee ØeewÅeesefiekeâer

kesâ Ûeueles keâchÙetšj mes efkeâS ieS keâeÙe& keâer peebÛe

ceW efMeefLeuelee yejlevee~

� yeQkeâeW Éeje efJeefYevve lÙeewnejeW SJeb DeJemejeW hej

oer ieF& Útš leLee mesJee ØeYeejeW ceW [ekeâ JÙeÙe

Deeefo keâer Jemetueer ve keâjvee~

� yeQkeâeW Éeje efJeefYevve $e+Ce KeeleeW hej oC[ mJe¤he

yÙeepe leLee pecee KeeleeW ceW vÙetvelece Mes<e mes keâce

OevejeefMe nesves hej ueieeÙes ieÙes ØeYeejeW keâer ØeYeeJeer

Jemetueer ve nesvee~

� yeQkeâeW Éeje pecee KeeleeW hej Deefleefjkeäle yÙeepe keâer

DeoeÙeieer keâjvee leLee $e+Ce KeeleeW hej yÙeepe keâer

hetCe& Jemetueer ve nes heevee keäÙeeWefkeâ pecee SJeb $e+Ce

KeeleeW hej yÙeepe keâer ojeW ceW meceÙe-meceÙe hej

heefjJele&ve neslee jnlee nw leLee yeQkeâ MeeKeeDeeW ceW

yeQkeâkeâceea Yeer Deebleefjkeâ DeLeJee yee¢e ¤he mes

mLeeveebleefjle nesles jnles nQ~

� yeQkeâeW Éeje yÙeepe DeLeJee DevÙe ØeYeejeW keâes Jemetueves

ceW DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW Éeje DeveeJeMÙekeâ

¤he mes JÙeÙe keâj efoS peeles nQ~

� yeQkeâ MeeKeeDeeW ceW DeYeer lekeâ ceeveJe Éeje ner

DeefOekeâebMe keâeÙe& mebhevve efkeâÙes peeles nQ Dele: KeeleeW

keâe Ùeesie, iegCeveheâue SJeb heefjkeâueve keâe ieuele

nesvee mJeeYeeefJekeâ Lee~ efkeâvleg, Deepe metÛevee ØeewÅeesefiekeâer

kesâ Ûeueles yeQkeâeW ceW DeefOekeâebMe keâeÙe& ceMeerveeW Éeje

nesves ueiee nw peyeefkeâ ceeveJe mebmeeOeve keâer DeveosKeer

veneR keâer pee mekeâleer Deewj metÛevee ØeewÅeesefiekeâer ceW

DeeÙe efjmeeJe kesâ Kelejs yeves jnles nQ~

� yeQkeâeW ceW YeejleerÙe efjpeJe& yeQkeâ DeLeJee mejkeâej

Éeje peejer ceeie&oMeea efmeæevleeW keâe DeefOekeâeefjÙeeW,

keâce&ÛeeefjÙeeW leLee heÙe&Jes#ekeâeW Éeje iebYeerjlee mes

heeueve veneR efkeâÙee peelee Dele: DeeÙe efjmeeJe keâer

mebYeeJevee yeveer jnleer nw~

� yeQkeâeW Éeje $e+Ce SJeb yÙeepe Jemetueer ceW osjer kesâ

keâejCe Deefleefjkeäle JÙeÙe Yeer Jenve keâjvee neslee nw

efpememes kegâue DeeÙe ceW keâceer nes peeleer nQ~

� yeQkeâeW ceW Debkesâ#ekeâeW, Deebleefjkeâ uesKee hejer#ekeâeW,

efvejer#ekeâeW SJeb GÌ[veomleeW Éeje yeleeÙeer ieÙeer

efJeefYevve efJemebieefleÙeeW keâes lelkeâeue otj ve keâjvee~

� yeQkeâeW ceW mebÛeeuekeâeW SJeb ØeyebOekeâeW keâer ÙeLeeLe&lee

SJeb heefjMegælee kesâ melÙeeheve ceW iebYeerjlee keâe ve

heeÙee peevee~

� yeQkeâeW ceW DeefOekeâebMe MeeKee ØeyebOekeâeW SJeb keâce&ÛeeefjÙeeW

Éeje DeeÙe efjmeeJe keâes ceveceeves {bie mes Øemlegle

keâjvee~

� yeQkeâ DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW kesâ DeefOekeâejeW

ceW keâceer kesâ Ûeueles mJeleb$e efveCe&Ùe keâe DeYeeJe

jnlee nw efpememes ueeieleeW ceW Je=efæ nes peeleer nw~

� yeQkeâeW ceW keâce&ÛeeefjÙeeW SJeb DeefOekeâeefjÙeeW kesâ meecetefnkeâ

ØeÙeemeeW ceW keâceer kesâ Ûeueles DeeÙe efjmeeJe ceW Je=efæ

nes peeleer nw~

� yeQkeâeW Éeje cenòJehetCe& #es$eeW keâes ØeeLeefcekeâlee veneR oer

peeleer efpememes keâheš, ogjeÛejCe, OeesKeeOeÌ[er Deeefo

keâer IešveeDeeW ceW yeÌ{eslejer nesves mes DeeÙe efjmeeJe

nes peelee nw~

� Ùeefo yeQkeâeW Éeje meceÙeeveg¤he

Deheveer efJeheCeve jCeveerefle ceW

heefjJele&ve veneR efkeâÙee peelee

Deewj hetJee&vegYeJeeW mes

meerKe veneR ueer peeleer

lees DeeÙe efjmeeJe keâer

I ešveeDee W ke â e r

hegvejeJe=efòe nesleer

jnsieer~

� Ùeefo yeQkeâkeâefce&ÙeeW

Éeje Deheves heo kesâ

Deveg¤he efpeccesoejer

keâe hetCe& Denmeeme

veneR efkeâÙee peelee Deewj

k e â eÙe & k e s â Øe e f l e

ueehejJeener yejleer peeleer

nw lees Jen DeeÙe efjmeeJe keâe

keâejCe yeve peeleer nw~

”

”ßeer efmebn pewve keâe@uespe kesâ JeeefCepÙe efJeYeeie ceW ØeJekeä lee nQ~

Deehe Sce.S. DeLe&MeeŒe, Sce.keâe@ce. leLee heerSÛe.[er. nQ~ efJeòeerÙe

ØeyebOeve Deewj yeQefkebâie ceW Deehekeâer efJeMes<e%elee nQ~ Deehekesâ ceeie&oMe&ve

ceW Dee" Úe$eeW ves heerSÛe.[er. keâer nw leLee Fleves ner Úe$e

heerSÛe.[er. keâj jns nQ~ Deeheves 18 heefjÙeespevee keâeÙe& hetje efkeâÙee

nw~ Ùeespevee, kegâ®#es$e, ØeyebOe, ØeefleÙeesefielee ohe&Ce, heÙee&JejCe

Ûeslevee leLee yeQefkebâie efÛebleve-DevegefÛebleve pewmeer heef$ekeâeDeeW ceW Deehekesâ

35 mes Yeer DeefOekeâ uesKe ØekeâeefMele ngS nQ~

Ùeefo KeeleeW ceW uesve-osve keâes me#ece DeefOekeâejer

Éeje ØeceeefCele veneR efkeâÙee ieÙee nw lees Gmekeâer

ueehejJeener, Goemeervelee SJeb keâle&JÙeefJecegKelee

kesâ keâejCe Ùeefo DeeÙe efjmeeJe ngDee nw lees Gmes

Yeer GòejoeÙeer "njeÙee peeÙes~


pegueeF& 2005

50

DeeÙe efjmeeJe kesâ ØeyebOeve keâe #es$e

heefjÛeeueve heejoefMe&lee:

yeQkeâeW Éeje mejkeâej, YeejleerÙe efjpeJe& yeQkeâ SJeb Deheves

cegKÙe keâeÙee&ueÙeeW Éeje efveie&le efveosMeeW keâe heeueve megefveefMÛele

efkeâÙee peevee ÛeeefnS~ yeQkeâ Deheves «eenkeâeW Éeje Keesues

ieÙes efJeefYevve KeeleeW keâes heefjÛeeefuele keâj, pecee jeefMeÙeeW

hej yÙeepe keâe Yegieleeve leLee $e+Ce KeeleeW hej yÙeepe keâer

Jemetueer keâjlee nw~ meeLe ner, DeefleosÙe Deef«eceeW hej

oC[mJe¤he yÙeepe Yeer Jemetuelee nw~ yeQkeâ, «eenkeâeW keâes

efJeefYevve mesJeeÙeW Øeoeve keâjles nw efpevekesâ efueS efJeefYevve

ojeW ceW ØeYeejeW keâer Jemetueer keâer peeleer nw~ Dele: yeQkeâ keâes

ÛeeefnS efkeâ Jen Deheves Fve heefjÛeeueveiele keâeÙe& ceW

heejoefMe&lee yeveeÙes jKes efpememes DeeÙe efjmeeJe ceW keâeheâer

no lekeâ keâceer keâer pee mekeâleer nw keäÙeeWefkeâ peye yeQkeâ kesâ

keâeÙeex ceW heejoefMe&lee nesieer lees «eenkeâ mJeÙeb Yeer Fme

yeele keâes peebÛe mekeWâies efkeâ Gvekesâ KeeleeW kesâ heefjÛeeueve

ceW keâesF& ieÌ[yeÌ[er lees veneR nw~ yeQkeâ Éeje $e+Ce SJeb

meeJeefOe pecee KeeleeW keâe GefÛele meceÙe hej veJeerveerkeâjCe

SJeb efMeveeKle keâer peeveer ÛeeefnS~ efyevee efMeveeKle leLee

DeefleosÙe KeeleeW hej oC[mJe¤he yÙeepe ueieekeâj Jemetueer

keâer peeveer ÛeeefnS~

ceeveJe mebmeeOeve SJeb GòejoeefÙelJe

Deepe yeQkeâeW keâe DeefOekeâebMe keâeÙe& Fueskeäš^e@efvekeâ yeQefkebâie

kesâ Debleie&le nes jne nw efkebâleg Gmekeâes megÛee® ¤he mes

Ûeueeves keâe keâeÙe& Deepe Yeer ceeveJe Éeje efkeâÙee peelee nw

Dele: keâeÙe& keâe efJeYeepeve keâeÙe& keâer efJeefMe°lee, ÙeesiÙelee

SJeb keâce&Ûeejer keâer ®efÛe kesâ Deveg¤he keâj, Gmekeâer

efpeccesoejer Yeer hetCe&®he mes Gme hej [eueveer ÛeeefnS~

yeQkeâkeâefce&ÙeeW keâes keâeÙe& keâer efpeccesoejer meeQheles meceÙe Jen

Yeer mhe° efkeâÙee peevee ÛeeefnS efkeâ ueehejJeener kesâ keâejCe

yeQkeâ keâer DeeÙe ceW keâesF& efjmeeJe neslee nw lees Gmekeâer

peJeeyeosner Gmeer keâer nesieer~ Fmekesâ efueS yeQkeâ kesâ efJeefYevve

keâeÙeeX kesâ Øeefle peJeeyeosner DeLeJee GòejoeefÙelJeeW keâe

efveOee&jCe keâj Gmes Skeâ hegefmlekeâe kesâ ¤he ceW ÚheJeekeâj

ØelÙeskeâ keâce&Ûeejer keâes efoÙee peevee ÛeeefnS~ yeQkeâ DeefOekeâeefjÙeeW

keâes ÛeeefnS efkeâ peye Yeer efkeâmeer keâesF& ieueleer keâe helee

Ûeues Gmekeâe legjble GheÛeej efkeâÙee peevee ÛeeefnS~ yeQkeâ

ceW keâefce&ÙeeW Éeje efkeâÙes ieÙes keâeÙeeX keâe uesKee-peesKee Yeer

Skeâ efvefMÛele meceÙe lekeâ jKee peevee ÛeeefnS leeefkeâ Yetle

ceW keâer ieF& ueehejJeeefnÙeeW leLee DeeÙe efjmeeJe kesâ Øeefle

Gvekeâer efpeccesoejer keâes efveOee&efjle efkeâÙee pee mekesâ~

DeeJeMÙekeâ metÛevee ØeyebOe

yeQkeâeW ceW DeeÙe efjmeeJe keâes jeskeâves kesâ efueS DeÅeleve

DeeJeMÙekeâ metÛeveeDeeW keâe ØeyebOeve DeefJeuebye efkeâÙee peevee

ÛeeefnS~ Ùeefo yeQkeâ mšeheâ meleke&â nes lees meYeer cenòJehetCe&

metÛeveeDeeW keâes efjkeâe@[& keâjves keâer DevegMeeefmele keâeÙe&

JÙeJemLee keâer pee mekeâleer nw efpememes keâesF& Ûetkeâ Ùee

ieueleer nesves Je Gmekesâ peejer jnves keâer mebYeeJeveeSb veieCÙe

nes peeleer nQ Deewj efveCe&Ùeve keâeheâer no lekeâ mener Je leer›e

nesles nQ~ Ùeefo keâesF& cenlJehetCe& metÛevee, efpemeceW yÙeepe

ojeW DeLeJee mebMeesefOele mesJee ØeYeej keâer ojeW keâe GuuesKe

nes, cegKÙe keâeÙee&ueÙe, mejkeâej leLee YeejleerÙe efjpeJe&

yeQkeâ mes Deeves ceW osjer nesleer nw lees Fme heefjJele&ve mes yeQkeâ

MeeKeeDeeW keâes pees DeeÙe nesveer ÛeeefnS Leer Jen yegjer lejn

mes ØeYeefJele nes mekeâleer nw~ mebYeJele: yeQkeâ MeeKeeÙeW

mLeeÙeer KeeleeOeejkeâeW keâes efJeMJeeme ceW ueskeâj Ssmes mesJee

ØeYeejeW DeLeJee yÙeepe keâer Jemetueer keâj mekeâleer nw efkeâvleg

Fme Øeef›eâÙee mes DeeÙe efjmeeJe ceW kegâÚ meercee lekeâ {erue

jnvee mJeeYeeefJekeâ nw~ Deepe mebÛeej JÙeJemLee Fleveer

lespe nes ieÙeer nw efkeâ DeÅeleve metÛeveeDeeW keâes Ûevo meceÙe

ceW ner Øesef<ele efkeâÙee pee mekeâlee nw efkeâvleg Fmekesâ meeLe-

meeLe Fmekesâ Kelejs Yeer Glhevve ngS nQ Dele: Fve meYeer

kesâ Øeefle yeQkeâ MeeKee kesâ keâce&ÛeeefjÙeeW DeefOekeâeefjÙeeW keâes

mepeie jnvee nesiee~

keâeÙe&efve<heeove ceW efJemebieefleÙeeb

yeQkeâ Éeje Deheveer MeeKeeDeeW ceW pees Yeer efoMeeefveoxMe

Yespes peeSb Jes efyeukegâue megmhe° SJeb efJemebieefleÙeeW mes

jefnle nesves ÛeeefnS keäÙeeWefkeâ efJeefYevve MeeKeeDeeW ceW Ùeefo

DeefOekeâeefjÙeeW Éeje efoMeeefveoxMeeW keâe Deueie-Deueie DeLe&

efvekeâeue efueÙee peelee nw lees GmeceW DeeÙe efjmeeJe keâer

mebYeeJevee Gleveer ner DeefOekeâ nesleer Ûeueer peeÙesieer DevÙeLee

yeQkeâ keâe JÙeJemeeÙe ØeYeeefJele nes peeÙesiee~ yeQkeâ ceW Debkesâ#ekeâ,

uesKee efvejer#ekeâ Ùee hejer#ekeâeW Éeje Ùeefo keâefLele efJemebieefleÙeeW

keâe heuee Ûeuelee nQ lees yeQkeâ MeeKeeDeeW DeLeJee keâeÙee&ueÙeeW

keâes ÛeeefnS efkeâ Jes legjble Ssmeer efJemebieefleÙeeW keâes megOeejkeâj

DeeÙe efjmeeJe keâer Dehesef#ele jeefMe keâes Jemetue keâjW~

MeeKee ØeyebOekeâ SJeb DeefOekeâejer leLee keâeÙee&ueÙe ØecegKe

Deheves Deevleefjkeâ efveÙeb$eCe ceW Dehesef#ele megOeej keâj

YeefJe<Ùe ces nesves Jeeues Ssmes efjmeeJe hej keâeyet hee mekeâles

nQ~

KeeleeW keâer heejoefMe&lee SJeb Glke=â° peebÛe

yeQkeâeW ceW Øeefle efleceener/Úceener yÙeepe keâe heefjkeâueve

efkeâÙee peelee nw Deewj KeeleeW ceW [sefyeš DeLeJee ›esâef[š

Yeer keâj efoÙee neslee nw leLee efove Øeefleefove efJeefYevve

mesJeeDeeW kesâ yeoues mesJee ØeYeej Yeer yeQkeâ Éeje Jemetues

peeles nQ efkeâvleg Gve hej mebyebefOele keâce&Ûeejer SJeb peebÛekeâlee&

Éeje nmlee#ej veneR nesles~ Deepekeâue keâchÙetšj ceW Yeer

yÙeepe SJeb mesJee ØeYeejeW keâe efveOee&jCe keâjves kesâ Ghejeble

pees Yeer efJeJejCe ØekeâeefMele efkeâÙes peeles nQ Gve hej

mebyebefOele keâceea SJeb DeefOekeâejer kesâ efJeefOeJele nmlee#ej

efkeâÙes peeves ÛeeefnS keäÙeeWefkeâ YeefJe<Ùe ceW Ùeefo efkeâmeer $egefš

keâe helee Ûeuelee nw lees Gmekesâ efueS Gmeer mebyebefOele

JÙeefkeäle keâes GòejoeÙeer "nje keâj Gmekesâ efJe®æ

DevegMeemeveelcekeâ keâeÙe&Jeener keâer pee mekesâ~ Ùeefo KeeleeW

ceW uesve-osve keâes me#ece DeefOekeâejer Éeje ØeceeefCele veneR

efkeâÙee ieÙee nw lees Gmekeâer ueehejJeener, Goemeervelee SJeb

keâle&JÙeefJecegKelee kesâ keâejCe Ùeefo DeeÙe efjmeeJe ngDee nw

lees Gmes Yeer GòejoeÙeer "njeÙee peeÙes~ Ùeefo yeQkeâ kesâ

DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW kesâ ceve ceW Ùen yeele yew"e

oer peeÙes efkeâ Jes Deheves keâeÙe& keâes iebYeerjlee mes ueW Deewj

ØelÙeskeâ uesve-osve keâer Megælee keâer peebÛe keâj ner nmlee#ej

keâjW lees DeeÙe efjmeeJe hej keâeheâer no lekeâ keâeyet heeÙee

pee mekeâlee nw~

MeeKee mlej hej meleke&âlee

DeeÙe efjmeeJe keâes jeskeâves nsleg MeeKee mlej hej meleke&âlee

yejleveer yengle DeeJeMÙekeâ nw~ meleke&âlee mes efkeâmeer Yeer

Øekeâej keâer DeefveÙeefcelelee keâes Meg¤ ceW ner jeskeâe pee

mekeâlee nw Deewj ØeyebOekeâ meceÙe jnles jCeveerefle yeveekeâj

mecYeeefJele Kelejs mes yeQkeâ keâes yeÛee mekeâlee nw~ Deepe

veJeerve metÛevee ØeewÅeesefiekeâer kesâ Ûeueles keâchÙetšjeW Éeje Yeer

DeeÙe efjmeeJe nes jne nw pewmes DeveefOeke=âle ¤he mes

efJeòeerÙe uesve-osve keâjvee, oes<ehetCe& keâchÙetšj Øees«eece

yeveevee, jeskeâ[ Mes<eeW keâer efveefMÛele DeJeefOe kesâ yeeo

efjheesefšËie, OeesKeeOeÌ[er mes $e+Ce meercee Je=efæ, DeveefOeke=âle

¤he mes yÙeepe ojeW ceW heefjJele&ve keâjvee leLee meceeMeesOeve

JÙeJenejeW ceW ieÌ[ye[er keâjvee, yÙeepe ieCevee nsleg ieuele

lejerkeâe Deheveevee, efJeosMeer efJeefveceÙe uesve-osveeW ceW heefjJeefle&le

efJeefveceÙe oj ueeiet ve keâjvee Deeefo~ Dele: yeQkeâeW keâes

ÛeeefnS efkeâ Jes Deheves mšeheâ meomÙeeW keâes ØeefMe#eCe

Øeoeve keâjW Deewj DeeÙe efjmeeJe mes mebyebefOele mebYeeefJele

#es$eeW keâer peevekeâejer Øeoeve keâjW~ yeQkeâeW Éeje Deheves

keâce&ÛeeefjÙeeW keâes ØeefMe#eCe ceW Ùen DeJeMÙe yeleeÙee peeÙes

efkeâ Jes peevekeâejer kesâ DeYeeJe ceW keâeF& Yeer keâeÙe& ve keâjW

Deewj ve ner keâjves keâer menceefle Øeoeve keâjW~ yeQkeâ kesâ Øeefle

Deheveer efpeccesoeefjÙeeW keâes hetCe& ¤he mes efveYeeSb leLee

DeeÙe efjmeeJe kesâ yeejs ceW peevekeâejer jKeles ngS meowJe

meleke&â jnW Deewj yeQkeâ keâer keâeÙe&ØeCeeueer, efveÙeceeW SJeb

Mes<e he=‰ meb. 52 hej


pegueeF& 2005

pewmee efkeâ veece mes ner mhe° nw, efJeveÙe yebmeue Éeje

efueefKele Jemlegefve‰ yeQefkebâie efJeefOe SJeb JÙeJenej' kesâ

efJeefYevve henuegDeeW keâer Jemlegefve‰ peevekeâejer oer ieF&

nw~ otmejs MeyoeW ceW, FmeceW yeQefkebâie mebyebOeer peevekeâejer

osves kesâ efueS ØeMveesòej Mewueer keâes DeheveeÙee ieÙee nw~

hegmlekeâ 17 DeOÙeeÙeÙeeW ceW efJeYekeäle nQ, efpeveceW yeQefkebâie

kesâ efJeefYevve he#eeW keâes mecesše ieÙee nw~ henuee DeOÙeeÙe

YeejleerÙe efJeòeerÙe ØeCeeueer hej nw, efpemeceW yeQkeâeW kesâ

GodYeJe, je°erÙekeâjCe, efJeueÙe SJeb DeefYe«enCe, YeejleerÙe

efJeòeerÙe ØeCeeueer kesâ {eBÛes Deewj Gmekesâ Debleie&le DeevesJeeues

efJeefYVve Øekeâej kesâ yeQkeâeW SJeb efJeòeerÙe mebmLeeveeW, Gvekeâer

mLeehevee, keâeÙe& SJeb keâeÙe&ØeCeeueer Deeefo mes mebyebefOele

ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~ otmeje DeOÙeeÙe

YeejleerÙe efjpeJe& yeQkeâ keâer mLeehevee, Gmekesâ heÙe&Jes#eCe,

efJekeâeme SJeb hegveefJe&òe mes mebyebefOele keâeÙeeX, he$e cegõe SJeb

keâjWmeer Ûesmš, meeKe efveÙeb$eCe kesâ DeueeJee efjpeJe& yeQkeâ

kesâ Jeeef<e&keâ veerefle efJeJejCe mes mebyebefOele peevekeâejer oslee

nw~ leermeje DeOÙeeÙe yeQkeâ-«eenkeâ mebyebOe hej keWâefõle nw,

efpemeceW efJeefYevve pecee SJeb Deef«ece KeeleeW kesâ mJe¤he,

Gve KeeleeW keâes Keesueves SJeb Gvekesâ mebÛeeueve mes mebyebefOele

ØeMveesòej efoS ieS nQ~

ÛeewLee DeOÙeeÙe peneB yeQkeâ kesâ keâle&JÙeeW SJeb DeefOekeâejeW

mes mebyebefOele nw, JeneR heeBÛeJeW DeOÙeeÙe ceW hej›eâecÙe

efueKele, GheYeeskeälee mebj#eCe, yeQefkebâie efJeefveÙeceve

DeefOeefveÙece meefnle keâF& cenòJehetCe& JeeefCeefpÙekeâ

DeefOeefveÙeceeW leLee Gvekesâ ØeeJeOeeveeW keâe meceeJesMe

efkeâÙee ieÙee nw~ yeQkeâ Skeâ Deesj peneB pevelee mes

peceejeefMeÙeeB mJeerkeâej keâjlee nw, JeneR pe¤jleceboeW

keâes GvnW $e+Ce kesâ ¤he ceW os oslee nw~ uesefkeâve, Ùes

$e+Ce [tye ve peeSB DeLee&led Devepe&keâ Deeefmle ve yeve

peeSB, Fmekesâ efueS yeQkeâ keâes $e+Ce osves mes hetJe&

$e+Ceoelee keâer efJeòeerÙe efmLeefle keâe efJeMues<eCe keâjvee

neslee nw~ hegmlekeâ keâe Ú"e DeOÙeeÙe $e+Ce osves kesâ

meeceevÙe efmeæebleeW, yeQkeâeW Éeje oer pee jner efJeefYevve

$e+Ce-megefJeOeeDeeW, $e+Ce mebmJeerke=âle keâjles meceÙe DeeefmleÙeeW

hej me=efpele efkeâS peeves Jeeues efJeefYevve ØeYeejeW, yebOekeâ

Deeefo mes ner mebyebefOele nw~ FmeceW $e+Ce-ØeuesKeeW kesâ

ØeuesKeerkeâjCe hej Yeer efJeÛeej efkeâÙee ieÙee nw~

osMe kesâ meblegefuele DeeefLe&keâ efJekeâeme kesâ efueS yeQkeâeW

keâes Deheves kegâue Deef«eceeW ceW mes 40 ØeefleMele Deef«ece

ØeeLeefcekeâlee Øeehle #es$e keâes osves nesles nQ~ meeleJeW

DeOÙeeÙe ceW ØeeLeefcekeâlee Øeehele #es$e Deewj Gmekesâ

Debleie&le DeevesJeeues ke=âef<e, ueIeg GÅeesie pewmes #es$eeW keâes

efoS peeves Jeeues $e+CeeW keâer meercee, yÙeepe-oj Deeefo

mes mebyebefOele ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~

Dee"JeeB DeOÙeeÙe yeQkeâeW Éeje oer peevesJeeueer yeQkeâ-

ieejbšer Deewj meeKe he$e mes leeuuegkeâ jKelee nw~

peceejeefMeÙeeB mJeerkeâej keâjves Deewj $e+Ce osves kesâ

DeueeJee yeQkeâ kegâÚ Deveg<ebieer mesJeeDeeW Éeje Yeer DeeÙe

keâe Depe&ve keâjles nQ~ ›esâef[š keâe[&, Oeve-efJeØes<eCe,

Fueskeäš^e@efvekeâ efveefOe DeblejCe, mesheâ ef[hee@efpeš uee@keâj,

ceÛeXš yeQefkebâie, efkeâjeÙee ›eâÙe SJeb hešdše Deeefo

mesJeeDeeW mes mebyebefOele cenòJehetCe& ØeMve Deewj Gvekesâ

Gòej veewJeW DeOÙeeÙe ceW efoS ieS nQ~ hegmlekeâ keâe

omeJeeB DeOÙeeÙe mejkeâejer JÙeJemeeÙe mes mebyebefOele nw,

efpemeceW mejkeâejer uesveosve SJeb heWMeve leLee ueeskeâ

YeefJe<Ùe efveefOe Keeles Deeefo mes mebyebefOele peevekeâejer oer

ieF& nw~ iejeryeer-Gvcetueve Deewj yesjespeieejeW keâes jespeieej

Øeoeve keâjves nsleg Yeejle mejkeâej Éeje ØeeÙeesefpele

mJeCe& peÙebleer «eece mJejespeieej, ØeOeeveceb$eer jespeieej

Deeefo efJeefYevve ÙeespeveeDeeW Deewj Gvekeâer efJeMes<eleeDeeW

keâe efJeJejCe iÙeejnJeW DeOÙeeÙe ceW efoÙee ieÙee nw~

yeQkeâeW Deewj efJeòeerÙe mebmLeeDeeW keâer efJeòeerÙe efmLeefle

Gvekesâ legueve-he$e ueeYe SJeb neefve Keeles pewmes efJeJejCeeW

mes mhe° nesleer nw~ yeejnJeW DeOÙeeÙe ceW efJeòeerÙe

legueve-he$e, ueeYe SJeb neefve Keelee, vekeâoer ØeJeen

efJeJejCe pewmes cenòJehetCe& efJeòeerÙe efJeJejCeeW Deewj Gvekesâ

Debleie&le DeevesJeeueer ceoeW, GvekeâeW GheÙeesefielee Deeefo

hej ØeMveesòej efoS ieS nQ~

DeefveÙeefceleleeDeeW keâes jeskeâvee Deewj efve<heeove yeÌ{eves

kesâ efueS GheÙegkeäle GheeÙe megPeevee efvejer#eCe keâe leLee

JÙeJemeeÙe keâer efJeòeerÙe efmLeefle keâe ØeceeCe osvee uesKee

hejer#ee keâe cetue GodosMÙe neslee nw~ lesjnJeeB DeOÙeeÙe

efvejer#eCe SJeb uesKeehejer#ee mes ner mebyebefOele nw, efpemeceW

meebefJeefOekeâ uesKeehejer#ee, mebieeceer uesKeehejer#ee, yee¢e

uesKeehejer#ee Deeefo mes mebyebefOele cenòJehetCe& peevekeâejer

oer ieF& nw~ meeLe ner FveceW OeesKeeOeÌ[er keâer jeskeâLeece

kesâ efueS efkeâS peeves Jeeues GheeÙe Yeer Meeefceue efkeâS

ieS nQ~

`cegõe yeepeej SJeb cÙetÛegDeue hebâ[' veecekeâ ÛeewonJeW

DeOÙeeÙe ceW cegõe keâer heefjYee<ee, Gmekesâ keâeÙe&, YeejleerÙe

cegõe yeepeej, cegõe yeepeej kesâ efueKele, JeeefCeefpÙekeâ

he$e, Gvekeâer keâeueeJeefOe, GvnW peejer keâjves Jeeueer

kebâheveer keâer vÙetvelece keâeÙe&Meerue hetBpeer, pecee ØeceeCehe$e,

cÙetÛegDeue hebâ[, Gvekesâ keâeÙe& Deeefo efJe<eÙeeW hej

efJeÛeej efkeâÙee ieÙee nQ~ hetBpeer yeepeej SJeb [sefjJesefšJe

šsef[bie mes mebyebefOele hebõnJeW DeOÙeeÙe ceW YeejleerÙe hetBpeer

yeepeej, MesÙej, $e+Ce-he$e SJeb yeeb[, MesÙej yeeFyewkeâ,

YeejleerÙe ØeefleYetefle SJeb efJeefveceÙe yees[& Ùeeveer mesyeer,

mše@keâ SkeämeÛeWpe, ef[hee@efpešjer ØeCeeueer SJeb [sefjJesefšJe

šsef[bie mebyebOeer peevekeâejer oer ieF& nw~

hegmlekeâ keâe meesuenJeeB DeOÙeeÙe Deblejje°^erÙe yeQefkebâie

kesâ yeejs ceW nw, efpemeceW efJeefYevve osMeeW keâer cegõeSB,

efJeosMeer efJeefveceÙe, DeefveJeeCer YeejleerÙe, DeefveJeemeer

Keeles, efveÙee&le efJeòe SJeb hesâ[eF& mes mebyebefOele cenòJehetCe&

ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~ hegmlekeâ kesâ

meceeref#ele hegmlekeâ : Jemlegefve‰ yeQefkebâie efJeefOe SJeb JÙeJenej

uesKekeâ : efJeveÙe yebmeue

ØekeâeMekeâ : Ghekeâej ØekeâeMeve, 2/11S, mJeosMeer yeercee

veiej (Meen efmevescee kesâ meeceves),

Deeieje-282002

cetuÙe : 145 ®heS

hegmlekeâ - meceer#ee


pegueeF& 2005

52

Debeflece Ùeeveer me$enJeW DeOÙeeÙe ceW jepeYee<ee efnboer,

De«eCeer yeQkeâ Ùeespevee, Devepe&keâ DeeefmleÙeeB, $e+Ce

Jemetueer vÙeeÙeeefOekeâjCe, Deeefmle hegveefve&cee&Ce kebâheveer,

yeQefkebâie ueeskeâheeue Ùeespevee 2002, mJeÙeb meneÙelee

mecetn, peesefKece ØeyebOekeâ, efJeMJe yeQkeâ JÙeeheej mebie"ve,

yeQefkebâie hej ieef"le efJeefYevve meefceefleÙeeW SJeb keâeÙe&oueeW

keâes mecesše ieÙee nw~

pewmee efkeâ yeleeÙee pee Ûegkeâe nw, hegmlekeâ ceW yeQefkebâie

mebyebOeer peevekeâejer osves kesâ efueS uesKekeâ ves ØeMveesòej-

Mewueer DeheveeF& nw~ yeQefkebâie kesâ ØeeÙe: meYeer he#eeW kesâ

mebyebOe ceW uesKekeâ ves mebYeeefJele ØeMveeW keâer keâuhevee keâer

nw Deewj Gvekesâ leerve-leerve, Ûeej-Ûeej Jewkeâefuhekeâ Gòej

efoS nQ, efpeveceW mes keâesF& Skeâ mener nw~ mener GòejeW

hej hee"keâ keâes efveMeeve ueieevee nw Deewj yeeo ceW

hegmlekeâ kesâ Deble ceW oer ieF& Gòejceeuee mes efceueekeâj

hegef° keâjveer nw efkeâ Gmekesâ Éeje Ûegves ieS Gòej mener

nw Ùee veneR~ Gòej mener nesves hej hee"keâ keâes hejer#ee

ceW meheâue nesves keâe Deevebo efceuelee nw Deewj ieuele

nesves hej lelkeâeue mener Gòej keâe helee ueie peeves mes

Deheves keâes heâewjve megOeejves keâe meblees<e neefmeue neslee

nw~ Ùen ØeMveesòej Mewueer peneB hee"keâ keâe %eeveJeOe&ve

keâjleer nw, JeneR yetPeves keâe mee Deevebo Yeer osleer nw

Deewj Fme Øekeâej, hee"keâ Kesue ceW yeQefkebâie pewmes

lekeâveerkeâer Deewj iebYeerj efJe<eÙe keâes Deelcemeeled keâj

ueslee nw~

peeefnj nw efkeâ Jemlegefve‰lee Fme hegmlekeâ keâer efJeMes<elee

kesâ ¤he ceW meeceves Deeleer nw~ hej Ùener Jemlegefve‰lee

hegmlekeâ keâer keâcepeesjer Yeer nw~ Fmekesâ Ûeueles hee"keâ

efJe<eÙe keâe Glevee ner %eeve neefmeue keâj heelee nw,

efpelevee uesKekeâ Deheves Éeje meesÛes ieS ØeMveeW kesâ

GòejeW kesâ ceeOÙece mes Gmes osvee Ûeenlee nw~ uesefkeâve,

ØeMve Deewj Yeer nes mekeâles nQ Deewj Dekeâmej ØeMve veS

ØeMveeW keâes pevce osles nQ~ Gve ØeMveeW kesâ Gòej ve

heekeâj hee"keâ efvejeMe nesiee Deewj otmejer hegmlekeâ keâe

meneje uesves kesâ efueS yeeOÙe nesiee~ Fme ¤he ceW Ùen

nuekeâer-hegâuekeâer-meer kegbâpeer-pewmeer hegmlekeâ Øeleerle nesleer

nw, pees hee"keâ keâes pewmes-lewmes meerSDeeF&DeeF&yeer,

pesSDeeF&DeeF&yeer Ùee Øeesvveefle hejer#eeSB GòeerCe& keâje

osvee Ûeenleer nw~ iebYeerj Deewj efJemle=le %eeve keâer

Deekeâeb#ee jKevesJeeues yeQkeâj Fmemes efvejeMee nes mekeâles

nQ~ uesefkeâve, uesKekeâ ves GvnW OÙeeve ceW jKekeâj

hegmlekeâ efueKeer ner veneR nw, Gvekeâe ue#Ùe-mecetn lees

keâce cesnvele Deewj keâce mes keâce meceÙe ceW Pešheš

hejer#ee GòeerCe& keâjves keâe leelkeâeefuekeâ GodosMÙe hetje

keâjves keâe Deekeâeb#eer DeJee[& mšeheâ nw~ heâemš hetâ[

keâer lejn Fmemes hesš lees Yej mekeâlee nw, Skeâyeejieer

Jen Ûešheše Deewj mJeeefo° Yeer ueie mekeâlee nw, hej

meblegefuele Yeespeve keâer leguevee ceW Jen mJeeLÙeJeOe&keâ

efkeâlevee nw, mJeÙeb mecePee pee mekeâlee nw~

hej Deiej nce Ùen OÙeeve jKeW efkeâ hegmlekeâ efkeâme

ue#Ùe-Jeie& kesâ efueS nw, lees keânvee nesiee efkeâ efJe<eÙe

mes mebyebefOele ØeeÙe: meYeer henuegDeeW keâer peevekeâejer Skeâ

ner peien GheueyOe keâjeves kesâ keâejCe hegmlekeâ Deheves

ue#Ùe-mecetn kesâ efueS keâce GheÙeesieer veneR nw~ hegmlekeâ

ceW efJeòe ceb$eeueÙe, YeejleerÙe efjpeJe& yeQkeâ, mesyeer Éeje peejer

meYeer veJeervelece efoMeeefveoxMe Meeefceue efkeâS ieS nQ~

DeefOekeâebMele: jepeYee<ee efnboer kesâ ceevekeâ MeyoeW keâe

ØeÙeesie efkeâÙee ieÙee nw~ nj DeOÙeeÙe kesâ Deble ceW mebkesâle

Deewj hegmlekeâ kesâ Deble ceW mebef#ehle efnboer-Deb«espeer yeQefkebâie-

MeyoeJeueer Yeer oer ieF& nw~ heoesvveefle-hejer#ee osvesJeeues/

mee#eelkeâej kesâ efueS GheefmLele nesves Jeeues yeQkeâ-keâce&ÛeeefjÙeeW

kesâ efueS Ùen efšhme keâer lejn peevekeâejer megueYe keâjeleer

nw~ ceQ keâecevee keâjlee nBt efkeâ mJeÙeb uesKekeâ meefnle meYeer

yeQkeâ-keâce&Ûeejer Fmekeâe ueeYe G"eSBies~ efJeveÙe yebmeue

yeQefkebâie-efJe<eÙeeW hej DeÛÚe efueKeles nQ Deewj efJeefYevve

yeQefkebâie-heef$ekeâeDeeW ceW Úheles jnles nQ~ yeQefkebâie keâer ØeeÙe:

meejer peevekeâejer mecesšvesJeeueer efnboer ceW efueKeer Gvekeâer

Fme hegmlekeâ kesâ ØekeâeMeve hej GvnW yeOeeF& osles ngS ceQ

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June 2,2005

SIGNING OF VIII BIPARTITE SETTLEMENT

Shri A. K. Purwar, Chairman, State Bank of India and Chairman, IBA signing the Settlement flanked byDr. Dalbir Singh to his right and Shri V.P. Shetty to his left.

IBA team with Officers’ AssociationsIBA team with Workmen Unions

COMMUNICATION@IBA

The VIII Bipartite Settlement was signed on 2nd June, 2005. The settlement is uniquely historic for the reason that it is forthe first time in the history of bipartite negotiations at the industry-level that four Officers’ Associations and six WorkmenUnions signed the industry-level Joint Note/Bipartite Settlement on the same day, at the same venue in a joint function atIBA Office, Mumbai. Shri A.K. Purwar, Chairman, IBA and Chairman, State Bank of India and Dr. Dalbir Singh, Chairman andManaging Director, Central Bank of India (who was then Chairman, IBA, when the 8th Bipartite Negotiations commenced inOctober 2002), Shri V.P. Shetty, and Chairman of the Negotiating Committee, IBA Chairman, IDBI Ltd., alongwith othermembers of the Negotiating Committee were signatories to the Settlement fromt he management side.

BREAKFAST SYMPOSIUM13.5.05 Mumbai

As a part of knowledge sharing exercise with members of the Association, IBA organized a breakfast symposium on 13.5.05 at IBA’s Office,World Trade Centre, Mumbai - 5. The Speaker was Dr.Sumit Agarwal, Senior Vice President, Credit Risk Management Executive Small BusinessRisk Solutions, Bank of America (Rockville, MD), Adjunct Professor of Finance, George Washington University, Washington DC.

Dr. Agarwal made a presentation to senior bankers in the areas of Basel II Accord and Capital Allocation, Risk Management of Small BusinessLoans and Relationship Lending. Presentation was followed by interactive session.

June 2,2005


53

RETAIL BANKING DIRECTIONSChallenges and Opportunities

MUMBAI May 28, 2005

On May 28, 2005, Banking Frontiers and IndianBanks’ Association jointly organized a conferencetitled “Retail Banking Directions: Challenges &Opportunities”. The keynote was presented byShyamala Gopinath, Dy. Governor, RBI. She said thatretail banking has turned out to be the key profitdriver with retail portfolio constituting 21.5% oftotal outstanding advances. Also the overallimpairment of the retail loan portfolio was muchlower than bank’s gross NPA. She mentioned thatretail loans constitute less than 7% of GDP in India,compared to 55% in South Korea, 52% in Taiwan,33% in Malaysia and 18% in Thailand. She thendeliberated on the two key aspects of retailbanking - cards and housing. She emphasized theneed for constant innovation in retail banking andin bracing for another paradigm shift.

business processes. According to Deepak Patil,banks have to constantly understand theircustomers and respond accordingly. According toNarendrakumar Baldota, co-op. banks are providingall the facilities that public and private sectorbanks are doing, including ATMs, demat, etc. S.C.Basu, Chairman of Bank of Maharashtra, there arethree challenges — creation of market,(particularly rural areas), packaging of product andsystem of delivery of services. Satish Marathe, CEO,United Western Bank, said that there is a need forsecondary sale of assets that are impared,including cars, houses, etc., ARCIL deals only in highvalue assets. Kumar Karpe of IBM said that banksneed to understand how they can create newproducts and how they can go to market whilekeeping a watch on costs so that project costs arenot overshot. He said that banks can optimize theiroperations by centralizing process that arecommon across different business activities.

In the session on top management MIS, Shantanusaid that it is all right for such data to sit on theservers. But critical data should come to thedecision makers immediately over the phone orthe web. There should be alerts wheneversomething crosses a threshold level. According to

This was followed by a CEO panel discussion.According to G.V. Nageswara Rao, CEO of IDBI Bank,the way the customer interacts with the bank andwhat he expects from the Bank has undergone arevolutionary change. Today customers seek moreadvice from their banks, such as what investmentproducts he should be looking at. Banks can stepup the quality of their analysis and advice. Withoverseas markets being opened up by RBI, the dayis not far off when banks will be advising customerswhether they should be investing in Koreanequities or US junk bonds. According to R.N.Ramanathan, Dy. MD SBI, in today’s fiercelycompetitive scenario, every bank wants to growthe balance sheet, and to grow the assets, bankshave to find the resources. Other challenges hereferred to are HR, technology, outsourcing, riskmanagement, compliance and re-engineering of

Dr. Anand Dhingra from IBM, worldwide there arecertain best practices, and they have been codifiedin certain business models. He then went on todescribe the business models. According to PankajPatharphod, IT Head at ABN Amro Bank, earlier theEDP department used to churn out a lot ofoperational reports. But now a lot of MIS isdovetailing towards business MIS. There is atremendous focus on overall customerrelationship and less on the number of systemsthat the customer touches. Sandeep Mukherjeefrom DCB said that banks need to analyze a lot ofexternal data such as malls coming up and thendetermine whether they have the capability toservice that opportunity.

On the ATM front, one of the points of debate waswhether ATM should be seen as an instrument forpushing the topline or the bottomline, ICICI Bank

representative O.P. Srivastava argued that queueswere building up at the ATMs and hence it waspreferably to migrate transactions other than cashwithdrawal from the ATM to other channels. Hesaid that ICICI Bank is putting up kiosks next to itsATMs to handle non-cash transactions. HDFC Bankrepresentative Rahul Bhagat was of the opinionthat non-cash transactions take only a smalladditional time and hence it was worthwhile forbanks to put up additional products on the ATM,thereby making the ATM a full fledged channel.

In the cards session, Mr. Pasricha of RBI said thatcards are spreading and card spends are increasing.He said that RBI wants cards business to grow in asecure manner. Pralay Mondal of HDFC Bank,economic indicators are rising which will lead tomore disposable income, which is good news forretail banking. Today less than 1% of the paymentshappens through cards and hence there isimmense scope. According to Pani, lifecycle ofICICI Bank, cards are unique because they combinetransaction processing with consumer lending.This industry has always delivered positive growthfor last 30 years in terms of consumer spend.According to Utul Kapadia from IDBI, the

exponential growth indicates that there is a lot ofuntapped potential ahead. He said that the cost ofthe network, infrastructure and PoS terminal aredeclining and the markets are maturing. Accordingto Shailandra Mittal from ReadyTestGo, thechallenge is how to capture spends on electricity,water, groceries, etc.

Keynote Address : Smt Shyamala GopinathDy. Governor, RBI

Panel Discussion (S.C. Basu, Dy. Chairman, IBA & CMD, B.O.M. third from left )

Attentive AudienceIBA BULLETINJULY 2005

54

IT@BFSI CONCLAVETechnology solutions for Business Transformation

June 7, 2005 MUMBAI

BFSI Conclave, country’s first IT Conferenceconsisted of four sessions covering topics onTechnology the key differentiator-implementation challenges, IT as an enabler,Reinventing with outsourcing and Security andRisk Management - Business Continuity whichincluded eminent speakers viz. Shri Ashok Kini,Managing Director, State Bank of India, Ms. H. A.Daruwalla, Executive Director - Oriental Bank ofCommerce, Shri T. S. Vijayan, Managing Director -Life Insurance Corporation of India and manyothers from the financial sector.

Smt. K. J. Udeshi - Dy. Governor, RBI in her keynoteaddress at the BFSI Conclave, mentioned, that RBIwill come out with new guidelines on outsourcingto improve the regulatory supervision and riskmanagement of outsourcing which will coveraspects related to operational and prudential risksarising out of outsourcing of banking activities bybanks.

“RBI has constituted an internal group onoutsourcing and based on its recommendations,regulatory guidelines will soon be issued. The

guidelines apply to banks operating in India. Themove is not towards curbing BPO, but to put inplace checks and balances to lower incidence offraud. “A number of IT-related services wereoutsoureed (by banks). This is posing a challengeto operational risk management and dataintegrity. Caution needs to be exercised as the newBasel norms require banks to handle voluminousdata,” said Ms. Udeshi, “Outsourcing has its ownchallenges, specially in drafting of legal contracts,”she added. The new guidelines will addressregulatory concerns on operational risks and dataintegrity. RBI is also concerned that outsourcingcould lead to transfer of banking risks, managementand regulatory compliance to third parties, overwhom RBI may not have any regulatory control.

Ms. Udeshi spoke about extending the reach ofbanking to rural areas. She mooted the idea of bankssetting up information kiosks in villages. “There aresix lakh villages in the country and one bank branch

per 18 villages. Banks can set up an information kioskfor every two or three villages. At the click of themouse, the farmer will know his account balanceand interest due to him and have a host of value-added services at his disposal,” she said.

“The kiosk can double up as a vending machine,but the only constraint will be adequate power

supply. Customers can use these kiosks. What betterway can there be to free farmers from the shacklesof moneylenders and middlemen,” she said.Emphasising on the potential in rural credit, Ms.Udeshi said while industry with a 22% share in the

country’s GDP accounted for 45% of gross bankloans, agriculture with 20% of the GDP, receivedabout 11% of advances. She said banks need to dealwith data transmission in a safe and secure way ona priority basis.

Keynote Address : Smt K. J. UdeshiDy. Governor, RBI

Ashok Kini, MD, SBI speaks on ‘‘IT as an enabler"

Welcome Address by H. N. Sinor

Speakers at the Conference(L – R) R. Jangoo Dalal; T.S. Vijayan; Ashok Kini; Ms. H. A. Daruwala; T. Srinivasan

Cross section of Participants 55IBA BULLETINJULY 2005

IT@BFSI CONCLAVE9th June, 2005 Bangalore

“With the increasing use of automation in bankingand communication, networking can be used fordistributed processing which would also help toreduce the costs besides improving efficiency,” saidShri V Leeladhar, Dy. Govenor - RBI, in his keynoteaddress at the BFSI conclave. While major Indian citieswere enjoying the fruits of banking automation, hesaid, there was a need to take it to the mid-sizedtowns and even rural areas. “The manufacturingsector has revived through a process of re-engineering and this is something that Indian banks

could f ocus on notably in the area of job processes,” he added. While rising competition was a certainty, there was even a possibility ofcompetition coming from unexpected quarters like retailers providing easy finance scheme to purchase durables. Earlier, welcoming Mr.Leeladhar, Chairman of Kamataka Bank, Mr. Ananthakrishna noted that the global BFSI segment was witnessing robust activity. “Globallybanks, financial services and insurance (BFSI) segment is witnessing annual investments to the tune of $6 billion,” he added. Mr. K. N.Prithviraj, CMD of Oriental Bank of Commerce, said that integration had become relatively easier given the fact that both OBC and GTB hadthe same technology platform – Finacle. Mr. Jangoo Dalal, senior VP at Cisco Systems — India and SAARC, said that with banks re-configuring their delivery systems, platforms like internet and ATMs were becoming common place. Mr. T. Srinivasan, MD of Mercury, saidthat while outsourcing was becoming common-place, there was a need to define the contours of this phenomenon.

M. Balachandran, CMD, Bank of India K. N. Prithiviraj, CMD, OBC


56 Seminar in progress

V. Leeladhar, Dy. Governor, RBI Welcome Address by Ananthakrishna,Chairman, Karnataka Bank Ltd.

banking > iba bulletin jul 2k5 onep

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