Tag: bankers

Bankers plan to seek safeguards against undue vigilance action, BFSI News, ET BFSI

Banking & Finance

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Bankers will seek a more robust framework for protecting them from any undue vigilance action in bona fide commercial decisions at a stakeholder conference on November 17-18 organised by the government to address issues relating to credit flow into different sectors of the economy.

Industry chambers and financial institutions, including non-banking financial companies (NBFCs), have been invited to the conference.

A senior bank executive told ET that a representation had been made to the finance ministry on this count.

Besides the finance ministry, senior officials from other ministries will also be a part of this stakeholder conference and provide insights to projects in the pipeline in their respective areas. Finance minister Nirmala Sitharaman will meet bankers, including from the private sector, financial institutions and other stakeholders at the two-day meeting.

“We want bankers to be protected under Section 197 of The Code of Criminal Procedure (CrPC) and bring them on a par with other government officials,” the bank executive said. “We will bring this to the attention of the finance minister.”

Under Section 197, a court cannot take cognisance of a criminal charge against a public servant unless there is prior sanction from the competent authority to prosecute him.

The move comes in the backdrop of Rajasthan police arresting former State Bank of India chairman Pratip Chaudhuri in relation to a complaint by a loan defaulter.

The government had, recently, issued a circular that laid down the standard operating procedure for processing cases under Section 17A of the Prevention of Corruption Act. As per the guidelines, any police inquiry on decisions taken by public servants in discharge of their duties need prior nod from the competent authority.

“These guidelines were flouted and hence it is necessary that a more robust framework should be put in place,” said another bank executive.

Last month, the finance ministry had advised state-run lenders to adopt broad guidelines on ‘Staff Accountability Framework for NPA Accounts up to ₹50 crore (Other than Fraud Cases)’. The new guidelines are aimed to protect bank staff taking commercial decisions as well as to ensure faster dispensation of vigilance cases while taking into account employees’ past track record.



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Protection to bankers: IBA knocks FinMin doors again

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The Indian Banks Association (IBA) has once again knocked the Finance Ministry’s door on the crucial aspect of protection to both retired and serving bankers post the now much talked about former SBI Chairman Pratip Chaudhuri’s arrest incident.

The Department of Financial Services has been requested by the IBA to extend protection to all serving and retired officers with the prior permission clause in line with the one already available for central government officials, sources in the banking industry said.

This is the second letter from the IBA, which had soon after Chaudhuri’s arrest on October 31 written to DFS seeking a new procedure to safeguard bankers’ against state-level authorities, including police in cases of loan defaults.

Also read: Bankers protest against Chaudhuri’s arrest, want FinMin to intervene

Now, IBA has said that the mechanism should involve prior permission clause in line with the GoI officers.

On October 31, Chaudhuri was arrested from his Delhi home by the Jaisalmer police for his alleged role in the Garh Rajwada hotel project in Jaisalmer. This project was financed — to the tune of ₹ 25 crore — by State Bank of India in 2007. This incomplete project was sold to Alchemist ARC in March 2014.

Chaudhuri has been a director at Alchemist ARC since his retirement in September 2013.

Soon after his arrest, several top level bankers called the decision unfortunate and sought protection of individuals by a legal framework so as to ensure that commercial decisions are taken without delays.

After a week in judicial custody, former SBI Chairman Pratip Chaudhuri got a bail in the Garh Rajwada hotel project case.

It may be recalled that protection of Section 197 of Criminal Procedure Code is already available to government servants, mandating prior sanction of concerned government before taking cognisance by any Court of offence allegedly committed by public servant in discharge of official duties. As per a Supreme Court judgment, same is not available to public sector undertaking employees.

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Sebi allows payments banks to act as investment bankers, BFSI News, ET BFSI

Banking & Finance

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NEW DELHI: To provide easy access to investors to participate in public and rights issues by using various payment avenues, markets regulator Sebi on Tuesday allowed payments banks to carry out the activities of investment bankers.

Non-scheduled payments banks, which have prior approval from the Reserve Bank of India (RBI), will be eligible to act as a banker to an issue (BTI), Sebi said in a circular.

This is subject to fulfilment of the conditions stipulated in the BTI rules.

Further, payments banks registered as a BTI will also be permitted to act as self-certified syndicate banks, subject to the fulfilment of the criteria laid down by the Sebi in this regard from time to time.

“The blocking/movement of funds from the investor to issuer shall only be made through the savings account of the investor held with the payments bank,” Sebi said.

In a notification dated July 30, the regulator amended the Bankers to an Issue rules, thereby permitting such other banking company, as may be specified by the Sebi, from time to time, to carry out the activities of Bankers to an Issue (BTI), in addition to the scheduled banks.

Bankers to an issue mean a scheduled bank or such other banking company as may be specified by Sebi carrying activities, including acceptance of application money, acceptance of allotment or call money, refund of application money and payment of dividend or interest warrants.



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Sebi allows payments banks to act as investment bankers, BFSI News, ET BFSI

Personal Finance

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NEW DELHI: To provide easy access to investors to participate in public and rights issues by using various payment avenues, markets regulator Sebi on Tuesday allowed payments banks to carry out the activities of investment bankers.

Non-scheduled payments banks, which have prior approval from the Reserve Bank of India (RBI), will be eligible to act as a banker to an issue (BTI), Sebi said in a circular.

This is subject to fulfilment of the conditions stipulated in the BTI rules.

Further, payments banks registered as a BTI will also be permitted to act as self-certified syndicate banks, subject to the fulfilment of the criteria laid down by the Sebi in this regard from time to time.

“The blocking/movement of funds from the investor to issuer shall only be made through the savings account of the investor held with the payments bank,” Sebi said.

In a notification dated July 30, the regulator amended the Bankers to an Issue rules, thereby permitting such other banking company, as may be specified by the Sebi, from time to time, to carry out the activities of Bankers to an Issue (BTI), in addition to the scheduled banks.

Bankers to an issue mean a scheduled bank or such other banking company as may be specified by Sebi carrying activities, including acceptance of application money, acceptance of allotment or call money, refund of application money and payment of dividend or interest warrants.



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HDFC Bank’s Puri top earner among bankers in FY21; ICICI Bank’s Bakhshi forgoes salary in COVID year

Banking & Finance

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Data available for ‘crorepati’ bankers, or those earning above Rs 8.5 lakh a month, revealed that HDFC Bank had 200 executives in this exclusive club. (File image)

HDFC Bank’s Aditya Puri emerged as the highest grossing banker among the top three private sector lenders in his retirement year with total emoluments of Rs 13.82 crore.

His successor Sashidhar Jagdishan, who took over as the chief executive and managing director of the largest private sector lender on October 27, 2020 grossed a salary of Rs 4.77 crore for the fiscal year, which included payments as a group head till his elevation. Puri’s overall payments included Rs 3.5 crore as post-retirement benefits.

Its immediate rival ICICI Bank’s MD and CEO Sandeep Bakhshi “voluntarily relinquished” his fixed compensation of basic and supplementary allowances for FY21, which had seen wide-scale impact of the COVID pandemic, as per the second largest lender’s annual report.

Bakhshi, however, did receive allowances and perquisites amounting to Rs 38.38 lakh, the document said, adding he also got Rs 63.60 lakh as performance bonus from ICICI Prudential Life Insurance Company as deferred variable pay for FY17 and FY18.

Amitabh Chaudhry, who has been leading the third largest private sector lender Axis Bank, got paid Rs 6.52 crore, the bank’s annual report said, adding that the top management was not given any salary increment in FY21.

In the case of ICICI Bank, material risk takers including executive directors, chief financial officer and company secretary voluntarily opted for a 10 per cent salary reduction from May 1 in their payments, possibly because of the impact of COVID. Its executive director in-charge of wholesale banking Vishakha Mulye grossed Rs 5.64 crore, as per the annual report.

When compared with the bank’s median salary, the allowances drawn by Jagdishan were the highest at 139 times the median salary of a bank employee, while Chaudhry earned 104 times the median and ICICI Bank executive directors drew 96 times the median salary.

Data available for ‘crorepati’ bankers, or those earning above Rs 8.5 lakh a month, revealed that HDFC Bank had 200 executives in this exclusive club, including key management personnel, serving officials and those who left the lender midway through the fiscal year.

In comparison, Axis Bank had 69 bankers in the category who served throughout the year, while 17 employees who would otherwise have been in the club left it midway through the year, as per the annual report.

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RBI policy will help revive growth amidst second wave of Covid, say Bankers

Banking & Finance

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The status quo on rates and the accommodative stance of the Reserve Bank of India will help revive growth amidst the second wave of the Covid-19 pandemic, bankers said.

“The RBI approach to continue with the accommodative stance as long as necessary to revive and sustain growth on a durable basis is quite encouraging. Given the challenging situation, the status quo on signal rates is on the expected line,” said Raj Kiran Rai, Chairman, Indian Banks’ Association and Managing Director and CEO, Union Bank of India.

Dinesh Khara, Chairman, State Bank of India, said the coordinated and active efforts of the RBI and government will support growth on a more durable basis during these difficult times

“The policy announcements of the RBI are clearly focused on extending liquidity support to stressed sectors by a more equitable distribution. The growth and inflation numbers have been revised looking at the current uncertain environment. The policy announcements are unequivocal in supporting growth through liquidity and market interventions through Regional Rural Banks and also by fast tracking resolution of stressed MSME sector,” he said.

“The decision of keeping the repo rate unchanged along with maintenance of accommodative stance is on expected lines and necessary to mitigate the growth uncertainty and inflation concerns,” said SS Mallikarjuna Rao, Managing Director and CEO, Punjab National Bank.

Zarin Daruwala, Cluster CEO, India and South Asia markets (Bangladesh, Nepal and Sri Lanka), Standard Chartered Bank, said, RBI’s reiteration of its accommodative stance till economic growth recovers, should help ease financial conditions and cap interest rates.

“RBI continued its focus on targeted credit delivery to sectors in need of liquidity by augmenting the special liquidity window to SIDBI for on-lending to MSMEs and by providing Banks with subsidised on-tap liquidity for on-lending to COVID intensive sectors,” she further noted.

Economists said a further downward revision in the RBI’s growth projection of 9.5 per cent for 2021-22 is possible while inflation may be higher than the estimated 5.1 per cent.

“The second wave of the pandemic, apart from immediate loss of economic activity, will likely also result in medium-term headwinds in recovery in business and consumer confidence. While the RBI has lowered their 2021-22 growth forecasts today by 1 percentage point, one feels further material downside to the same remains a possibility,” said Siddhartha Sanyal, Chief Economist and Head – Research, Bandhan Bank.

“We think a critical mass of the population will be vaccinated by December, and the rise in activity and demand will give producers the confidence to pass on higher input costs to consumers, putting upward pressure on core inflation,” said a note by HSBC Global Research.

However, as long as CPI inflation remains under 6%, we are not expecting a repo rate hike in the foreseeable future, or for as long as private investment remains subdued, it further said.

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BFSI firms reshaping customer service with chatbots and robotics, BFSI News, ET BFSI

Banking & Finance

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There is no dearth of chatbots when it comes to the BFSI industry, more and more organizations are leveraging it to reduce cost and serve increasingly tech-savvy customers, most basic tasks are being handled by chatbots allowing customer representatives to handle complex issues leading to a more positive banking experience.

In the 2nd ETBFSI Virtual Summit, Bankers discussed and shared their experience on how they’ve been deploying chatbots and robotics to service customers, cut costs and free up resources for customer representatives to handle complex queries.

Dheemant Thacker, Head – Digital Banking, Ujjivan Small Finance Bank said, “Chatbots have evolved from structured responses to unstructured responses from text to voices, from single language to multilingual. Chatbot is like a new born baby, as we feed a lot of structured information the bot learns itself through self-learning algorithms to get the right response for unstructured information.”

Thacker also believes that the text to voice evolution is happening in a phenomenal way and a lot of voice based chatbots are being used in contact centres where customers are now able to be serviced round the clock with higher accuracy and in case the chatbot fails then humans can take over.

Patanjali Somayaji, CTO, Capital Float echoes the same thought.

According to Somayaji, Chatbot straddles between a manual and automated experience and can be leveraged on respective platforms depending on the customer journey and platform the customer opts for. He also believes that the use of chatbots has not only evolved from a customer or user experience perspective and in-fact it started right from the product building perspective too.

Haresh Hiranandani, Sr VP at Kotak Mahindra Bank says, “Chatbots have brought in a common AI layer which can go across digital channels. Today a customer journey can be started and closed on a chatbot and it also brings intelligence on the platform.”
Hiranandani adds, “Chatbots are getting intelligent on the common AI layer and building more intelligence is the way forward.”



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States, UTs not giving priority to bankers to get vaccinated, says AIBOC

Banking & Finance

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The All India Bank Officers’ Confederation (AIBOC) has requested the Union Ministry of Health Services & Family Welfare (MoHFW) to suitably intervene so that bank employees and other service providers can avail of Covid-19 vaccination easily and on priority basis.

The Association said despite the Parliamentary Standing Committee on Home Affairs recognising bankers as frontline Covid-19 warriors, till date no perceptible initiative has been taken by any State Government/Union Territory (UT), save and except Arunachal Pradesh, for arranging vaccination to the bank employees/workers and their families on priority basis.

Vaccinate banking and insurance sector staff on ‘priority basis’: FinMin to States

‘Undue procrastination’

Emphasising that bankers are rendering yeoman service to the nation during the pandemic to keep the wheels of the economy moving, Soumya Datta, General Secretary, AIBOC, said: “As per information available, nearly 1,500 bankers have succumbed to the virus. The toll has been heavy in the resurgent second wave which has wreaked havoc. It is extremely unfortunate that several young employees and officers below the age of 45 have succumbed to this pandemic.”

Banks roll out special schemes to protect, treat employees amidst Covid surge

Datta observed that had these bankers been vaccinated in time along with other frontline workers, number of precious lives could have been saved.

“This undue procrastination has caused deep angst and resentment across the nation amongst bankers. While all State Governments and UTs arranged for vaccination for the frontline workers particularly for healthcare workers and police department, the bank employees and officials continue to be ignored,” he said.

In a letter to Rajesh Bhushan, Secretary, MoHFW, Datta requested him take up the issues with appropriate authorities in States and UTs for procuring sufficient quantity of vaccine for Bankers, their family members and all service providers, including casual/ contractual workers, business correspondents, workers in cash logistic companies and cash-in-transit companies connected with banks, ATM maintenance personnel, banking correspondents, and security guards on priority basis.

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PSBs form ‘Alliance’ to provide door step banking, BFSI News, ET BFSI

Banking & Finance

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Public sector banks (PSBs) have come together to form a new company in an attempt to take banking services to the doorsteps of their customers as they battle the challenges posed by the Covid 19 pandemic.

The new company called PSB Alliance Pvt Ltd will engage banking correspondents on behalf of the 12 public sector banks under a common standard operating precedure (SoP) to provide financial and non financial services directly to customer homes.

Former State Bank of India (SBI) chief general manager and deputy CEO of Reliance Jio Payments Bank, Rajinder Mirakhur has been appointed as CEO of the new company.

“Currrently, different PSBs engage different banking correspondents (BCs) for their doorstep banking services. With this company we are hoping to provide resources which can be used by all PSBs at a low cost,” Mirakhur told ET.

Currently eleven non financial services like pick up of cheques, request for an account statement, request for income tax documents like TDS certificates, delivery of payorders etc can done through this facility. Customers can also request a digital life certificate. Cash withdrawal is the only financial service currently provided. PSB customers can request the services through the web, mobile app or phone after an OTP based verification process.

Customers will have to pay a fee of about Rs 88 per service including GST. A part of this fee will go to the vendor providing the service and rest to the bank.

“We are still finalising the model to scale up. We can either hire different BCs and use their technology and manpower or create our own application to be used pan India by all BCs servicing PSBs which will create standardisation and ensure all can plug into the system, which is more feasible,” Mirakhur said.

Two service providers, Atyati Technologies and Integra Microsystem have already been hired by PSB Alliance as service providers.

PSB Alliance has a capital base of Rs 14 crore and has emerged out of another PSB promoted company Cordex India which was formed in 2010 to study operational risk in banks. The articles of association of Cordex were changed to include door step banking services on 29 April when it received approval from the registrar of companies as PSB Alliance.

Besides public sector banks, two private sector lenders IDBI Bank and ICICI Bank were also shareholders in Cordex but will surrender their stake in favour of PSBs.

“This entity is now one promoted by PSBs but all individually hold less than 10%. Each PSB has deputy one person as employee of this company right now and we will see how much personnel we need going forward,” Mirakhur said.

Bankers said the model provides banks with various benefits besides cost savings.

“It gives us economies of scale, collective bargaining and polling of resources. But most of all it gives us a collective knowledge pool which will help us to benefit from each others experiences,” said Rajkiran Rai, MD at Union Bank of India.

Bankers are hoping that by providing some services at homes they can wean away customers from branches which will help reduce the risk of spreading infections and free staff from routine work to focus on revenue earning opportunities.



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FICCI-IBA survey, BFSI News, ET BFSI

Banking & Finance

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Asset quality of banks, which saw some improvement in the second half of 2020, is likely to worsen during the first six months of 2021, according to a survey.

The findings are part of the 12th round of bankers‘ survey carried out by FICCI-IBA between July and December 2020.

The survey was conducted on 20 banks, including public sector, private sector and foreign banks, representing about 59 per cent of the banking industry, as classified by asset size.

In the current round of the survey, half of the respondent banks reported a decline in NPAs during the second half of 2020. About 78 per cent of participating state-run banks have cited a reduction in NPA levels.

“However, in terms of outlook, nearly 68 per cent of respondent bankers expect the NPA levels to be above 10 per cent in the first half of 2021,” the survey showed.

Close to 37 per cent of respondents expect NPA levels to be upwards of 12 per cent.

The Reserve Bank of India’s Financial Stability Report, released in January this year, showed that gross non-performing assets (NPAs) of banks may rise to 13.5 per cent by September 2021, under the baseline stress scenario.

Some of the high NPA risk sectors identified by majority of respondent bankers in the current round of survey include tourism and hospitality, MSME, aviation and restaurants, the survey showed.

Around 55 per cent of respondents believe NPAs to rise substantially in the tourism and hospitality sector, while another 45 per cent reported that NPAs are likely to increase moderately in this sector.

Another high NPA risk sector reported in the current round of survey is the MSME sector, with 84 per cent respondents expecting an increase in NPAs in this sector.

Close to 89 per cent respondents also expect the restaurant sector to see an increase in NPAs, though only 26 per cent expect NPAs to increase substantially in this segment, it showed.

The survey revealed that there was a significant increase in the requests for one-time restructuring for MSMEs, announced by the RBI in August last year.

“An overwhelming 85 per cent of the respondent banks have cited an increase in requests for restructuring of advances as against 39 per cent in the last round,” it said.

The long-term credit demand has been growing for sectors such as infrastructure, pharmaceuticals and food processing, the findings showed.

“Particularly for the pharma sector, 45 per cent of the respondents have indicated an increase in long term loans in the current round of survey as against 29 per cent in the previous round,” it showed.

Over half of the respondents indicated that they did not avail funds under on-tap targeted long-term repo operations (TLTRO) while about 33 per cent said that TLTRO funds were deployed completely in securities issued by NBFCs/ MFIs, the survey showed.



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