Saturday, August 30, 2008
New Article of Dr.K.K.Ammannaya
You can refer to Southern Economist dated 1st September 2008 for the new article of Ammannaya on'' Housing Micro Finance and Inclusive Housing''.
SKILL DEVELOPMENT
The decision to place the national skill development policy before the union cabinet shortly is a welcome initiative.The National Skill dDevelopment Corporation will commence its opeartions from 1st september 2008,it is learnt.
Skills and talents are vital for performance and progress.Skills and talents must be developed in all spheres of activities and across all sectors on a national scale.We need skills in such areas as planning,teaching,governance,handling and management of all types of risks,project formulation,implementation skills,monitoring skills,oratory skills,P.R skills,information technolgy,programming skills,painting ,farm management,horticulture,energy conservation,and so on.With better skills even micro finance and self help groups and SMEs as well as agriculture can be managed in a better way and greater results can be obtained.Basic education is a pre-requisite for building skills and hence education must be given primacy by centre and all states and spendings on and allocations for education must be enhanced.
Setting up of more and more institutes of excellence such asIITs,AIMs,management institutes,and statrting of skill and talent development -oriented courses in all colleges can be of great help in this regard.We must aim at education revolution as recently stated by our Prime Minister Dr.Manamohan Singh to provide a fillip to skill development.What we must aim at is creation of a variety of skills in abundance The degrees and qualifications to be given by our institutes of excellence must beome globally recognised degrees and qualifications..The launching of NationalTalent Development Corporation is a welcome initiative in this regard. Private sector too can play an important role in area of skill development.Corporates can start Skill development institutes .Two or more corporates can join hands and launch such institutes .Private universities such as deemed universities can take major initiatives in this regard.Skill development must be an area of emphasis at the state level also.Each boy and girl has some latent skill or talent which has to be identified and developed by conscious effort and training.To achieve this we must encourage boys and girls to select courses of study based on their aptitude and not as dictated by parents or teachers or on the basis of selection of other students in the batch.The mad rush for electronics and communication stream of engineering is but the reflection of this and the rush is not based on aptitudes of students.States must also take initiative in this matter and launch state level Skill development institutes through public private partnership.Skill development in all areas and sheres of activities and across all sectors will surely help promote and enhance productivity and the same will enable the country to reap rich demographic dividend.
Skills and talents are vital for performance and progress.Skills and talents must be developed in all spheres of activities and across all sectors on a national scale.We need skills in such areas as planning,teaching,governance,handling and management of all types of risks,project formulation,implementation skills,monitoring skills,oratory skills,P.R skills,information technolgy,programming skills,painting ,farm management,horticulture,energy conservation,and so on.With better skills even micro finance and self help groups and SMEs as well as agriculture can be managed in a better way and greater results can be obtained.Basic education is a pre-requisite for building skills and hence education must be given primacy by centre and all states and spendings on and allocations for education must be enhanced.
Setting up of more and more institutes of excellence such asIITs,AIMs,management institutes,and statrting of skill and talent development -oriented courses in all colleges can be of great help in this regard.We must aim at education revolution as recently stated by our Prime Minister Dr.Manamohan Singh to provide a fillip to skill development.What we must aim at is creation of a variety of skills in abundance The degrees and qualifications to be given by our institutes of excellence must beome globally recognised degrees and qualifications..The launching of NationalTalent Development Corporation is a welcome initiative in this regard. Private sector too can play an important role in area of skill development.Corporates can start Skill development institutes .Two or more corporates can join hands and launch such institutes .Private universities such as deemed universities can take major initiatives in this regard.Skill development must be an area of emphasis at the state level also.Each boy and girl has some latent skill or talent which has to be identified and developed by conscious effort and training.To achieve this we must encourage boys and girls to select courses of study based on their aptitude and not as dictated by parents or teachers or on the basis of selection of other students in the batch.The mad rush for electronics and communication stream of engineering is but the reflection of this and the rush is not based on aptitudes of students.States must also take initiative in this matter and launch state level Skill development institutes through public private partnership.Skill development in all areas and sheres of activities and across all sectors will surely help promote and enhance productivity and the same will enable the country to reap rich demographic dividend.
Saturday, August 23, 2008
Review of Dormant Accounts--Financial Inclusion
The directive issued by RBI to banks to undertake annual review of inoperative accounts and inform the same to customers concerned is indeed a welcome initiative.This instruction of RBI if properly implemented will go a long way in achieving real and meaningful financial inclusion.
Many customers with Little or no financial literacy are scared to go to the banks and ascertain the position of their accounts as they have the fear that banks may ask them to pay some money towards shortfall in minimum balance charges.Many such old accounts are yet to to be treated as no-frills accounts.Banks must do away this fear on the part of inoperative account holders.If this is done most of them may resume operations in the accounts.Some have opened accounts for encasing account payee cheques drawn in their favour.After getting the cheques encased they have forgotten the account.They may be made to start operations in the account through proper follow-up and motivation..
Banks must educate all dormant account holders to make use of the accounts and resume operations for their own benefit.Banks usually ignore such accounts for fear of extra work.A process of education will surely encourage all dormant account holders to make use of their accounts.Banks may follow the strategy adopted by Dr.T.M.A.Pai in the initial years of Syndicate Bank.He never allowed account holders to have a gap in operations.He used to monitor and send word through Pygmy agents to come and meet him or the bank manager .He used to exhort such dormant account holders to operate the account at least once a month by depositing Rs5 or any small amount.This way he developed banking habit and saving habit among people in Udupi and Dakshina Kannada districts.Today these districts are having adequate banking habit among people.This strategy can be replicated so as to achieve meaningful financial inclusion in lieu of present statistics -oriented ritual of financial inclusion.
Banks must view RBI fiat as an opportunity for bringing those nominally brought in to banking fold in the past and now having dormant accounts to achieve their real and meaningful financial inclusion.They must be made to resume relationship and enjoy the relationship.The directive to pay interest on such accounts can serve as an incentive for dormant account holders to start operations in the account.The annual review may afford an excellent opportunity for banks to build up relationship with dormant account holders bring them back in to their fold and get business from them now on.If this is done financial inclusion can be real and meaningful for both banks and customers..It is possible that many of the dormant account holders might have improved their economic lot now.Banks can get better business from them if their economic condition has improved.
Banks must as a fine gesture reverse minimum balance charges debited if any to all such accounts and treat all such accounts as no frills accounts to encourage and motivate dormant account holders.Banks can launch special campaigns for reviving dormant accounts as LIC is doing in respect of lapsed life policies.Efforts at promotion of financial literacy promotion of ,savings habit and ,banking habit etc can also be made by banks.The proposed FLCCs can also attend to this task once they are set up.
Many customers with Little or no financial literacy are scared to go to the banks and ascertain the position of their accounts as they have the fear that banks may ask them to pay some money towards shortfall in minimum balance charges.Many such old accounts are yet to to be treated as no-frills accounts.Banks must do away this fear on the part of inoperative account holders.If this is done most of them may resume operations in the accounts.Some have opened accounts for encasing account payee cheques drawn in their favour.After getting the cheques encased they have forgotten the account.They may be made to start operations in the account through proper follow-up and motivation..
Banks must educate all dormant account holders to make use of the accounts and resume operations for their own benefit.Banks usually ignore such accounts for fear of extra work.A process of education will surely encourage all dormant account holders to make use of their accounts.Banks may follow the strategy adopted by Dr.T.M.A.Pai in the initial years of Syndicate Bank.He never allowed account holders to have a gap in operations.He used to monitor and send word through Pygmy agents to come and meet him or the bank manager .He used to exhort such dormant account holders to operate the account at least once a month by depositing Rs5 or any small amount.This way he developed banking habit and saving habit among people in Udupi and Dakshina Kannada districts.Today these districts are having adequate banking habit among people.This strategy can be replicated so as to achieve meaningful financial inclusion in lieu of present statistics -oriented ritual of financial inclusion.
Banks must view RBI fiat as an opportunity for bringing those nominally brought in to banking fold in the past and now having dormant accounts to achieve their real and meaningful financial inclusion.They must be made to resume relationship and enjoy the relationship.The directive to pay interest on such accounts can serve as an incentive for dormant account holders to start operations in the account.The annual review may afford an excellent opportunity for banks to build up relationship with dormant account holders bring them back in to their fold and get business from them now on.If this is done financial inclusion can be real and meaningful for both banks and customers..It is possible that many of the dormant account holders might have improved their economic lot now.Banks can get better business from them if their economic condition has improved.
Banks must as a fine gesture reverse minimum balance charges debited if any to all such accounts and treat all such accounts as no frills accounts to encourage and motivate dormant account holders.Banks can launch special campaigns for reviving dormant accounts as LIC is doing in respect of lapsed life policies.Efforts at promotion of financial literacy promotion of ,savings habit and ,banking habit etc can also be made by banks.The proposed FLCCs can also attend to this task once they are set up.
Thursday, August 21, 2008
List of Papers and magazines where Ammannaya's Kannada articles have appeared.
The first article oif Dr.K.K.Ammannaya in Kannada was published in Rashtramatha Kannada weekly then being edited by noted poet and journalist Kadengodlu Shankar Bhat in 1963 when Ammannaya was in 9th standard.Subsequently he published his articles in Ashavadi,Bhavyavani,Yugapurusha,Nirmala,etc.Thereafter when he was studying the B.Com course he started writing in Kannada Prabha in 1967-68.When he was in M.Com he used to write almost every week and publish his articles in Kannada Prabha on banking and economic issues of concern.After Udayavani daily came into being he started publishing his articles in that paper.He was one of the first writers to that paper.Thereafter his articles were published in papers like Kannada Janantharanga,Mungaru Kannada Daily,Janavahini,Prajavani,Dhyeyanishta Patrakartha daily ,Anantha Prakasha,Hosathu,Uthana,Udyamadarshi,Ulume,Vijaya Karnataka,etc.He has also written and published articles in well known Kannada weekly Taranga.His total published articles in Kannada during last 45 years so far i.e till 21st August 2008 is 2297.In addition his articles in Kannada have also been published in Souvenirs,college and school magazines,etc.
Wednesday, August 20, 2008
REVAMPING AND REVITALISING LEAD BANK SCHEME
Fourteen Major Commercial banks were nationalised on July 19, 1969. A number of measures were taken to correct the imbalances in banking growth and to achieve the various goals of nationalisation, in post nationalisation era.
The formulation and implementation of the lead bank scheme, the credit guarantee scheme, introduction of performance budgeting in commercial banks, etc., are some of the important supportive measures initiated by the authorities concerned.
The lead bank scheme is by far the most important supportive action taken by the authorities in the direction of enabling banks to achieve the various objectives of nationalisation.
In terms of the recommendations of the study group of the National Credit Council (NCC) and the Nariman Committee, the Reserve Bank of India finalised the Lead Bank Scheme.
Under the scheme, all districts, of course, with the exception of metropolitan areas of Bombay, Calcutta, Madras and the Union Territories of Delhi, Goa and Chandigarh were distributed among banks for the purpose of organising banking development on planned lines.
The State Bank group has been allotted 89 districts, while the 14 nationalised banks have been allotted 250 districts. The three private sector banks have been given 9 districts.
Allotment of districts was guided by several considerations, such as size of the bank, adequacy of its resources, contiguity of districts etc. The scheme which was almost a novelty was regarded as an important method to correct regional imbalances in banking growth.
Until that time, Indian banking was following economic development, instead of spearheading it. In other words, banks were concentrating their operations only in economically advanced regions. That was why backward states and regions remained under-banked.
The authorities recognised that the absence of organised banking comes in the way of planned economic development. With a view to aligning bank functioning with Plan priorities and involving the banking system intensively in the process of economic development of different regions, the concept of `area’ or `project’ approach was given concrete shape and the lead bank scheme was introduced in December, 1969.
Dual Role :
The lead bank had to play a dual role in the matter of development of banking and credit in the districts allotted to it. It had to plan and organise banking development of the district in a manner conforming to the plans prepared by the Government or the district administration for the economic development of the district.
Thus, the lead bank had to lead banking and economic growth of the districts allotted to it. It had to function as the leader of the consortium of banks operating in the district.
The scheme was a partnership business. All the banks operating in a district are partners in this business and the lead bank is the active partner.
It had to enlist the co-operation of other banks functioning in the district, including co-operative banks. It had to build up and maintain close contact and liaison with Government and quasi-Government agencies which are entrusted with the task of brining about economic development of the district.
By associating itself closely and actively with the economic activities of all types the lead bank was expected to spearhead the process of economic development of the districts in respect of which it was playing the lead role.
Thus, under the scheme, the lead bank had to lead the growth process by means of providing “banking” and “credit” leadership in the district.
The lead bank scheme has been in operation for nearly four decades now. Considerable progress has been made in the implementation of the scheme. Lead Banks completed the surveys of all districts. On the basis of these surveys lead banks estimated the deposit potential and credit gaps. Unbanked and underbanked centers were identified and such centers were allotted to different banks for branch expansion.
Branch Expansion :
Progress made by banks in the sphere of branch expansion was really significant.
However, it must be noted that branch expansion was conditioned by a good number of factors, some of which were beyond the control of the lead banks. In spite of this, the performance in the area of branch expansion in post-nationalisation period has been really impressive as could be seen from the following table:-
Growth of Banking Sector
Sl No Parameters 1969 2007 Increase
1 No of branches 8262 70711 8.5 times
2 Deposits (Rs in Crores) 4646 25,98,823 559 times
3 Advances (Rs in Crores) 3599 19,49,567 542 times
4 Population per branch 64000 16000 -4 times
5 Deposits per branch Rs.56 Lakhs Rs.36.75 Crores 66 times
6 Advances per branch Rs.44 Lakhs Rs.27.57 Crores 62.6 times
In post-nationalisation era till to-day, banking expansion in India has been phenomenal. The share of banking and insurance in India’s GDP is over 5 per cent now. There is an elaborate and vast network of scheduled commercial banks now with 181 commercial banks (of which, 96 RRBs) operating with 71497 branches as at the end of June 2007. In addition, there are 1853 Urban Co-operative Banks and 109924 Rural Co-operative Credit Institutions Loans and advances constitute over 50 per cent of GDP and nearly 65 percent of branches are in rural and semi-urban areas. Banks have been playing a crucial role in driving economic growth by financing various sectors of the economy. CD ratio has now gone up to 75 per cent as against the benchmark of 60 per cent.
The vast network of bank branches to-day and the significant progress achieved in the areas of deposit mobilisation and credit expansion were due in no small measure to the implementation of Lead Bank Scheme.
Role in Altered Scenario :
In the altered context to-day there is need to revamp and revitalise the lead bank scheme and redefine its role. A high power committee has been constituted to examine the role of the scheme in the present scenario under the leadership of Smt Usha Thorat, Dy Governor of RBI. Usha Thorat is the Chairperson
The High Level Committee consists of the following:-
1. Usha Thorat Dy Governor RBI Chairperson
2. Manjula Subramanian, Chief Secretary, Govt of Maharastra Member
3. R J M Pillai, Dev Commissioner, Govt of Bihar “
4. Sudhakar Rao, Chief Secretary, Govt of Karnataka “
5. H S Das, Principal Secretary (Finance) Govt of Assam “
6. M V Nair, Chairman & Managing Director, Union Bank of India “
7. Dr K C Chakraborty, CMD, Punjab National Bank “
8. Anoop Benarjee, Dy MD, SBI “
9. M Balachandran, Director, Institute of Banking Personnel Selection, Mumbai “
10. B Vijayendra, Regional Director, RBI, Rajasthan “
11. G Srinivasan, Chief General Manager, RPCP, RBI, Mumbai Member Secretary
The Chairman NABARD & Chairman SIDBI will be permanent invitees for all meetings.
The terms of reference are:-
1. To prepare a comprehensive set of objectives and scope of Lead Bank Scheme
2. To make recommendations for rationalisation of various committees/fora and functions under the scheme.
3. To recommend measures to improve the effectiveness of the scheme particularly for encouraging greater decentralised approach, dissemination of policies/guidelines, implementation of policies at local level and creation of awareness of banks’ products and policies.
4. To make recommendations relating to timely and consistent information and monitoring system taking advantage of improved IT capabilities in the banking system.
5. To prepare comprehensive guidelines and manual of instructions based on the above.
Initial Focus
Immediately after its adoption in the year 1969, the Lead Bank Scheme focused on surveys of all the lead districts and identification of unbanked and underbanked centers. In the 1970’s the focus of the scheme was expansion of network of bank branches in Lead Districts, particularly in identified unbanked centers. In the 1980s however there was reduced focus on branch expansion but increased focus on credit planning and formulation and implementation of district credit plans. In the 1990’s service area approach became the area of focus and concentration under the Lead Bank Scheme. Now in the past reform-era, following a thorough change in the scenario there is a need for redefining the role of the Lead Bank Scheme. It is hoped that the high power committee headed by Smt Usha Thorat will undertake a thorough and comprehensive study and come out with appropriate recommendation to revamp and revitalise the scheme. The committee has to provide a comprehensive definition of the new rate of the scheme.
New Players :
The Lead Bank Scheme must be revamped and revitalised in such a manner that it becomes competent to play its role in the present day context. To-day, we find many new players in a district apart from banks and financial institutions. The new players include new private sector banks Micro Finance Institutions, self-help groups, NGOs, Small and Medium Enterprises (SMEs) etc. There are also trusts engaged in the task of rural development. In view of the entry such new entities credit planning at the district level must undergo a change so as to cover and involve all these entities and institutions.
The SME sector has district focus and product focus. There are also artisans and crafts persons, entrepreneurs of different categories, persons engaged in rural non-farm activities. All these should be covered in the district credit plan. Potential linked plans of NABARD must be merged and integrated with district credit plan.
The Arjun Sengupta Committee on the unorganised sector also found banks’ inability to reach the small village entrepreneurs. In fact, the real problem lies somewhere else. The core objective of banks is business. Creating the right environment for small enterprises should also be the core objective of the Government and development agencies.
A healthy SHG can address the multifaceted problems of a village as the awareness of a common goal narrow the caste divide, develops a spirit of co-operation among villagers and takes care of all kinds of development works in the village. Additionally, it channels the village’s idle energy into various business propositions.
Nevertheless, banks need to be judicious. Too stiff a target for financial inclusion could pose a problem as it would force banks to sacrifice quality in pursuit of numbers. SHGs should not be made into a mass revolution; rather they should be seen as a natural evolution that happens with the co-ordinated effort of banks, villagers and the extension agencies for the common good.
The findings and suggestions of Arjun Sengupta Committee must also be kept in view while preparing a blue print for revamp of Lead Bank Scheme.
Financial Inclusion :
Complete and total financial inclusion is a task that has to be achieved by banks. This is a great challenge. Financial inclusion must not get reduced to the ritual of opening no-frills savings ank accounts at the rate of one account per household. It should on the other hand, become real and meaningful financial inclusion. The financially included must be enabled to learn and acquire savings habit, banking habit, financial literacy, credit literacy the manner of utilising credit for undertaking a productive activity and earning some income for livelihood etc. The setting up of Financial Literacy and Credit Counseling Centers (FLCCs) in all villages may became a necessity. The financially included must be enabled to come to the mainstream of financial and economic life. This is a real challenge. The Lead Bank Scheme must play an effective role in accomplishing this task. Preparation and launching of financial inclusion plans at district, block and village levels will become necessary. The Lead Bank Scheme must be given a definite role to play in this regard.
Revamping Data Collection :
At present, the District Level Co-ordination/Consultative Committees are headed by Dy Commissioners/District Collectors as Chairman. The Lead District Manager who is a Scale III Officer on Middle Management Grade looks after the work relating to data collection and compilation, preparation of District Credit Plan, convening meetings, preparation of proceedings of the meetings etc. Most of the time of Lead District Manager is spent in collection of data from banks. It is necessary to revamp the system of data collection. All the banks must be made to submit relevant data and statistics on line on a daily basis. If data and statistics reach the Lead District Manager on a daily basis without any need for reminder and follow up, the Lead District Manager can find adequate time to focus on his major tasks and responsibilities such as preparation of District Credit Plans formulation of financial inclusion plans, compilation of review reports regarding progress in implementation of various plans, schemes and projects etc.
The meetings of District level co-ordination/consultative committees are now held by way of a ritual and reviews are conducted in a routine manner. The meetings must be made purpose-oriented and discussions in the meetings must become meaningful and purposive. The discussions in the meetings of various sub-committees must also become purpose-oriented and fruitful.
At present, the committees like District Level Bankers’ Committee District Co-ordination committee and District level review committee etc seldom function with any seriousness. This position has to be corrected. The District Collectors or Dy Commissioners must give full importance to the review meetings and other important discussions. Also, the Lead Bank Scheme needs to be re-invigorated with clear guidelines on respecting commercial judgements of bankers even as they fulfil their sectoral targets.
Empowerment of Lead District Office :
At present, the Lead District Manager is only a Scale III Officer. It is better to upgrade the post of Lead District Manager to that of Scale V post. Scale V Officers on Senior Management Grade must be posted and their designation must be changed as Chief Lead District Managers. The Chief Lead District Manager must have a Deputy in Dy Lead District Manager. He must be an officer on Scale IV in senior management grade. In the Lead District Office there must be a district credit planning and financial inclusion committee. A couple of economists and chartered accountants of the district can be included as members on this committee. In the review process also a few economists and chartered accountants of the district can be involved. The Lead district Office must be adequately empowered to discharge its role effectively. The high power committee may look into all the above aspects. The committee must examine the present structure of Lead District Office steps required to empower the Lead District Office authority of different functionaries issue of co-ordination with banks and various government agencies and also with new players in the district plan formulation process, information system reporting mechanism and monitoring system and make appropriate recommendations.
Identification and meeting of challenges :
The high power committee must also identify the challenges to be faced by the scheme in the altered scenario to-day and spell out the manner in which such challenges can be faced with adequate measure of success.
Co-ordination with new players such as private commercial banks housing finance companies, micro finance institutions, NGOs, rural development trusts, etc and bringing about their involvement and participation, through the process of synergising their efforts towards larger goals of the district will be a challenge for the revamped Lead Bank Scheme. The high power committee has to examine this in depth and make suitable suggestions and recommendations.
The committee has to examine and suggest how balancing profitability with more and more inclusiveness in the matter of extension of banking services and banking products can be done. In the present competitive environment transaction costs have to be reduced further even while ensuring social and geographical spread of banking services. Utilisation of banking correspondents, launching of rural ATMs, using the services of post offices as agents of banks in rural branch-less locations etc must be examined.
Promotion of financial literacy, credit literacy and a good and healthy repayment culture will be another challenge. A healthy banking mentality must be developed among the rural poor. The committee has to examine this and come out with useful suggestions for facing the above challenge.
The above are only some examples of the challenges involved in implementing the revamped lead bank scheme in the altered scenario of to-day. There may be many more similar challenges which the high power committee can identify and spell out how such challenges can also be faced successfully. The high power committee may also explore the possibility of involving corporates in the process of district development. The support of corporates may be required by way of discharge of their corporate social responsibility. Corporates may play an important role in expanding the basic infrastructural facilities. The revamped LBS must become an effective instrument in bringing about full and active involvement of all member banks and all new players in the district such as new private banks, micro finance institutions self help groups, rural co-operative credit societies, NGOs, rural development trusts, proposed FLCCs that may come into being in due course and all government agencies.
Unity of Purpose :
It is also necessary to ensure that adequately qualified officers with flair for co-ordinating, development and monitoring work are identified and posted as chief Lead District Managers and Dy Chief Lead District Managers. Officers having relevant educational qualification such as MA (Economics), M Com, or MBA (Finance) must be selected for those posts. The Regional Director of RBI in each State must also take the revamped scheme and its implementation seriously so that, all banks, NABARD and other new players in the district come forward to involve themselves actively in the implementation of the scheme. Financial inclusion calls for united action on the part of all banks and financial institutions and unity of purpose on the part of all players in a district. An approach on the lines of area approach can be adopted and in each area or location a particular bank can be given responsibility for achieving full and meaningful financial inclusion. These aspects must also be looked into by the high power committee.
The Lead Bank Scheme which played an important role in bringing about speedy expansion of bank branches in post nationalisation era, can surely make significant contribution to the achievement of full comprehensive and meaningful financial inclusion and also to inclusive growth if the scheme is thoroughly revamped and revitalised and the revamped LBS is effectively implemented in all the districts in India with the active involvement of all banks, all other players in the district and all concerned government departments. With a revamped and revitalised Lead Bank Scheme alone the objectives of full financial inclusion, strengthening and expansion of micro finance including productivity linked home micro finance and extricating the rural masses from the debt trap etc can be accomplished.[Published in Southern Economist dated 15th September,2008]
The formulation and implementation of the lead bank scheme, the credit guarantee scheme, introduction of performance budgeting in commercial banks, etc., are some of the important supportive measures initiated by the authorities concerned.
The lead bank scheme is by far the most important supportive action taken by the authorities in the direction of enabling banks to achieve the various objectives of nationalisation.
In terms of the recommendations of the study group of the National Credit Council (NCC) and the Nariman Committee, the Reserve Bank of India finalised the Lead Bank Scheme.
Under the scheme, all districts, of course, with the exception of metropolitan areas of Bombay, Calcutta, Madras and the Union Territories of Delhi, Goa and Chandigarh were distributed among banks for the purpose of organising banking development on planned lines.
The State Bank group has been allotted 89 districts, while the 14 nationalised banks have been allotted 250 districts. The three private sector banks have been given 9 districts.
Allotment of districts was guided by several considerations, such as size of the bank, adequacy of its resources, contiguity of districts etc. The scheme which was almost a novelty was regarded as an important method to correct regional imbalances in banking growth.
Until that time, Indian banking was following economic development, instead of spearheading it. In other words, banks were concentrating their operations only in economically advanced regions. That was why backward states and regions remained under-banked.
The authorities recognised that the absence of organised banking comes in the way of planned economic development. With a view to aligning bank functioning with Plan priorities and involving the banking system intensively in the process of economic development of different regions, the concept of `area’ or `project’ approach was given concrete shape and the lead bank scheme was introduced in December, 1969.
Dual Role :
The lead bank had to play a dual role in the matter of development of banking and credit in the districts allotted to it. It had to plan and organise banking development of the district in a manner conforming to the plans prepared by the Government or the district administration for the economic development of the district.
Thus, the lead bank had to lead banking and economic growth of the districts allotted to it. It had to function as the leader of the consortium of banks operating in the district.
The scheme was a partnership business. All the banks operating in a district are partners in this business and the lead bank is the active partner.
It had to enlist the co-operation of other banks functioning in the district, including co-operative banks. It had to build up and maintain close contact and liaison with Government and quasi-Government agencies which are entrusted with the task of brining about economic development of the district.
By associating itself closely and actively with the economic activities of all types the lead bank was expected to spearhead the process of economic development of the districts in respect of which it was playing the lead role.
Thus, under the scheme, the lead bank had to lead the growth process by means of providing “banking” and “credit” leadership in the district.
The lead bank scheme has been in operation for nearly four decades now. Considerable progress has been made in the implementation of the scheme. Lead Banks completed the surveys of all districts. On the basis of these surveys lead banks estimated the deposit potential and credit gaps. Unbanked and underbanked centers were identified and such centers were allotted to different banks for branch expansion.
Branch Expansion :
Progress made by banks in the sphere of branch expansion was really significant.
However, it must be noted that branch expansion was conditioned by a good number of factors, some of which were beyond the control of the lead banks. In spite of this, the performance in the area of branch expansion in post-nationalisation period has been really impressive as could be seen from the following table:-
Growth of Banking Sector
Sl No Parameters 1969 2007 Increase
1 No of branches 8262 70711 8.5 times
2 Deposits (Rs in Crores) 4646 25,98,823 559 times
3 Advances (Rs in Crores) 3599 19,49,567 542 times
4 Population per branch 64000 16000 -4 times
5 Deposits per branch Rs.56 Lakhs Rs.36.75 Crores 66 times
6 Advances per branch Rs.44 Lakhs Rs.27.57 Crores 62.6 times
In post-nationalisation era till to-day, banking expansion in India has been phenomenal. The share of banking and insurance in India’s GDP is over 5 per cent now. There is an elaborate and vast network of scheduled commercial banks now with 181 commercial banks (of which, 96 RRBs) operating with 71497 branches as at the end of June 2007. In addition, there are 1853 Urban Co-operative Banks and 109924 Rural Co-operative Credit Institutions Loans and advances constitute over 50 per cent of GDP and nearly 65 percent of branches are in rural and semi-urban areas. Banks have been playing a crucial role in driving economic growth by financing various sectors of the economy. CD ratio has now gone up to 75 per cent as against the benchmark of 60 per cent.
The vast network of bank branches to-day and the significant progress achieved in the areas of deposit mobilisation and credit expansion were due in no small measure to the implementation of Lead Bank Scheme.
Role in Altered Scenario :
In the altered context to-day there is need to revamp and revitalise the lead bank scheme and redefine its role. A high power committee has been constituted to examine the role of the scheme in the present scenario under the leadership of Smt Usha Thorat, Dy Governor of RBI. Usha Thorat is the Chairperson
The High Level Committee consists of the following:-
1. Usha Thorat Dy Governor RBI Chairperson
2. Manjula Subramanian, Chief Secretary, Govt of Maharastra Member
3. R J M Pillai, Dev Commissioner, Govt of Bihar “
4. Sudhakar Rao, Chief Secretary, Govt of Karnataka “
5. H S Das, Principal Secretary (Finance) Govt of Assam “
6. M V Nair, Chairman & Managing Director, Union Bank of India “
7. Dr K C Chakraborty, CMD, Punjab National Bank “
8. Anoop Benarjee, Dy MD, SBI “
9. M Balachandran, Director, Institute of Banking Personnel Selection, Mumbai “
10. B Vijayendra, Regional Director, RBI, Rajasthan “
11. G Srinivasan, Chief General Manager, RPCP, RBI, Mumbai Member Secretary
The Chairman NABARD & Chairman SIDBI will be permanent invitees for all meetings.
The terms of reference are:-
1. To prepare a comprehensive set of objectives and scope of Lead Bank Scheme
2. To make recommendations for rationalisation of various committees/fora and functions under the scheme.
3. To recommend measures to improve the effectiveness of the scheme particularly for encouraging greater decentralised approach, dissemination of policies/guidelines, implementation of policies at local level and creation of awareness of banks’ products and policies.
4. To make recommendations relating to timely and consistent information and monitoring system taking advantage of improved IT capabilities in the banking system.
5. To prepare comprehensive guidelines and manual of instructions based on the above.
Initial Focus
Immediately after its adoption in the year 1969, the Lead Bank Scheme focused on surveys of all the lead districts and identification of unbanked and underbanked centers. In the 1970’s the focus of the scheme was expansion of network of bank branches in Lead Districts, particularly in identified unbanked centers. In the 1980s however there was reduced focus on branch expansion but increased focus on credit planning and formulation and implementation of district credit plans. In the 1990’s service area approach became the area of focus and concentration under the Lead Bank Scheme. Now in the past reform-era, following a thorough change in the scenario there is a need for redefining the role of the Lead Bank Scheme. It is hoped that the high power committee headed by Smt Usha Thorat will undertake a thorough and comprehensive study and come out with appropriate recommendation to revamp and revitalise the scheme. The committee has to provide a comprehensive definition of the new rate of the scheme.
New Players :
The Lead Bank Scheme must be revamped and revitalised in such a manner that it becomes competent to play its role in the present day context. To-day, we find many new players in a district apart from banks and financial institutions. The new players include new private sector banks Micro Finance Institutions, self-help groups, NGOs, Small and Medium Enterprises (SMEs) etc. There are also trusts engaged in the task of rural development. In view of the entry such new entities credit planning at the district level must undergo a change so as to cover and involve all these entities and institutions.
The SME sector has district focus and product focus. There are also artisans and crafts persons, entrepreneurs of different categories, persons engaged in rural non-farm activities. All these should be covered in the district credit plan. Potential linked plans of NABARD must be merged and integrated with district credit plan.
The Arjun Sengupta Committee on the unorganised sector also found banks’ inability to reach the small village entrepreneurs. In fact, the real problem lies somewhere else. The core objective of banks is business. Creating the right environment for small enterprises should also be the core objective of the Government and development agencies.
A healthy SHG can address the multifaceted problems of a village as the awareness of a common goal narrow the caste divide, develops a spirit of co-operation among villagers and takes care of all kinds of development works in the village. Additionally, it channels the village’s idle energy into various business propositions.
Nevertheless, banks need to be judicious. Too stiff a target for financial inclusion could pose a problem as it would force banks to sacrifice quality in pursuit of numbers. SHGs should not be made into a mass revolution; rather they should be seen as a natural evolution that happens with the co-ordinated effort of banks, villagers and the extension agencies for the common good.
The findings and suggestions of Arjun Sengupta Committee must also be kept in view while preparing a blue print for revamp of Lead Bank Scheme.
Financial Inclusion :
Complete and total financial inclusion is a task that has to be achieved by banks. This is a great challenge. Financial inclusion must not get reduced to the ritual of opening no-frills savings ank accounts at the rate of one account per household. It should on the other hand, become real and meaningful financial inclusion. The financially included must be enabled to learn and acquire savings habit, banking habit, financial literacy, credit literacy the manner of utilising credit for undertaking a productive activity and earning some income for livelihood etc. The setting up of Financial Literacy and Credit Counseling Centers (FLCCs) in all villages may became a necessity. The financially included must be enabled to come to the mainstream of financial and economic life. This is a real challenge. The Lead Bank Scheme must play an effective role in accomplishing this task. Preparation and launching of financial inclusion plans at district, block and village levels will become necessary. The Lead Bank Scheme must be given a definite role to play in this regard.
Revamping Data Collection :
At present, the District Level Co-ordination/Consultative Committees are headed by Dy Commissioners/District Collectors as Chairman. The Lead District Manager who is a Scale III Officer on Middle Management Grade looks after the work relating to data collection and compilation, preparation of District Credit Plan, convening meetings, preparation of proceedings of the meetings etc. Most of the time of Lead District Manager is spent in collection of data from banks. It is necessary to revamp the system of data collection. All the banks must be made to submit relevant data and statistics on line on a daily basis. If data and statistics reach the Lead District Manager on a daily basis without any need for reminder and follow up, the Lead District Manager can find adequate time to focus on his major tasks and responsibilities such as preparation of District Credit Plans formulation of financial inclusion plans, compilation of review reports regarding progress in implementation of various plans, schemes and projects etc.
The meetings of District level co-ordination/consultative committees are now held by way of a ritual and reviews are conducted in a routine manner. The meetings must be made purpose-oriented and discussions in the meetings must become meaningful and purposive. The discussions in the meetings of various sub-committees must also become purpose-oriented and fruitful.
At present, the committees like District Level Bankers’ Committee District Co-ordination committee and District level review committee etc seldom function with any seriousness. This position has to be corrected. The District Collectors or Dy Commissioners must give full importance to the review meetings and other important discussions. Also, the Lead Bank Scheme needs to be re-invigorated with clear guidelines on respecting commercial judgements of bankers even as they fulfil their sectoral targets.
Empowerment of Lead District Office :
At present, the Lead District Manager is only a Scale III Officer. It is better to upgrade the post of Lead District Manager to that of Scale V post. Scale V Officers on Senior Management Grade must be posted and their designation must be changed as Chief Lead District Managers. The Chief Lead District Manager must have a Deputy in Dy Lead District Manager. He must be an officer on Scale IV in senior management grade. In the Lead District Office there must be a district credit planning and financial inclusion committee. A couple of economists and chartered accountants of the district can be included as members on this committee. In the review process also a few economists and chartered accountants of the district can be involved. The Lead district Office must be adequately empowered to discharge its role effectively. The high power committee may look into all the above aspects. The committee must examine the present structure of Lead District Office steps required to empower the Lead District Office authority of different functionaries issue of co-ordination with banks and various government agencies and also with new players in the district plan formulation process, information system reporting mechanism and monitoring system and make appropriate recommendations.
Identification and meeting of challenges :
The high power committee must also identify the challenges to be faced by the scheme in the altered scenario to-day and spell out the manner in which such challenges can be faced with adequate measure of success.
Co-ordination with new players such as private commercial banks housing finance companies, micro finance institutions, NGOs, rural development trusts, etc and bringing about their involvement and participation, through the process of synergising their efforts towards larger goals of the district will be a challenge for the revamped Lead Bank Scheme. The high power committee has to examine this in depth and make suitable suggestions and recommendations.
The committee has to examine and suggest how balancing profitability with more and more inclusiveness in the matter of extension of banking services and banking products can be done. In the present competitive environment transaction costs have to be reduced further even while ensuring social and geographical spread of banking services. Utilisation of banking correspondents, launching of rural ATMs, using the services of post offices as agents of banks in rural branch-less locations etc must be examined.
Promotion of financial literacy, credit literacy and a good and healthy repayment culture will be another challenge. A healthy banking mentality must be developed among the rural poor. The committee has to examine this and come out with useful suggestions for facing the above challenge.
The above are only some examples of the challenges involved in implementing the revamped lead bank scheme in the altered scenario of to-day. There may be many more similar challenges which the high power committee can identify and spell out how such challenges can also be faced successfully. The high power committee may also explore the possibility of involving corporates in the process of district development. The support of corporates may be required by way of discharge of their corporate social responsibility. Corporates may play an important role in expanding the basic infrastructural facilities. The revamped LBS must become an effective instrument in bringing about full and active involvement of all member banks and all new players in the district such as new private banks, micro finance institutions self help groups, rural co-operative credit societies, NGOs, rural development trusts, proposed FLCCs that may come into being in due course and all government agencies.
Unity of Purpose :
It is also necessary to ensure that adequately qualified officers with flair for co-ordinating, development and monitoring work are identified and posted as chief Lead District Managers and Dy Chief Lead District Managers. Officers having relevant educational qualification such as MA (Economics), M Com, or MBA (Finance) must be selected for those posts. The Regional Director of RBI in each State must also take the revamped scheme and its implementation seriously so that, all banks, NABARD and other new players in the district come forward to involve themselves actively in the implementation of the scheme. Financial inclusion calls for united action on the part of all banks and financial institutions and unity of purpose on the part of all players in a district. An approach on the lines of area approach can be adopted and in each area or location a particular bank can be given responsibility for achieving full and meaningful financial inclusion. These aspects must also be looked into by the high power committee.
The Lead Bank Scheme which played an important role in bringing about speedy expansion of bank branches in post nationalisation era, can surely make significant contribution to the achievement of full comprehensive and meaningful financial inclusion and also to inclusive growth if the scheme is thoroughly revamped and revitalised and the revamped LBS is effectively implemented in all the districts in India with the active involvement of all banks, all other players in the district and all concerned government departments. With a revamped and revitalised Lead Bank Scheme alone the objectives of full financial inclusion, strengthening and expansion of micro finance including productivity linked home micro finance and extricating the rural masses from the debt trap etc can be accomplished.[Published in Southern Economist dated 15th September,2008]
Saturday, August 16, 2008
Opportunities for MERGERS
It is heartening to note that State Bank of Saurashtra is being merged with its parent SBI and RBI has issued notification suggesting that SBS brancehes will operate as SBI branches.
Opportunities that unfold themselves in any industry ,more so in banking sector must be availed in the larger and long range interests of stake holders.Mergers and consequent consolidation fetch following benefits -
1 Mergers bring the benefits of economies of scale.In an industry like banking where earnings are based on the interest differential and spread available, volumes alone matter.Otherwise in the long uncertain run we can not say what will happen to profitability and pressure on spreads and profitability will keep on growing and intensifying.This is a challenge for all banks,particularly for the small regional players.
2.Avoidance and elimination of duplications can be done through mergers.Supervisory and monitoring infrastructure by way of head offices,regional offices,circles etc available with the bank with which other banks are being merged can be used for all banks on merger and similar offices of merged entities can be eliminated thus cutting lot of costs.Similarly sanctionimg authorities can be the same for all entities and duplications can be eliminated saving huge money..
3.On account of merger and consolidation size will grow and on merger aggregate capital , increases market capitalisation and with that advantage the consolidated entity will be able to access equity from the market as and when needed with ease.
4.Small entities can not spend heavily on new technology.Bigger banks can adopt latest technology and for them the same may be more cost effective when compared to small players.
5.Employees will be greatly benefited from mergers.Consolidated entities will have more paying capacity and they can extend better amenities and facilities.They can also provide employee stock option.
6.In today's context creating value for stake holders and enhancing value from year to year will be very crucial.Bigger ,stronger and highly performer entities can create better value for all.
7Creation of banking entities of global size and global competitive strength will be crucial for India to take full advantage of globalisation.
8.Product innovation will be very important for banks in the days to come.The forthcomong generations will need newer and newer banking products.Large and giant banks can spend heavily on product innovation and not small banks.Mergers are thus beneficial for banks,customers,staff,and all stake holders alike.
In the case of SBI group already systems are identical and organisational culture too is similar.Even if they are dissimilar the same can be easily integrated in a couple of years.Organisations are permanent.Staff come and go.Once the present staff leave the organisation on attaining superannuation the new staff will be quite different.They need opportunities,challenges,pay hike of large amounts annually.incentives stock options and so on.They may jump from one bank to another for getting larger pay. Theyounger new staff are not loyal to any bank.They are loyal to their profession.Any bank is OK for them if they get what they want.We can not keep things intact assuming that present staff are permanent in these banks and none else will come from outside with new and heightened aspirations..Any dynamic bank can not have such assumption and can not have status -qua for ever.For staff of today what is vital is to get one more option for pension.All those who were in service as on the date of last day fixed for earlier option in 1996 regardless of their subsequent retirement.resignation,VRs or death must be given one more option for pension.For this staff and unions must fight.If they add hundreds of things which are not relevant the issues of concern for bank staff viz pension option will be lost sight of at all levels.Other things will put in shade the vital concern.
Mergers are therefore inevitable for our banking prosperity tomorrow.If we give up merger opportunities today that augers well for bank's prosperity in the future years the posterity will not forgive us.We must therefore avail such opportunities for increasing prospects for growth and performance.Recently CBOP and HDFC Bank took advantage of such opportunity and SBI group or other PSU banks can not lag behind.
Opportunities that unfold themselves in any industry ,more so in banking sector must be availed in the larger and long range interests of stake holders.Mergers and consequent consolidation fetch following benefits -
1 Mergers bring the benefits of economies of scale.In an industry like banking where earnings are based on the interest differential and spread available, volumes alone matter.Otherwise in the long uncertain run we can not say what will happen to profitability and pressure on spreads and profitability will keep on growing and intensifying.This is a challenge for all banks,particularly for the small regional players.
2.Avoidance and elimination of duplications can be done through mergers.Supervisory and monitoring infrastructure by way of head offices,regional offices,circles etc available with the bank with which other banks are being merged can be used for all banks on merger and similar offices of merged entities can be eliminated thus cutting lot of costs.Similarly sanctionimg authorities can be the same for all entities and duplications can be eliminated saving huge money..
3.On account of merger and consolidation size will grow and on merger aggregate capital , increases market capitalisation and with that advantage the consolidated entity will be able to access equity from the market as and when needed with ease.
4.Small entities can not spend heavily on new technology.Bigger banks can adopt latest technology and for them the same may be more cost effective when compared to small players.
5.Employees will be greatly benefited from mergers.Consolidated entities will have more paying capacity and they can extend better amenities and facilities.They can also provide employee stock option.
6.In today's context creating value for stake holders and enhancing value from year to year will be very crucial.Bigger ,stronger and highly performer entities can create better value for all.
7Creation of banking entities of global size and global competitive strength will be crucial for India to take full advantage of globalisation.
8.Product innovation will be very important for banks in the days to come.The forthcomong generations will need newer and newer banking products.Large and giant banks can spend heavily on product innovation and not small banks.Mergers are thus beneficial for banks,customers,staff,and all stake holders alike.
In the case of SBI group already systems are identical and organisational culture too is similar.Even if they are dissimilar the same can be easily integrated in a couple of years.Organisations are permanent.Staff come and go.Once the present staff leave the organisation on attaining superannuation the new staff will be quite different.They need opportunities,challenges,pay hike of large amounts annually.incentives stock options and so on.They may jump from one bank to another for getting larger pay. Theyounger new staff are not loyal to any bank.They are loyal to their profession.Any bank is OK for them if they get what they want.We can not keep things intact assuming that present staff are permanent in these banks and none else will come from outside with new and heightened aspirations..Any dynamic bank can not have such assumption and can not have status -qua for ever.For staff of today what is vital is to get one more option for pension.All those who were in service as on the date of last day fixed for earlier option in 1996 regardless of their subsequent retirement.resignation,VRs or death must be given one more option for pension.For this staff and unions must fight.If they add hundreds of things which are not relevant the issues of concern for bank staff viz pension option will be lost sight of at all levels.Other things will put in shade the vital concern.
Mergers are therefore inevitable for our banking prosperity tomorrow.If we give up merger opportunities today that augers well for bank's prosperity in the future years the posterity will not forgive us.We must therefore avail such opportunities for increasing prospects for growth and performance.Recently CBOP and HDFC Bank took advantage of such opportunity and SBI group or other PSU banks can not lag behind.
NHB Residex
NHB undertook a pilot study to examine the feasibility of preparing an index at the national levelto track the movements in prices of residential properties.Based on this pilot study NHB residex has been prepared under the guidance of the technical advisory group with Advisor Ministry of Finance as chairman and comprising experts as members from RBI,NSSO,CSO.NHB,and other players.NHB Residex was launched by Honourable Finance Minister Sri P.Chidambaram on 10th July 2007.NHB is likely to extend the coverage of the index to all major cities in a phased manner.Finally a composite index for the entire country will be launched.The Residex will be operated by NHB on half yearly basis.To begin with it is proposed to develop the index only for residential properties.At a later stage index could be extended to cover commercial properties as well.Under Residex the actual transaction prices will be reckoned..The prices inclusive of land costs,but exclusive of registration fee,stamp duty brokerage etc would be considered.
The launching of Residex is a welcome development and the same will help all those who are interested-the banks and HFCs,property buyers,and custmers of banks and HFCs.
The launching of Residex is a welcome development and the same will help all those who are interested-the banks and HFCs,property buyers,and custmers of banks and HFCs.
Saturday, August 9, 2008
LEAD BANK SCHEME--ITS OPERATIONAL PROBLEMS
The Lead Bank Scheme has to be revamped and revitalised to make it more effective in the present day context.The committee appointed under the leadership of Mrs Usha Thorat,RBI Dy Governor may come out with suitable recommendations in this regard.In my article titled''Lead Bank Scheme--Its operatioal Problems'' published in Financial Express dated 25th August 1973 I have made some suggestions .In my book titled ''Indian Banking--Yesterday,Today.and Tomorrow'' published in 2004 there is one chapter on this subject.It is chapter 6,on page 29.
There is pressing need to revamp and revitalise the lead bank scheme so as to make it an effective instrument for bringing about meaningful co-ordination among banks and other players operating in a district.Today there are new players such as micro finance institutions,NGOs ,co-operatives,rural development trusts,HFCs self help groups etc.A revamped lead bank scheme must be able to bring about greater participation among all players in achieving full and meaningful finacial inclusion.
Financial inclusion calls for united action and unity of purpose among all banks and players in a district.An approach on the lines of area approach can be adopted and in each area or location a particular bank can be given responsibility for achieving meaningful financial inclusion.A system of full computerisation of the process of data collection and feeding of data by all banks must be put in place at once.All banks must enter data online on a daily basis.With the help of this the lead district office can periodically prepare updates and review reports for monitoring purposes.Such data base can also help in preparing credit plans,fianacial inclusion plans progress reports etc from time to time.Potential linked plan of NABARD must be integrated with District Credit Plan of each district.
The district consultative committees must also be revamped and the periodic meetings must be result-oriented and not mere rituals.The revamped LBS must become an effective instrument in bringing about full and active involvement of all banks and other players in all efforts and schemes.
The lead district manager is an officer on scale III in MMG at present .The post must be upgraded and an Asst.General Manager must be appointed as Chief Lead District Manager and he must have a Deputy in Dy Chief Lead District Manager who must be a chief manager in grade.Adequately qualified officers say with postgraduation in Economics,Commerce or Statstics with flair for co-ordinating and development work must be identified and posted as Chief Lead District Manager.The RBI must give adequate importance to the scheme and its revitalisation.The regional Director of RBI in each state must take the scheme seriously so that banks can involve themselves fully in the scheme and its implementation.
There is pressing need to revamp and revitalise the lead bank scheme so as to make it an effective instrument for bringing about meaningful co-ordination among banks and other players operating in a district.Today there are new players such as micro finance institutions,NGOs ,co-operatives,rural development trusts,HFCs self help groups etc.A revamped lead bank scheme must be able to bring about greater participation among all players in achieving full and meaningful finacial inclusion.
Financial inclusion calls for united action and unity of purpose among all banks and players in a district.An approach on the lines of area approach can be adopted and in each area or location a particular bank can be given responsibility for achieving meaningful financial inclusion.A system of full computerisation of the process of data collection and feeding of data by all banks must be put in place at once.All banks must enter data online on a daily basis.With the help of this the lead district office can periodically prepare updates and review reports for monitoring purposes.Such data base can also help in preparing credit plans,fianacial inclusion plans progress reports etc from time to time.Potential linked plan of NABARD must be integrated with District Credit Plan of each district.
The district consultative committees must also be revamped and the periodic meetings must be result-oriented and not mere rituals.The revamped LBS must become an effective instrument in bringing about full and active involvement of all banks and other players in all efforts and schemes.
The lead district manager is an officer on scale III in MMG at present .The post must be upgraded and an Asst.General Manager must be appointed as Chief Lead District Manager and he must have a Deputy in Dy Chief Lead District Manager who must be a chief manager in grade.Adequately qualified officers say with postgraduation in Economics,Commerce or Statstics with flair for co-ordinating and development work must be identified and posted as Chief Lead District Manager.The RBI must give adequate importance to the scheme and its revitalisation.The regional Director of RBI in each state must take the scheme seriously so that banks can involve themselves fully in the scheme and its implementation.
Saturday, August 2, 2008
Repo Rate and CRR
The Repo rate was 7.5 percent on 31st January 2007.It was hiked to 7.75 with effect from 30th March 2008 and to 8 percent from 11th June 2008.It was revised upwards to 8.50 percent with effect from 24th June 2008.It has been hiked to 9 percent with effect from 29th June 2008
As reagrds CRR it was 6 percent on 13th February 2007.It was hiked to 6.50 percent from 30th March 2007.It was revised upwards to 7 percent with effect from 31st July 2007.It was hiked to 7.50 percent from 30th October 2007.It was hiked to 8 percent from 17th April 2008 and to 8.25 percent from 29th April 2008.With effect from 24thJune 2008it was hiked to 8.75 percent.Recently i.e with effect from July 2008 CRR was hiked to 9 percent.
As reagrds CRR it was 6 percent on 13th February 2007.It was hiked to 6.50 percent from 30th March 2007.It was revised upwards to 7 percent with effect from 31st July 2007.It was hiked to 7.50 percent from 30th October 2007.It was hiked to 8 percent from 17th April 2008 and to 8.25 percent from 29th April 2008.With effect from 24thJune 2008it was hiked to 8.75 percent.Recently i.e with effect from July 2008 CRR was hiked to 9 percent.
Friday, August 1, 2008
GROWTH OF INDIAN BANKING
In 1969 the number of bank branches were8262.Number of branches increased to 70711 in 2007,8.5 times increase.During the same period i.e from 1969 to 2007 deposits increased from Rs4646 crores to Rs.2598823 crores.This shows559 times increase.In 1969 total advances were Rs.3599 crores and advances rose to Rs.1949567 crores in 2007.This was 542 times increase.Per branch population which was 64000 in 1969 declined to 16000 in 2007.This was 4 times decline.Deposits per branch were Rs.56 lakhs in 1969.Deposits per branch rose to Rs36.75 crores in 2007,66 times increase.Advances per branch were Rs.44lakhs in 1969.Advances per branch rose to Rs.27.57 crores in 2007,an increase of 62.6 times.
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