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COVER
STORY
Bank
Credit: Redefining Priorities
- - Katuri Nageswara Rao
An
internal group of RBI studied the question of priority
sector credit and recommended that directed lending
has to be continued with respect to small borrowers.
Directed lending, if continued, has the potential to
generate huge employment.
© 2006 IUP . All Rights Reserved
COVER
STORY
Rural
Credit and Microfinance: What the RBI Internal Group
Report Says
- - Katuri Nageswara Rao
Financial
exclusion of vast ruralities is a cause of concern.
Recently, an RBI committee formed to look into the matter
recommended microfinance route through self-help groups,
with two models namely business facilitator model and
business correspondent model.
© 2006 IUP . All Rights Reserved.
RISK
MANAGEMENT
Building
Blocks of Credit Risk Management in Commercial Banks:
Influence of Basel II
- - Sandip Kumar Bagchi
Lax
credit standards can jeopardize the existence of a bank.
Major building blocks to its management are skilled
and experienced manpower and innovative technology.
Basel II has suggested various innovative approaches
to manage the credit risk. Due to huge investment and
skills required with adoption of advanced approach,
Indian banks have been instructed by the RBI to adopt
standardized approach initially and upgrade later on
to more sophisticated approaches.
© 2006 IUP . All Rights Reserved
SCENARIO
HR
and Operational Challenges in Bancassurance: An Indian
Perspective
- - VV Ravi Kumar
While
bancassurance is a new concept in India, it is fast
catching up. In such an environment, both insurer and
banks could face HR (Human Resource) and operational
challenges in the early stage of its implementation.
Some of these challenges relate to training of employees,
compensation, before and after sale services etc. The
success of both insurers and banks in this area would,
therefore, lie in the strategies adopted to tackle these
issues.
© 2006 IUP . All Rights Reserved
SCENARIO
The
Trends in the Financial Performance of Banks in India
2000-01 to 2003-04
- - Sajikumar
The
policy initiatives have ushered in greater competitiveness
among the banks by granting greater autonomy in deciding
upon the instruments to mobilise resources and deploy
them accordingly to ensure optimal returns. However,
the change in the micro and macro environment of the
scheduled commercial banks have not yielded significant
gains in terms of interest income/other income, operating
profits, net profits and spread. In almost all the positive
financial performance indicators the foreign banks are
dominating, followed by the public sector banks and
the private sector banks.
© 2006 IUP . All Rights Reserved
PRODUCT
Debit
Cards Overtaking Credit Cards in India
- - Tapash Ranjan Saha
Though
the number of credit cards has been growing at a good
pace, of late, debit cards growth is outpacing the
credit cards. It shows that either the banks are charging
too much for credit cards with regard to fees, interest
etc., or Indians are conservative and they dont want
to put themselves in a debt trap. Also, to obtain a
debit card only savings account is required with a bank.
© 2006 IUP . All Rights Reserved
CREDIT
MANAGEMENT
Bankers
Dilemma: To Lend or Not to Lend
- - Chowdari Prasad
Indian
banks have been able to reduce the level of NPAs. Still
they are in a dilemma whether to lend to corporates
and follow up the recovery or shift their focus elsewhere.
To this effect, they are moving towards safer side by
increasing lending to housing sector, consumer durables
etc. Although benefits of retail lending are many, corporate
lending cannot be ignored. Banks should develop appropriate
strategies in terms of risk management, lending practices
etc., which will help to reduce NPAs in corporate credit.
© 2006 IUP . All Rights Reserved
MONEY
LAUNDERING
KYC:
Anti-Money Laundering Standards and Banks
- - Reena Ray
In
2004, RBI came out with recommendations whereby it instructed
the banks to frame out their own KYC (Know Your Customers)
policies. Banks are expected to ensure full compliance
before end-December 2005. Though such compliances create
challenges for banks with regard to profitability, technology
etc., benefits are also huge like reputation building,
gain of trust and respect of customers, employees, business
associates and society at large.
© 2006 IUP . All Rights Reserved
CASE
IN FOCUS
The
Revival of United Bank of India
- - Krishna Chaitanya V
UBI
was one of the sick banks according to the parameters
suggested by Verma Committee in 1999. But after restructuring,
it has shown impressive performance with regard to the
seven parameters set by the Verma Committee. The bank
has worked hard on marketing and motivational starategies
and focused on strict cost control measures, with good
results.
© 2006 IUP . All Rights Reserved
SPEECH
Banks
and Corporates as Partners in Progress
- - YV Reddy
Banks
have to think over the implications of recent paradigm
shift in global banking for the bank-corporate relationship.
There are differences across countries in the role and
functioning of banks vis-à-vis the corporates. In the
bank denominated financial system, like India, banks
support corporates not only by direct lending, but also
through their positions in money, debt, equity and derivatives
markets. Banks should focus on risk involved in business
to which they are lending.
© 2005 Reserve Bank of India (www.rbi.org). Valedictory
address by Dr. YV Reddy, Governor, Reserve Bank of India
at the FICCI-IBA Conference on `Global Banking: Paradigm
Shift on October 7, 2005 at Hotel Hilton Towers, Mumbai
.
BOOK
REVIEW
Innovations
in Banks
- - Katuri Nageswara Rao
The
banking industry underwent profound changes of consolidation,
with the spread of electronic banking and increased
freedom to combine banking with other financial services.
This book on innovations in banks states that banks,
face challenges in meeting the surging customer expectations,
profitability, thinning spreads and employee productivity.
These challenges were instrumental in bringing about
core banking solutions, centralized processing, distributed
servicing and easily scalable open systems to provide
choice and convenience. The new game requires new strategies
with an accent on innovation for organizational transformation
and for achieving world class competitiveness through
improved efficiency and reduced operational cost.
© 2006 IUP . All Rights Reserved
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