Maximum Government and Minimum Governance

The Governance in PSBs  and in the Regulator is maximum by the Government and the result is visible in the functioning of the PSBs and RBI as well. The Reserve Bank has lost its regulatory autonomy and the interference of the Government on the functioning of RBI and Banks has led to the weakening of banks and dominance of Directors appointed by the Government in the sanctioning of loans and isssue of Directives by the Government Instead of by the RBI to banks. It is  also wrong to assume that all is well in private sector banks and everything is wrong in PSBs. The window dressing of Balance sheets and Profit and loss accounts is there in both the PSBs and Private sector banks but unfortunately the borrowers have more freedom to hoodwink the PSBs and get away easily which is somewhat difficult in Private sector banks as there are no Directors on their Board  either from the Government or RBI. Further the so called new generation  Private sector banks have some built in advantages of high tech, free of certain directives compelling them to lend to Prioirity sector, Financial Inclusion and opening of branches in unbanked and non profitable areas in as much as they are applicable to PSBs and above all they are acountable to shareholders.The pattern of lending resorted  to by PSBs and Private Sector Banks also differs and the clientele they have particularly new generation private sector banks are mostly high tech and they are also not concerned with various charges they are subjected to.The level playing field varies a lot and PSBs are always at a disadvantage.Instead of Maximum Governance other than by the Government, there is no Governance both in PSBs and RBI due to Governments' interference particularly in relation to regulation of banks  is a reality and this has to be accepted. Even the transmission of Monetary policy has not been as effective as it was in the olden days because of the interference of the Government in various ways.

Dr.T.V.Gopalakrishnan

(This comment is given in BS against an article Minimum Govenment and maximum Governance that appeared on 27/8/14). 

Is it not time for Depositors to unite and fight against exploitation?

Banking is becoming a mess and the way things are moving depositors would be asked to pay a fee for depositing the money. The use of technology is to save cost of transactions and ATMs have facilitated to save a lot of cost in terms of maintaining branches and staff at a high cost.SB account holders get a pittance of 4% for their balances and on that they have to pay taxes also if the interest exceed Rs 10000. Banks can manage to accommodate lakhs of Crores of NPAs and write off of loans again at the Cost of depositors as there is absolutely no resistance from them. Charging for ATM withdrawal is nothing but a planned loot and RBI should not be party to this.Time depositors unite and fight for their rights. It is unfortunate that banks and bad borrowers are thriving exploiting the depositors by all possible means and it is the best opportune moment for Money Life to organise Depositors and fight for their justifiable rights.

Dr.T.V.Gopalakrishnan

(This comment is published in Money Life dated 25/8/14 against an article is  the restriction on the free use of ATM  fair ?)

Comments on the Decommisioning of Planning Commission.

The move to remove planning Commission is excellent. This needs to be replaced with a suitable body  which can take care of the Regional Imbalances and equitable development of various states particularly underdeveloped states seeking active coopration of developed states. The new body should have experts from Agriculture, Planning, Industry, taxation,rural development, Information technology and data collection. It should have representation from all regions. The village surveys which were once prominent and helped to devise developmental plans have been unfortunately given a go bye and it needs to be reintroduced involving NABARD and Regional Offices of the Reserve Banks.  Local Boards of RBI need to be involved actively by the new body The strength and weaknesses of each and every state should be studied in depth and efforts have to be identified and activated to exploit the potential to the optimum. Infrastructure needs like Roads, Cold storage facilities, transports at reasonable costs need to be built without any leakage of money through corrupt practices. Social audits should be made compulsory whereever public spending is involved. A lot can be done by the new organisation and care should be taken to see that it does not become another white elephant.

Dr.T.V.Gopalakrishnan

Forex Reserves

Forex Reserves no doubt have been on the increase and are at somewhat comfortable leve, but the fact that the external debt is in excess of these Reserves cannot be ignored. The share of short term debt is also on the increase needs to be factored into. The best way to enhance the Forex Reserves is to increase the exports considerably particularly high value items through enhanced industrial production and project exports. The import of non essential items needs to be curtailed and imports substitutes should get encouragement through meticulous planning and execution. While inflows need to be given a boost, the outflows call for caution through persuation and moralsuation as liberalisation  should not lead to misuse. Management of reserves deserves continuous monitoring and skilled deployment to attract returns and further flows.

Dr.T.V..Gopalakrishnan

(this comment is given against the Editorial in BL on More Cover needed  dated 9/8/14)

The Technology that Banks use can land you in trouble - Money Life

How risk-free banking process promised by technology-driven banks can create problems for you

My experience with one of the largest private banks, among the more aggressive ones that came up in the 1990s, speaks a lot about how technology can be a bane instead of a boon. I left for a trip to the US and before leaving I called on the branch official to draw some foreign exchange, as also to ensure that in case I may need it, I should be able to execute my banking transactions through internet banking, which is relatively secure and hassle free. I also made a request in the prescribed format to ensure that the One Time Password (OTP), essential for internet banking, be forwarded to my e-mail account in addition to being sent to the registered mobile number. Further as a matter of abundant precaution, I requested the official to help me on my request in case any need arises as high tech banking permits, encourages and welcomes e-mail contacts and correspondence to avoid personal interactions.

As a back-up and to avoid the title of a defaulter of credit card dues, I cleared all my credit card dues till the day of my departure as per the banks’ statement. But the happiness of hassle-free banking was short-lived and I now find that I have become a defaulter for non-payment of an insurance premium to one of the group's associate companies, as well as a tax defaulter for not filing Income Tax returns by 31st July!

The mistake I made was that I did not carry my debit card and did not sign up for the international roaming facility on my mobile phone, as these requirements were not made known to me by the branch officials. All thanks to the risk-free banking process promised by technology-driven banks.

ICICI Bank, one of the largest in India, has a system to register complaints and feedback at various levels, through internet banking, by email and personally with the relationship manager designated for all privileged customers. However, when one contacts them, the system only ensures that the customer gets standardised replies with regret couched in very polite language.

The bank responded quickly, saying that, ‘We regret that currently we do not have the process to send One Time Password (OTP) for resident customers on e-mail. For resident customers, the OTP is sent on the registered mobile number. Alternatively, we wish to inform you that you may call our 24-hour Customer Care, post authentication, they will be able to confirm to you the OTP generated for your transactions’.

The customer cannot have any complaints about the behaviour and tone (which is very polite), but definitely cannot expect any favourable response for his or her grievances. This is to be expected as machines take care of the grievances and human beings have a limited role in delivery and redress of complaints.

I have been in constant and long-winded correspondence with the Bank, since May 2014, about my inability to access to my internet banking account, and inability to transact in the account for want of the so called OTP. The bank neither bothered to understand the problem in totality, nor did it care to arrive at a workable solution. The issue of the OTP, even though cumbersome, could still be resolved and I had a small share in the blame, but without one’s debit card, the technology would not allow any transaction through internet banking and the bank has no solution or process to take care of this.

What is more shocking is that either the Bank's branch level personnel are either unaware or do not care to inform the customer, that it is essential to carry their debit card and registered mobile (obviously on international roaming) while going abroad.
All this, thanks to the risk-free banking processes offered by banks, without knowing banking in the real sense of the term and without considering a customer's needs.

Meanwhile, I came across a news report in Business Standard that the Bank has plans to introduce/ improve their services to non-resident Indian (NRI) customers.

I think it would be better for the Bank to improve its services for domestic customers first, before it attempts to introduce/ improve its services to customers outside the country. The bank has a system to receive complaints and feedback, and these can be registered at various levels, but the fact remains that the replies are standardised from all levels and the complainants receive the same stereotyped replies.

Knowledge of banking is alien to its operational level staff and the human touch and interaction cannot be expected of them. These were virtues of banking in the 1990s and earlier periods. The present staff are expected to know and refer only to some standard checklist fed into the computer. Know your customer (KYC) norms and technology have also become more of a handicap than a help for customers when it comes to switching banks. When the domestic customers undergo harassment and harrowing experiences without any possibility of getting relief, one cannot even imagine the sort of suffering the NRI customers would undergo. The top management's intentions are most likely good and laudable, but the fact remains that their intentions seldom percolate to the operational level and the ground realities are completely different and unpleasant.

Banks need to provide services based on customer needs and adopt processes built more on common sense, knowledge and human interaction wherever needed. KYC and technology are to be used only, at the most, as facilitators.

Dr.T.V.Gopalakrishnan
(This article appeared in Money Life dated 1/8/2014).

Surprises and shocks

The article is very interesting and gives an analysis of events in a  unique way.Life is full of surprises for all particularly Indians. They got UPA into power twice in 2004 and 2009,but they got only scams and unmanageable price increases all around. It was both a surprise and a shock.They elcted BJP for the total surprise of all Congressmen and their leaders. Now people are wondering whether some Change would happen in the economy  or not . Expectations were at the peak when Mr Modi took charge of the country on May 26th and now two months are over and what would happen to the economy is still a mystery.Budget has not only surprsed but added to the confusion. Nobody including veteran economists are able to say in very clear terms whether budget is growth oriented or people oriented. or both. A bit confusion is there on that count. Nature has its own surprises.Earlier prediction was that it would be a failure but now it rains cats and dogs throught out the country as per some reports.Russia and Israel have created chaos, shocks and surprises the world over. Life goes on with lot of optimism,surprises and hopes.

Dr.T.V.Gopalakrishnan

(This comment is given in response to an   article by T C A Srinivasa-Raghavan: Bau saras, Mr Modi that appeared in BS dated 2/8/14).

   

Time for RBI to be soft

The fact that both Government and RBI are really seized of the concern of inflation and steps initiated by them have started yielding some positive signs on inflation and inflation expectations, cannot be ignored by the RBI while deciding the monetary policy at this crucial stage when the efforts of the Government to give a boost to the confidence level in the economy are catching on well and needing solid support from monetary policy angle. Further, the monsoon seems to be favourable and other trends which can cause inflation except perhaps the price of oil are moving in favourable direction. Industrial production has been picking up well and agricultural activities have been going strong all over the country with improved monsoon. This is the ideal opportune moment for RBI to give a signal that RBI favours soft rates to keep the growth momentum shown in industry and elsewhere. Inflation is definitely not because of monetary policy is a known fact and RBI can definitely be bold in reducing the policy rates. 

Dr.T.V.Gopalakrishnan