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