New PSU bank board to oversee merger moves
- Mahua Venkatesh, Hindustan Times
The government would not get involved in the process, a senior finance ministry official told HT.
The board is expected to be set up in the next few months. Finance minister Arun Jaitley had announced the setting up of the board in his budget speech.
"The board would act as a consultant while identifying banks that could be possibly merged with another one, exactly the process followed in the private sector," a source familiar with the development said, adding, the final decision would be taken by lenders.
While there have been talks of consolidation activities among public sector banks, nothing has fructified, with the unions strongly opposing the idea.
The proposed board would be a link between the government and banks and would have less than 10 members, of which five would be professional ones. There would only be one government nominee on the board. The board would do the job of a consultant as well as a headhunter for finding the right talent.
The board would also help in bringing in more autonomy in banks, thereby enabling them to take their own decisions. "The government is very serious about creating a professional environment for public sector banks to operate in... more autonomy would be given in terms of daily operations and human resource issues," a senior government official added.
Bank staff pact, a retrograde step-Deccan Herald 09.03.2015
The terms agreed to by the Indian Banks Association and staff unions to avert last month’s four-day strike threatened by the latter are not in the interest of the customers or the banks themselves.
The banks would actually have been paralysed for five days with a Sunday following the four days of strike. The strike was tactically planned to disrupt financial operations in the last week of February when attention to economic and financial matters would be high with the presentation of Budget and the economic survey.
The managements seem to have succumbed to the pressure, agreed to give a 15 per cent salary hike and allowed banks to remain closed on two Saturdays in a month. Talks on the demands of the bank staff have been going on for a long time and the present settlement will be in force till 2017. It will benefit about 8.5 lakh employees, mostly belonging to the public sector banks.
The agreement to keep the banks closed on two Saturdays in a month is a very customer-unfriendly decision. Making the other two Saturdays full working days does not help the customer much. Extension of the working time by a few hours on two Saturdays will not make any difference to the customers, but the closure of banks on two full days will certainly be inconvenient.
It suits the staff because a half-day on a Saturday is in any case lost to work and the price of a few more hours in office is too small for two holidays. The bank staff had actually asked for a five-day week. The argument that internet, mobile banking and ATMs have made physical access to banks irrelevant is wrong because these facilities are used by only a small section of customers.
The decision goes against the need to increase financial inclusion through better access to banks. Clearing operations and other banking facilities will certainly be impacted by the new holiday scheme. Banks should have considered the interests of customers more important than those of the staff.
The 15 per cent salary increase is to be implemented with retrospective effect from November 2012. It will amount to an outgo of an additional Rs 4,725 every year. It is for the banks to decide how much they should pay their employees but the general public cannot dissociate the decision from the reality of bad finances of public sector banks and the poor service often rendered to the customers. It has also been noted that it will have some inflationary impact.
Social security rollout: Centre calls meet with banks, insurers-FinancialExpress
The Centre has called a meeting of banks and insurers on March 11 to roll out, with fixed deadlines and targets, the three schemes announced in Budget fy16 to ensure universal social security for the underprivileged.
The schemes — the Pradhan Mantri Suraksha Bima Yojana (or PMSBY, providing accidental death risk cover), Atal Pension Yojana (for a defined pension) and Pradhan Mantri Jeevan Jyoti Bima Yojana (or PMJJBY, covering both natural and accidental death risk) — will be implemented on a mission mode like the Pradhan Mantri Jan Dhan Yojana, with the full backing of banks and insurance firms, financial services secretary Hasmukh Adhia told FE.
He said the new schemes will be implemented initially through the existing bank account holders, and their premium/pension amounts can be either deposited by them in their accounts or automatically debited provided the accounts have the required amount in them.
The deadlines and targets for the new schemes will be fixed during the meeting and the progress will be continuously monitored by the Centre to ensure that they are met, Adhia said. At the end of February, 13.7 crore accounts had been opened under PMJDY and 12.2 crore RuPay debit cards were issued. These new accounts have mobilised deposits of Rs 12,694 crore.
Calling the three schemes the “biggest reform measure” in Budget FY16, Adhia said: “Any citizen with a bank account and aadhar number can join. All he/she has to do is give a signed letter to the bank stating his/her name and of the nominee. The bank will enrol him/her as rest of the details will already be with it.”
“We will push the new schemes on a mission mode like the PMJDY, take out common advertisements and hold financial literacy campaigns. Banks and insurance companies will jointly implement them. Bank mitras (banking correspondents) will also get good incentives for ensuring more subscribers,” he added.
These schemes will ensure at least Rs 12 (which the subscribers have to pay annually as premium for accidental death risk of Rs 2 lakh under PMSBY) go into all the zero balance accounts opened under PMJDY, thereby making them accounts with deposits, Adhia said. At the end of February, around 8.6 crore accounts were zero-balance and the government was trying to ensure that these accounts also mobilise deposits.
“Even the poorest of the poor will be able to afford to deposit Rs 12 per year and they will do it as the insurance cover comes sans conditions. This product is simple and easy to understand. I see crores of rupees going in as bank deposits,” he added.
The PMSBY incentive is, of the Rs 12 given by a subscriber, Re 1 goes each to the bank and the bank mitra (for getting subscribers for the scheme). Also, banks are free to give their Re 1 commission to the bank mitra as additional incentive. The annual premium for PMJJBY (which covers both natural and accidental death risk of Rs 2 lakh) is just Rs 330, or less than Re 1 per day, for age group 18-50. On the structure of PMJJBY, Adhia said that of the Rs 330, Rs 289 will go to the insurance fund while the remaining Rs 41 will go as commission and bank charges. “If a bank mitra gets 100 people as subscribers from one village, he will make Rs 3,000. Since it is not a term product, the bank mitra will have to ensure that new subscribers join the scheme every year,” Adhia added.
Banks dither, Raghuram Rajan actsThe Hindu
Since the time he took over as the Governor of the Reserve Bank of India in September, 2013, Raghuram Rajan has consistently drawn flak from across the spectrum for being hawkish in his policy stance.
It took a little over 16 months for him to effect his maiden reduction of 25 basis points in the policy rate. And, he surprised everyone by doing it outside of the policy cycle on January 15. On March 4, he yet again dropped it by another 25 basis points. This time, too, he did not wait for the policy day.
More than the rate reduction per se, what he said to analysts post-cut merits a debate. He hinted that the RBI could revisit the Base Rate determination policy for banks. The provocation for this is very obvious. The double-quick two-round rate reduction within two months has done very little on the ground for common man. Banks have not come forward to cut lending rates.
“The process of transmission is somewhat asymmetric,’’ he said. And, he went on to add, “banks tend to be a little faster in raising rates rather cutting rates.’’
The reluctance of banks to pass the rate cut benefits to borrowers has made the Governor wonder if there were any institutional constraints to do so. Not surprisingly, he has now decided to examine if the changes in Base Rate determination “is working as effectively as they should be.’’ Given this ground situation, is it right to blame Dr. Rajan?
Arguments, often times, veer round to the need for the RBI to distribute its focus on growth as well. And, the Rajan-led RBI has been blamed for the decelerating economy. While the RBI has been getting the stick, banks have not been blamed for not passing the rate cut benefits. Of course, banks have to factor in a different set of dynamics in its lending rate decisions. Why do they play a waiting game? Can’t their internal committees take a call on rate cuts? Are they expecting hints from their political bosses? Often times, one discovers a convenient whipping boy, and deflect the focus to unreal spheres. The situation on the ground requires a quick action. Dithering banks could only accentuate the pains of the economy.
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