Friday, April 24, 2015

News On Saturday Holiday, Fraud And Health Of Bank

RBI chief wants PMO to act against bank frauds worth Rs 17,500 crore-Hindustan Times -24.04.2015
RBI chief Raghuram Rajan has written to the prime minister’s office seeking “concerted” action in the country’s 10 biggest bank frauds allegedly involving prominent real estate, media and diamond firms that are being probed by the CBI, officials told HT.

Rajan listed the scams pegged at about Rs 17,500 crore and outlined their dates, the reasons cited by banks for delays in their investigation and the status of the cases obtained from the CBI, said sources.

“All these high-value frauds have taken place in the last 10-15 years,” said a senior official from the department of financial services (DFS), a finance ministry wing. “Investigations by the CBI are on in the listed cases.”

Analysts say such frauds have triggered a rise in non-performing assets, which stood at Rs 2,60,531 crore for public sector banks last December. The top 30 defaulters accounted for more than a third of these bad loans.

The bank accounts cited by the RBI belong to Winsome Diamond and Jewellery, Zoom Developers, Tiwari Group, Surya Vinayak Industries, Deccan Chronicle Holdings, First Leasing Company of India, Biolor Industries, Surya Pharmaceuticals, Prime Impex / Prime Pulses and a person identified as Shivraj Puri, sources said.

“We have no comments to offer,” Alpana Killawala, the central bank’s spokesperson, told HT.
The PMO has told the DFS secretary to examine the scams and take it up with the cabinet secretary. It has also asked all concerned agencies to pursue the cases “vigorously”.

“The PMO asked the DFS to suggest a mechanism for coordinating and pursuing large-value banking frauds including structural changes that may be required in fraud reporting and coordinating arrangements apart from suggesting regulatory changes where necessary,” sources said

The PMO last month asked for the setting up of a high-level committee to formulate a set of standard operating procedures to be followed by all agencies for a robust anti-fraud banking mechanism.

Facebook News which appears to be correct is reproduced below9 ( PNB officers association)

IBA Circular regarding 2nd and 4th Saturday Off for Banks in India
Following is the Original Copy of IBA ( Indian Bank's Association ) regarding negotiation between Bank Union and IBA regarding 2nd and 4th Saturday
Holiday for Banks in India under NI act.

Our Verdict : With so many rounds of negotiations finally we have seen that some conclusion has been arrived or at least some positive have come for the poor public sector bankers, by going through this circular dated 21 April 2015, we can say that sooner or later there will be 2nd and 4th Saturday off for bankers then exact date is not known but we can assume that it may happen from June or July 2015.

Regarding the issue on number of Holidays , it seems that IBA wants to reduce the number of holiday under NI act for bankers but this seems to be a tough nut to crack as the holidays available to banker under NI act are lesser as compared to State / Central government employees presently. And these days the holidays or festivals are becoming more of a political tool , we assume that hardly there will be any reduction in the existing holidays for banks and one or the another state government announcing holiday on Festivals and Birthdays of old prominence leaders in days to come we may see even increase in the number of festival holidays for banks state wise.

Banks Set for Cost Rises on New Loan Provisioning Rules-NDTV 25.04.2015

India's banks could see their lending-related costs rise by up to a fifth as a recent rule change means they must make bigger provisions for restructured debt, crimping their profits at a time when consumers and firms are starting to borrow more.

This could make banks cautious about lending, hurting an economy that is emerging from its weakest growth since the 1980s. The stricter provisioning norms may also affect the recovery chances of troubled borrowers as more loans are classified as bad instead of attempts to restructure them.

The Reserve Bank of India (RBI) ended last month what it called a period of "forbearance", dating back to the financial crisis. During this time, problematic loans that were being restructured required provisions amounting to only 5 per cent of their value, instead of 15 per cent for the loans classified as "bad".

"If an account needs to be restructured, then they would have to provide for that as if it were a non-performing loan. So the credit cost is going to go up," said Ananda Bhoumik, a senior director at ratings agency India Ratings and Research.

Brokerage Macquarie estimates credit costs for the state-run lenders, including State Bank of India and Punjab National Bank, who dominate the Indian banking landscape, will rise from 1.18 per cent of their total loans in fiscal year 2013-14 to 1.3-1.4 per cent through 2016-17.

The state-controlled banks not only have a higher percentage of poor quality loans of their total loans than privately owned banks such as HDFC Bank and ICICI Bank, they are also under-provisioned.

Macquarie expects gross non-performing loans for state-owned banks to increase 40 to 50 basis points to 6.2 per cent in the current financial year as they won't have the flexibility to classify loans as restructured.

No reprieve

After the 2008 financial crisis, the RBI had allowed banks to treat restructured loans differently, in order to put distressed projects back on track. But critics say banks have been using the window to avoid classifying loans as bad.

Despite the central bank flagging the rule change well in advance banks were hopeful of a reprieve until almost the last minute.

As it started to become clear that the RBI was in no mood to relent, banks rushed to take advantage of the lower provisions, likely causing a spike in restructured loans in the March quarter, analysts and bankers said.

Among the largest was Pipavav Defence and Offshore Engineering's more than $1 billion debt, cleared for restructuring just days before the window closed.

"The restructured portfolio will go up very substantially," said state-owned Andhra Bank's chairman, C V R Rajendran, referring to the fourth quarter as a "peak".

Unseasonal rain could impact banks' profitability: India Ratings-Times of India

COIMBATORE: The asset quality of India's agricultural credit could be significantly impacted by crop damage due to untimely hail and rain in March 2015, according to India Ratings and Research.

The NPL (non-performing loans) ratio of the agricultural loan portfolio could double for some banks, though the reduction of overall return on asset may be muted at between 4 bps-6 bps or 0.04%-0.06%, which is about 10% of the profitability of government banks, the agency said.

The unseasonal rain followed one of the weakest and most deficient (12%) monsoons that the country had experienced in 2014-15, which has heightened the impact. Agricultural loans grew 16% in 2014-15 and have contributed 25% to incremental credit growth since March 2014

With delinquencies in the agricultural loan portfolio likely to rise, they would add to the already stressed assets of banks (10.6% of loans on 31 December 2014), India Ratings said. States highly impacted by these excess rain make up a significant portion (37%) of the overall agricultural credit extended by banks in 2013-14.

India Ratings estimates that system-wide agricultural NPLs as a percentage of total agricultural advances will rise to 16.9% by 2015-16 from 13% in 2013-14 as a direct result of the unseasonal rain. The gross NPL ratio on total advances for the banking system will increase by 40 bps or 0.4%, the agency said. This will translate into a profitability impact of 2 bps-3 bps (0.02%-0.03%) on system-wide post tax return on assets, according to India Ratings.

The impact of the unseasonal rain will be felt with a lag, as NPA recognition policies for agricultural loans (one or two crop seasons past due) differ from those of corporate or retail loans (90 days past due). India Ratings, which is part of the Fitch Group, expects the profitability impact to be felt in the second half of 2015-16.

Governmental support through subsidies may not significantly benefit banks as the amount of support (Rs 2,500 per acre) to be provided is marginal compared with the extent of the losses (Rs 20,000 per acre). Also, it is unlikely that the support money will be used by impacted farmers to repay bank loans.

Reserve Bank revises norms for priority sector lending-The Hindu

The Reserve Bank of India (RBI), on Thursday, said that medium enterprises, social infrastructure and renewable energy would form part of priority sector in addition to the existing categories.
“The distinction between direct and indirect agriculture is dispensed with,” the RBI said.
The revised guidelines are operational with immediate effect.
However, it said the priority sector loans sanctioned under the earlier guidelines would continue to be classified under priority sector till repayment/maturity/ renewal.
It prescribed a target of 8 per cent for the small and marginal farmers within agriculture. RBI asked banks to achieve this in a phased manner, that is, 7 per cent by March 2016 and 8 per cent by March 2017.
A target of 7.5 per cent has been prescribed for micro enterprises, which also has to be achieved in a phased manner, that is, 7 per cent by March 2016 and 7.5 per cent by March 2017.
There is no change in the target of 10 per cent for weaker sections, it added
Foreign banks, with 20 branches and above, already have priority sector targets and sub-targets for agriculture and weaker sections, which are to be achieved by March 31, 2018, as per the action plans submitted by them and approved by RBI. The sub-targets for small and marginal farmers and micro enterprises would be made applicable post 2018 after a review in 2017, the RBI said.
Foreign banks
“Foreign banks with less than 20 branches will move to total priority sector target of 40 percent on par with other banks by 2019-20, and the sub-targets for these banks, if to be made applicable post 2020, would be decided in due course,” it added.
Bank loans to food and agro processing units will form part of agriculture. Export credit up to 32 per cent will be eligible as part of priority sector for foreign banks with less than 20 branches.
For other banks, the incremental export credit over corresponding date of the preceding year will be reckoned up to 2 per cent.
The loan limits for housing loans and MFI loans qualifying under priority sector have been revised.
RBI said the priority sector non-achievement would be assessed on a quarterly average basis at the end of the respective year from 2016-17 onwards, instead of annual basis as at present.

My Blog dated August 8, 2012 Is Reproduced below

Fraud and Manipulation Is Deep Rooted Culture

Culture of fraud is deep rooted in Indians. Fraud and manipulation are at the root of all successes barring a few exceptions. If a person enters into any government service by paying bribe or by using the source of some VIP or by using any unfair means as per demand of the situation, he is bound to promote fraud culture, he is bound to apply all tools to earn money and power by same brand of illegal means to gain money power, positional power and finally to become a attractive figure in the society. Similarly if a businessman or a trader has to pay bribe for starting and continuing a business he will tend to use unfair means to earn more and more wealth to perpetuate the corrupt culture.

This is why Banks incurred loss of about Rs.2000 crore in 2010, Rs.4000 crores in 2011 and Rs.2500 crores from January 2012 to June 2012 due to fraud committed by bank employees or by bank customers .It is important to mention here that these figure represents only those cases of frauds which caused loss to bank by amount more than Rs.1.00 in one cases. If the amount lost by bank in petty frauds i.e. cases involving less than one crore rupees , total loss caused by frauds to banks will be much more than banks appear to suffer loss due to bad assets.

As a matter of fact volume of fraud by number and by amount involved will go on increasing until the government stops mal practices prevalent in recruitment, promotion and transfers of services in banks and other government offices. Loss by frauds or by bad assets may be reduced to minimum not merely by strengthening control mechanism but by striking at the root of corruption wherefrom it originates.

It is also true that after the exposure of fraud of Mr. Harshad Mehta or Mr. Telgi or Mr. Raja or Mr. Kalamadi , the perception about loss has completely changes. Now a days loss of one crore or ten crore rupees by fraud or by bad lending caused to any bank or any organization is treated as very small crime and treated in a very casual manner. This is why CBI has instructed banks not to report the cases of fraud to CBI if the value involved is less than three crore rupees.

 As a matter of fact government does not want to punish the evil doers but want to punish those who raise voice against the evil doers. This is why the person who report the cases of fraud with the system or who report the incident of corruption or any crime is taken to task not only by the evil doers who are exposed but by the protecting agencies like police , CBI  top officials and ministers forming part of the  government. 

Government did not try to understand the exposure made by Team Anna and neither they thought it fit to frame strong Lokpal but they left no stone unturned to torture key members of Team Anna on flimsy grounds and puncture the movement.CBI or nay top officials who try to precipitate real criminal by their devoted and sincere investigation are transferred to remote places so that the prime evil doers are saved from further exposures. Similarly judges in courts and top officials in all departments are removed from the post if they make efforts to reveal the truth of the system.

CBI does not get time to devote on cases related to ministers and VIPs but have enough time to trap Bal Krishna , disciple of Ramdeo Guru and they got success in sending him to jail without loss of much time.CBI did not not think it fit even to penalize Passport officer in the same way as Bal Krishna was.

It is the tradition and it is the strategy of the top ranked officials to save bad persons and to punish good persons. This is why they do not like to act and respond on anonymous complains, anonymous emails or anonymous message even if they contain serious facts of fraud and manipulation with the system. Top officials try to investigate who are sending anonymous complains to expose the truth but never tries to look into the truth hidden in such messages. Police starts torturing the person who go for lodging FIR against any VIP because they know it is VIP who may help them in trouble or when their misdeeds are exposed by media or any crusader or any whistle blower.

This is why honest speakers do not want to speak the truth of frauds or any crime incident to police or CBI or any investigating agency. Everyone knows that the people who speak against criminal are to face the torture of the system.

Further government also makes all efforts to weaken the capacity of police, CBI , Court and all agencies which are meant to provide justice and punish evil doers .Government will never provide adequate manpower and infrastructure to these protecting agencies so that they may not pursue the cases of fraud or any crime to its logical conclusion.

This is why lacs and crores of cases against actual criminals, evil doers and fraud committers are pending in Indian courts and in topmost offices of CBI or CVC and on the contrary lacs of innocents accused of crime are languishing in jail waiting justice by court or by CBI or CVC.

It is pity that an officer who is entrusted to prevent corruption is not provided proper infrastructure whereas those who are master in fraud and crime are provided all support and all infrastructures.

It is further disheartening that in the current era of information and technology when most of the works are done online and on computers, adequate policies and tools are not developed to prevent misuse of technology. More disheartening is the fact that all departmental heads and the government in general look into academic qualifications of the person, his flattery quality and his appearance before recruiting him or and before elevating him or her to higher post attracting higher responsibilities. Character of the person has either become the last point or has become NO-POINT at all levels. This is why I usually say that the culture of fraud and manipulation is deep rooted and the culture of flattery and bribery irrigates and promotes the same.

If at all government want to reduce level of corruption prevalent in government offices, they have to fight it out on all fronts
  • Ensure Quality education (Stop Giving jobs of teachers on recommendation of VIP or through bribe).
  • Ensure honesty in recruitment, promotion and positing in all offices and in all departments (stop recruiting inspectors on payment of bribe).Stop promotion of flattery culture.
  • Ensure timely punishment to evil doers after quickest investigation into all types of allegation and all acts of fraud including that in Human Resource Department. Punishment to evil doers should send a message to all that if they commit crime they will face the same consequences.
  • Ensure all protection to those who expose the fraud, who informs the facts of crime and who tries to awaken the system of persisting irregularities.

Unfortunately, most of the key posts are manned by corrupt persons and hence they make all efforts to close the files of evil doers if willingly or unwillingly the evil works of him or her is exposed by any person or any group or by media. Who will then bell the cat?

The greatest tragedy of our country is that there are hundreds of sympathizers of a person whose evil works are exposed and who are likely to be punished. There are hundreds of well wishers who make all efforts to save such evil doers from punishment. On the contrary there are none to save an innocent person who is wrongly or under a conspiracy by a team of evil doers is falsely alleged of evils and who is punished for none of his or her fault.

There are persons in all offices who ridicule and who laugh at a person who advocate honesty and who try to ensure justice or try to punish who perpetuate reign of injustice.

after the launch of reformation era in 1991 when banks were given complete freedom to recruit and promote strictly as per their choice in the name of merit and recruit and promote fully based on their  whims and fancies they forgot to verify the credentials of officers and staff joining the bank. 

Before that, banks used to get credentials of a new recruit got verified by two valued persons of his locality. Now these banks ask for police report which is obtained by payment of a few pieces of five hundred rupee notes. This is why persons with doubtful integrity has entered into various banks and they managed timely and before time promotions by managing their bosses by offering what bosses liked , it may be any of WWW or all three WWW. 

Due to this ,persons of bad integrity not only entered into bank but could reach upto even highest level and that is why volume of fraud and bad assets have gone unchecked and now appears to be beyond control and have crossed all prudential limits set by RBI or GOI

Thursday, April 23, 2015

Mandatory Leave For Bank Staff AND Amendment In LTC Rules For Central Government Employees

Approval to introduce the Negotiable Instruments (Amendment) Bill, 2015 in Parliament
The Union Cabinet, chaired by the Prime Minister Shri Narendra Modi, has approved the proposal to introduce the Negotiable Instruments (Amendment) Bill, 2015 in Parliament. The amendments are focused on clarifying jurisdiction related issues for filing cases of offence committed under Section 138 the Negotiable Instruments Act,1881 (NI Act).

The main amendment included in this is the stipulation that the offence of rejection/return of cheque u/s 138 of NI Act will be enquired into and tried only by a Court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment is situated.

Section 138 of the NI Act deals with the offence pertaining to dishonour of cheque for insufficiency, etc., of funds in the drawer’s account on which the cheque is drawn for the discharge of any legally enforceable debt or other liability. Section 138 provides for penalties in case of dishonour of cheques due to insufficiency of funds in the account of the drawer of the cheque. The object of the NI Act is to encourage the usage of the cheque and enhancing the credibility of the instrument so that normal business transactions and settlement of liabilities could be ensured.

The clarification of jurisdictional issues may be desirable from the equity point of view as this would be in the interests of the complainant and would also ensure a fair trial.

The clarity on jurisdictional issue for trying cases of cheque bouncing would increase the credibility of the cheque as a financial instrument. This would help trade and commerce in general and allow lending institutions, including banks, to continue to extend financing to the economy, without the apprehension of the loan default on account of bouncing of a cheque.

Action will be initiated to introduce the Negotiable instruments (Amendment) Bill, 2015 in Parliament in the second phase of the current Session of Parliament.


Various financial institutions and industry associations have expressed difficulties, arising out of the recent legal interpretation of the place of jurisdiction for filing cases under Section 138 to be the place of drawers’ bank by the Supreme Court. To address the difficulties faced by the payee or the lender of the money in filing the case under Section 138 of the NI Act, because of which, large number of cases were stuck, the jurisdiction for offence under Section 138 has been clearly defined. The Bill provides for filing of cases only by a court within whose local jurisdiction the bank branch of the payee, where the payee presents the cheque for payment, is situated. Further, where a complaint has been filed against the drawer of a cheque in the court having jurisdiction under the new scheme of jurisdiction, all subsequent complaints arising out of Section 138 against the same drawer shall be filed before the same court, irrespective of whether those cheques were presented for payment within the territorial jurisdiction of that court. Further, it has been provided that if more than one prosecution is filed against the same drawer of cheques before different courts, when this fact is brought to the notice of the court, the court shall transfer the case to the court having jurisdiction as per the new scheme of jurisdiction.

Read more at: 

Frauds in Indian banks have increased: Deloitte survey-LiveMint

Most of the incidents were linked to retail banking, including frauds linked to Internet banking, automated teller machines (ATMs) and debit and credit cards
Incidents related to fraud are increasing in Indian banks, a survey has found.
Audit and consultancy company Deloitte Touche Tohmatsu Ltd surveyed 44 banks in the second edition of its India Banking Fraud Survey, in which more than 50% of the respondents said fraud-related incidents increased at least 10% in the last two years.
Most of the incidents were linked to retail banking, including frauds linked to Internet banking, automated teller machines (ATMs) and debit and credit cards, apart from identity frauds.
The banks surveyed pointed to an average loss of Rs.10 lakh per fraud in retail banking, while a similar incidence in the corporate banking side led to a loss of Rs.2 crore.
In corporate banking, most of the frauds are linked to diversion of funds and siphoning off of money, while identity thefts and fraudulent documentation were mainly the routes for frauds in private banking.
“Majority of the respondents indicated that less than 25% of the reported fraud loss value is recovered,” Deloitte said.
Frauds in Indian banks are discovered mostly through customer complaints, internal whistleblowers, during the reconciliation of accounts or through automated data analysis or transaction monitoring software, Deloitte said.
K.V. Karthik, senior director, financial advisory services at Deloitte said banks have to pull up their socks in monitoring loans both before giving them and during their usage.
“In retail loans, it is important to prevent frauds when taking the customer on board not after you give the loan because it is very difficult to check where the funds are used. In corporate banking, because the relationships are much more long term and are renewed frequently, end use monitoring is important,” Karthik said.
He added that public sector banks are increasingly becoming sensitive to increasing investments to ensure fraud prevention.
“The mentality of public sector banks is changing. Private banks are anyway on par with the foreign banks,” Karthik said.
The survey was conducted between August and September 2014. The majority of banks surveyed had an asset size above Rs.5,000 crore

LTC Exemption: Rules Relaxed for Unmarried Government Employees-NDTV-23.04.2015

Unmarried central government employees can now avail benefits of Leave Travel Concession (LTC) for visiting any part of the country, as per a relaxation in the rule, which earlier restricted them to use the facility for going to their hometown only.

"It has been decided that the facility of conversion of home town LTC to allow travel to different parts of the country, under the special dispensation scheme, will also apply to an unmarried central government servant, who is eligible to avail the benefit of LTC to visit hometown every year," a fresh order issued by the Department of Personnel and Training (DoPT), said.

The facility may be availed by converting one occasion of hometown LTC out of the block of four years, it said.
As per norms, an eligible government employee gets to and fro journey reimbursement after availing LTC. However, employees are supposed to undertake the visit from the place of their posting to their hometown.

The DoPT has been allowing special dispensation to the government servants for taking LTC from time to time by relaxing rules.
Presently, one such dispensation in operation is the relaxation for the government servants to travel by air to visit North East region, Jammu and Kashmir or to the Andaman and Nicobar Islands by converting one block of hometown LTC available to them.

The DoPT has received references seeking clarification on the admissibility of conversion of hometown LTC facility into travel to different parts of the country, which is permissible under special dispensation, to such unmarried government servants.
The matter was examined in consultation with the Ministry of Finance and it has been decided to allow unmarried government employees to visit any other part of the country under the LTC scheme, it said

Mandatory leave for select bank employees, says RBI Economic Times 23.04.2015

MUMBAI: A rise in banking frauds has forced the Reserve Bank of India to ask banks to send employees working in treasury business, risk management and currency chests among others on mandatory 10 days leave. The dictate comes after the banking regulator in its inspection observed that the policy of 'mandatory leave' is not being implemented effectively, leading to an increase in operational risk across banks.

The bank should identify such highly sensitive positions where the bank will, without any prior intimation, advise the employee to be away from his desk for a specified number of working days each year,'' said the RBI in a statement.

The central bank has asked banks to immediately implement the mandatory leave policy if not already done.

Banks in consultation with the board would have to put in place an exhaustive list of sensitive positions or areas of operations to be covered

under 'mandatory leave' and under 'away from desk' requirement.

``Implementation of such policy would be covered under the Pillar 2 review of banks' risk management system by the Reserve Bank of India,'' said the central bank.

Wednesday, April 22, 2015

PSU Bank Staff Are Lowest Paid Staff

PSU Bank Staff Among Lowest Paid in State-Indian Express 07.01.2015
KOCHI: It may be hard to believe, but a daily wage labourer earns more than a PSU bank clerk earns in Kerala.  In fact, the starting salary of PSU bank employees is lower than even a primary school teacher, going by a presentation made by the All-India Bank Officers Confederation (AIBOC), at the wage negotiations. As per the AIBOC comparison, a bank clerk gets a starting salary of Rs 15,000 per month, which is much lower than the salaries of the other similar white-collar employees, including Central Government officers, college lecturers and even primary school teachers.  A primary school teacher earns Rs 31,000 per month, same as what a bank officer earns. A Central Government employee enjoys a starting salary of Rs 52,000 per month. But, the top earner is the college lecturer, at Rs 56,000 per month.
AIBOC also noted that a daily wage labourer gets Rs 750, which is higher than the Rs 500/day a PSU bank clerk gets.  Pressing home their demand for wage hike, the unions pointed out that the operating profit of PSU banks for the fiscal 2013-14 stood at Rs 1,27,000 crore. If the wage hike demand is met, the total outgo would only be about Rs 6,000 crore for 10 lakh PSU bank employees. 

But, when it comes to writing off loans, especially corporate loans, the banks are quite liberal. According to the AIBOC, the PSU banks have written off Rs 34,409 crore worth loans in 2013-14.  Following talks with the Indian Banks Association, which upped the hike offer by 1.5 per cent to 12.5 per cent, the bank unions have deferred the one-day nationwide  strike planned for Wednesday. The talks are expected to continue on Wednesday.  The bank unions are also planning a complete shutdown of the banking industry from January 21 to 24. The unions have threatened to go on an indefinite strike from March 16, if demands are not met.

Following Are the Views Expressed by Sri Kamlesh Chaturvedi on Facebook-23.04.2015

Whereas sources close to leaders of UFBU are busy in spreading the news that issue of holiday on 2nd and 4th holiday has been cleared by RBI and is being pursued with Government, following communication purported to have been issued by IBA is reflecting different story. The communication is addressed to sponsored banks of RRBs and it informs :

(1) As the functioning of Clearing Houses, RTGS/NEFT and Currency Chests are required to be closed on second and fourth Saturdays of the month, matter has been taken up with RBI requesting them to accord their consent. 

 This clearly shows that RBI has not yet permitted Holidays for second and fourth Saturday of the month. It further indicates that perhaps RBI has raised query with regard to RRBs which are not members of IBA and which enter into separate settlement with their unions. This communication points out another hindrance of Regional Rural Banks agreeing to observe Second and Fourth Saturdays as Holidays, which was not shared with us.

(2) The Communication further informs that matter was discussed in the managing committee of the IBA held on 7th April and members agreed that "there was a case for implementation of five days week in banks." 
(3) The communication makes it clear that IBA is working on curtailment of Holidays declared under Negotiable Instruments Act, 1881. There has been no communication from our unions on this point. If IBA succeeds in its attempt of curtailing Holidays which have already been declared as Holidays, it will prove the calculation of Full Day Working on all Saturdays in lieu of holiday on Second and Fourth Saturday shared with us by our leaders as wrong.
जब कोई बड़ा नेता बन जाता है, उसका बताने का अंदाज रहस्मय हो जाता है. आज की वार्ता पर अधिकारियों के सबसे बड़े संगठन के सबसे बड़े नेता जी ने जो सूचना साझा की है, दिलचस्प और मजेदार है. आइये हम भी नेता जी की सूचना का रसास्वादन लें :

Meeting of Sub group of IBA was held today on other issues of officers at Mumbai. Many issues including PQA, FPA,CAIIB Increment, tax on perks,allowance for naxal affected areas, LFC etc. were discussed. Our concerns of structuring of pay scales were also shared and discussed with the IBA. The meeting was positive. Next round of talks is expected next week.
नेता जी बता रहे हैं आज बहुत सारे मुद्दों पर वार्ता हुई जिसमें एफपीए, पीक्यूपी, सीएआईआईबी इन्क्रीमेंट, पर्क्स पर टैक्स, नक्सल प्रभावित क्षेत्रों के लिए भत्ता, एलएफसी आदि पर वार्ता हुई. वेतन संरचना को लेकर हमारी चिंता को भी साझा किया गया और वार्ता हुई. वार्ता सकारात्मक रही. अगले दौर की वार्ता अगले हफ्ते सम्भावित है.

गौर कीजिये नेता जी ने रहस्मय तरीके से खुद कहा है कि बहुत सारे मुद्दों पर वार्ता हुई जिसमें उल्लिखित मुद्दे शामिल हैं. यानी कुछ ऐसे मुद्दों पर भी वार्ता हुई जो बताये हुए मुद्दों मेँ शामिल नहीं हैं. अब वे मुद्दे क्या हैं? नेता जी ने खुद इसे साझा नहीं किया, बल्कि यह कार्य अपने नज़दीकी भक्तों के लिए छोड़ दिया कि वे अपने अपने तरीके से उन मुद्दों पर जो उनका मन करे नेता जी की तरफ से साझा करके लोगों को भ्रमित कर उनका ध्यान मुख्य मुद्दों से हटाने की प्रक्रिया में लगे रहें,नेता जी के पास तो उपयुक्त समय आने पर फैलाई गयी बातों का खंडन करने का अधिकार सुरक्षित है.

ऐसी ही नेता जी द्वारा साझा नहीं की गयी सूचना है कि शनिवार अवकास के मुद्दे पर प्रगति हुई है और अब यह मुद्दा रिज़र्व बैंक की और से केंद्र सरकार को भेजा गया है.

विश्वस्त सूत्र बताते हैं कि वेतन संरचना के मुद्दे पर आईबीए ने कहा कि अंतिम रुख स्पष्ट करने के लिए उसकी एचआर कमेटी को अभी दो दिन का और समय चाहिए. सूत्र यह भी बताते हैं की आईबीए की प्रबंध समिति की बैठक ३० अप्रैल को प्रस्तावित है, उसके बाद ही वेतन संरचना सहित सभी आर्थिक मुद्दों पर सार्थक वार्ता हो सकेगी.

सौ टके का सवाल यह है कि जब नेता जी की सूचना से इसके अलावा और कोई अर्थ नहीं निकल रहा कि आज बहुत से मुद्दों पर वार्ता हुई,तो फिर ऐसी सूचना को साझा करने का क्या तुक है? यह बात तो एक एक बैंक कर्मी भली भांति जानता है कि उसके नेता नवंबर २०१२ से वेतन बढ़ोत्तरी के लिए वार्ता कर रहे हैं.
नेताजी ये फेसबुक और व्हाट्सप्प वाले लोग क्या जानें कि आप "शीघ्र, उचित और सम्मानजनक" वेतन वृद्धि के लिए ढाई साल से कितने चिंतित रहे हैं, चिंता और फ़िक्र में आपका वजन रोज़ कम हुआ है, नवंबर २०१२ के बाद अगर कोई आज आपको देखे तो ठीक से पहचान भी न पाए, आप सूख के काँटा हो गए और इन फेसबुकियों को यह समझ नहीं आ रहा कि २३ फ़रवरी को हुई सहमति से उपजी वेतन संरचना की गणित इतनी पेचीदा है कि आर्यभट्ट तक उसे ९० दिन में हल नहीं कर सकते जबकि आप उससे पहले कर लेंगे. लेकिन नेता जी यह बात तो समझ आती है कि आईबीए की एचआर कमेटी को रुख स्पष्ट करने के लिए दो दिन का समय चाहिए, लेकिन यह बात गले के नीचे नहीं उतर रही कि आपको समय क्यों चाहिए ? आखिर यूनियन और एसोसिएशन ने भी तो वेतन संरचना की होगी जिस पर रुख स्पष्ट करने के लिए समय माँगा गया है, आखिर अपने सदस्यों के साथ वह वेतनमान और महंगाई भत्ते का फार्मूला साझा करने में कौन सी परेशानी है जो आप हमें दिलवाना चाहते हो? अरे हम लोग कैसे जानेंगे कि नेता जी क्या दिलवाने वाले थे और आईबीए क्या देने को राज़ी हुई?

All of you are aware of the Notification issued by Department of Financial Services, Government of India on Transfer of Female Employees.

When management of Central Bank of India initiated no steps towards implementation of guidelines contained in above notification, Sri Subhash Sawant, General Secretary took up the matter with Sri Gajanan Kirtikar who is leader of Shiv Sena in Lok Sabha.
Just go through the reply given by Mr. Jayant Sinha, Hon'ble Minister of State for Finance.

Now a question arises, if Prime Minister has assured the banks that there would be "zero interference" in the internal working of the banks, then what was the need for Department of Financial Services to issue guidelines on transfer of female employees?

Guidelines are issued for implementation and Government must have ensured that these guidelines are being followed and implemented in true letter in spirits.

Its really surprising that Government earned appreciation for taking care of "hardship of female employees" thats what has been communicated through notification but when Banks did not implement the guidelines and such violations were brought to the notice of Hon'ble Minister, he is regretting and showing inability referring PM.

Not only this, Hon'ble Minister is helpless to interfere in the matter of transfer/posting on Compassionate grounds and Ex-servicemen which are given priority as per convention on humanitarian grounds.
These developments are indicative of Government behaviour towards bank employees.


HC restrains bank from passing final order in departmental inquiry against union leader Subhash Sawant- Times of India 16th April 2015

MUMBAI: In a major relief to veteran trade union leader Subhash Sawant, the Bombay high court has restrained the Central Bank of India from passing a final order in a departmental inquiry against him.

"The inquiry may go on, however final order may not be passed until further orders," Justice V M Kanade and Justice A R Joshi observed in a brief order.

The Central Bank of India employees union led by Sawant had taken out a procession against the bank in November. The union's contention was that the bank was facing a heavy resource crunch owing to steady growth in non-performing assets and poor recovery.

The union had demanded that the bank issue a red-corner notice against defaulters who had fled the country and that the management should take all employees and unions into confidence to draft a strategy to improve the performance of the bank.

Taking strong objection to the union's stand, a show-cause notice was served on Sawant, who retired six years ago, under the Pension Regulations, 1995. The bank contended that as a retired employee, Sawant's action had damaged the image of the bank and it amounted to misconduct.

Assistant general manager P N Ramanarayana wrote in a two-page notice to Sawant: "As a retired employee, Sawant has failed to maintain good conduct, which is evident from the news appearing in a section of the media ... he has disclosed the names of borrowers... his act constitutes a grave misconduct."

In his reply, Sawant submitted that the trade union had informed the management about the agitation and its intention to disclose the list of defaulters.

"The list of defaulters was on the bank's notice board," Sawant said.

Both the union as well as Sawant filed a writ petition before the high court, saying it was beyond the powers of the bank to conduct a departmental inquiry against a retired employee and reduce his pension.

A week ago, the court passed a three line order restraining the bank from passing a final order in the departmental inquiry until further orders.

Recovery of bad loan crucial for success of Make in India: Shiv Sena-23.04.2015

MUMBAI: The Shiv Sena has asked Prime Minister Narendra Modi to launch a special drive to recover outstanding loans to mobilize funds for the successful implementation of the Make-in-India mission.

In a letter to Modi, Shiv Sena Lok Sabha member Gajanan Kirtikar said a comprehensive action will have to be drafted for recovering loans to the tune of Rs 2.36 lakh crore which have been disbursed by nationalized banks.

Kirtikar suggested that for recovering the loans in a time-bound period, nationalized banks should dispose of properties of erring industrial houses. "In view of the SC verdict in the case of Sahara group chairman Subrato Roy and other landmark rulings in Maharashtra, nationalized banks should follow the same route to recover outstanding loans," Kirtikar said.

He pointed out that a section of prominent trade unions in Kolkata, Chennai and Mumbai had launched an agitation not for pay revision or promotion but demanding recovery of bad debts. "I was told that bank employees are under constant stress lest their employers go into liquidation. To highlight the status of bad debts, workers had resorted to agitation. A whistleblower, Subhash Sawant, has filed a PIL despite the fact that the bank has initiated steps to stop his pension," the Sena MP said.

Kirtikar said utmost care should be taken that the drive should not halt on account of procedural or legal grounds.

"The drive should be carried out without fear or favour. Once the drive is launched, it will send a strong message to the debtors and the banks that outstanding loans will be recovered at any cost and the Centre will not write them off as was done in the past," he said.  

Tuesday, April 21, 2015

Merger And Consolidation Of Banks And Window Dressing

Prepare small banks for merger with large PSBs: Finance Ministry panel-Hindu Business Line 21.04.15
Mumbai, April 20:  

Small public sector banks, with assets of less than ₹2-lakh crore, should be readied for merger with five large PSBs, a Finance Ministry-appointed panel has recommended.
PSBs with less than ₹2 lakh crore assets (loans plus investments) include Andhra Bank, Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, Vijaya Bank, and United Bank of India.
The large PSBs, with the capability to acquire include Bank of Baroda, Bank of India, Canara Bank, Punjab National Bank and Union Bank of India.
Ahead of the consolidation, the small PSBs will need to reorient their portfolio and improve operational efficiencies over the next one year. The Working Group on Consolidation and Restructuring of PSBs has proposed that as a means to improve profitability by leveraging economies of scale and avoiding duplication, all PSBs should share infrastructure, including back-office space, IT backbone and telecom contracts through a “shared service organisation.”
State Bank of India had kick-started the process of consolidating its associate banks almost seven years ago. In 2008 and 2010, India’s largest bank took over State Bank of Saurashtra and State Bank of Indore. Currently, it has five associate banks.
Reasons for consolidation
Most smaller public sector banks are caught in the middle. Having little differentiation, they focus on the same customer segments and have similar offerings.
Compared with private sector rivals, their net non-performing assets are four times more and the return on assets is just a third.
The banks will need to raise almost ₹4.50-lakh crore in Tier 1 capital (which includes ₹2.40-lakh crore equity capital) by March 2018 under Basel III norms.
 The Working Group has suggested that over the next one year all PSBs focus on four areas — improving risk management capabilities, shifting to profitability-linked performance metrics, leveraging technology to reduce costs, and developing capital-light business models.
To rapidly reorient smaller PSBs, a performance assessment of their loan portfolio will be made so that they can exit areas where they are not strong or are unprofitable.
The next step for these banks would be to define the target customer segments.
After that, the large PSBs will identify the relevant acquisition targets based on complementary businesses and synergies. However, the panel suggested that any consolidation should be driven by market forces and decisions taken independently by the board of each bank.
There are 27 public sector banks, including State Bank of India’s five associate banks, in the country. As at March-end 2014, their share in total deposits and total advances was 77.22 per cent and 75.74 per cent, respectively. 
Government has been building pressure on banks to make best efforts for merger and acquisition. But I am unable to understand the motive behind it in Indian perspective.Finance Minister has said that through the consolidation, financial powers of banks will improve and they will not only be able to augment efficiency and help in GDP growth but also get success in competing with International big banks. 

Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?

Have government forgotten the social objective of banks completely?

Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India? 
Branch Expansion And Closure of Loss Making Branches Cannot Run Together-Read by clicking on following Link

Tuesday, May 08, 2012

Competition,Consolidation and Merger of Banks

Pradeep S Mehta: Will RBI be a better judge for banking mergers?
As a prudential regulator, the central bank cannot step into the shoes of the Competition Commission of India. What is needed is more cooperation between the two authorities
Pradeep S Mehta / May 09, 2012, 00:09 IST

Ever since the Competition Commission of India (CCI) started taking baby steps to regulate the jungle of competition abuses in the country, and some very successful cases, many started howling for an exemption from its bite. The latest one is from banking circles asking for an exemption from CCI’s remit to review mergers under the Competition Act, 2002, in that sector. Other strong contenders include the Department of Telecommunications seeking an exemption for the telecom sector. These moves are tragic and will affect the integrity of our economic governance system, and should be discouraged as strongly as the demand being made for exemptions.

In the case of giving the Reserve Bank of India (RBI) power to review mergers in the banking sector, let me argue thus. The banking sector’s stability is critical for the whole economy and we have learnt bitter lessons from the regulatory failures in the mecca of capitalism: the US. Second, there are too many banks in the public sector in India that need to be consolidated. However, these are two different issues and should not be confused. In Brazil, the central bank reviews all banking mergers from the angle of financial stability, but only when the competition authority refers the matter to the bank after it carries out its own due diligence.

 It has been argued that CCI does not have the expertise to regulate mergers and acquisitions (M&As) in the banking sector, and that it is still young. Recent experience shows that CCI has been efficient, and has also cleared a takeover by HSBC of RBS’s retail business in India, a deal worth $1.8 billion. It did not refer the matter to RBI since there was no need and later even RBI may clear the merger with come conditionalities in line with our international rights and obligations. In some other cases, CCI has consulted sector regulators like in telecom and electricity because it felt that their opinion was germane to merger cases.

RBI is a prudential regulator of banks, while CCI is a competition regulator for the whole economy, including the financial sector. Prudential regulation requires laying out and enforcing rules that limit risk-taking of banks, ensuring safety of depositors’ funds, stability of the financial sector and other public policy requirements. Thus, regulation of M&As by RBI would be determined by such benchmarks. Competition regulation of M&As in the banking sector, on the other hand, is a different matter. The review will take into account whether such a merger can lead to an “appreciable adverse effect” on competition. For illustration, it will seek to ensure that banks compete among themselves for customers by offering the best terms and interest rates for both deposits and borrowings. While CCI is not a prudential regulator, RBI is not a competition regulator, though both are required to promote competition and consumer interest.

Competition in the banking sector helps the economy hugely and, in India, we can see its benefits after deregulation.
Studies have found a negative relationship between an increase in the level of concentration and savings deposit rates, and a positive relationship between an increase in concentration and an increase in interest rates and accompanying conditionalities. The recent move by RBI to allow portability of bank accounts is a step forward to expose banks to competition since they currently have an incentive to extract more rents from customers owing to switching costs once they are dominant.

However, central banks normally abhor intense competition among banks so as to ensure stability in the sector and depositor security. Competition can lead to high risk-taking as banks fight for customers, thereby compromising on security; hence, there would be a trade-off with financial stability. It is, therefore, important that both authorities are given space to exercise their mandates in the banking sector.

The International Competition Network (ICN), the global association of competition authorities, calls for application of general competition rules to the banking sector by competition authorities in parallel to the rules enforced by the central bank. This practice is also followed by almost all countries with competition laws, save for a few, but qualified, exceptions. There is only one significant exception, that is, Turkey.

In Turkey, the competition law is not applicable to the banking sector, but only if the total assets of the banks to be subjected to merger does not exceed 20 per cent of the market share. In Italy, although the competition law applies to the banking sector, it is applied by the central bank. The situation in the US is unique. Although banking mergers are exempted from competition laws, once the relevant agency (there are four of them, which includes the Federal Reserve) has approved a merger, the Anti-Trust Division of Department of Justice can file a suit within 30 days to block the transaction. If such a suit is filed, the parties are barred from consummating the merger until a federal district court conducts a review of the transaction.

In the case of failing banks, unquestionably, the mergers are allowed swiftly as in the case of Global Trust Bank in India that was taken over by the Oriental Bank of Commerce in 2004. There can also be a one-time exception from competition rules allowed in specific cases like in the UK in 2009 when Halifax Bank of Scotland was merged with Lloyds TSB after the earlier turned turtle following the financial crisis.

There is room, therefore, for both CCI and RBI in the banking sector, and the economy stands to benefit if both are allowed to exercise their powers. Genuine concerns such as the effects of delays from CCI in making decisions, especially in case of forced mergers, should not be used as justification for total but rather conditional exemptions. Just like in other countries, CCI can handle M&As in the sector with no delays only if there is cooperation between RBI and CCI. The sooner the two regulators sit down and work out a cooperation agreement the better for the whole economy, and one hopes that this call for exemptions will not be a basis for an adverse relationship between the two.

The author is the Secretary General of CUTS International and can be reached at

My views are given below

Needless mergers of banks

Central Government has been building pressure on banks to make best efforts for merger and acquisition. But I am unable to understand the motive behind it in Indian perspective. Finance Minister has said that through consolidation, financial powers of banks will improve and they will not only be able to augment efficiency and help in GDP growth but also get success in competing with International big banks.

Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?

Have government forgotten the social objective of banks completely?

Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India?

Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake?

It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to real estate developers and to infra structure developers.

Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India?

Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living. Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical assistance and they remain unemployed in want of adequate opportunities. This is India where even federal structure of the country is at stake due to largely growing unemployment and where person like Raj Thakre has been trying hard to disallow Non-marathi to seek employment in Maharashtra and Shiv Raj Chouhan CM says he would not employment to Biharis and North Indian in the state of MP. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment.


Service Area Approach And Financial Inclusion 
 Why merger of banks is needed
Folowing is the blog submitted five years ago , link given above this line

Central Government has been building pressure on banks to make best efforts for merger and acquisition. But I am unable to understand the motive behind it in Indian perspective. Finance Minister has said that through consolidation, financial powers of banks will improve and they will not only be able to augment efficiency and help in GDP growth but also get success in competing with International big banks.

Here the million dollar question arises whether Late Indira Gandhi had nationalized banks to compete with International banks, whether banks are meant to extend credit in thousands of crores to a few hundred merchants or manufacturers only?

Have government forgotten the social objective of banks completely?

Is it possible for a government to survive by discarding the interest of common men, farmers, small traders in India?

Is it necessary for India to have bigger banks to extend credit to farmers and small traders who together constitutes 95% of population and without whose support even economic viability of large projects would be at stake?

It is important to mention here that there is sharp rise in loan portfolio or visible growth in advances of banks in general is not due to financing made by banks to small traders and farmers but only due to bulk financing made to big corporate houses, to real estate developers and to infra structure developers.

Does any one in the government or in RBI mean that by merger and enhancing powers of banks, there will be equitable GDP growth in country like India?

Even in America where big banks are many, one out of every seven Americans starves and struggle for earning their bread and butter for at least survival. In India the position is worse than that in USA. In India nine out of every ten Indians are unable to earn sufficient money even for respectful living. Considerable large proportion of Indian population is suffering from mal-nutrition; they die of curable diseases in want of proper medical assistance and they remain unemployed in want of adequate opportunities. This is India where even federal structure of the country is at stake due to largely growing unemployment and where person like Raj Thakre has been trying hard to disallow Non-marathi to seek employment in Maharashtra and Shiv Raj Chouhan CM says he would not employment to Biharis and North Indian in the state of MP. Besides in majority of villages, small towns and cities there is no proper sanitation facilities, acute scarcity of water and electricity, crisis for medical treatment and what not. This is why I reiterate that Indian environment is different from other developed nations and hence need unique treatment.

It is worthwhile to add here that USA government have realized after fall of big banks and financial Institution during last year that management of big banks is very difficult compared to smaller ones. Still there are about 8000 smaller banks functioning in USA to serve common men. It is also true that 125 banks became bankrupt or closed their shutters during the current year in USA.

If we talk of India we have less than 30 public sector banks and they are said to be in better health position. They are well scattered in every nook and corner of the country to serve Indians in general. They have to be encouraged to extend maximum help to small borrowers.They cannot extend any better help to poor person after merger of banks.Then what is the need of merger and acquisition? Why is government bent upon merger Need of the hour is to make them able to cater to the needs of common men.

Even if government feels the necessity of having large banks with huge capital to compete with foreign banks, they can choose to have one or two like SBI or PNB (after merger of SBI with associate banks I think capital size of SBI will be comparable with their foreign counterparts and similarly after merger of PNB with some suitable bank),At least other banks should be left untouched to serve common men and forget big projects, bulk financing, corporate borrowers completely and concentrate only on small and mid size borrowers i.e. credit upto ten lacs.

Even if we leave aside the social objective,it is not commercially proposition to build pressure (frequent request by FM or RBI is enough to build pressure) on banks to go for merger and acquisition especially when government have granted economic freedom to individual banks in the era of economic reformation , liberalization and globalization When need will arise banks will themselves strive hard to grow bigger to survive. As of now banks in India are said to be safer than foreign banks. Even government has admitted it repeatedly.

Inspite of all,if government still consider it better to go for merger , I would like to suggest our Finance Minister to merge all PSBs including SBI and make them one entity like Income Tax department and other departments of Government of India so that there be no unwarranted interest rate war, no case of multiple financing, no case of take over at the cost of bank’s interest and no unhealthy competition as prevalent in banking industry. There will be unified effort to recover the money from recalcitrant borrowers. Banks will be able to check money laundering in a better way .People will not get opportunity to park their black money in different branches of different banks.

Need of the hour is to strengthen the existing structure of banks, make them more and more efficient and enthusiastic. Government should make efforts for repayment of loan and for this purpose make water tight laws to ensure cent percent recovery of loan from willful defaulters so that proportion of dead money in bank’s balance sheet comes down and they can afford and generate will to make finance to common men. Present scenario is that branch manager of every bank’s branch is afraid of extending credit to small borrowers in fear of account going bad and lastly added to Non Performing Asset. Need of the hour is to avoid political intervention in banking affairs and to resort to healthy norms for financing without any fear of target achievement. To add fuel to fire every banks are suffering from staff shortage and as a consequence there is no monitoring on existing borrowal accounts and gradually service quality in banks at many branches is deteriorating in want of adequate staff. Banks are even unable to redeploy the existing surplus staff at Metro branches due to protest from powerful employees union.

Last but not the least; bitter truth is that big business houses are getting all sorts of help from the government, from the banks and from all corners but all at the cost of poor and middle family. Rich business houses are producing, hoarding and realizing maximum profit on their products and it will not exaggeration to say that the present trend of rising price is caused by these profit makers only. Government has been making promises and promises to control price, but always fail on this front because they have given undue freedom and undue privileges to these business houses. I hope government will make all best efforts to give relief to general mass who are subjected to unbearable pain on account of sharp price rise in all commodities without proportionate rise in their monthly income.

India is said to be suffering from naxalism due to increasing poverty and due to the fact that they are denied their legitimate right and they are even deprived of justice in proper time. Can merger and acquisition by banks help in ameliorating their problems of poverty ridden Indians? I would like to draw the attention of learned FM and PM that late Indira Gandhi (Congress Party) had nationalized banks because private banks were hesitant to extend credit to common men, villagers were deprived of banking facilities and common men was afraid of even entering in to bank. Private Banks were exploiting not only staff working in the banks but were also exploiting business houses. It will not be exaggeration to predict and say that the same Congress Party under the banner of UPA is dragging banking industry in pre-nationalization era.

Please keep in mind that during reformation era 23 banks were forcefully merged to bigger banks by government of India because they succumbed to malady and irregularity they accumulated, and not because they were small banks. Giant banks, Lehman Brothers, AIG failed not because they were big but they followed wrong policies and committed misadventure in delivery of credit and in making investments.

 In India I doubt the honesty and integrity of government in their efforts for merger, acquisition and consolidation of banks because they know the quantum of malady and bad assets hidden behind the rosy balance sheets of PSBs.Otherwise there is no reason for providing capital infusion to various weak banks from time to time. It is their political agenda to save the banks from exposure of their reality when the misdeeds increases to such a large extent that it punctures the tyre of running banks. They are trying to divert the attention of public from inherent weaknesses of PSBs and this is why they are not agreeable to respectable wage revision of bank employees even after two year long dialogue with union leaders. Exodus of talented employees and non entry of well qualified person in PSB banks is also a vital reason behind growing weakness of Banks. On the contrary private banks like ICICI and HDFC banks have grown to such a large extent in last 15 years of their existence that even 100 year old PSBs are facing challenge for survival.
Further any merger of banks may cause more chaos and confusion that solve any problem. Different banks have different identity and its unique geographical concentration or expansion and hence merger of two banks with different characteristics and different process of promotions and transfers will create more conflicts, more industrial disturbance and public grievance. There are banks where management gives ten promotions in 30 years and on the contrary there are banks where even one promotion is not given in 30 years. Some employees are south centered and some are confined to Metro Branches in their entire tenure in banks. There are various points of conflicts which banks have to settle before contemplating acquisition and mergers. 

Pros And Cons Of Merger

 Danendra Jain
No let-up in year-end window dressing by banks-Hindu Business Line- By NS Vageesh-21.04.15

2015 April 20:  
Banks distributed a third of their loans for the last fiscal in the second fortnight of March. While for the whole of 2014-15, banks gave out about ₹7.5 lakh crore as loans, they lent ₹2.6 lakh crore in just 14 days.
That is an alarming skew. For the last three years, banks disbursed roughly ₹6.5-7.5 lakh crore as loans annually. About 10 per cent of the amount was given in the last fortnight of every fiscal. This was probably to maintain the façade of growth, or to window-dress the balance sheet.
No one in the banking industry is surprised at this long-standing practice. A banker stifled a yawn when asked to comment on the issue, though the quantum of the increase did jolt him a bit. Another banker chuckled and said nothing could be done about it.
Why does it happen?

Banks want to show that they have done good business in the year that went by. And branch managers are judged by the deposits they bring in and the amount of loans they give. There is, therefore, an incentive to boost those numbers. This, they ensure by asking corporate clients to draw their sanctioned limits fully. Sometimes, they are told to deposit the same amount in another branch of the same bank — so that the deposit numbers also go up. A veteran banker revealed that there were borrowers who obliged bankers, provided the branch manager gave them good service and was honest with them.
Sometimes, there is pressure from the government to show improved numbers.
Government departments contribute to the last minute surge by drawing their entitlement in the last fortnight and putting the funds into bank deposits. Another senior banker pointed to the practice of erstwhile term-lending institutions that usually made some disbursements to clients at the end of the fiscal even though the project being funded required money only in the next fiscal. But in order to ensure that the promoter did not misuse the money, they were directed to different bank accounts of the company, with the stipulation not to release it without the lending institution’s consent. This may still be happening with some banks, the banker speculated.
A different method

What if branches are judged not by deposits and advances growth but only on profits? That has its downside too. Branches would then refuse to do business that doesn’t fetch them direct benefits. For instance, the remittance business is today a major activity in banks, given the growing level of migrant labour. This will be hit because the branches that facilitate such remittances earn next to nothing; instead, they find their staff and premises fully engaged with such low-ticket items.
So, can this practice of inflating the business numbers artificially be stopped? An experienced banker responded with a huge guffaw. He revealed that his bank tried to stop the practice by fixing a different day (an earlier date than the last day of the fiscal) as the cut-off for the calculation of business targets. But, as you may guess, the window-dressing simply moved to the earlier date!
Finally, a top banker said: “It is like catching a tiger’s tail. Once you have, you can’t get off it.”
Many Finance Secretaries and Ministers have issued dire warnings on the practice of window-dressing. Even that made no difference. No senior banker is able to stop it, having themselves practised such subterfuge in their younger days. To use the biblical analogy, therefore, let him who has not sinned cast the first stone. Meanwhile, let those who look at these numbers be armed with a ton of salt.

Government plans to rate PSU banks for fund infusion-DNA
The government is looking at rating public sector banks going ahead for capital infusion for which these banks will be required to fulfil criteria, which are under discussion, such as the quantum of retail loans they disburse, the number of Jan Dhan accounts opened besides the return on assets and return on equity they earn.
The proposed moved may lead to a big push for retail loans by PSU banks with special offers to woo customers.
The finance ministry is setting up a rating system for public sector banks where their performance will be measured. Still in the planning stage, some of the criteria that are under discussion for the rating are the number of Jan Dhan accounts and financial inclusion programmes that banks have implemented, and the quantum of retail advances undertaken by them against their corporate advances.

Private sector execs give top slots at PSU banks a miss-Hindustan Times 21.04.2015
There have been no takers from the private sector for the top position in leading public sector banks, including Bank of Baroda, Punjab National Bank, Bank of India, Canara Bank and IDBI Bank.

The government, which opened the doors to private sector executives to take over as chiefs in public sector banks, has got a lukewarm response for the same. The finance ministry is now looking to relax the eligibility criteria for applicants, including lowering the age criteria, and even doing away with the requirement for experience as a board member.

“The finance ministry is looking to relax the eligibility criteria soon... the criteria may have been a little stiff, which acted as a dampening factor,” a senior finance ministry official told HT.

The Appointments Committee of Cabinet (ACC), which approved the criteria and method of selection earlier this year, said candidates should have at least 15 years of mainstream banking experience, of which a minimum three should be at the board level.

In a notification, the finance ministry said salaries would be “flexible” and candidates should be in the age group of 45 to 55 years. They would have a fixed tenure of three years, subject to the normal age of superannuation of 60 years.
The government’s move to appoint private sector executives at the top posts in public sector banks comes at a time when the banking sector has seen a surge in non-performing assets — loans that do not yield returns — and slowing credit demand. While state-owned banks have been hiring talent from outside for various other roles, the top slot was always reserved for insiders.