This refers to your edit ‘credit where it is not due’ (December 26,2011).The NPA menace which was kept under some check for a few years has again been raising its ugly head. More NPAs mean, more resources the banks have to find to maintain capital adequacy. The loss to the economy on account of NPAs is unfortunately made to bear by tax payers as the Govt loses its revenues on account of reduction of GDP because of non performance of assets and also is made to contribute to capital through budgetary provisions to enable the banks to maintain the capital adequacy standards as per Basle norms. Further, the cost of NPAs is unknowingly borne by all stakeholders of banks other than by the bad borrowers is an unfortunate reality. The fact that banks can camouflage NPAs and keep them under the carpet is well known and the hidden NPAs are difficult to be identified. Added to this, the permission granted by the Reserve Bank in August 2008 to restructure some of the unsatisfactory accounts and treat them as standard assets if found viable, has helped banks to keep the NPAs down artificially.
It is for the Govt and the Reserve Bank to seriously view the NPA menace and introduce a lasting solution perhaps acceptable to all stakeholders of banks other than borrowers. Time has come to give a serious thought to discipline the borrowers and to contain the problem of NPAs. Since only banks and borrowers do figure in the generation of NPAs, the only and ideal way to come out of this ever greening problem is to have a built in mechanism to liquidate NPAs by means of creating a fund under the nomenclature Precautionary Margin Reserve Fund (PMR) involving all borrowers and banks themselves. This has to be done on a systematic and scientific basis. Over a period this fund will be more than the formation of NPAs, and this approach can strengthen the vitally missing credit discipline among the borrowers. This suggestion developed through a statistical model has been found workable resulting in disciplining the borrowers and making the balance sheet of the banks strong. The Govt is the major beneficiary in case the solution is introduced.
T.V. Gopalakrishnan
(edited version of this appeared in Business-Standard dt 27/12/11).
Tuesday, December 27, 2011
Saturday, December 24, 2011
GDP , Economic Activities and Taxation policy
There are varieties of economic activities.But to what extent these economic activities and income generated from them reflect in GDP or tax revenue etc are in serious doubt. In various cities like Mumbai, Chennai Delhi, Calcutta, there are varieties of markets dealing right from scraps to gold bullion. There are whole sale and retail markets and transactions are generally in cash running into lakhs and even crores. These merchants are seldom seen issuing any receipts and it is difficult to assess tax collection if any. Apart from loss of revenue to the Govt, this system of transactions encourage black money and indiscipline in the society. It is desirable in the larger interest of the society that these transactions and the turn over should reflect online in some centralised data collection centre making use of the IT strength of the country. The very system of data generation will help to throw some light on the volume of transactions and money generated in the economy. This will pave way for formulation of policies on taxation,improvement of financial and banking inclusion, tracking black money generation and bringing in discipline and order among the trading community in paricular for conducting their business as per the laws of the country. It is not that difficult to get the transactions properly accounted for. Insistence of official receipt and getting the transactions tracked through IT will do the trick.The benefit is for the economy and the society.
Wednesday, December 21, 2011
NPA Menace
Time for the Govt and the Reserve Bank to come out of the morass caused by Non Performing Advances ( NPAs) in Banking and the Economy.
The NPA menace which was kept under some check for a few years has again been raising its ugly head disturbing the peace of mind of authorities i.e. the Govt and the Reserve Bank. More NPAs mean, more resources the banks have to find to maintain capital adequacy. As long as lending remains an inevitable function of banking and banks have to deal with human beings as borrowers, this problem will continue to haunt the banks. Further, the changes in economic scenario which gets influenced by several micro and macro economic factors that include both domestic and international such as declining GDP growth, high inflation, financial instability, exchange and interest rate volatility, monsoon conditions etc where the management of banks have no control whatsoever, also affect the working of banks adversely and resulting in increased level of NPAS. The present approach by the regulator to expect the banks to make good the loss on account of NPAs by charging to banks' profit and loss account at the cost of all stakeholders of banks viz; depositors, borrowers, shareholders, employees and even customers is neither ethical nor prudential by any reckoning. Further the loss to the economy on account of NPAs is unfortunately made to bear by tax payers as the Govt loses its revenues on account of reduction of GDP because of non performance of assets and also is made to contribute to capital through budgetary provisions to enable the banks to maintain the capital adequacy standards as per Basle norms. The position of Public Sector Banks NPAs vis-a-vis advances, deposits and investments for the period 1993 to 2011 is given below.
( Amount in Rs Crores)
Year Advance NPA NPA as % of Total Advances Deposit CD Ratio Investment Investment Deposit Ratio
1993 1,69,340 39,253 23.2 2,63,315 58.5 99,889 37.9
1994 1,65,621 41,041 24.8 3,03,392 48.4 1,32,810 43.7
1995 1,97,352 38,385 19.5 3,48,938 50.9 1,50,432 43.1
1996 2,31,321 41,661 18.0 3,90,820 53.1 1,62,667 41.6
1997 2,44,214 43,577 17.8 4,49,329 49.0 1,91,058 42.5
1998 2,84,971 45,653 16.0 5,31,723 48.9 2,27,102 42.7
1999 3,25,328 51,710 15.9 6,36,810 46.7 2,76,802 43.5
2000 3,80,077 53,294 14.0 7,37,280 47.8 3,33,414 45.2
2001 4,42,134 54,773 12.4 8,59,376 48.2 3,94,107 45.9
2002 5,09,368 56,473 11.1 9,68,623 52.6 4,54,509 46.9
2003 5,77,813 54,090 9.4 10,79,393 53.5 5,45,668 50.6
2004 6,61,975 51,541 7.8 12,29,462 53.8 6,26,176 50.9
2005 8,77,825 48,399 5.5 14,20,750 61.8 6,60,674 46.5
2006 11,34,724 41,358 3.6 16,22,481 69.9 6,33,557 39.0
2007 14,64,493 38,968 2.6 19,94,199 73.4 6,64,645 33.3
2008 18,19,074 40,595 2.2 24,53,868 74.1 7,99,841 32.6
2009 22,83,473 45,156 2.0 31,12,748 73.4 10,12,666 32.5
2010 27,01,019 57,301 2.1 36,91,802 73.2 12,05,783 32.7
2011 33,05,632 71,047 2.2 43,72,985 75.6 13,28,534 30.4
Source : Trend and Progress of Banking various issues.
It is gratifying to observe that the gross NPAs as percentage of gross advances have drastically come down from 23.2% in March 1993, (when the concept of NPA was first introduced in terms of Financial Sector Reforms) to 2.2 % in March2011. Working of banks got further streamlined based on banking sector reforms introduced in 1998. The results are very encouraging. In the decade 2000 to 2010s, Banks could bring down considerably its NPAs. Many factors have come to the rescue of banks in keeping the NPAs down. The banks were identifying the NPAs through manual process all these years and it was humanly impossible to assess the correct position of NPAs. The banks could manage to keep many NPAs under the carpet and the hidden NPAs were difficult to be identified as banks had umpteen ways to camouflage NPAs. The boom in real estate prices came handy for banks to bring pressure on borrowers who also found it advantageous to sell off their assets and come out of banks' clutches. Further, Debt Recovery tribunals, Lok Adalats, implementation of SURFAESI Act 2002 for recovery of dues, improved performance of the economy and bank's own performance in terms of better profitability on account of enhanced efficiency, productivity, competition, better return out of investments and diversification of operations greatly contributed to bring down NPAs. Huge write offs of NPAs again at the cost of shareholders who include the Govt, effective regulation and supervision of the Reserve Bank had also played an important and effective role in keeping down the level of NPAs. The provisioning requirements of the Reserve Bank in particular compelled banks to be vigilant in minimising the NPAs. Added to this, the permission granted by the Reserve Bank in August 2008 to restructure some of the accounts (though strictly need to be classified as NPAs) and treat them as standard assets if found viable, limited the growth of gross NPAs. The gross NPAs of public Sector banks with all aforesaid adjustments stood at Rs 71047 crores as at end March 2011 are still staggering and causing concern. The steep increase in advances since 2005 onwards (CD ratio increased from 61.8 in 2005 to 75.6 in 2011) is something abnormal and how much of this would turn out to be NPAs is worth watching. With the recent switch over to computerised system to identify the NPAs, the position has been moving from bad to worse. The high interest rate regime, persisting inflationary and near recessionary conditions in the domestic economy, and discouraging economic scenario in US and Europe, the chances of generation of more NPAs in coming months cannot be ruled out. The fact that NPAs affect the economy in general and all stakeholders of banks in particular adversely and finally lead to bail out of banks with budget allocations has been the trend, has to be recognised and this approach to manage NPAs needs a final go-bye.
Time has come to give a serious thought to this NPA menace and a lasting solution to put up with NPAs and at the same time discipline the borrowers without jeopardising the interests of other stake holders has to be attempted. Since only banks and borrowers do figure in the generation of NPAs, the only and ideal way to come out of this ever greening problem is to have a built in mechanism to liquidate NPAs by means of creating a fund under the nomenclature Precautionary Margin Reserve Fund (PMR) involving all borrowers and banks themselves. This has to be done on a systematic and scientific basis. Over a period this fund will be more than the formation of NPAs, and this approach can strengthen the vitally missing credit discipline among the borrowers.
There is a saying that all truth passes through three stages. First it is ridiculed. Second it is violently opposed. Third it is accepted as being self evident( Arthur Scapenhauer). The suggestion to remedy the NPA menace through creation of fund i.e. PMR should not be similar to that and kept aside. Bankers and borrowers will ridicule the suggestion first and oppose it as it affects them directly. Banks will have to tighten the monitoring of accounts on a continuous basis to rate the borrowers, discipline them and levy the contribution towards the PMR fund based on borrowers' rating. Bankers are generally inclined to satisfy the borrowers and do not want to incur any displeasure by being strict and vigilant with them for fear of losing the account when the going is good. Borrowers will oppose creation of this fund as it adds initially to their cost of funds and expects them to adhere to strict credit discipline though they can derive the benefit in the long term. Besides, the rating will have reputation risk with attendant consequences.
It is for the Govt and the Reserve Bank to seriously view the NPA menace and introduce a solution perhaps acceptable to all stakeholders of banks other than borrowers. This suggestion developed through a statistical model has been found workable resulting in disciplining the borrowers and making the balance sheet of the banks strong. The Govt is the major beneficiary in case the solution is introduced.
(Views are personal).
Dr.T.V.Gopalakrishnan
(Edited Version of this write up appeared in The Hindu-Business Line dated 19/12/11)
The NPA menace which was kept under some check for a few years has again been raising its ugly head disturbing the peace of mind of authorities i.e. the Govt and the Reserve Bank. More NPAs mean, more resources the banks have to find to maintain capital adequacy. As long as lending remains an inevitable function of banking and banks have to deal with human beings as borrowers, this problem will continue to haunt the banks. Further, the changes in economic scenario which gets influenced by several micro and macro economic factors that include both domestic and international such as declining GDP growth, high inflation, financial instability, exchange and interest rate volatility, monsoon conditions etc where the management of banks have no control whatsoever, also affect the working of banks adversely and resulting in increased level of NPAS. The present approach by the regulator to expect the banks to make good the loss on account of NPAs by charging to banks' profit and loss account at the cost of all stakeholders of banks viz; depositors, borrowers, shareholders, employees and even customers is neither ethical nor prudential by any reckoning. Further the loss to the economy on account of NPAs is unfortunately made to bear by tax payers as the Govt loses its revenues on account of reduction of GDP because of non performance of assets and also is made to contribute to capital through budgetary provisions to enable the banks to maintain the capital adequacy standards as per Basle norms. The position of Public Sector Banks NPAs vis-a-vis advances, deposits and investments for the period 1993 to 2011 is given below.
( Amount in Rs Crores)
Year Advance NPA NPA as % of Total Advances Deposit CD Ratio Investment Investment Deposit Ratio
1993 1,69,340 39,253 23.2 2,63,315 58.5 99,889 37.9
1994 1,65,621 41,041 24.8 3,03,392 48.4 1,32,810 43.7
1995 1,97,352 38,385 19.5 3,48,938 50.9 1,50,432 43.1
1996 2,31,321 41,661 18.0 3,90,820 53.1 1,62,667 41.6
1997 2,44,214 43,577 17.8 4,49,329 49.0 1,91,058 42.5
1998 2,84,971 45,653 16.0 5,31,723 48.9 2,27,102 42.7
1999 3,25,328 51,710 15.9 6,36,810 46.7 2,76,802 43.5
2000 3,80,077 53,294 14.0 7,37,280 47.8 3,33,414 45.2
2001 4,42,134 54,773 12.4 8,59,376 48.2 3,94,107 45.9
2002 5,09,368 56,473 11.1 9,68,623 52.6 4,54,509 46.9
2003 5,77,813 54,090 9.4 10,79,393 53.5 5,45,668 50.6
2004 6,61,975 51,541 7.8 12,29,462 53.8 6,26,176 50.9
2005 8,77,825 48,399 5.5 14,20,750 61.8 6,60,674 46.5
2006 11,34,724 41,358 3.6 16,22,481 69.9 6,33,557 39.0
2007 14,64,493 38,968 2.6 19,94,199 73.4 6,64,645 33.3
2008 18,19,074 40,595 2.2 24,53,868 74.1 7,99,841 32.6
2009 22,83,473 45,156 2.0 31,12,748 73.4 10,12,666 32.5
2010 27,01,019 57,301 2.1 36,91,802 73.2 12,05,783 32.7
2011 33,05,632 71,047 2.2 43,72,985 75.6 13,28,534 30.4
Source : Trend and Progress of Banking various issues.
It is gratifying to observe that the gross NPAs as percentage of gross advances have drastically come down from 23.2% in March 1993, (when the concept of NPA was first introduced in terms of Financial Sector Reforms) to 2.2 % in March2011. Working of banks got further streamlined based on banking sector reforms introduced in 1998. The results are very encouraging. In the decade 2000 to 2010s, Banks could bring down considerably its NPAs. Many factors have come to the rescue of banks in keeping the NPAs down. The banks were identifying the NPAs through manual process all these years and it was humanly impossible to assess the correct position of NPAs. The banks could manage to keep many NPAs under the carpet and the hidden NPAs were difficult to be identified as banks had umpteen ways to camouflage NPAs. The boom in real estate prices came handy for banks to bring pressure on borrowers who also found it advantageous to sell off their assets and come out of banks' clutches. Further, Debt Recovery tribunals, Lok Adalats, implementation of SURFAESI Act 2002 for recovery of dues, improved performance of the economy and bank's own performance in terms of better profitability on account of enhanced efficiency, productivity, competition, better return out of investments and diversification of operations greatly contributed to bring down NPAs. Huge write offs of NPAs again at the cost of shareholders who include the Govt, effective regulation and supervision of the Reserve Bank had also played an important and effective role in keeping down the level of NPAs. The provisioning requirements of the Reserve Bank in particular compelled banks to be vigilant in minimising the NPAs. Added to this, the permission granted by the Reserve Bank in August 2008 to restructure some of the accounts (though strictly need to be classified as NPAs) and treat them as standard assets if found viable, limited the growth of gross NPAs. The gross NPAs of public Sector banks with all aforesaid adjustments stood at Rs 71047 crores as at end March 2011 are still staggering and causing concern. The steep increase in advances since 2005 onwards (CD ratio increased from 61.8 in 2005 to 75.6 in 2011) is something abnormal and how much of this would turn out to be NPAs is worth watching. With the recent switch over to computerised system to identify the NPAs, the position has been moving from bad to worse. The high interest rate regime, persisting inflationary and near recessionary conditions in the domestic economy, and discouraging economic scenario in US and Europe, the chances of generation of more NPAs in coming months cannot be ruled out. The fact that NPAs affect the economy in general and all stakeholders of banks in particular adversely and finally lead to bail out of banks with budget allocations has been the trend, has to be recognised and this approach to manage NPAs needs a final go-bye.
Time has come to give a serious thought to this NPA menace and a lasting solution to put up with NPAs and at the same time discipline the borrowers without jeopardising the interests of other stake holders has to be attempted. Since only banks and borrowers do figure in the generation of NPAs, the only and ideal way to come out of this ever greening problem is to have a built in mechanism to liquidate NPAs by means of creating a fund under the nomenclature Precautionary Margin Reserve Fund (PMR) involving all borrowers and banks themselves. This has to be done on a systematic and scientific basis. Over a period this fund will be more than the formation of NPAs, and this approach can strengthen the vitally missing credit discipline among the borrowers.
There is a saying that all truth passes through three stages. First it is ridiculed. Second it is violently opposed. Third it is accepted as being self evident( Arthur Scapenhauer). The suggestion to remedy the NPA menace through creation of fund i.e. PMR should not be similar to that and kept aside. Bankers and borrowers will ridicule the suggestion first and oppose it as it affects them directly. Banks will have to tighten the monitoring of accounts on a continuous basis to rate the borrowers, discipline them and levy the contribution towards the PMR fund based on borrowers' rating. Bankers are generally inclined to satisfy the borrowers and do not want to incur any displeasure by being strict and vigilant with them for fear of losing the account when the going is good. Borrowers will oppose creation of this fund as it adds initially to their cost of funds and expects them to adhere to strict credit discipline though they can derive the benefit in the long term. Besides, the rating will have reputation risk with attendant consequences.
It is for the Govt and the Reserve Bank to seriously view the NPA menace and introduce a solution perhaps acceptable to all stakeholders of banks other than borrowers. This suggestion developed through a statistical model has been found workable resulting in disciplining the borrowers and making the balance sheet of the banks strong. The Govt is the major beneficiary in case the solution is introduced.
(Views are personal).
Dr.T.V.Gopalakrishnan
(Edited Version of this write up appeared in The Hindu-Business Line dated 19/12/11)
Wednesday, November 23, 2011
Tame the rise
Better Late Than never.
This refers to your editorial Get Going, Montek (Et dt,22/11/11). Inflation is said to the worst enemy of poor and the Govt and the planners have miserably failed to contain the inflation which has been in double digit for the past few months and continues to be defiant despite series of measures taken by the Reserve Bank. Containing inflation cannot be a lone battle by the Reserve Bank has been well proved and the failure of the Govt in this aspect has been very obvious. As rightly pointed out in your editorial, supply chain management with appropraite and effective logistics in the procurement, storage, cheap and quick transporation and distribution of the produce is the need of the hour to check spiralling of prices of food products. Further, incentives for improved productivity, controlling of corruption , black money and hoarding of agricultural products using bank funds will go a long way in bringing down prices. The suggestion to scrap the Agricultural Produce Market Committee Act is very valid and long overdue to be implementd. Coordination is the essence and planning Commission is well suited for that. Involvement of NABARD at state levels and Local Boards ofthe Reserve Bank would be of great help to coordinate.
(edited version of this appeared in ET dt 23/11/11)
Dr.T.V.Gopalakrishnan.
This refers to your editorial Get Going, Montek (Et dt,22/11/11). Inflation is said to the worst enemy of poor and the Govt and the planners have miserably failed to contain the inflation which has been in double digit for the past few months and continues to be defiant despite series of measures taken by the Reserve Bank. Containing inflation cannot be a lone battle by the Reserve Bank has been well proved and the failure of the Govt in this aspect has been very obvious. As rightly pointed out in your editorial, supply chain management with appropraite and effective logistics in the procurement, storage, cheap and quick transporation and distribution of the produce is the need of the hour to check spiralling of prices of food products. Further, incentives for improved productivity, controlling of corruption , black money and hoarding of agricultural products using bank funds will go a long way in bringing down prices. The suggestion to scrap the Agricultural Produce Market Committee Act is very valid and long overdue to be implementd. Coordination is the essence and planning Commission is well suited for that. Involvement of NABARD at state levels and Local Boards ofthe Reserve Bank would be of great help to coordinate.
(edited version of this appeared in ET dt 23/11/11)
Dr.T.V.Gopalakrishnan.
Monday, November 14, 2011
Make the Service Meaningful for self and others in society:
“People , it is said , can be placed in three classes; the few who makes things happen, the many who watch things happen, and the overwhelming majority, who have no idea what has happened”. The bank officials in general and public sector bank officials in particular have to necessarily find their place in the first category as by any standard they enjoy all possible comforts one can think of in a developing economy and they are comparatively in a commanding position by means of resources and support they get from the authorities to be of great service to society.
Corruption has been rampant in India and it has become a subject of discussion even among illiterate masses who are unfortunately the worst victims as they are at the receiving end in the sense unless bribe is given, they do not get their entitlements as citizens of this great nation. It is more than six decades since the country got independence, but have the people got their economic independence and dues for a comfortable and peaceful life is the question lingering in the minds of all right thinking human beings. The bank officials right from top to bottom can do a lot to improve the living conditions of masses and have the satisfaction of serving them in letter and spirit and giving the support system to give a big boost to the economic growth provided they get fully absorbed and involve themselves with commitment in the discharge of their responsibilities. The mandate for this has to come from within and for that everyone has to do an introspection to satisfy himself or herself as to whether justice has been done to the society which takes care of everyone’s need and to some extent greed also.
The celebration of Vigilance Awareness week has been going on for decades and the taking of oath on elimination of corruption has become a ritual and has been taken faithfully by each and every employee of Public Sector during the week. Bank employees, by and large are not corrupt, is a great consolation, but are they fully satisfying the expectations of the economy or the society consisting of around 70 percent of the people living below poverty line? It is not that banks alone can remove the poverty in India, but they can easily come to the rescue of poor people and give them the recognition they badly need in society for their survival.
Banks’ raw materials are basically money and people but they discriminate a lot, not by rule but rather by convention in their day to day business by not entertaining people of less means. This is a fact which cannot be ignored and this is exactly the reason for the financial inclusion not being a success despite persuasion, compulsion, motivation, incentives and encouragement. Why this reluctance and discrimination on the part of a bank official who deal with public deposits and authorities want financial inclusion by all means? There are millions of bank employees scattered throughout the length and breadth of the country and they are better placed to bring people of less means and less privileged under the banking fold. Employees have their own servants, iron wallas, plumbers, electricians and contacts with all categories of people in a society right from pan wallas to Gold merchants .Many people like carpenters, dealers in scraps, waste materials, traders etc do not have bank accounts or do not operate the accounts even if some have. If employees turn their attention a little and no special effort is called for, millions of people can be brought under banking fold. All their contacts can be easily encashed and many can be brought under banking fold. The officials have to take financial inclusion as an opportunity to show humanism and at the same time help the needy to improve their lot. Through financial inclusion bank employees can provide life to many and this will the greatest satisfaction one can derive from service.
KYC is a weapon to serve the customer better by understanding him and his requirements fully and not to kill him. Here the bank officials can perform better and add business to the bank. The present day banking is enjoying lot of freedom, products and advanced technology to improve business. Full understanding of Financial Inclusion and Know Your Customer norms offer excellent business opportunities and help the bank to comply with the authorities’ requirements. By adopting a human approach rather than being mechanical, even the NPA menace which has been growing like a cancer in the banking system can be tackled to a great extent. Mind should be devoted for service and service alone. Will the employees rise to the occasion and be more humane in their responsibilities to the society? By being humane, one derives great mental satisfaction and no money or compensation can achieve that?
I wish each and every bank employee would emerge as a great leader with the qualities defined in Sloka-21 of Chapter -3 of Bhagavat Geetha which says “Whatever action a great man performs, common men follow. And Whatever standards he sets by exemplary acts, all the world pursued”. It is time for each and every bank employee to set standards in his actions.
(Views expressed are personal)
Dr. T.V.Gopalakrishnan,
Corruption has been rampant in India and it has become a subject of discussion even among illiterate masses who are unfortunately the worst victims as they are at the receiving end in the sense unless bribe is given, they do not get their entitlements as citizens of this great nation. It is more than six decades since the country got independence, but have the people got their economic independence and dues for a comfortable and peaceful life is the question lingering in the minds of all right thinking human beings. The bank officials right from top to bottom can do a lot to improve the living conditions of masses and have the satisfaction of serving them in letter and spirit and giving the support system to give a big boost to the economic growth provided they get fully absorbed and involve themselves with commitment in the discharge of their responsibilities. The mandate for this has to come from within and for that everyone has to do an introspection to satisfy himself or herself as to whether justice has been done to the society which takes care of everyone’s need and to some extent greed also.
The celebration of Vigilance Awareness week has been going on for decades and the taking of oath on elimination of corruption has become a ritual and has been taken faithfully by each and every employee of Public Sector during the week. Bank employees, by and large are not corrupt, is a great consolation, but are they fully satisfying the expectations of the economy or the society consisting of around 70 percent of the people living below poverty line? It is not that banks alone can remove the poverty in India, but they can easily come to the rescue of poor people and give them the recognition they badly need in society for their survival.
Banks’ raw materials are basically money and people but they discriminate a lot, not by rule but rather by convention in their day to day business by not entertaining people of less means. This is a fact which cannot be ignored and this is exactly the reason for the financial inclusion not being a success despite persuasion, compulsion, motivation, incentives and encouragement. Why this reluctance and discrimination on the part of a bank official who deal with public deposits and authorities want financial inclusion by all means? There are millions of bank employees scattered throughout the length and breadth of the country and they are better placed to bring people of less means and less privileged under the banking fold. Employees have their own servants, iron wallas, plumbers, electricians and contacts with all categories of people in a society right from pan wallas to Gold merchants .Many people like carpenters, dealers in scraps, waste materials, traders etc do not have bank accounts or do not operate the accounts even if some have. If employees turn their attention a little and no special effort is called for, millions of people can be brought under banking fold. All their contacts can be easily encashed and many can be brought under banking fold. The officials have to take financial inclusion as an opportunity to show humanism and at the same time help the needy to improve their lot. Through financial inclusion bank employees can provide life to many and this will the greatest satisfaction one can derive from service.
KYC is a weapon to serve the customer better by understanding him and his requirements fully and not to kill him. Here the bank officials can perform better and add business to the bank. The present day banking is enjoying lot of freedom, products and advanced technology to improve business. Full understanding of Financial Inclusion and Know Your Customer norms offer excellent business opportunities and help the bank to comply with the authorities’ requirements. By adopting a human approach rather than being mechanical, even the NPA menace which has been growing like a cancer in the banking system can be tackled to a great extent. Mind should be devoted for service and service alone. Will the employees rise to the occasion and be more humane in their responsibilities to the society? By being humane, one derives great mental satisfaction and no money or compensation can achieve that?
I wish each and every bank employee would emerge as a great leader with the qualities defined in Sloka-21 of Chapter -3 of Bhagavat Geetha which says “Whatever action a great man performs, common men follow. And Whatever standards he sets by exemplary acts, all the world pursued”. It is time for each and every bank employee to set standards in his actions.
(Views expressed are personal)
Dr. T.V.Gopalakrishnan,
Monday, November 7, 2011
Time to clear off real estate accummulation
It makes sense to sell real estates particularly flats at current prices or even at discounted prices to clear off debts and avoid future losses. The market sentiments are against corruption and black money and accummulation of wealth by a few at the cost of masses will not be tolerated anymore. If the Govt is serious in tracking black money and accummulation of illegal wealth, the prices of real estate will have to crash sooner than later. This is the ideal time for builders to get rid off the stocks even at a lesser margin and profit than to incur heavy losses and debt.The advice by HDFC chief makes sense and worh pursuing.
T.V.Gopalakrishnan (Mumbai)
06 Nov, 2011 03:12 PM
T.V.Gopalakrishnan (Mumbai)
06 Nov, 2011 03:12 PM
Sunday, October 23, 2011
Exporters and Incentives
Posted on: Oct 17, 2011 at 22:32 IST inresponse to the editorial'Misguided Sops'.
Exporters are always a pampered lot.They enjoy tax incentitives, concessions,reliefs and interest rate subventions as the economy needs them to bring in as much foreign exchange as possible to support its essential imports particularly oil.Now it is time for the Govt to assess the support extended to exporters and value the benefits derived by the economy and reallocate the resources to vital segments like infrastructure which requires a thorough review, restructuring and fast development.One source of black money generation abroad is through exports and the inflow of funds to the economy through FDIs etc are part of this black money needs to be given weightage by the Govt when tax reliefs and concessions are liberally offered to exporters.Need based support is essential to encourage exports but as rightly pointed outin the editorial,it should not be at the cost of public money ignoring the other support system vitally needed for the economy to make all round progress.
Dr.T.V.Gopalakrishnan
This appeared in The Hindu-Businessline dated 18/10/11)
Exporters are always a pampered lot.They enjoy tax incentitives, concessions,reliefs and interest rate subventions as the economy needs them to bring in as much foreign exchange as possible to support its essential imports particularly oil.Now it is time for the Govt to assess the support extended to exporters and value the benefits derived by the economy and reallocate the resources to vital segments like infrastructure which requires a thorough review, restructuring and fast development.One source of black money generation abroad is through exports and the inflow of funds to the economy through FDIs etc are part of this black money needs to be given weightage by the Govt when tax reliefs and concessions are liberally offered to exporters.Need based support is essential to encourage exports but as rightly pointed outin the editorial,it should not be at the cost of public money ignoring the other support system vitally needed for the economy to make all round progress.
Dr.T.V.Gopalakrishnan
This appeared in The Hindu-Businessline dated 18/10/11)
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