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The collaboration suite of cyber criminals Cautious and considerate Another route for achieving financial inclusion New bank licences, at last... Bottomlines shrink, bad loans rise... From lazy banking to easy banking Mega merger is on Smart banking in smart cities Greet Lakshmi the banking robot Rationalised Cradle of banks to a smart city... How okay are new banks? Perhaps small is more beautiful than big! Capital base of regional rural banks raised Big bank merger, bigger expectations Banking overhauling or reorganisation? Lacklustre credit expansion Good, bad and ugly Indian customers are tech savvy Grows Bigger What is the priority – mergers or NPA reduction? All that glitters is not gold... Banking on Risk Anytime banking to anywhere banking Nothing much can happen…. LVB- A supermarket of financial services Fund healthcare clinics in villages... A new development bank rising in the east… Managing NPAs... A development bank for BRICS Bank deposits account for 46.3 per cent of household savings Two banks: their jubilees and performances Well-lived... One down in private sector Ferrying digital banking to Lakshadweep Needed a Banking Atlas Growing volume of stressed assets… Drop in SLR- sparing lendable resources Monetary policy continues to adopt dis-inflationary path It’s a war on black money, support it. How ‘secure’ are the secured loans? Payment banks have arrived Holy or unholy? Why any time money? Reaching the Unreached… Why priority status? Small finance payment banks... Too big to fail and too small to sail New capitals of Migrant banks Targets continue to be ad hoc Insatiable appetite for credit Cut in repo rate – lower than expected Who is the real beneficiary? Governance in Reverse Gear? Small is ‘more’ beautiful Drastic decline in asset quality Thirty more cities seek to become SMART Hesitancy in announcing year-end results A bank for women, by women The paradox: clamour for the Goliath and David Ernakulam excels... Just 660 days! Target over-ambitious... Banking in Telangana Reaching out: is it slowing down? Aadhaar, niraadhaar and banking Stage set for Indian ‘avatar’ of foreign banks Emerging crisis Small finance banks offer high interest rates Financial inclusion vs unclaimed deposits Merger mania haunts banks United India Insurance - Rs 110 crore losses have been claimed till now due to floods in Tamil Nadu Growing gainfully
 
Why priority status?
Recently, the charismatic Governor of Reserve Bank of India, Raghuram G Rajan, raised an important question: “should a student loan for study abroad come under priority sector?”

Priority sectors have, over the years, become an omnibus carrying all types of passengers. Successive committees have widened the definition without bothering to fix uniform targets across banks.

Domestic educational loans do qualify to be included in the priority group. And happily no targets are fixed for such loans. The total amount lent as on March 2012 is Rs 52,004 crore. These loans have enabled thousands of young students to pursue higher studies. The number of borrowers is 26.47 lakh, of which about 55 per cent (15.48 lakh) are from rural and semi-urban areas.

Originally, education loans were extended for students from the middle-income groups to pursue higher studies. Taking advantage of the readily available schemes, parents from the richer sections also began availing such loans, especially for education abroad. There are now indications of defaults in repayment and that too after securing their plump jobs. Tracing defaulters in an alien country after a lapse of three to four years is difficult for bank mangers stationed in remote towns. The dollar-earning borrower, changes jobs like changing his shirt. There are also instances where the old parents, who stood as guarantors, are abandoned by the beneficiaries.

It is therefore desirable to confer the priority status only to domestic education loans and to treat foreign study loans as any other commercial loan. Incidentally, even in domestic education loans, there are problems of recovery.

 

When medicos refuse to service in rural areas

Since the implementation of the programme Health for All, more medical colleges have come. Banks have financed many of these colleges and have extended educational loans to students. It was expected that these medicos would spend at least two years in rural service. Unfortunately, most of them are looking for greener pastures. Atleast in one highly reputed medical college in the south, after completion of studies, the young doctors were insisting upon refunding the stipend obtained rather than serving the rural term!

 

Improving the efficiency of banks’ human capital

The banking sector in India has grown very large, functionally and geographically, during the last couple of decades. The size of bank personnel has also enlarged. The banking sector now trains the new recruits by out-sourcing. The Reserve Bank of India has appointed a Committee on Capacity Building in Banks and non-banks, under the chairmanship of Gopala-krishna, former Executive Director, Reserve Bank of India and currently Director, Centre for Advanced Financial Research and Learning.

The committee has made useful recommendations on improving the efficiency of the banking sector. “The recruitment process should not be sporadic or lumpy but ensure regular in-take so as to ensure growth in manpower in tandem with business needs. The recruitment process needs to be re-engineered to reduce the time lag between conduct of exams and issue of appointment letter.” Further it has argued for a transparent and comprehensive performance assessment exercise. The factors to be taken into consideration include clear Key Result Areas (KRA), a holistic performance evaluation framework which includes 360 degree feedback, ensuring adequate performance differentiation among employees and suitable reward and recognition. Creation of the position of Chief Learning Officer in banks is one of the other important recommendations made by the committee.

A minor omission is that no reference is made to the need for improving the skills of the lead district managers in the context of the accent on financial inclusion. When the lead bank scheme was introduced in 1970, there were less than 330 lead districts, whose number has gone beyond 630 at present. The recruitment, training and promotional prospects of this group of officers is grossly neglected in most of the banks. In order to make the Jan Dhan project a success, this cadre of managers has to be properly selected and trained.

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