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(UPDATED UP TO 31.05.2015)

Compiled By :

Shrabana Kumar Nial

Chief Manager (Lead Bank))
State Bank of India
Lead Bank Office, V.T.Road
e-Mail :
: 9437328855/7077332244
Your Interview, Shrabana Kumar Nial




Tips to face Interview









Union Budget 2015-16







Economy Survey of India 2015-16





















New Initiatives









Important E-Circulars













List of Selected Abbreviations

Name of the Indivisual Topic



Your Interview, Shrabana Kumar Nial


Union Budget 2015-16
Economy Survey of India 2015-16
Economic & Financial News
Atal Pension Yojana (APY)1 Details of the Scheme.


Sukany Samriddhi Account
Mudra Bank - new regime, old philosophy
Another Gold Hunt
Post Bank of India: All You Need To Know,
NITI Aayog
What is a payments bank
Make in India - beyond the slogan
Mission 2020: Banks Need to be Cautiously Optimistic
Lessons from Indias debt crisis
How will workplaces in India look like in 2022?


Your Interview, Shrabana Kumar Nial


Full convertibility is on its way

Economic reforms: Looking back & ahead
Why the govt. took a U-turn on public debt office
Inflation is bad, but is deflation good
Ways to deliver good customer service
The customer is king. Really
Selling never goes out of fashion
India in "sweet spot" of lower deficits, more growth Economic Survey
Foreign direct investment (FDI) in retail sector
Shortage of capital:Should government's stake in PSU
banks be divest
Bank Privatisation by the Backdoor
A new framework for monetary policy
Nuts and bolts of financial inclusion
Why business groups should not own banks
Wanted: An independent, accountable RBI
India and the Age of Acceleration
Why India's Corporate Bigwigs Want to be Bankers
Provision Coverage Ratio (PCR)
Khandelwal Committee Recommendations
The Basel III

All about ESOPs
How banking next will click
Cheque mate
ALM: It's all about risk management
Take-Out Financing
What is the proposed ABCD
What is Shadow Banking System
Casino banking


Your Interview, Shrabana Kumar Nial


Bearing: Walk erect and with confidence. Look into the eyes of the Chairman and
Members when you talk to them. Smile and be pleasant. Be enthusiastic and
interested. You must be lively, keen and cheerful. Let your optimism and energy radiate.
Conduct: Politeness pays. Be sympathetic and attentive. Observe meticulously the
code of manners and etiquette. Never be rude or offensive. Do not neglect to pay
Speech : Talk slowly deliberately and audibly. You should neither shout nor mumble.
Pronounce your words clearly and crisply. Never be dull or monotonous with your words.
the use of such phrases like, you see, I say, of course I mean etc.
Dress: chose your dress with care. It must be befitting the occasion.
Personal Hygiene: Be neat, tidy and clean. See that you are well groomed.
Self control: Do not become emotional or get nervous. Be confident and patient.
Check unnecessary movements. The Board may deliberately try to provoke you and
see how easily you could be upset. Never lose your temper.
Do not bluff: State only what you know to be correct. Do not hazard guesses unless you are
asked to do so. Shooting lions and boasting will land you in trouble. Do not try to be too
Remember, the board has year of experience and has seen many candidates.
Own up your mistakes : If the board points out that you had made a mistake and you
realize it to be fact, then be courageous and own it up. Never try to cover it up. The
Board will respect you for your honesty.
Initiative: Use your initiative but watch the reactions of the Board. Also be conscious of
your limitations. Do not over shoot. Do not draw conclusions. Be discreet when you talk
about your own accomplishments. They should be conveyed subtly and tactfully.
Criticism and Arguments: Do not criticize. Never try to find faults. As faras possible,
stress the good point of others. It is better to be silent than to criticize. Do not get
Your Interview, Shrabana Kumar Nial

involved in unproductive arguments. You have not gone to the interview to win a
verbal battle but to have an enjoyable conversation. See how you can agree rather
than to disagree. As a last resort, you may agree or disagree.
Listen and Observe: Keep your eyes and ears open. Study their reactions. You will
know when tostop talking and when to listen. As a rule, do not interrupt. If the other
person wishes to talk, let him do so. In fact, encourage him to talk. Be an attentive and
enthusiastic listener.
Practice: Practice, Practice and Practice. You must have as much practice as possible.
Enlist the goodwill and co-operation of your friends, colleagues, elders and family
members and have practice session with them. The more practice you

You do need to be aware about your surroundings and this includes some
familiarity with current

affairs. Banking industry specific questions are common.


addition, there are certain questions you may encounter during the interview, in one
for or another. These relate to questions about yourself, what you have been doing and
what you want to do in future. It is a good idea to sit for mock interviews with your friends
or colleagues. Remember, practice makes man perfect.Here are some general questions
you can answer during your mock sessions:
W hat are your strengths and weakness?
Suppose you could choose any particular post in the new scale/ grade, what would it
Be and why?
W hat does success means to you and how do you measure it?
What motivates you?
Narrate any two strengths/weaknesses of yours. Have you done anything?

In the

last one year to improve yourself? If yes, what?

What has been your greatest achievement in the Bank/in your personal life

? And

your biggest disappointment?

Say something about your best and worst bosses.
What qualities do you value most in those who report directly to you?
Your Interview, Shrabana Kumar Nial

Why you should be promoted?

In your view, what were your shortcomings in the earlier tests/ interviews?
What are your hobbies?
W ho is the editor of newspaper your read?
In our Bank, what impressed you much?
How do you handle stress?
Is there anything else you would like to tell us about yourself?
In addition to these general questions, you may face certain questions
About your previous assignments. Some of these questions can include the following
W hat do you like and dislike most about your current assignment?
Do you work independently in your current assignment or a part of a team?
Do you prefer working independently or as part of a team?
W hat are some of the problems you encountered in your earlier Assignments and
how did you solve them?
To understand your future ambitions and the reasons for seeking Promotions, the board
may ask questions like:

Why do you want to work in the new grade /scale

W hat kind of experience do you think this assignment will provide that Your
earlier assignment did not provide?

How do you feel about working late in the evenings ? And working

During the


W hat do you see as your future in the Bank?

Are you considering premature retirement at this point? Why?

How does this job compare with your earlier job?

How can you contribute more to our Bank?

Your Interview, Shrabana Kumar Nial

How do you feel about transfer to other Module / Circle?

There is no correct answer as such. What you need to do is to answer this question
calmly. Even during the real interview, you should think before answering the
questions. You need to pause before answering as it will help you put together
all the points, substantiating your response. Though you should not gloss over
your weaknesses, you need to focus on your success and your achievements
/strengths. You need to convince the interviewer that you are the correct person for
the higher position.


Net Profit increased by20.30* from Rs.10,891 crores in FY14 to Rs.13102 crores in
Operating Profit increased by 21.19% from Rs.32,109 crores in FY 14 to Rs. 38,913
crores in FY15.
Total Interest Income by 11.77% from Rs. 1,36,351 crores in FY14 to Rs.1,52,396
crores in FY 15.
Total Interest Expenses by 11.84% from Rs.87,069 crores in FY14 to Rs. 97,382
crores in FY15.
Net Interest Income increased by 11.63% from Rs. 49,282 crores in FY 14 to
Rs.55,014 crores in FY
Non Interest Income increased by 21.69% from Rs. 18,553 crores in FY 14 to Rs.
22,577 crores in FY
Operating Income increased by increased by 14.38% from Rs. 67,835 crores in FY14
to Rs. 77,591 crores in FY
Staff Expenses increased increased by 4.59% from Rs.22,504 crores in FY14 to
Rs.23,537 crores in FY15.
Expenses Ratio has declined by 282 bps from 52.67% in Mar 14 to 49.85% in Mar
Net Interest Margin for Domestic Operations up by 5 bps from 3.49% in FY14 to
3.54% in FY15.
Gross NPA Ratio is down by 70 bps from 4.95% in Mar 14 to 4.25% in Mar 15.
Net profit increased from Rs.3,041 crores in Q4FY14 to Rs.3,742 crores in Q4FY15
( 23.06% YOY growth).
Your Interview, Shrabana Kumar Nial

Operating profit increased from Rs.10,628 crores in Q4FY14 to Rs.12,409 crores in

Q4FY15 ( 16.76% YOY growth).
Total Interest Income increased from Rs. 35,858 crores in Q4FY14 to 40100 crores
in Q4FY15 (11.83% YOY growth).
Total Interest Expenses increased from Rs.22,955 crores in Q4FY14 to Rs. 25,389
crores in Q4FY15 (10.61% YOY growth).
Staff Expenses increased from Rs. 5,279 crores in Q4FY14 to Rs. 6,567 crores in
Q4FY15 (24.39%YOY growth).
Operating Expenses increased from Rs. 8,861 crores in Q4FY14 to Rs.10,818 crores
in Q4FY15 (22.09% YOY growth
Deposits of the Bank increased from Rs.13,94,409 crores in Mar 14 to Rs.15,76,793
crores in Mar 15.( 13.08%.YOY growth)
Savings Bank Deposits increased from Rs.4,69,262 crores in Mar 14 to Rs.
5,13,905 crores in Mar 15 (9.51% YOY growth) .
Current Account Deposits increased from Rs.1,10,935 crores in Mar 14 to
Rs.1,23,855 crores in Mar 15 (11.65% YOY growth).
Gross Advances Rs.13,35,424 crores in increased from Rs. 12,45,122 crores in Mar
14 to Rs.13,35,424 crores in Mar 15 (7.25% YOY growth).
Large Corporate Advances increased from Rs.2,42,719 crores in Mar 14 to
Rs.2,71,778 crores in Mar 15 (11.97%. YOY growth).
Retail Advances increased from Rs. 2,37,667 crores in Mar 14 to Rs.2,72,429 crores
in Mar 15 (14.63% YOY growth). Home loans increased from Rs.1,40,738 crores in
Mar 14 to Rs.1,59,237 crores in Mar 15 ( 13.14 % YOY growth)
Mar 14
Mar 15

Gross NPA (%)


Net NPA (%)



Gross NPAs declined from Rs.61,605 crores in Mar 14 to Rs.56725 crores in Mar

Return on Assets 0.68% in Mar 15 increased from 0.65% in Mar 14

Return on Equity 11.17% in Mar 15 increased from 10.49% in Mar 14
Average Cost of Deposits moved to 6.34% in Mar 15 from 6.27% in Mar 14
Average Yield on Advances moved to 10.58% in Mar 15 from 10.47% in Mar 14.
Your Interview, Shrabana Kumar Nial

Performance of Associates and Subsidiaries:

Net Profit of all Associate Banks increased by 15.23% from Rs.2,777 crores in FY14
to Rs.3,200 crores in FY 15.
Net Profit of all Non- Banking Subsidiaries increased by 12.70% from Rs.1,361
crores in FY 14 to Rs.1,534 crores in FY 15.
Net Profit (after minority interest) of SBI Group has increased from Rs 14,174 crores
in FY14 to Rs 16,994 crores in FY15 (19.90% YOY growth).
Return on Equity of SBI Gp is up by 68 bps from 10.83% in FY 14 to 11.51% in FY 15.
SBI Capital Markets Ltd (consolidated) has registered a net profit of Rs.334 crores in
FY 15 up from Rs.262 crores in FY14 (27.32%YOY growth).
Details of profit and loss account for stand alone are as follows

Total Interest Income

Total interest
Net interest income
Total Non-interest
Total operating
Total staff expenses
Total overhead
Total operating
Operating profit
Operating profit
Net profit


FY 15
over FY





































Your Interview, Shrabana Kumar Nial

We are witnessing the Indian Economy passing through a very critical period. While, there is
optimism that the Indian economy will rebound and again post robust growth,caution and
conservatism has prevailed for the major part of the year, with investors and corporates
preferring to Wait and Watch till economic reforms actually begin to kick-start the economy. In
line with industry, the banking sector too, is witnessing muted growth. The liquidity is ample but
demand for bank credit continues to be tepid, which has only put further pressure on our
margins. Slippages in the credit portfolio have continued in the aftermath of the poor performance
of industry in earlier years, though these appear distinctly lower than the preceding year,
signifying that a turnaround is not far away.
2. Economy & Outlook for 2015-16
As the new Government embarks on its first full budget, the Indian economy is showing every
sign of reclaiming its position as the second fastest growing economy in the world and may even
overtake the leading economy viz. China, as the latter, of late, is witnessing a distinct slowdown.
The positivism on the economic front stems out of the fact that:
Inflation has eased significantly with the CPI hovering around 5.00% (well below the
targeted level of 6%) and the WPI too at 0.11% is comfortable.
The current account deficit, albeit aided by the falling crude prices, is likely to be around
1.40% as at the end of FY15. The fiscal deficit target of the Government at 4.10%, also
seems to be on course at this point of time.
The economy is likely to post GDP growth of around 7.5% during the current year. For FY
2015-16, our Economic Research Department (ERD) believes it will be even better.
3. Industry Scenario
A number of key initiatives have recently been undertaken by the Government, which have
boosted investor sentiment and augur well for industrial growth and, also for the demand for
credit.The increase in F.D.I. limits in Defence, Railways and Insurance, the Make In India
initiative to make India a vast manufacturing hub, the auction of coal mines, the kickstarting
of stalled infrastructure projects, initiatives for increasing generation of clean energy and
renewables, the simplification of processes for obtention of Environment Clearances, reforms in
labour laws, doing away with obsolete laws and the proposed creation of 100 new Smart cities,
are all expected to result in robust demand for bank credit and portend a host of exciting
opportunities in the coming months.
4. Rural Economy
On the Rural front, the proposed amendments to the APMC Act to eliminate middle men and
improve the supply chain for vegetables and fruits, the additional allocation of rice for distribution
to BPL families, the fall in diesel prices, the Jan Dhan Yojana for full financial inclusion, the
implementation of the DBT Scheme, will, all have the effect of boosting rural incomes and
savings, as well as, demand for goods and services.
5. Outlook for the Banking Sector
The reforms in the banking Sector to professionalize public sector banks by granting them more
autonomy and the recent Gyan Sangam initiatives for strengthening and improving risk
management and asset quality in banks, as also proposed strengthening of the recovery system
and legal process will go a long way towards strengthening PSBs and creating a more level
playing field. In particular, the Governments intention to reduce stake in PSBs to 52% will give

Your Interview, Shrabana Kumar Nial

the banks the necessary head room to raise much needed capital from the markets to meet
Basel III requirements.
6. Banks Performance during 2014-15
Let me now share with you the salient features of the Banks performance for the period upto Dec
2014 and the likely trends upto the end of the financial year. Some of the positive aspects of our
performance are given below:
Operating Profit has increased by 23.38% while Net Profit has increased by 19.22% YoY.
Gross NPAs have gone down by Rs 5808 crores from Rs 67799 crores (5.73%) in Dec 13
to Rs 61991 crores (4.90%) in Dec 14.
Net NPAs have decreased by 44 bps from 3.24% in Dec 13 to 2.80% in Dec 14.
Total impaired assets of the bank have gone down by 48 bps from 9.06% in Dec 13 to
8.58% in Dec 14.
ROA is up by 5 bps from 0.63% in Dec 13 to 0.68% in Dec 14.
ROE is up by 15 bps from 10.97% in Dec 13 to 11.12 % in Dec 14.
Expenses ratio is down by 432 bps from 55.57% in Dec 13 to 51.25% in Dec 14.
Yield on advances has increased by 17 bps from 10.40% in Dec 13 to 10.57% in Dec 14.
NII has registered a growth of 10.79% over Dec 13.
Market share in deposits has increased by 9 bps from 16.64% in Dec 13 to 16.73% as on
Dec 14.
Market cap has increased by 92.78% from Rs 120766 crores in Dec 13 to Rs 232818
crores as onDec 14, and currently stands at Rs 229235 crores (as on 13 th February 2015).
The Bank opened 3.99 crores SB accounts in the 9 month period ended Dec 14
Notwithstanding the above performance, we have seen some stress points emerging
during the current year, which are a cause of concern. The areas where the situation is
alarming are: Market share in advances has declined by 43 bps from 16.57% in Dec 13 to
16.14% as on Dec 14. Market share in Home Loans has declined by 63 bps from 26.05%
in Dec 13 to 25.42% as on Dec 14.
Market share in Auto Loans has declined by 88 bps from 21.96% in Dec 13 to 21.08% as
on Dec 14.
CASA Ratio has declined by 131 bps from 43.89% in Dec 13 to 42.58% in Dec 14, and we
are no longer the Bank with highest CASA.
Whole Bank NIM has registered a decline of 7 bps from 3.19% in Dec 13 to 3.12% in Dec
The decline in market share in our core activities of deposits and advances and in Home Loans
and Auto Loans where we have always been the market leaders, is particularly disconcerting. For
example, in Home Loans, the YTD growth upto Dec 14 was Rs. 12167 crores whereas HDFC
Ltd. and ICICI Bank grew by Rs. 18900 crores and Rs. 13805 crores respectively during the
same period. Given our pricing capability, (including discretionary powers given to the Circles),
our vast network, our processing infrastructure in terms of RACPCs, Documentation Centers, etc.
and of course, our expertise, should not our Home Loan growth, in sheer volumes, be at
least, double that of the three leading competitors cited above? I will revert on how we need
to strategize on this product later.
Similarly, the drop in CASA ratio indicates that we are falling behind in the opening of good
quality Savings Bank Accounts and Current Accounts, our basic bread and butter products.
Given the above performance scenarios, both highlights and areas of concern, let us now look
ahead with a firm resolve to take a big leap forward and not only push the competitors behind
but increase the distance between us and our competitors. Some of the important performance
parameters of our Bank vis--vis peer-level banks are given in the Annexure, which needs to be

Your Interview, Shrabana Kumar Nial

shared with your team at each level. Similarly, data at state level is also available at the Circle
level which needs to be discussed at P review meetings so that we endeavor at all times to do
much better than the competition.
7. Budget 2015-16
As you are all aware, the Banks performance is measured by analysts, shareholders, other
stakeholders, investors and rating agencies the world over, by its net profit and reserves. The
bottom line i.e. PROFIT is what the world wants to see. The profitability related ratios viz.
Return on Equity (ROE), Return on Assets (ROA), Profit per Employee, Cost to Income
Ratio, Gross NPA Ratio and Net NPA Ratio are, therefore, of paramount importance. While
some of these ratios are monitored only at the LHO level and the Whole Bank level, it is
important that each operating unit should have an overview of its profitability and the contribution
it makes to the Whole Bank profit. In other words, we need to usher in a culture of a profit
oriented budgeting instead of focusing merely on achieving the business targets of Deposits &
Advances. Profit cannot be a resultant byproduct of our years effort rather we need to gear all
our efforts towards achieving the targeted profit. For this to happen, every branch, every
business unit has to focus on achieving and surpassing the target set by its Controllers for Net
Profit. The top-line budget of every branch / Business Unit therefore, needs to be fixed
keeping the Net Profit in mind. In this way, if the targeted levels of Deposits, Advances and
Other Income and NPA levels are achieved, every branch will definitely achieve its Net
Profit level as well. It has also been decided to introduce Risk Based Budgeting (RBB) to create
awareness and focus on capital conservation and maximization of return on capital. As a
measure to quantify the reduction in risk we will be introducing levers to assess improvement
periodically, based on Credit Risk Weighted Assets (CRWAs). Achievement of the budgeted
advances levels will be subject to achievements under the specified levers. To start with these
will be computed quarterly to be drilled down from Whole Bank level to Business Unit level and
Branch level in a phased manner.
8. Customer Experience
We are a preferred Bank for our customers and we have to make all out efforts in order to
become a truly customer centric bank. Our customers are now looking out for more than basic
banking transactions. Convenience, services at one click, one stop shop, pro-active bank
employees, etc. have become the new normal. In a fiercely competitive market, superior
customer service experience is one of the critical measures in improving the bank's ability to
acquire affluent customers and cement customer loyalty. Quality customer service can be a
powerful competitive differentiator. It is, therefore, critical that we invest in improving customer
service delivery in, our biggest strength, our branches. We have designed a comprehensive
branch solution and have piloted this in 52 branches across 6 circles which has shown good
results. It has now been further rolled out to 140 branches in all 14 Circles. The Bank has
introduced the following nine key changes in branches to improve customer service experience:
Crowd Management through installation of QMS, empowering Grahak Mitra.
Branch choreography is especially important as this enables the branch to be proactively
ready to handle expected large footfalls, without increase in wait time.
Account opening cell (officer and clerk) to provide the customer single desk experience.
Increased customer migration to alternate channels through Grahak Mitra, and installation
and use of self-service machines like ATMs, CDMs, Electronic Cheque Drop Boxes,
Barcode enabled passbook printers.
Branch Layout changes - Better Customer Orientation e.g. customer facing desks in the
front, while back office activities like CTS clearing etc in the rear.

Your Interview, Shrabana Kumar Nial

Roles - Standardized SWO roles in branches and creation of Customer Service Desk for
all non-SWO transactions.
Customer feedback on Customer satisfaction and Net Promoter Score through feedback
Daily Team Huddles to review daily sales, celebrate success and foster peer learning and
idea generation.
Introduction of systematic process for sales management and cross sell.
We have also designed solutions for improving home loan sales and efficient delivery, improving
TAT, and making entire process more customers friendly and transparent. We have implemented
pilots in two RACPCs at Mumbai and Lucknow. Enthused with the results, we are implementing
these new initiatives in RACPCs across all Circles in a phased manner.One of the most
important ingredients to ensure better customer service is handling customer complaints.
It is a great challenge to substantially reduce customer complaints. We received 14,07,789
complaints including 8,72,582 complaints related to ATMs, INB and POS transactions and
5,35,207 non technical complaints during April to Dec 2014. Around 550 complaints pertained to
staff misbehaviour. To reduce tech related complaints and increase migration of customers to
alternate channels, a unique customer education initiative called State Bank Tech Learning
Centers (TLCs) has been rolled out across 385 RBOs of the Bank. Training sessions on various
products and services of alternate channels are being conducted on 3 Friday of every month
between 4 and 6 pm for the benefit of customers. TLCs across the country have covered about
20,000 customers during December, 2014 and January, 2015. I urge you all to introspect to see
how you can improve the job knowledge of our staff and the customer interaction. In today's
competitive environment, there has to be zero tolerance for incompetent and indifferent handling
of customer interactions.It is imperative that we ensure a disciplined execution of all these new
initiatives as they can significantly improve customer experience, drive business growth and also,
improve employee satisfaction.I will now move to the key business areas.
A. Deposits
Whole Bank Deposits during the year upto Dec 14 (9 months) have shown a modest YTD growth
of 8.30%. Going forward, the economy and credit growth are both likely to post rapid growth. We
have set for ourselves a YoY growth for 2015-16 in Deposits at 15%. I had emphasized last year
on the need to post a quantum jump in CASA deposits. It is, therefore a matter of concern that
CASA deposits YTD (9 months) have fallen from 44.43% in Mar 2014 to 42.58% in Dec 2014.
Some of the strategies we need to follow are:
1. The CAG & MCG must together take ownership for revitalising the F.I.B.U.(Financial
Institutions Business Unit) and methodically identify the cash rich companies who can offer
large float funds and bring them to our books. There are several large companies both MNCs
and others who have no borrowings but need to be tapped for CASA deposits by offering
them our remittance products through CMP.
2. The large trading community of retailers, wholesalers, distributors, stockists, dealers, vendors,
petty shopkeepers need to be targeted in a big way by every branch in its vicinity. Many of
these (especially jewellers and textile traders) would be needing Cash pick-up services which
needs to be leveraged.
3. Institutions - schools, colleges, housing societies, Government & Quasi-Government bodies,
professional associations, trade associations, municipalities, remain largely untapped by us
and every branch needs to identify and systematically approach them for Current Accounts.
4. Government deposits and their various recipients viz. Government institutions, special
projects, Government contractors would continue to be a vital segment to procure deposits.

Your Interview, Shrabana Kumar Nial

5. In Savings Bank accounts, though we have opened a huge number of accounts this year
especially under Jan Dhan Yojana, we now need to focus on encouraging ustomers to build
on balances. The focus must be on increasing average balances in the Savings Bank
accounts rather than merely having large number of accounts with low balances, and with
little or no transaction. Encouraging opening of R.D. accounts and P.P.F. accounts with
Standing Instructions (S.I.) will ensure higher balances in the Savings Bank accounts.
Savings Bank
Accounts are the surest way of initiating a relationship with a customer that can become the
launching pad of all future cross-sell and up-sell initiatives. All new SB account must be
opened with INB and mobile banking facilities to ensure more use of alternate channels by
the customer subsequently.Along with these Savings Bank Accounts, we need to
simultaneously bundle the opening of Demat Accounts. With the improving perception of the
countrys economy and a rising equity market it is important for every individual to have
Demat account. In addition to equity shares, Demat account can also used for other
investments like Mutual Funds, Gold ETF etc., and will soon become as important as Bank
accounts for personal financial management. We may have lost the first movers advantage in
this area, but now that we have a robust technology infrastructure with our Associate (SBI
Capital Market Securities Ltd.), we have to make up for the lost time. Further, while we have
done well in opening a large number of Salary Accounts, we need to focus on the upper and
more lucrative segment viz. the account of the owners, Top Management and senior
executives of large companies.
B. Advances
Credit growth during 2014-15 is likely to pick up in tandem with GDP growth. Infrastructure
Financing is also likely to pick up in a big way. We have set for ourselves a modest YOY growth
for 2015-16 in Advances at 14%. The current year has witnessed a situation of ample liquidity but
inadequate takers. We see this trend changing especially with the recent downward trend in
interest rates heralded by RBIs lowering of Repo Rate in mid-January. With demand for credit
likely to pick-up, we need to strategize as under:
1. In CAG and MCG, focus would continue to be on the best rated / above investment grade
companies. Take over of the best accounts of companies with other banks, consortium
lending and diversified exposure rather than sector specific would remain the focus. We must
be guided by the RMD directives on each industry and continue to focus on top quality assets.
2. In the SME Segment, we need to build up a large portfolio in risk mitigated products viz. the
e-DFS and Vendor Finance Scheme, CGTMSE guaranteed loans, L.C., B.G., Discounting
and Asset Backed Loans. Every large corporate already with us must be approached for the
loan accounts of their vendors and dealers. I may add that other banks are aggressively
pitching for this business and targeting our best accounts.
3. In the Retail Segment, as already mentioned, marketing of our basic products of Home Loans
and Auto Loans have to be stepped up in a big way and there cannot be any let up in this. In
Home Loans, our inflow of proposals, especially big ticket loans depends entirely on our
ability to deliver quickly i.e. TAT. We are being beaten in TAT by our competitors, and
Controllers will need to closely monitor the position of pending loan applications. The same
would hold good for Auto Loans and High value Education Loans too where, quick delivery is
the mantra.
4. As the Home Loan market is witnessing fierce competition, there is an urgent need to put in
place an arrangement to ensure that our Bank gets the major share of Home Loan business

Your Interview, Shrabana Kumar Nial

in all ongoing / upcoming Residential Projects of reputed builders. It is seen that the builder is
a very important link for Home Loan business, as the product is builder-driven, tie-ups with
reputed builders will enable us to bring to our books, borrowers with a relatively low risk
profile viz. HNIs / Affluent NRIs / highly paid executives / IT professionals etc. Arrangement
with builders will also enable us to publicise our various schemes / products. It is therefore,
imperative that we build a strong and long lasting relationship with the builders, work with
them in close co-ordination and enter into tie-up arrangements for all their residential
projects. This will help in effectively competing with other Banks / HFCs / NBFCs for retaining
our leadership position in Home Loans.
5. Xpress Credit has to be marketed to the corporate sector employees in Metro /urban areas. It
is a simple asset class product, which is highly popular among the middle rung State and
Central Government employees as well as Defence employees. However, penetration has
been more in the RUSU areas. In the Metro / urban areas, we have not made much headway
because of delivery issues that put off corporate sector employees. An online Customer
Acquisition Solution (OCAS) is undergoing pilot testing and will effectively meet the
requirement of this class of customers. This product has a good risk adjusted yield and
volumes here would also positively impact the banks profitability.
6. Under the Agri Segment, the focus on Gold Loans must continue. To ensure growth with
quality, it is necessary to focus on risk mitigated products like multi purpose gold loan, Stree
Shakti Tractor Loan, financing Farmers Producer Organisations, etc. These products are
structured in tune with the market dynamics and backed by liquid collateral or Government
guarantee. Competitive pricing, in-built monitoring controls and very low delinquency has a
positive impact on the profitability. In KCC, the big ticket business must be focused upon,
especially where there are tie-up arrangements for marketing of the produce. Annual
renewal / review of the KCC accounts must be done and we cannot allow a situation where
the branch has not met or seen the farmer for years. KCC account holders must be
encouraged to repay the KCC after harves and take a fresh loan at the time of sowing. This
would bring about the much needed discipline and improvement in the quality of the portfolio.
The National Banking Group would be issuing detailed strategies for Agri segment.
C. Asset Quality & Provisioning
NPAs continue to be the major area of concern. A situation of unabated slippages leading to huge
increase in provisions cannot be allowed to continue. We have undertaken several measures to
contain slippage as also to improve recovery of NPAs during the current year, which include review of both SMA accounts and NPA accounts at every level including the level of the M.D.s
and Chairman, reporting of SMAs to R.B.I. and setting up of Joint Lender Forums where
applicable, bringing the SARBs under SAMG for increased focus, strengthening recovery efforts
across the bank, emphasizing on timely review/renewal in all segments, especially KCC accounts
and strengthening the Risk Management products in the Bank. An Early Warning Signal System
will also be put in place shortly. But, the tug of war against NPAs can only be won by all of us
pulling together. Recovery of NPAs is everybodys responsibility and we have to put in place a
system of Recovery Teams hunting in groups. Simultaneously, we need to ensure that fresh
slippages are kept at bare minimum by initiating swift and concrete action on Day 1 instead of
Day 90.There have also been a lot of errors, where filling up of the correct security details in each
loan account is concerned. Several ab-initio secured loans including Gold Loans are showing NIL
security. Controllers, at all levels, must own responsibility to ensure that the value of security is
correctly shown in the system to ensure that provisions are made correctly based on available
security. Every branch, every business unit and consequently all Business Groups, must

Your Interview, Shrabana Kumar Nial

individually track account wise provisions starting from Q4 of 2014-15 itself. Business Groups will
have to submit the forecast, at the beginning of every quarter what their provisions will be at the
end of the quarter. Monitoring of the movement in provisions must be done every month at
performance review meetings at all levels. GITC to provide all branches with their provision
figures every month to facilitate comparison over previous year numbers. Deductions of provision
of the Circles from their profit figures every month is being contemplated at Corporate Centre, the
details of which will be conveyed to Circles and Business Groups shortly. In short, the
implications of wrong provisioning as a result of wrong input or NIL input of the security must be
conveyed to the grass root level. Every Branch Manager and Controller will be required to ensure
that the provisions in respect of the branches / business units under his control are 100% correct.
D. Capital
With the implementation of Basel III guidelines with stiff capital adequacy requirements for the
Bank, only the Banks that have capital will be able to grow. In terms of RBI roadmap for
implementation of Basel III, the Banks are required to maintain CAR of 11.5% by March 2019,
whereas, our Board has mandated to maintain CAR of 12%. Being the largest Bank in India, we
are also likely to be categorized as a Domestic- Systemically Important Bank (D-SIB), which
would require us to maintain an additional capital of 0.80%. We have in the past, been dependant
on the Government to meet our capital needs. However, the Government has recently made it
clear that only the top performing Banks will get Government support for capital in future. The
Bank is also taking steps to raise capital from the market to meet our capital requirement. To be
able to raise capital from the market, it is essential for us to deliver substantial improvement in
our performance, especially in profitability related ratios like RoA and RoE in the coming year.
However, to become self sustainable in meeting our capital requirements, which does not require
approaching the market frequently, it is essential that we set ourselves a target of taking our RoA
to 1.75-2 and RoE to 18-20%. I know that these ratios are substantially higher than where we are
today (RoA: 0.68%, RoE: 11.12%). However, considering the fact that top Private Sector Banks,
with whom we are benchmarked, already operate close to these ratios, I believe this target is
achievable and I am sure that we have within the Bank enough expertise and experience to plan
and achieve this in coming years. To achieve this, improved credit processes and optimum
capital allocation are the keys Basel III capital guidelines require more effective capital usage.
We need to weigh each and every business proposition from the perspective of risk and pricing.
In order to enable quality business expansion, we need to roll out models that have ability to
appraise and monitor the performance on risk adjusted basis.
E. Other Income including Fee Income
You will recollect, we had last year, set for ourselves a growth target of 22% under this head.
While the YOY growth under this head upto Dec 14 has been 17.49% which is higher than the
14.36% posted during the previous year, we are nevertheless, falling short of our target. The
other concern here is that the increase has come about largely as a result of increasing various
charges across the board, rather than through a quantum jump in volumes. It is for the Circles
and Business Groups to ensure that the desired volumes increase happens. While investors
have appreciated the fact that we have improved on this front, they want SBI to be on par with
the foreign and private sector banks. Our near term target for Other Income as a percentage of
Total Income (presently at 11.13% as on Dec 14) is 15%. Every branch and every controller
needs to strategize on how to ensure that the target under this head is achieved. I would request
each Group Head to set forth the strategies for boosting Other Income including Cross- Selling.
This year too, we would need to grow Other Income by at least 22%.
F. Treasury Income (Global Markets)
Given the present interest rate scenario in India, there are expected to be a lot of opportunities to
book Treasury Income in the coming year. Right calls on the timing of interest rates moves would

Your Interview, Shrabana Kumar Nial

need to be taken to improve the yield on investments and also to make profit from trading activity.
The Global Market Group will need to plan for profits and build strategic positions rather than
profit being totally dependent on the movement in interest rates in our portfolio. The currency and
stock markets are also expected to be buoyant and opportunities will exist for good trading profit
without exposing the Bank to more than usual business risks. In view of the increasing
commoditization of forex markets, finding new avenues to increase profit from forex trading would
be a challenge which would have to be taken up earnestly.
G. Cost Control
This is another area where we have met with partial success as a result of several cost control
measures introduced last year. Our Cost to Income ratio which stood at 52.67% in Mar 14 (the
highest amongst PSBs) has improved to 51.25% as at Dec 14 and will, hopefully improve further
by the year end. The cost to income ratio needs to be brought down to industry levels, as most of
the Private Sector and Public Sector banks are much lower than us. Our target should be to bring
it down to 47%. For this to happen, the tempo must not be allowed to slow down and must
continue with increased vigour. Wasteful and unnecessary expenditure must be avoided and
economy must be exercised in all spending, especially travel (T.A. & H.A.), entertainment,
Printing & Stationery costs etc. Rent, Taxes and Lighting shows a major increase and renewal of
lease deeds of branches and residential premises need to be done in time through the Rent
Module and escalation kept at minimum level. Increase in rents at branches even beyond 100%
has been observed. Every renewal has to be negotiated and where necessary we may convey
our intention to vacate the premises. Our stature as a good and valued tenant must be
leveraged. For the year 2015-16, expenses under all heads under Overheads must be capped
at a maximum of 8% overall over current year end levels ensuring, simultaneously, that the
overheads for the last quarter of FY15 are capped at the level of the last quarter of FY14.
H. International Banking Operations
For SBI to become a truly global bank, we need to improve the profitability of our international
operations. In the present scenario of recessionary trends in Europe, we need to identify new
vistas for growth in business. The U.S. economy is showing trends of returning to growth after a
long spell of stagnancy. The recent reciprocal visits of the Indian Prime Minister and the U.S.
President, augur well for increased trade between India and the U.S. With a good presence in the
U.S., we need to identify new areas of business. The BRICS economies are also expected to do
well, though China may not post as high a growth rate as hitherto. Bilateral trade with
neighboring countries and with countries like Australia and Japan, who have recently indicated
increased interest to do business with India, should be focused upon. The IBG must focus on
increasing treasury income, fee income (through participation in loan syndication) and focus on
building up a portfolio of high quality local assets.It is expected that the Operating Profit of IBG
during 2015-16 will also grow at 24% so that the Net Profit is in line with the target for the Whole
Bank. The targets for Cost Control, Other Income, RoA, and RoCE would also apply to the
International Banking Group. While achieving the set targets for FY-16, IBG shall endeavor to
keep sight of changing compliance and regulatory norms in different countries and also put in
place a robust support structure to be fully compliant with them.
I. Information technology and Data Purity
We have been making substantial investment in updating existing and procuring new technology
so that we remain the most tech-savvy bank. The niche Digital Branches to attract the next
generation customers and bring Young India to our books have met with considerable
enthusiasm. Our foray into the social media viz. Twitter, YouTube and Facebook have aroused
the curiosity of the younger generation. But this has to be translated into business and IT
expenditure must be viewed as a return on investment. To ensure that this happens, we must
leverage our IT strengths to generate business by say targeting the salary accounts of

Your Interview, Shrabana Kumar Nial

employees of all the IT Companies and IT services companies by making presentations on our
technical products and convincing them that our products are truly world class. Latest tech
products, backed by our vast network of ATMs, CDMs, e-Corners, e-Lobbies, Tale banking and
POS terminals should be showcased at every opportunity to bring home savings accounts in
thousands. In the area of data purity, I can only say that any system is only as good as the
people behind it. Errors while filling in particulars of deposits and loan accounts, non-filling of
various fields, inadequate and sometimes indifferent supervision is gravely hampering our
progress. I would request the CGMs of the Circles and the Business Groups to ensure
100% data purification by the end of FY 15 so that we can start the new Financial Year
without the baggage of inaccurate or incorrect data.
Keeping in mind the overall profit objectives of the bank, the targets under the various
parameters have been worked out as under:



Operating Profit to increase by minimum

Net Profit to increase by minimum
Net Interest Income to increase by minimum
Fee Income to increase by minimum
Overheads to increase by maximum
Cost to Income ratio- should not exceed
NIM , Domestic minimum between
CASA- Minimum
Gross NPA- Reduction in Absolute Level by
Growth in Deposits YoY
Growth in Advances YoY


I take the opportunity to wish each and everyone of you outstanding success in yourefforts during
2015-16. Let the new fiscal be the year of a quantum leap in business and profits for SBI.

Key Features of Budget 2015-2016

Feb 28, India's FINANCE Minister Arun Jaitley on Saturday announced a budget aimed
at high growth, saying the pace of cutting the fiscal deficit would slow as he seeks to
boost INVESTMENT and ensure that ordinary people benefit.
Here are the highlights of Jaitley's budget for the fiscal year that begins on April 1.
Fiscal deficit seen at 3.9 percent of GDP in 2015/16
Will meet the challenging fiscal target of 4.1 percent of
Remain committed to meeting medium term fiscal deficit target of 3 percent of GDP
Current account deficit below 1.3 percent of GDP
Jaitley says have to keep fiscal discipline in mind despite need for higher INVESTMENT
Your Interview, Shrabana Kumar Nial

GDP growth seen at between 8 percent and 8.5 percent y/y

Nominal economic growth seen between 11 and 12 percent
Aiming double digit growth rate, achievable soon
Expects consumer inflation to remain close to 5 percent by March, opening room for more
monetary policy easing
Monetary policy framework agreement with the RBI clearly states objective of keeping
inflation below 6 percent
One of the achievements of my government has been to conquer inflation. This decline in my
view represents a structural shift."
Revenue deficit seen at 2.8 percent of GDP
Non tax revenue seen at 2.21 trillion rupees
Agricultural incomes are under stress
Net receipts under market stabilisation scheme estimated at 200 billion rupees
Government targets 410 billion rupees ($6.7 billion) from stake sales in companies in
Total stake sale in 2015/16 seen at 695 billion rupees
Sets stake sale target for 2016/17 at 550 billion rupees
Revises down stake sale target for 2014/15 to 313.5 billion rupees
Propose to merge commodities regulator with SEBI
To bring a new bankruptcy code
Jaitley says will move to amend the RBI act this year, and provide for a monetary policy
To set up public debt management agency
Proposes to introduce a public contract resolution of disputes bill
To establish an autonomous bank board bureau to improve management of public sector
To enact a comprehensive new law on black money
Propose to create a universal social security system for all Indians
To launch a national skills mission soon to enhance employability of rural youth
To raise visa-on-arrival facility to 150 countries from 43
Allocates 346.99 billion rupees for rural employmentguarantee scheme
Your Interview, Shrabana Kumar Nial

Raises threshold for application of transfer pricing rules to 200 million rupees from current 50
million rupees

Gross market borrowing seen at 6 trillion rupees
Net market borrowing seen at 4.56 trillion rupees


Government defers rollout of anti-tax avoidance rules GAAR by two years
GAAR to apply prospectively from April 1, 2017
Retrospective tax provisions will be avoided

To abolish wealth tax
Replaces wealth tax with additional 2 pct surcharge on super rich
Proposes to cut to 25 percent corporate tax over next four years
Corporate tax of 30 percent is uncompetitive
Net gain from tax proposals seen at 150.68 billion rupees
Jaitley proposes modification of permanent establishment norms so that the mere presence
of a fund manager in India would not constitute a permanent establishment of the offshore
fund, resulting in adverse tax consequences.
Proposes to rationalise capital gains tax regime for real estate INVESTMENT trusts
Extends withholding tax concession on foreign debt purchases by two years
Expects to implement goods and services tax by April 2016
To reduce custom duty on 22 items
Basic custom duty on commercial vehicle doubled to 20 percent
Proposes to increase service tax rate and education cess to 14 percent from 12.36 percent
Plans to introduce direct tax regime that is internationally competitive on rates without
Exemptions for individual tax payers to continue
To enact tough penalties for tax evasion in new bill
Tax dept to clarify indirect transfer of assets and dividend paid by foreign firms
No revision of income tax brackets
Limit of deduction of health insurance premium increased to 25,000 rupees from 15,000
rupees; limit increased to 30,000 rupees from 20,000 rupees for the elderly
People aged above 80 and not covered by health insurance to be allowed deduction of
30,000 rupees for medical expenses
Additional deduction of 25,000 rupees for the disabled
Limit on deduction for contributions to pension fund and new pension scheme increased to
150,000 rupees from 100,000 rupees
Your Interview, Shrabana Kumar Nial

Additional deduction of 50,000 rupees for contribution to new pension scheme under section
Monthly transport allowance exemption doubled to 1,600 rupees

Import tax on iron and steel increased to 15 percent from 10 percent
Import tax on metallurgical coke increased to 5 percent from 2.5 percent

Investment in infrastructure will go up by 700 bln rupees in 2015/16 over last year
Plans to set up national investment infrastructure fund
Proposes tax-free infrastructure bonds for projects in roads, rail and irrigation projects
Proposes 5 "ultra mega" power projects for 4,000 MW each
Second unit of Kudankulam nuclear power station to be commissioned
Will need to build additional 100,000 km of road
Ports in public sector will be encouraged to corporatize under Companies Act

Plan expenditure estimated at about 4.65 trillion rupees
Non-plan expenditure seen at about 13.12 trillion rupees
Allocates 2.46 trillion rupees for defence spending
Allocates 331.5 billion rupees for health sector
If revenue improves, hope to raise budgeted allocations for rural job scheme by 50 billion
Government to provide 79.4 billion rupees capital infusion to state-run banks
Propose to do away with different types of foreign investment caps and replace them with
composite caps
To allow foreign investment in alternative investment funds
Public investment needed to catalyse investment

To launch gold deposit accounts and sovereign bond
Import duty stays at 10 percent; disappoints jewelers
To work on Indian-made gold coin to cut imports

Raises excise duty on cigarettes by 25 percent for cigarettes of length not exceeding 65 mm
Raises excise duty by 15 percent for cigarettes of other lengths

Food subsidy seen at 1.24 trillion rupees
Your Interview, Shrabana Kumar Nial

Fertiliser subsidy seen at 729.69 billion rupees

Fuel subsidy seen at 300 billion rupees
Major subsidies estimated at 2.27 trillion rupees
We are committed to subsidy rationalisation based on cutting leakages
"We inherited a sentiment of doom and gloom. The investment community had almost written
us off. We have come a long way since then."
"We have turned around the economy, dramatically restoring macroeconomic stability and
creating the conditions for sustainable poverty elimination, job creation, durable double digit
economic growth."
"While being mindful of the challenges ... this gives us reason to feel optimistic."
"Domestic and international investors are seeing us with renewed interest and hope."
2015 Budget will further reignite our growth engine, signalling the dawn of a prosperous
Budget is investment friendly & removes all doubts on tax issues. It assures investors that
we have a stable, predictable & fair tax system.
BSE index gains 0.48 percent; NSE index up 0.65 percent


New Delhi: Union Railway Minister Suresh Prabhu on 26th Ferbruary 2015 i.e. on
Thursday presented his maiden Rail Budget in Lok Sabha. Here are the key
highlights from Rail Budget 2015:
1. Indian Railways to become prime mover of economy once again#
2. Resource Mobilization for higher INVESTMENTS
3. Decongestion of heavy haul routes and speeding up of trains: emphasis on gauge
conversion, doubling, tripling and electrification
4. Project delivery
5. Passenger Amenities.
Your Interview, Shrabana Kumar Nial

6. Safety
7. Transparency & System Improvement.
8. Railways to continue to be the preferred mode of transport for the masses.
9. Sustainability.
Four goals for Indian Railways to transform over next five years:
a) To deliver a sustained and measurable improvement in customer experience.
b) To make Rail a safer means of travel.
c) To expand Bhartiya Rail's capacity substantially and modernise infrastructure.:
increase daily passenger carrying capacity from 21million to 30 million: increase
track length by 20% from 1,14,000 km to 1,38,000 km: grow our annual freight
carrying capacity from 1 billion to 1.5 billion tonnes.
d) Finally, to make Bhartiya Rail financially self-sustainable. Generate large
surpluses from operations not only to service the debt needed to fund our capacity
expansion, but also to INVESTMENT on an on-going basis to replace our
depreciating assets.
Execution strategy to have five drivers:
a) Adopting a medium-term perspective: Railway Budget part of trilogy of documents
viz. the White Paper placed today, Budget 2015-16 & a Vision-2030 document which will
follow. Budget proposals to mark beginning of a Five Year Action Plan to transform the



Amount (Rs in

Network Decongestion (including DFC, Electrification,

Doubling including electrification and traffic facilities)


Network Expansion (including electrification)


Your Interview, Shrabana Kumar Nial

National Projects (North Eastern & Kashmir connectivity



Safety (Track renewal, bridge works, ROB, RUB and

Signalling & Telecom)


Information Technology / Research


Rolling Stock (Locomotives,

production & maintenance)




Passenger Amenities


High Speed Rail & Elevated corridor


Station redevelopment and logistic parks






b) Building Partnerships:
This will require partnering with key stakeholders: States, PSU's, partner with
multilateral and bi-lateral organizations & other governments to gain access to long
term FINANCING and technology from overseas, the private sector to improve
last mile connectivity, expand fleet of rolling stock and modernize our station
c) Leveraging additional resources:
IR envisages INVESTMENT of Rs. 8.5 lakh crore in next five years to be mobilized
from multiple sources to cater to funding i.e Multilateral

development banks,

pension funds.
Your Interview, Shrabana Kumar Nial

d) Revamping management practices, systems, processes, and re-tooling of

human resources:
Targeted operating ratio for 2015-16 at 88.5% against 91.8%in 2014-15: best in the
last 9 years.
IR to speed up decision making, tighten accountability, improve management
information systems: training and development of human resource.
e) To set standards for Governance and Transparency
Station Redevelopment
Station redevelopment policy to be revamped and processes simplified by inviting
open bids; present stations be available for development on "as is where is" basis,
to exploit the space and air rights on concession basis; Zonal and Divisional
offices be empowered for quicker decision making;Land will not be sold;
Development of 10 Satellite Railway terminals in major cities with twin purpose of
decongesting the city and providing service to n suburban passengers.
Capacity Augmentation
Network expansion:
Decongesting networks with basket of traffic generating projects priority; priority to
last mile connectivity projects ; fast track sanctioned works on 7,000 kms of
double/third/fourth lines and commission 1200 km in 2015-16 at an INVESTMENT
of Rs. 8686 crore, 84% higher Y-O-Y.
Commissioning 800 km of gauge conversion targeted in current fiscal.
77 projects covering 9,400 km of doubling/tripling/quadrupling works along with
electrification, covering almost all States, at a cost of Rs. 96,182 crore which is
over 2700% higher in terms of amount sanctioned.
Traffic facility works a top priority with outlay of Rs. 2374 crore .
In the North East States, Meghalaya brought on the Railway map of India and
direct connectivity to Delhi provided. Barak Valley to be connected on BG .
Your Interview, Shrabana Kumar Nial

Award of 750 km of civil contracts and 1300 km of system contracts in 2015-16 on

Dedicated Freight Corridor; 55 km section of Eastern DFC to be completed in the
current year. Preliminary Engineering cum Traffic Survey (PETS) for four other
DFCs in progress.
Acceleration of pace of Railway electrification: 6,608 route kilometers sanctioned
for 2015-16 ,an increase of 1330% over the previous year.
Expansion of freight handling capacity
Transport Logistics Corporation of India (TRANSLOC), to be set up for developing
common user facilities with handling and value-added services to provide end-toend logistics solution at select Railway terminals through Public Private
For the benefit of our farmers, a state of the art Perishable Cargo Centre under
completion at the Azadpur Mandi with a scientific banana-ripening Centre; air
cargo sector to be developed to facilitate and integrate the movement of air cargo
between ICDs and the gateway airports.
Policy for Private Freight Terminals (PFT) to be revised.
Automatic Freight Rebate Scheme for traffic to be expanded
Long haul freight operations to be used extensively; construction of long loop lines
to be expedited. Distributed power system for multi-loco haulage to be accelerated.
Improving train speed
Speed of 9 railway corridors to be increased from existing 110 and 130 kmph to
160 and 200 kmph respectivel y so that inter-metro journeys like Delhi-Kolkotta
and Delhi-Mumbai can be completed overnight.
Average speed of freight trains in empt y and loaded conditions, will be enhanced
to 100 kmph for empty freight trains and 75 kmph for loaded trains; loading density
on all major freight bearing routes to be upgraded to 22.82 tonne axle loads.
Bullet train
Your Interview, Shrabana Kumar Nial

Feasibility study for High Speed Rail between Mumbai-Ahmadabad is in advanced

stage and report expected by the mid of this year. For other high speed routes on
the diamond quadrilateral, studies are being commissioned.
Upgrading manufacturing capability
Creation of job opportunities by upgrading the manufacturing capability.
Functioning of Indian Railways Production Units and Workshops would be
reviewed to provide them a cutting edge; measures for technological upgradation
and enhancing productivity be undertaken to make them self-sustaining.
Action plan being prepared for areas where accidents occur: five-year corporate
safety plan b y June 2015 indicating annual quantifiable targets; Pending
recommendations made by High Level Safety Review Committee headed by Dr.
Kakodkar Committee to be examined by April 2015.
RDSO to develop a suitable device with reliable power supply system based on








Organization, using geo-spatial technology for providing audio-visual warning to

road users at unmanned level crossings; radio based signal design project been
taken up with IIT Kanpur for warnings at unmanned level crossing
970 ROB/RUBs and other safety-related works to eliminate 3438 level crossings
at a total Railway expense of Rs. 6,581 crore have been sanctioned which is
2600% higher than the previous year covering most States.
Train Protection Warning System and Train Collision Avoidance System to be
installed on select routes at the earliest.
Modern track structure consisting of sleepers and heavier rails being used while
carrying out primary track renewals. Better welding techniques being promoted;
digital type machines to replace analogue type machines.
Technology upgradation
Your Interview, Shrabana Kumar Nial

Constituting an innovation council called "Kayakalp" for business re-engineering

and introducing a spirit of innovation in Railways.
Technology portal being constituted to invite innovative technological solutions.
Strengthening of RDSO into an organization of excellence for applied research;
four Railway Research Centers to be set up in select universities for fundamental
research; 'Malaviya Chair' for Railway Technology at IIT (BHU), Varanasi to be set
Consortium of Ministry of Railways, Ministry of Human Resource Development,
Ministry of Science And Technology and Industries on to take up identified Railway
projects for research.
IT vision to be unveiled: information on latest berth availability station navigation
system, bar coded/RFID tracking of parcels and freight wagons, automated parcel
warehouses. Integration of train control and asset management applications.
Mechanize integrated track maintenance.
Partnerships for development
PPP cell to be revamped to make it result oriented.
Projects for rail connectivity to many ports and mines being developed under
participative models; simplification of procedures and consistency of policy to be
"Foreign Rail Technology Cooperation scheme" to be launched.
MUTP III for Mumbai to be taken up.
Joint ventures to be set up with States for focused project development, resource
mobilization, land acquisition, project implementation and monitoring of critical rail
JVs to be set up with major public sector customers for meeting requirements of
new lines.
Improvements to Management Processes and Systems
Your Interview, Shrabana Kumar Nial

Delegate, de-centralize, de-regulate & simplify to be the new mantra.

Systems audit to be conducted for review of all processes and procedures.
Global benchmarks for key operating and maintenance activities.
Improve appraisal mechanism for the selection of projects and introduce simulation
tools for project planning and decision-making; introducing EPC system of
Constitution of a working group to modify present system of accounting, to ensure
tracking of expenditure to desired outcomes.
Train operations to be audited.
Paperless working in material management system to be expanded; Vendors to be
integrated through Vendor Interface Management System to provide single window
interface to vendors.
Resource Mobilisation
Plan Budget up by 52% from Rs. 65,798 crore to Rs. 1,00,011 crore in 2015-16.
Support from the Central Government 41.6% of the Plan and Internal generation
17.8 %; setting up of a FINANCING Cell in the Railway Board.
Setting up an infrastructure fund, a holding company and a JV with an existing
NBFC of a PSU with IRFC, for raising long term debt from domestic as well as
overseas sources, including multilateral and bilateral financial institutions.
Monetisation of assets rather than selling them.
Digitized mapping of land records and responsibility fixing for encroachments.
New strategy to tap latent advertising potential, including offering stations and
trains for corporate branding.
Coastal Connectivity Program. Railways in partnership with ports will deliver rail
connectivity to Nargol, Chharra, Dighi, Rewas and Tuna.

Your Interview, Shrabana Kumar Nial

Projects worth Rs 2500 crore through BOT/ Annuity route. These include WardhaNagpur 3rd line, Kazipet-Vijaywada 3rd line, Bhadrak -Nargundi 3rd line and BhujNalia Gauge Conversion.
Scrap disposal policy to be reviewed for speedier scrap disposal.
Human Resources
Human Resource Audit to be undertaken. Focused Human Resource strategy to
raise employee productivity in line with global standards. Separate accounting
head for HRD. ERP based Human Resource Management System.
Special training module on soft skills for frontline staff so that our customers feel
Training in yoga.
Setting up a full-fledged University during 2015-16.
Improved delivery of health services to employees: Upgradation of four Holiday
Energy and sustainability
Environment Directorate to be constituted in Railway Board to give increased focus
and thrust on environment management.
Detailed energy audit for energy saving.
Procure power through the bidding process at economical tariff from generating
companies, power exchanges, and bilateral arrangements. Initiative likely to save
at least Rs. 3,000 crore in next few years.
Solar Power as part of the Solar Mission of Railways. 1000 MW solar plants will be
set up by the developers on Railway/private land and Railway buildings with
subsidy/viability gap funding support of Ministry of Non-Renewable Energy in next
five years.
Water conservation mission including water audit and expansion of water
harvesting systems.
Your Interview, Shrabana Kumar Nial

Accreditation for environment management to be extended.

100 DEMUs to be enabled for dual fuel - CNG and diesel. Locomotives running on
LNG are also currently under development.
Noise levels of locos to be at par with international norms; concerns related to
wildlife to be addressed.
INVESTING in Indian Railways necessary for our ecological sustenance mainly
due to efficiencies of fuel consumption.
Transparency and Governance initiatives
System of on-line applications introduced for two categories of recruitment as a
pilot project- to be extended.
All possible solutions be explored to address menace of corruption.
E-procurement value chain being expanded.
Constituting a mechanism for making regulations, setting performance standards,
determining tariffs & adjudicating disputes among licensees/private partners and
the Ministry, subject to review in appeal.
Social initiatives
Infrastructure like stations and training centers to be made available for skill
ndian Railways personnel and their services also available for this national cause.
Promotion of products made by Self Help Groups, consisting mainly of women and
youth on the model of Konkan Railway.
Incredible Rail for Incredible India to be launched; Promotion of training of autorickshaw and taxi-operators as tourist-guides on the model of Konkan Railway.
Coaches in select trains connecting major tourist destinations to travel agencies
may be offered on a revenue sharing model.

Your Interview, Shrabana Kumar Nial

IRCTC to work on promoting the Gandhi circuit to attract tourists to mark the
occasion of 100 years of the return of Mahatma Gandhi to India from South Africa;
IRCTC will work on Kisan Yatra, a special travel scheme for farmers for farming &
marketing technique centres.
Net reduction in Gross Traffic Receipts by Rs 917 crore compared to the BE of Rs
1,60,165 crore.
Growth in Ordinary Working Expenses (O.W.E) scaled down to 11.7% as against
BE of 15.5% y-o-y. Taking into account the likely savings accruing from drop in
prices of HSD (high speed diesel) for traction partly offset by higher requirements
under certain heads for maintenance, safety and cleanliness activities, the
budgeted O. W. E. of Rs 1,12,649 crore decreased in the RE 2014-15 to Rs.
1,08,970 crore i.e. by Rs 3,679 crore.
Appropriation to the Pension Fund has been increased to Rs. 29,540 crore in RE.
Internal resource generation also improved and accordingly the appropriation to
DRF has been scaled up to Rs 7,975 crore in RE from the BE 2014-15 provision of
Rs 7,050 crore. After taking into account the above, "Excess" of receipts over
expenditure stands at Rs 7,278 crore in RE 2014-15 reflecting better financial
management. Plan size for 2014-15 increased from Rs 65,445 crore in the B.E to
Rs 65,798 crore in the Revised Estimates i.e. by Rs 353 crore with higher
provisions under internal resource component and market borrowings for rolling
stock requirement.
Budget Estimates for 2015-16.









appropriate INVESTMENTS so as to de- congest the system and enhance linecapacity.

Your Interview, Shrabana Kumar Nial

Passenger earnings growth pegged at 16.7% and target budgeted at Rs. 50,175
Freight traffic is pegged at an all time high incremental traffic of 85 million tonnes,
anticipating a healthier growth in the core sector of economy; Goods earnings
proposed at Rs. 1,21,423 crore which includes rationalisation of rates, commodity
classification and distance slabs.
Other coaching and sundries are projected at Rs. 4,612 crore and Rs. 7,318 crore.
Gross Traffic Receipts estimated at Rs 1,83,578 crore , a growth of 15.3%.
Ordinary Working Expenses proposed to grow at 9.6% over RE 2014-15. Traction
fuel bill anticipated to shrink further.
Higher provisions made for safety maintenance and cleanliness. Lease charges,
interest component of the current and previous market borrowings, at a growth of
Appropriation to Pension Fund proposed at Rs 35,260 crore and appropriation to
DRF at Rs 8,100 crore. Appropriation of Rs 7,616 crore proposed to be made to
Capital Fund for payment of principal component of lease charges to IRFC.
Plan Outlay 2015-16
Gross Budgetary Support of Rs 40,000 crore for the Railway's annual Plan. Rs
1,645.60 crore has also been provided as Railway's share of diesel cess from the
Central Road Fund. Market borrowing under EBR projected at Rs 17,655 crore, an
increase of about 46.5%. Balance Plan outlay includes Rs 17,793 crore from
Internal Resources and Rs. 5781 crore from PPP. Significantly, we are allocating
large amounts towards Doubling, Traffic Facilities, Electrification and Passenger
Given the huge shelf of project and ensuring proper funds flow for the same with a
view to completing them on target, a new FINANCING approach to expand EBR
has been projected. This EBR, presently named EBR (Institutional Finance) would
Your Interview, Shrabana Kumar Nial

be based on institutional investments in railway projects through Railway/ PSUs.

This element is projected at Rs 7,136 crore and is aimed at accelerating








be FINANCED through this mode are listed in the Budget documents.

Plan Outlay is Rs 1,00,011 crore, an increase of 52% over RE 2014-15. It is
anticipated that the Plan size will get higher once resources from institutional
bodies are formalized during the course of the ensuing financial year.
Complete the review of speed restrictions soon.
All critical initiatives to be pursued in mission mode under designated senior
officials in the Ministry of Railways as Mission Directors; similar structure replicated
in all Zonal Railways.

Key Features of the Economic Survey 2015-16

The Survey forecasts a growth rate of over 8% for the financial year
2015-2016 on the basis of the new GDP calculation formula and
emphasises that there is scope for big bang reforms as of now.
The growth estimates of over 8 percent for the current year is on expectations
that the monsoon will be favourable, as it was forecast to be normal, compared
to last year"The Economic Survey indicates that a clear political mandate for
reform and a benign external environment now is expected to propel India on to
a double digit trajectory. Indian economy appears to have now gone past the
economic slowdown, persistent inflation, elevated fiscal deficit, slackening
domestic demand, external account imbalances and oscillating value of the
rupee," the survey said.The Survey outlines a medium-term strategy to create
buffers for future economic downturns, which are
1.Reduce deficits
Reduce fiscal deficit over the medium term to the established target of 3% of
Government will adhere to fiscal deficit target of 4.1 percent of GDP in 2014/15

Your Interview, Shrabana Kumar Nial

Govt should ensure expenditure control to reduce fiscal deficit

Expenditure control and expenditure switching to invest key

Move towards the golden rule of eliminating the revenue deficit

Ensure thereby that borrowing over the cycle is only for capital formation.

2.Expenditure Control and Expenditure Switching

Maintain a firm control on expenditures, in order to achieve the above targets
Improve quality of public expenditure; shift away from public consumption (by
reducing subsidies) towards invest GROWTH

2015/16 GDP growth seen at over 8 pct y/y

Double digit economic growth trajectory now a possibility

Economic growth at market prices seen between 8.1 - 8.5 percent in 2015/16 on
new GDP calculation formula

Total stalled projects seen at about 7 percent of GDP, mostly in private sector


There is scope for big bang reforms now

India can increase public investment and still hit its borrowing targets


Inflation shows declining trend in 2014/15

Inflation likely to be below central bank target by 0.5 - 1 percentage point

Lower inflation opens up space for more monetary policy easing

Govt and central bank need to conclude monetary framework pact to consolidate
gains in inflation control
Your Interview, Shrabana Kumar Nial

Consumer inflation in 2015/16 likely to range between 5-5.5 percent


Govt remains committed to fiscal consolidation

India can balance short-term imperative of boosting public INVESTMENT to

revitalize growth with fiscal discipline

Outlook for external FINANCING is correspondingly favourable


Estimated at about 1.3 percent of GDP in 2014/15 and less than 1.0 percent of
GDP in 2015/16


Overhauling of subsidy regime would pave the way for expenditure rationalisation


Liquidity conditions expected to remain comfortable in 2015/16

The Survey invokes thegolden rule: Governments are expected to borrow over the
cycle only to finance investment, and not to fund current expenditures. Hence
Short-term targets should be set accordingly. This, the Survey argues, would assist
the Government to take the economy back to a durably higher growth path.
Here are the highlights
1. Supply side there are concerns but 2014-2015 double-digit growth trajectory is
now possible. The CSO forecasts FY16 GDP growth between 8.1-8.5 percent.
Meanwhile, FY15 GDP growth is seen at 7.4 percentThe Survey says expectation
for such a growth rate is due to a number of reforms that have already been
undertaken and more that are being planned for. The Survey enlist various
Your Interview, Shrabana Kumar Nial

reform measures like de-regulation of diesel price, taxing energy products,

replacing cooking gas subsidy by direct transfer on national scale, passing an
Ordinance to reform the coal sector via auctions, increasing the FDI caps in
defence, etc.
2. Economic Survey says overhauling of subsidy regime would pave the way for
expenditure rationalization
3. Farm output growth, however, is likely to lag behind at 4 percent
4. Government should ensure expenditure control to reduce fiscal deficit. So
expenditure control and expenditure switching is key for government to achieve
its fiscal deficit target
5. Retail inflation for FY15 is seen between 5 and 5.5 percent. Survey says inflation
showing declining trend as a result of government measures and falling
international oil prices.
6. Foodgrain production for 2014-15 estimated at 257.07 mn tonnes; to exceed that
of last 5 years by 8.5 million tones
7. Survey expects fy15 current account deficit at 1.3 percent of GDP
8. Economic Survey says outlook for external sector is perhaps most favourable
since 2008 financial crisis
9. Food subsidy bill rises 20 percent in April-January 2014-15 at Rs 1.07 lakh crore
10. The Survey says that a close look at price subsidies, which are estimated to be
about 3,78,000 crore rupees, about 4.24 percent of GDP, reveal that they may
not be the governments best weapon for fighting poverty.
11. Adopting what it called the JAM Number Trinity-Jan Dhan Yojana, Aadhaar and
Mobile numbers would allow States to deliver subsidies to poor in a targeted and
less distorted manner.
12. The survey says that liquidity conditions (money supply) have remained broadly
balanced during 2014-2015 except for some temporary tight conditions due to
delayed government expenditure. Steps taken by the RBI played a positive role
in managing the liquidity conditions.
13. According to Survey, FY 2014- 2015 saw some stress on the asset quality of
banks as there was an increase in gross NPAs. As on June 2014 , five subsectors,
viz. Infrastructure, Textiles, Iron & Steel, Mining and aviation hold 54% of total
stressed advances of Public Sector Banks.
14. The Survey states that fiscal action cannot wait and that it should continue in the
upcoming year as well. It however adds that the need for accelerated fiscal
consolidation has reduced, in view of reduced macroeconomic pressures.
15. Survey says that skill development and employment are the major challenged
faced by the economy today. Dearth of formal vocational education, lack of
variation quality, high chool dropout rates, inadequate skill training capacity,
negative perception towards skilling, and lack of industry ready skills even in
processional courses are the major cause of poor skill levels of Indias workforce,
it said.

Your Interview, Shrabana Kumar Nial

The survey has also shown that the cause for concern is the deceleration in the
compound annual growth rate of employment during 2004-05 to 2011-12 to 0.5
percent from 2.8 percent during 1999-2000 to 2004-05 as against growth rate of
2.9 percent and 0.4 percent respectively in the labour force for the same periods. In
order to improve generation of productive employment under MNREGA, the
Intensive and Participatory Planning Exercise has been initiated to prepare the
labour budget for financial year 2015-16 in selected 2500 backward blocks using
participatory rural appraisal technique.The Economic Survey, however,expressed
serious concern that several projects have been stalled. It suggested revitalizing
public private partnership model of investment.The survey prepared by the finance
ministry's chief economic adviser Arvind Subramanian on the state of Asia's thirdlargest economy was released ahead of Saturday's federal budget announcement for
2015/16 fiscal year that begins on April 1.


Second Bi-monthly Monetary Policy Statement, 2015-16 Dr.
Raghuram G. Rajan, Governor Date : Jun 02, 2015
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic
situation, it has been decided to:

Short-term lending rate (repo) cut by 0.25 pc to 7.25 pc

Cash Reserve Ratio unchanged at 4 pc
Statutory Liquidity Ratio retained at 21.5 pc
Inflation expected to rise to 6 pc by January 2016
Strong food policy management needed to keep inflation and inflationary
expectations under check
Growth forecast lowered to 7.6 pc for 2015-16 from 7.8 pc projected in
Banks asked to pass on benefit of rate cuts to borrowers
Targeted infusion of bank capital into PSU banks needed to ensure credit
flows to productive sectors
continue to provide liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL at the LAF repo rate and liquidity under 14-day term repos
as well as longer term repos of up to 0.75 per cent of NDTL of the banking
system through auctions; and
continue with overnight/term variable rate repos and reverse repos to
smooth liquidity.
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Consequently, the reverse repo rate under the LAF stands adjusted to 6.25
per cent, and the marginal standing facility (MSF) rate and the Bank Rate
to 8.25 per cent.
Third bi-monthly policy statement on August 4
2. Since the first bi-monthly monetary policy statement of 2015-16 issued in
April 2015, incoming data suggest that the global recovery is still slow and
getting increasingly differentiated across regions. In the United States, the
economy shrank in Q1 owing to harsh weather conditions, the strength of the US
dollar weighing on exports and a decline in non-residential fixed investment. In
the euro area, financial conditions have eased due to the European Central
Banks (ECB) quantitative easing and a depreciating euro. There has, however,
been some moderation in composite purchasing managers indices (PMI),
economic sentiment and consumer confidence in April. In Japan, growth
surprised on the upside in Q1, supported by private demand as business
spending boosted inventories and personal consumption. For most emerging
market economies (EMEs), macroeconomic conditions remain challenging due to
domestic fragilities, exacerbated by bouts of financial market turbulence. China
continues to decelerate in spite of monetary easing. The recent firming up of
crude prices has reduced headwinds to growth for some energy exporters, while
increasing them for importers. Even absent a decisive economic recovery or
adverse geopolitical shocks, oil prices appear to be volatile.
3. Global financial markets have also been volatile, with risk-on risk-off shifts
induced by changing perceptions of monetary policies in the advanced
economies. Global currency markets continue to be dominated by the strength of
the US dollar, with the G3 currencies reflecting the asynchronicity of their
monetary policy stances. Volatility in global bond markets has increased with a
number of factors at play: unwinding of European assets by investors due to the
Greek crisis; rapidly changing expectations around the Feds forward guidance;
sharp movements in crude prices; and market corrections due to changes in risk
4. As anticipated, the Central Statistics Office has revised downwards its estimate
of Indias gross value added (GVA) at basic prices for 2014-15 by 30 basis points
from the advance estimates. Domestic economic activity remains moderate in Q1
of 2015-16. Agricultural activity was adversely affected by unseasonal rains and
hailstorms in north India during March 2015, impinging on an estimated 94 lakh
hectares of area sown under the rabi crop. Reflecting this, the third advance
estimates of the Ministry of Agriculture indicate a contraction in foodgrains
production by more than 5 per cent in relation to the preceding years level.
Successive estimates have been pointing to a worsening of the situation, with the
damage to crops like pulses and oilseeds where buffer foodstocks are not
Your Interview, Shrabana Kumar Nial

available in the central pool posing an upside risk to food inflation. For
the kharif season, the outlook is clouded by the first estimates of the India
Meteorological Department (IMD), predicting that the southwest monsoon will be
7 per cent below the long period average. This has been exacerbated by the
confirmation of the onset of El Nino by the Australian Bureau of Meteorology.
5. What is clear is that contingency plans for food management, including
storage of adequate quantity of seeds and fertilisers for timely supply, crop
insurance schemes, credit facilities, timely release of food stocks and the repair
of disruptions in food supply chains, including through imports and de-hoarding,
need to be in place to manage the impact of low production on inflation. Inflation
control will also be helped by limiting the increase in agricultural support prices.
6. Industrial production has been recovering, albeit unevenly. The sustained
weakness of consumption spending, especially in rural areas as indicated in the
slowdown in sales of two-wheelers and tractors, continues to operate as a drag.
Corporate sales have contracted. The disappointing earnings performance could
have been worse if not for the decline in input costs. Capacity utilisation has
been falling in several industries, indicative of the slack in the economy. While an
upturn in capital goods production seems underway, clear evidence of a revival in
investment demand will need to build on the tentative indications of unclogging
of stalled investment projects, stabilising of private new investment intentions
and improving sales of commercial vehicles. In April, output from core industries
constituting 38 per cent of the index of industrial production declined across the
board, barring coal production. The sustained revival of coal output augurs well
for electricity generation and mining and quarrying, going forward. There is some
optimism on gas pricing and availability. The resolution of power purchase
processes has to be expedited and power distribution companies financial stress
has to be addressed on a priority basis. Some public sector banks will need more
capital to clean up their balance sheets and support lending as investment
7. Leading indicators of services sector activity are emitting mixed signals. A
pick-up in service tax collections, sales of trucks, railway freight, domestic air
passenger and air freight traffic could augur well for transport and
communication and trade. On the other hand, the slowdown in tourist arrivals,
railway traffic and international air passenger and freight traffic could affect
hotels, restaurants and some constituents of transportation services adversely.
The services PMI declined in April 2015, mainly on account of slowdown in new
business orders. Community and personal services are likely to be held back by
the ongoing fiscal consolidation.
8. In April, retail inflation measured by the consumer price index (CPI)
decelerated for the second month in a row, supported by favourable base effects
Your Interview, Shrabana Kumar Nial

[of about (-) 0.8 per cent] that moderated the rise in the price index for the
fourth successive month. Food inflation softened to a contra-seasonal four-month
low, with the impact of unseasonal rains yet to show up. Vegetables inflation
continued to ease, along with that of other sub-groups such as cereals, oil, sugar
and spices. On the other hand, protein items, especially milk and pulses,
continued to impart upward inflationary pressures.
9. Fuel inflation rose for the fourth successive month to a twelve-month high,
driven by prices of electricity and firewood. Inflation in these components was
accentuated by base effects the recent price uptick coming on top of muted
increases a year ago. Inflation excluding food and fuel rose marginally. House
rent, education, medical and transport expenses were among the major drivers
of inflation in this category. Rural wage growth, although still moderate, picked
up. Inflation expectations remain in high single digits, although they may adapt
further to current low inflation. Yet, both input and output price pressures remain
muted as reflected in the Reserve Banks industrial outlook survey. Purchasing
managers indices also corroborate these developments.
10. Liquidity conditions eased in April 2015 after the tightness in the second half
of March 2015 on account of advance tax outflows and financial year-end
behaviour of banks. The Reserve Banks liquidity management operations were
reversed in view of the improvement in liquidity conditions through April. During
May, however, rapid increases in currency in circulation and a build-up of
government balances resulted in liquidity conditions tightening again.
Accordingly, fine tuning operations of varying tenors were conducted, besides the
regular overnight repo at fixed rate and 14-day variable rate repo auctions.
These injections helped meet the frictional liquidity requirements. In May, the
average daily net liquidity injected through LAF fixed rate repos, besides regular
14-day variable rate repos, additional variable rate repos and MSF, was 1031
billion as compared with 819 billion in April. As a result, weighted average
money market rates shadowed the policy rate. Longer term interest rates,
particularly gilts, hardened in early May on international cues but eased in the
second half of the month, particularly after the issuance of the new benchmark
11. Merchandise export growth has weakened steadily since July 2014 and
entered into contraction from January 2015 through April, with a recent shrinking
of even volumes exported. The deterioration in export performance affected
economies across Asia as global demand fell and the fall in commodity prices
impacted terms of trade for commodity exporters. From December 2014
onwards, merchandise import growth also turned negative, led by a sharp
decline in the volume of oil imports as inventory build-up by refineries subsided.
Gold imports spiked in the month of March and remained elevated in April owing
to festival demand and regulatory relaxations. Notably, the volume of imports
has been recording increases, despite the value decline. Given these
Your Interview, Shrabana Kumar Nial

developments, the reduction in the current account deficit resulting from the
sharp decline in oil prices has begun to reverse, though the size of the deficit is
expected to be contained to about 1.5 per cent of GDP this year. Net exports are,
therefore, unlikely to contribute as much to growth going forward as they did in
the past financial year. Consequently growth will depend more on a
strengthening of domestic final demand. While portfolio and direct foreign
investment flows were buoyant during 2014-15, with net foreign direct
investment to India at US$ 36.6 billion and net portfolio inflows at US$ 41 billion,
the year 2015-16 has begun with net portfolio outflows in the wake of a
reduction in global portfolio allocations to India. Foreign exchange reserves are
around US$ 350 billion, providing a strong second line of defence to good
macroeconomic policies if external markets turn significantly volatile.
Policy Stance and Rationale
12. Banks have started passing through some of the past rate cuts into their
lending rates, headline inflation has evolved along the projected path, the impact
of unseasonal rains has been moderate so far, administered price increases
remain muted, and the timing of normalisation of US monetary policy seems to
have been pushed back. With low domestic capacity utilization, still mixed
indicators of recovery, and subdued investment and credit growth, there is a case
for a cut in the policy rate today.
13. Yet, of the risks to inflation identified in April, three still cloud the picture.
First, some forecasters, notably the IMD, predict a below-normal southwest
monsoon. Astute food management is needed to mitigate possible inflationary
effects. Second, crude prices have been firming amidst considerable volatility,
and geo-political risks are ever present. Third, volatility in the external
environment could impact inflation. Therefore, a conservative strategy would be
to wait, especially for more certainty on both the monsoon outturn as well as the
effects of government responses if it turns out to be weak. With still weak
investment and the need to reduce supply constraints over the medium term to
stay on the proposed disinflationary path (to 4 per cent in early 2018), however,
a more appropriate stance is to front-load a rate cut today and then wait for data
that clarify uncertainty. Meanwhile banks should pass through the sequence of
rate cuts into lending rates.
14. Assuming reasonable food management, inflation is expected to be pulled
down by base effects till August but to start rising thereafter to about 6.0 per
cent by January 2016 slightly higher than the projections in April. Putting more
weight on the IMDs monsoon projections than the more optimistic projections of
private forecasters as well as accounting for the possible inflationary effects of
the increases in the service tax rate to 14 per cent, the risks to the central
trajectory are tilted to the upside.
Your Interview, Shrabana Kumar Nial

15. Reflecting the balance of risks and the downward revision to GVA estimates
for 2014-15, the projection for output growth for 2015-16 has been marked
down from 7.8 per cent in April to 7.6 per cent with a downward bias to reflect
the uncertainties surrounding these various risks .
16. Strong food policy and management will be important to help keep inflation
and inflationary expectations contained over the near term. Furthermore,
monetary easing can only create the enabling conditions for a fuller government
policy thrust that hinges around a step up in public investment in several areas
that can also crowd in private investment. This will be important to relieve supply
constraints and aid disinflation over the medium term. A targeted infusion of
bank capital into scheduled public sector commercial banks, especially those that
implement concerted strategies to clean up stressed assets, is also warranted so
that adequate credit flows to the productive sectors as investment picks up.
17. The third bi-monthly monetary policy statement will be announced on August
4, 2015.
Highlights of RBI's first bi-monthly monetary policy statement, 2015-16:

Short-term lending rate (repo) unchanged at 7.5 pc

Cash Reserve Ratio unchanged at 4 pc
Retains Statutory Liquidity Ratio at 21.5 pc
Estimates GDP growth at 7.8% in FY'16, up from 7.5% in FY'15
Forecasts CPI inflation at 5.8 pc by March 2016
CPI inflation to dip to 4 pc in August 2015
Hailstorms in March affected 17% of ..

First Bi-monthly Monetary Policy Statement, 2015-16

Date : 07 Apr 2015
Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic

situation, it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 7.5 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liability (NDTL); and
continue to provide liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day
term repos of up to 0.75 per cent of NDTL of the banking system through
auctions; and
Your Interview, Shrabana Kumar Nial

continue with daily variable rate repos and reverse repos to smooth
Consequently, the reverse repo rate under the LAF will remain unchanged at 6.5
per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.5
per cent.

2. Since 2014-15s sixth bi-monthly monetary policy statement of February, a

moderate and uneven global recovery is emerging, with economies being
buffeted (or supported) by currency fluctuations and commodity prices. Growth
in the United States is likely to have been weak in the first quarter of calendar
2015, partly because of US dollar appreciation, but is expected to strengthen.
The Euro area has started to show modest improvement, supported by a boost to
demand from lower crude prices and the depreciation of the euro as well as
easing financial and credit conditions following the commencement of
quantitative easing. With the waning of the impact of the consumption tax
increase, growth turned positive in Japan in Q4 of 2014 and consumer confidence
and exports picked up. However, retail sales and industrial production contracted,
indicating that the outlook is still weak. Growth continues to slow in China amidst
financial fragilities and macroeconomic imbalances. This will have regional and
global ramifications, although the softness in international commodity prices is
providing some offset for net importers while adversely impacting net exporters.
Global growth is likely to firm up through 2015 and 2016, supported by stronger
recovery in the advanced economies (AEs) and soft energy prices. Downside
risks mainly emanate from the slowdown in China, geopolitical risks surrounding
oil prices and the uneven effects of currency and commodity price movements.
3. Global financial markets have been boosted by expectations of normalisation
of US monetary policy being pushed back into late 2015, monetary policy stances
turning highly accommodative in other AEs, and several emerging market
economies (EMEs) easing policy rates to address growth concerns. Long-term
yields have declined to all-time lows on weak inflation expectations, compression
of term premiums and the safe haven allure of US Treasuries. Ultra low interest
rates and reduction in risk premia have raised most asset prices to record highs,
and have pushed investors to riskier assets such as equity and lower rated debt
instruments. Exchange rates have experienced large and volatile movements,
with the US dollar strengthening against most currencies. Among EMEs, markets
have tended to discriminate against those with relatively weaker fundamentals
and/or oil exporters. Nevertheless, with high portfolio flows to EMEs, risks from
sudden shifts in market sentiment have increased.

Your Interview, Shrabana Kumar Nial

4. Domestic economic activity is likely to have strengthened in Q4. Second

advance estimates of the Ministry of Agriculture suggest that the contraction in
food grains production in 2014-15 may turn out to be less than earlier
anticipated. However, the adverse impact of unseasonal rains and hailstorms in
March is still unfolding. Initial estimates indicate that as much as 17 per cent of
the sown area under the rabi crop may have been affected though the precise
extent of the damage remains to be determined. The growth in allied activities is
likely to remain strong as in the recent past, though it remains to be seen
whether it will fully compensate the decline in food grains output.
5. The industrial sector, and in particular, manufacturing appears to be regaining
momentum, with the growth of production in positive territory for three
consecutive months till January. While basic goods production has been
expanding steadily since November 2013, capital goods output has been
relatively lumpy and volatile, and more positive readings are needed to be
confident about a durable pick-up in investment demand. The persisting
contraction in consumer durables production for over two years could be
reflecting the underlying weakness in consumption demand as well as higher
6. Mixed signals are coming from the service sector. While the national accounts
statistics seem to suggest that consumption demand for services is robust
relative to the demand for goods, and purchasing managers perceive activity
expanding on new orders, various coincident indicators of services sector activity
including railway and port traffic, domestic and international passenger traffic,
international freight traffic, tourist arrivals, motorcycle and tractor sales as well
as bank credit and deposit growth remain subdued.
7. Retail inflation measured by the year-on-year changes in the revised consumer
price index (CPI) firmed up for the third successive month in February as
favourable base effects dissipated, despite the price index remaining virtually flat
since December. The still elevated levels of prices of protein-rich items such as
pulses, meat, fish and milk kept food inflation from following the seasonal decline
in prices of vegetables and fruits. The prices of items such as sugar and edible oil
moderated in consonance with the downturn in global commodity prices. Fuel
inflation edged up for the second month in a row due to the increase in prices of
electricity and firewood.
8. Inflation excluding food and fuel fell successively in the nine months till
February. A large part of this disinflation has been on account of the slump in
international crude oil prices feeding through into domestic prices of petrol and
diesel that are included under the category transport and communication.
Inflation in respect of housing has also eased in the revised CPI, in part reflecting
methodological and coverage improvements. Furthermore, upside pressures
affecting prices of services such as education, health and other services have
Your Interview, Shrabana Kumar Nial

also fallen on account of weak demand conditions. The rate of growth of rural
wages has come off substantially from the double digit levels that prevailed up to
November 2013. Firms are also reporting a substantial easing of input price
pressures, barring the most recent purchasing manager surveys. Reflecting past
disinflation, inflation expectations of households are in single digits, although
they too exhibit some firming up in Q4 in response to the turning up of food and
fuel inflation during January-February.
9. Since the shift in the monetary policy stance in January towards
accommodation, the Reserve Bank has moved to ensure comfortable liquidity
conditions through pro-active liquidity management, including fine-tuning
operations on week days and access to the MSF and fixed rate reverse repo on
Saturdays. This has helped to smooth the liquidity frictions that characterise
events such as advance tax payments and balance sheet dates, keeping the
money market rates anchored to the repo rate. In order to alleviate the
pressures that build up in March on account of frictional factors, the Reserve
Bank augmented its liquidity management instruments by engaging in repos of
maturities ranging from 8 to 28 days cumulating to an outstanding amount
of `1430 billion (including support from the MSF of `416 billion) at end-March in
addition to regular 14-day term repo auctions and fixed rate overnight repos. The
availability of liquidity can be gauged from the fact that in March, average daily
liquidity returned by market participations through variable/fixed rate reverse
repos amounted to `293 billion.
10. Export performance has been progressively weakening and contraction set in
on both non-oil and petroleum product exports since December 2014. Fragile
external demand conditions and the softness in international commodity prices
have taken a heavy toll, as in several other EMEs in Asia. In particular, price
realisations have been eroded, despite export volumes going up. With the Indian
rupee gaining in real effective terms, export margins are coming under pressure
for those exporters without substantial imported inputs. Net terms of trade gains
and compression in imports of petroleum products have narrowed the trade
deficit in the last three months to its lowest level since 2009-10. Gold imports
remained contained; although non-oil non-gold imports grew at a modest pace in
these months, they may be reflecting substitution effects in view of the
sluggishness in domestic manufacturing.
11. Exports of services, particularly, software and travel have provided a silver
lining and have helped to hold down the current account deficit (CAD) which has
narrowed in Q3. This improvement has likely extended into Q4. As a result,
capital inflows mainly portfolio flows into domestic debt and equity markets
and foreign direct investment have exceeded the external financing
requirement and enabled accretion to the foreign exchange reserves which
reached an all-time peak of US$ 343 billion as on April 3, 2015. These reserves,
Your Interview, Shrabana Kumar Nial

including forward purchases that will be delivered over the next few months,
provide some buffer against potential capital outflows when monetary policy
normalisation in AEs commences. Good macroeconomic policy will, of course, be
the critical first line of defence in retaining investor confidence.
Policy Stance and Rationale

12. In 2015 so far, the inflation path has evolved along the projected path after a
sizable undershoot of the January 2015 target. CPI inflation is projected at its
current levels in the first quarter of 2015-16, moderating thereafter to around 4
per cent by August but firming up to reach 5.8 per cent by the end of the year
(Chart 1). There are upside risks to the central projection emanating from
possible intensification of el nio conditions leading to a less than normal
monsoon; large deviations in vegetable and fruit prices from their regular
seasonal patterns, given unseasonal rains; larger than anticipated administered
price revisions; faster closing of the output gap; geo-political developments
leading to hardening of global commodity prices; and spillover from external
developments through exchange rate and asset price channels. However, at this
juncture, these upside risks appear to be offset by downsides originating from
global deflationary/disinflationary tendencies, the still soft outlook on global
commodity prices; and slack in the domestic economy.
13. Transmission of policy rates to lending rates has not taken place so far
despite weak credit off take and the front loading of two rate cuts. With little
transmission, and the possibility that incoming data will provide more clarity on
the balance of risks on inflation, the Reserve Bank will maintain status quo in its
monetary policy stance in this review.
14. The Monetary Policy Framework Agreement signed by the Government of
India and the Reserve Bank in February 2015 will shape the stance of monetary
policy in 2015-16 and succeeding years. The Reserve Bank will stay focussed on
ensuring that the economy disinflates gradually and durably, with CPI inflation
targeted at 6 per cent by January 2016 and at 4 per cent by the end of 2017-18.
Although the target for end-2017-18 and thereafter is defined in terms of a
tolerance band of +/- 2 per cent around the mid-point, it will be the Reserve
Banks endeavour to keep inflation at or close to this mid-point, with the
extended period provided for achieving the mid-point mitigating potentially
adverse effects on the economy. As outlined above, several favourable forces are
at work, consistent with the change in the monetary policy stance towards
accommodation effected from January. The Reserve Banks intent is to allow the
disinflationary momentum to spread through the economy, but remain vigilant
about any resurgence of inflationary pressures that may destabilise the progress
towards the inflation objectives set in the Agreement.

Your Interview, Shrabana Kumar Nial

15. The outlook for growth is improving gradually. Comfortable liquidity

conditions should enable banks to transmit the recent reductions in the policy
rate into their lending rates, thereby improving financing conditions for the
productive sectors of the economy. Along with initiatives announced in the Union
Budget to boost investment in infrastructure and to improve the business
environment, these factors should provide confidence to private investment and,
together with the conducive outlook on inflation, deliver real income gains to
consumers and lower input cost advantages to corporates. GDP growth estimates
of the CSO for 2014-15 already project a robust pick-up, but leading and
coincident indicators suggest a downward revision of these estimates when fuller
information on real activity for the last quarter becomes available. Uncertainty
surrounding the arrival and distribution of the monsoon and unanticipated global
developments are the two major risks to baseline growth projections. Assuming a
normal monsoon, continuation of the cyclical upturn in a supportive policy
environment, and no major structural change or supply shocks, output growth
for 2015-16 is projected at 7.8 per cent, higher by 30 bps from 7.5 per cent in
2014-15, but with a downward bias to reflect the still subdued indicators of
economic activity (Chart 2).
16. Going forward, the accommodative stance of monetary policy will be
maintained, but monetary policy actions will be conditioned by incoming data.
First, the Reserve Bank will await the transmission by banks of its front-loaded
rate reductions in January and February into their lending rates. Second,
developments in sectoral prices, especially those of food, will be monitored, as
will the effects of recent weather disturbances and the likely strength of the
monsoon, as the Reserve Bank stays vigilant to any threats to the disinflation
that is underway. The Reserve Bank will look through both seasonal as well as
base effects. Third, the Reserve Bank will look to a continuation and even
acceleration of policy efforts to unclog the supply response so as to make
available key inputs such as power and land. Further progress on repurposing of
public spending from poorly targeted subsidies towards public investment and on
reducing the pipeline of stalled investment will also be helpful in containing
supply constraints and creating room for monetary accommodation. Finally, the
Reserve Bank will watch for signs of normalisation of the US monetary policy,
though it anticipates India is better buffered against likely volatility than in the
Part B: Developmental and Regulatory Policies

17. This part of the Statement reviews the progress on various developmental
and regulatory policy measures announced by the Reserve Bank in recent policy
statements and also sets out new measures to be taken for strengthening the
banking structure; broadening and deepening financial markets and extending
the reach of financial services to all.
Your Interview, Shrabana Kumar Nial

I. Monetary Policy Framework

18. Steps taken to revise the monetary policy framework are documented in the
accompanying Monetary Policy Report.
II. Banking Structure

19. The Basel Committee on Banking Supervision issued the final rules on the
Net Stable Funding Ratio (NSFR) in October 2014. The Reserve Bank has already
started phasing in implementation of the Liquidity Coverage Ratio (LCR) from
January 2015 and is committed to the scheduled implementation of NSFR from
January 1, 2018 for banks in India. The Reserve Bank proposes to issue draft
guidelines on NSFR by May 15, 2015.
20. Guidelines on Countercyclical Capital Buffers (CCCB) were issued on February
5, 2015. They advised that the CCCB would be activated as and when
circumstances warrant, and that the decision would normally be pre-announced
with a lead time of four quarters. The framework envisages the credit-to-GDP
gap as the main indicator which may be used in conjunction with other
supplementary indicators such as the incremental credit-deposit (C-D) ratio for a
moving period of three years, the industrial outlook survey (IOS) assessment
index and the interest coverage ratio. A review and empirical testing of these
indicators was carried out to assess whether activation of the CCCB is warranted.
It was concluded that the overall situation does not warrant imposition of CCCB
at this point of time.
21. In July 2014, banks were allowed to issue long term bonds (LTBs), with
exemptions from certain regulatory pre-emptions, for lending to (i) long-term
projects in infrastructure sub-sectors, and (ii) affordable housing. However,
cross-holding of such bonds amongst banks is currently not permitted. On a
review, it has been decided to allow banks to invest in such bonds issued by
other banks, subject to the following conditions:
i. banks investment in these bonds will not be treated as assets with the
banking system in India for the purpose of calculation of NDTL; and
ii. any single banks holding of bonds in a particular issue will be subject to
certain limits in relation to the bond issue size. Its aggregate holding of such
bonds will also be subject to certain limits in relation to its own assets.
iiLTBs held for trading will reduce the banks priority sector and liquidity benefits
obtained from its own issuance of LTBs.
Detailed guidelines in this regard will be issued shortly.

Your Interview, Shrabana Kumar Nial

22. For monetary transmission to occur, lending rates have to be sensitive to the
policy rate. With the introduction of the Base Rate on July 1, 2010 banks could
set their actual lending rates on loans and advances with reference to the Base
Rate. At present, banks are following different methodologies in computing their
Base Rate on the basis of average cost of funds, marginal cost of funds or
blended cost of funds (liabilities). Base Rates based on marginal cost of funds
should be more sensitive to changes in the policy rates. In order to improve the
efficiency of monetary policy transmission, the Reserve Bank will encourage
banks to move in a time-bound manner to marginal-cost-of-funds-based
determination of their Base Rate. Detailed guidelines will be issued shortly.
23. The Financial Benchmarks India Pvt. Ltd., jointly floated by the Fixed Income
Money Market and Derivatives Association of India (FIMMDA), the Foreign
Exchange Dealers' Association of India (FEDAI) and the Indian Banks Association
(IBA), has been established as an independent benchmark administrator. This
administrator will start operations by end-May 2015. Once it starts publishing
various indices of market interest rates, the Reserve Bank will explore the
possibility of encouraging banks to use the indices as an external benchmark for
pricing bank products.
24. The Reserve Bank has been prescribing a comprehensive Calendar of
Reviews to be deliberated by the boards of banks, with significant additions to
the calendar over the years. Time spent on reviews reduces the leeway for the
board to discuss issues of strategic importance for banks such as product market
strategy and risk management. The Committee to Review Governance of Boards
of Banks in India (Chairman: Dr. P.J.Nayak) recommended that discussions in the
boards of banks need to be upgraded and greater focus should be on strategic
issues. It is, therefore, proposed to do away with the mandatory calendar of
reviews and instead, replace it with the seven critical themes prescribed by the
Nayak Committee namely, business strategy, financial reports and their integrity,
risk, compliance, customer protection, financial inclusion and human resources,
and leave it to the banks boards to determine other list of items to be
deliberated and periodicity thereof.
25. The need to bring in professionalism to the boards of banks cannot be
overemphasized. In order to attract and retain professional directors, it is
essential that they are appropriately compensated. Public sector banks follow
guidelines issued by the government in this regard. The remuneration of the
part-time Chairmen of private sector banks are approved specifically for each
bank under the current statutory provisions. However, there is no guidance on
remuneration to other non-executive directors of private sector banks. Therefore,
it is proposed:

Your Interview, Shrabana Kumar Nial

i. to issue guidelines to private sector banks on a policy on remuneration for the

non-executive directors (other than part-time Chairman) that will reflect market
realities and will be within the parameters specified in the Banking Regulation Act
1949 and the Companies Act, 2013; and
ii. to discuss with the Government the adoption of a similar remuneration policy
for the non-executive directors of the public sector banks.
26. With a view to enlarging the scope of urban co-operative banks for expanding
their business, it has been decided to allow financially sound and well managed
(FSWM) scheduled urban co-operative banks, which are CBS-enabled and having
minimum net worth of `100 crore, to issue credit cards. Detailed guidelines in
this regard will be issued separately.
27. Similarly, with a view to providing greater freedom to state co-operative
banks to expand their business and to provide technology-enabled services to
their customers, it has been decided to permit state co-operative banks
satisfying certain eligibility criteria to set up off-site ATMs/mobile ATMs without
obtaining prior approval from the Reserve Bank. Detailed guidelines in this
regard will be issued separately.
III. Financial Markets

28. Several steps have been taken by the Reserve Bank to promote liquidity in
the government securities (G-sec) market as recommended by the Working
Group on Enhancing Liquidity in the Government Securities and Interest Rate
Derivatives Markets (Chairman: Shri R. Gandhi). These include, inter alia, a)
conduct of G-sec auctions at both uniform price and multiple price formats; b)
change of the settlement cycle of primary auctions for treasury bills (T-bills) from
T+2 to T+1 basis; and c) re-issuance of state development loans.
29. As part of continuing measures to promote liquidity, the Reserve Bank will
formulate a scheme for market making by primary dealers in semi-liquid and
illiquid government securities. Details of the scheme will be worked out and
implemented in consultation with market participants within the next three
30. Although the G-sec market is predominantly institutional in nature, the
Reserve Bank has initiated several steps to promote retail/individual investments,
such as the non-competitive bidding scheme, and enabling access to the
Negotiated Dealing System-Order Matching (NDS-OM). To increase participation
of the retail and mid-segment investors in the G-sec market, gilt account holders
(GAHs) were also extended web-based access to NDS-OM (secondary market
trading platform) and NDS-auction platform (primary market platform) earlier.

Your Interview, Shrabana Kumar Nial

Auctions of G-secs have since moved to a more robust CBS platform (e-Kuber).



it is now proposed to introduce a similar web-based solution for participation of

all mid-segment / retail investors having gilt accounts on the e-Kuber platform.
The facility is expected to be made available within the next three months.
Considering the need to tap private savings through G-secs, retail
investors/individuals could be provided direct access to both primary and
secondary market platforms without any intermediary. Hence, it is proposed to
explore the creation of alternate channels of distribution (e-Distribution
Channels) for G-secs by the Reserve Bank.
The Reserve Bank has been in consultation with all stakeholders to enable
seamless movement of securities from subsidiary general ledger (SGL) form to
demat form and vice versa to promote trading of G-secs on stock exchanges.
Concomitantly, it has also been decided to provide demat account holders a
functionality to put through trades on NDS-OM. As implementation of these
reforms involves multiple agencies, it is proposed to constitute an
Implementation Group with representatives from all stakeholders to roll out the
measures within a period of six months.
The non-competitive bidding facility available to retail investors is currently
applicable only to auctions of dated securities other than Treasury Bills. In the
case of Treasury Bills, a different type of non-competitive bidding is permitted
only for State governments, eligible provident funds, select foreign central banks
and sovereign wealth funds. It is proposed to allow non-competitive bidding
facility in Treasury Bills to individuals as well. Details of the facility will be worked
out and implemented in consultation with the Government of India.
31. A few international financial institutions were permitted to issue rupee bonds
in overseas markets, subject to certain conditions. These issues have been
received with interest. The appetite for rupee debt amongst international
investors is a welcome development. In view of this, it is proposed to expand, in
consultation with the Government of India, the scope of such bond issues by the
international financial institutions as also to permit Indian corporates eligible to
raise external commercial borrowing (ECB) through issuance of rupee bonds in
overseas centers with an appropriate regulatory framework.
32. Under the present regulatory framework governing foreign exchange
derivatives contracts under the Foreign Exchange Management Act, 1999
(FEMA), writing of options by the users on a standalone basis is not permitted.
However, end-users can enter into option strategies of simultaneous buying and
selling of plain vanilla European options, provided there is no net receipt of
premium. With a view to encouraging hedging of forex exposures and enhancing
the liquidity of the currency options market, it is proposed to permit Indian
exporters and importers to write covered options on the basis of actual
Your Interview, Shrabana Kumar Nial

contracted forex exposure, subject to conditions. Detailed operating instructions

shall follow separately.
IV. Access to Finance

33. The Reserve Bank had constituted an Internal Working Group to revisit the
Priority Sector guidelines. The Working Group has since submitted its report,
which was placed on the Reserve Banks website for comments/suggestions.The
Working Group has, inter alia, recommended specific sub-targets for small and
marginal farmers and micro enterprises and inclusion of certain specific types of
social infrastructure within the ambit of priority sector lending. The working
Group has also recommended introduction of tradable Priority Sector Lending
Certificates as another instrument to manage deficit/surplus amongst the players
within the system. The Reserve Bank will take a view on the recommendations in
the light of feedback received and the guidelines in this regard will be issued
34. Taking into consideration the improvement in the Micro-Finance Institutions
(MFI) sector and recommendations of the Committee on Comprehensive
Financial Services for Small Businesses and Low Income Households (Chairman:
Dr. Nachiket Mor), there is a need to revise upwards the limit relating to total
indebtedness of the borrower, eligible rural and semi-urban household annual
incomes and loan amounts to be disbursed in the first cycle and in subsequent
cycles as follows:


Total indebtedness of a borrower, excluding educational/ medical expenses, not

to exceed `1,00,000 (raised from the current limit of `50,000).
Loan disbursed to a borrower with a rural household annual income not
exceeding `1,00,000 (enhanced from `60,000) or urban and semi-urban
household income not exceeding `1,60,000 (enhanced from `1,20,000).
Disbursement of the loan amount not to exceed `60,000 (enhanced
from `35,000) in the first cycle and `1,00,000 (enhanced from `50,000) in
subsequent cycles.
Detailed guidelines will be issued shortly.
35. Several measures have been taken to ensure the timely flow of funds to the
infrastructure sector. One of them was to create a separate category of non-bank
finance companies (NBFCs) called NBFC-infrastructure debt fund (NBFC-IDF).
These NBFCs were allowed only to provide take-out finance for infrastructure
projects in the Public Private Partnership (PPP) segment under a tripartite
agreement involving, among others, the project authority. Certain regulatory
dispensations were also given to these NBFCs. With a view to expanding the
nature of projects to which they can lend, it is proposed to allow NBFC-IDFs to
provide take-out finance for infrastructure projects that have completed one year
Your Interview, Shrabana Kumar Nial

of operation in the PPP segment without a tripartite agreement and to the nonPPP segment, subject to certain conditions. Detailed guidelines are being issued
36. Looking ahead, the Reserve Banks developmental and regulatory policies will
continue to be guided by the five-pillar approach to improve the efficacy of
monetary and liquidity management, expand financial inclusion and carry
forward banking sector reforms by adapting the best international practices to
country-specific requirements.
37. The second bi-monthly monetary policy statement will be announced on June
2, 2015; the third bi-monthly monetary policy statement on August 4, 2015; the
fourth bi-monthly monetary policy statement on September 29, 2015; the fifth
bi-monthly monetary policy statement on December 1, 2015; and the sixth bimonthly monetary policy statement on February 2, 2016.


Sixth Bi-Monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G. Rajan,
Governor Date : 03 Feb 2015
Part A: Monetary Policy
Monetary and Liquidity Measures
On the basis of an assessment of the
macroeconomic situation, it has been decided to:




Keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 7.75 per cent;
Keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0
per cent of net demand and time liabilities (NDTL);
reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by
50 basis points from 22.0 per cent to 21.5 per cent of their NDTL with
effect from the fortnight beginning February 7, 2015;
replace the export credit refinance (ECR) facility with the provision of
system level liquidity with effect from February 7, 2015;
continue to provide liquidity under overnight repos of 0.25 per cent of
bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day
term repos of up to 0.75 per cent of NDTL of the banking system through
auctions; and
Your Interview, Shrabana Kumar Nial

continue with daily variable rate term repo and reverse repo auctions to
smooth liquidity.
Consequently, the reverse repo rate under the LAF will remain unchanged at 6.75
per cent, and the marginal standing facility (MSF) rate and the Bank Rate at 8.75
per cent.
Fifth Bi-Monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G Rajan,
Date : 02 Dec 2014
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation, it has
been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF) unchanged at 8.0
per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per cent of
net demand and time liabilities (NDTL);
continue to provide liquidity under overnight repos at 0.25 per cent of bank-wise NDTL
at the LAF repo rate and liquidity under 7-day and 14-day term repos of up to 0.75 per
cent of NDTL of the banking system through auctions; and
continue with daily one-day term repos and reverse repos to smooth liquidity.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per cent, and
the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per cent.
Fourth Bi-Monthly Monetary Policy Statement, 2014-15 Date : 30 Sep 2014
Part A: Monetary Policy
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation,
it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liabilities (NDTL);

Your Interview, Shrabana Kumar Nial

reduce the liquidity provided under the export credit refinance (ECR) facility
from 32 per cent of eligible export credit outstanding to 15 per cent with
effect from October 10, 2014;
continue to provide liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL at the LAF repo rate and liquidity under 7-day and 14-day
term repos of up to 0.75 per cent of NDTL of the banking system
through auctions; and
continue with daily one-day term repos and reverse repos to smooth
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per
cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per
Third Bi-Monthly Monetary Policy Statement, 2014-15 Date : 05 Aug 2014
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation,
it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liabilities (NDTL);
reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by
50 basis points from 22.5 per cent to 22.0 per cent of their NDTL with
effect from the fortnight beginning August 9, 2014; and
continue to provide liquidity under overnight repos at 0.25 per cent of
bank-wise NDTL and liquidity under 7-day and 14-day term repos of up to
0.75 per cent of NDTL of the banking system.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per
cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per
Second Bi-Monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G Rajan,
Date : 03 Jun 2014
Your Interview, Shrabana Kumar Nial

Monetary and Liquidity Measures

On the basis of an assessment of the current and evolving macroeconomic situation,
it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liabilities (NDTL);
reduce the statutory liquidity ratio (SLR) of scheduled commercial banks by
50 basis points from 23.0 per cent to 22.5 per cent of their NDTL with
effect from the fortnight beginning June 14, 2014;
reduce the liquidity provided under the export credit refinance (ECR) facility
from 50 per cent of eligible export credit outstanding to 32 per cent with
immediate effect;
introduce a special term repo facility of 0.25 per cent of NDTL to
compensate fully for the reduction in access to liquidity under the ECR with
immediate effect; and
continue to provide liquidity under 7-day and 14-day term repos of up to
0.75 per cent of NDTL of the banking system.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per
cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per
First Bi-monthly Monetary Policy Statement, 2014-15 By Dr. Raghuram G. Rajan, Governor
Date : 01 Apr 2014
Part A: Monetary Policy
Monetary and Liquidity Measures
On the basis of an assessment of the current and evolving macroeconomic situation,
it has been decided to:
keep the policy repo rate under the liquidity adjustment facility (LAF)
unchanged at 8.0 per cent;
keep the cash reserve ratio (CRR) of scheduled banks unchanged at 4.0 per
cent of net demand and time liability (NDTL); and

Your Interview, Shrabana Kumar Nial

increase the liquidity provided under 7-day and 14-day term repos from
0.5 per cent of NDTL of the banking system to 0.75 per cent, and decrease
the liquidity provided under overnight repos under the LAF from 0.5 per
cent of bank-wise NDTL to 0.25 per cent with immediate effect.
Consequently, the reverse repo rate under the LAF will remain unchanged at 7.0 per
cent, and the marginal standing facility (MSF) rate and the Bank Rate at 9.0 per



Chairman Smt. Arundhati Bhattacharya

Shri P Pradeep Kumar MD & GE Corporate Banking
Shri B Sriram MD&GE National banking group
Shri V. G. Kanan MD & GE Associate and Subsidiries
Rajnish Kumar MD & GE (Compliance & Risk)
No. of Circles 14
Newly formed circle Kerala

8. Bank formation day 1st July

9. LHO (Circle) is headed by Chief General Manager
10. Admin. Unit is headed by Dy. Gen. Manager (B & O)
11. Disaster Recovery Centre for CBS Chennai
12. No. of Associate Banks 5
13. Partner of SBI Life Cardiff S A
14. Partner in our Credit Card Business GE Capital
15. Partner in our Mutual Fund business Societe General 15. Internet banking is supported
by Satyam Computers
16. Consultant of SBI for BPR Mc Kinsey & Co.
17. Integration of Softwares for CBS Tata Consultancy Services
18. Software used for housing loans Dream home
19. Partner of SBI Custodial Services Pvt. Ltd. (SBICSL) Societe Generale
20. Partner of our JV- SBI General Insurance Ltd., IAG, Australia
Apex institutions/TrainingCentres
1. State Bank Academy (SBA) Gurgaon
Your Interview, Shrabana Kumar Nial

2. State Bank Staff College (SBSC) Hyderabad

3. State Bank Institute for Rural Development (SBIRD) Hyderabad
4. State Bank Institute of Information and Communication Management (SBIICM) Hyderabad
5. State Bank Institute of Management in Kolkata
(Foundation stone laid by SBI Chairman Pratip Choudhuri on 16.06.2013)
5. No. of Apex colleges / institutions SBLCs 47
6. Central Office (Corporate Centre) Mumbai
7. Registered Office Kolkata
8. Foreign Department Kolkata
9. Central Data Centre (CDC) Belapur,Navi Mumbai
10. Inspection Department Hyderabad
11. Strategic Training Unit SBSC, Hyderabad

Domestic Banking Subsidiaries

State Bank of Bikaner & Jaipur
State Bank of Hyderabad
State Bank of Mysore
State Bank of Patiala
State Bank of

Non Banking Subsidiaries

SBI Capital Markets Ltd.
SBICAP Securities Ltd.
SBICAP Ventures Ltd.
SBICAP Trustees
(Singapore Ltd.)
SBI Payment Services Pvt. Ltd.
SBI Mutual Fund Trustee Company Pvt Ltd.
SBI Global Factors Ltd.
SBI Pension Funds Pvt. Ltd.
SBI Funds Management Pvt. Ltd.
SBI Funds Mgt. (International) Pvt. Ltd.
SBI Cards & Payment Services Pvt. Ltd.
SBI Life Insurance Company Ltd.
Your Interview, Shrabana Kumar Nial

SBI-SG Global Securities Services Pvt. Ltd.

SBI General Insurance Company Ltd.

Joint Ventures
C-Edge Technologies Ltd.
GE Capital Business Process Mgt. Services Pvt. Ltd.
Macquarie SBI Infrastructure Mgt. Pte. Ltd. - Macquarie SBI Infrastructure Trustee Ltd.
SBI Macquarie SBI Infrastructure Mgt. Pvt. Ltd.
SBI Macquarie SBI Infrastructure Trustee Pvt. Ltd.
Oman India Joint Investment Fund-Mgt. Co Pvt. Ltd.
Oman India Joint Investment Fund-Trustee Co Pvt. Ltd.

Foreign Banking Subsidiaries

State Bank of India (California)
State Bank of India (Canada)
Commercial Bank of India LLC,
SBI (Mauritius) Ltd.
PT Bank SBI Indonesia
Nepal SBI Bank Ltd.

Important Rates/Ratios:
Banks Base Rate (%)
State Bank of India:
Major Public sector BanksState Bank of India 9.70
Punjab National Bank 10.00
Bank of India 09.95
Bank of Baroda 10.00
Major Private sector Banks
ICICI Bank 9.75%
1. Bank Rate : 8.25%
2. Cash Reserve Ratio (CRR) : 4.00%
3. Statutory Liquidity Ratio: 21.50%
4. Repo Rate:7.25%
5. Reverse Repo Rate: 6.50%
Your Interview, Shrabana Kumar Nial

6. Savings Bank interest rate: 4.00% *

7. SBI BASE RATE 9.85%
8. SBI BPLR 14.45%
9. Marginal standing Facility Rate: 8.25%
(* Now applied on daily products w.e.f. 1.4.2010)
New Joint Venture Companies of SBI:
1. SBI Custodial Services Pvt. Ltd.
2. SBI




Merger of subsidiaries with

a. State Bank of Saurashtra Merged with SBI
b. State Bank of Indore Merged with SBI



Maximum GDP growth from which sector? Service Sector.


Capital Market regulated by SEBI.


RBI reviews the RBIs policy at periodically Bimonthly


Current Base Rate is 9.85%

IDRBT is located at Hyderabad.


BCSBI is Banking Codes and Standards Board of India.


Sense is an index based on BSE specified 30 stocks.


Branch Dossier contains Data on economic environment, competition Environment,

Business environment & completion environments.


Subprime lending refers to finance to ineligible / not worthy borrowers

10. Signtrieve refers Signatures of officers & customers.

11. E learning programme Gyanodaya
12. International Bank for Development and Reconstruction is also known as World Bank
13. For BPR the consultants are Mckinsey & co.
14. IT magazine published by SBI is Kshitiz.
Your Interview, Shrabana Kumar Nial

15. The Statutory Auditors submit their report on the annual accounts of SBI to the President
of India.
16. In Basel II: Pillar I deals with Capital Adequacy
17. In Basel II: Pillar II deals with Supervising Review Process
18. In Basel II: Pillar III deals with Market Discipline.
19. Expand IFRS International Financial Reporting Standard.
20. RIDF stands Rural Infrastructure Development Fund
21. Investment Fluctuation Reserve is classified under Tier II capital.
22. GATT replaced by WTO.
23. Head quarter of WTO is at Geneva.
24. Take out finance is provided to banks financing infrastructure projects by IDFC.
25. LIBOR stands London inter Bank offered Rate.
26. UCPDC is issued by ICC, Paris.
27. RTGS stands Real time Gross Settlement.
28. Maximum member in SHG 20.
29. Blue Revolution relates to Fisheries.
30. ADR stands for American Depository Receipt.
31. RIDF is maintained by NABARD.
32. What is Bank Rate The standard rate at which RBI is prepared to buy or Rediscount
bills of exchange or other commercial papers eligible for purchase under these acts.
33. Validity period of IT Refund order is 3 months.
34. GILT edged securities are- Government securities.
35. Customer Day is observed in branches on the 15th of the months.
36. TAT stands for Turn around Time.
37. Cyber law relates to Law relating to electronic media.
38. Hot listing of card refers to deactivation of lost ATM card at ASC
39. Server is a Multi user computer.
40. Internet is Global network of computers.
41. SWIFT stands for Society for worldwide Inter Bank Financial Telecommunications.
Your Interview, Shrabana Kumar Nial

42. Priority sector is defined by RBI

43. Hot money means Short term capital movements from one country to another seeking
safety or higher rate of interest.
44. Net profit of SBI as on 31.03.2011 Rs. 8265 crore
45. Farmers Training programme by circle authorities & Agri Technical persons is called
SBI Hariyali Ganga.

46. A combo product of KCC and Produce Marketing loan is called Krishi Kalyan
47. Name of our cash management product is SBIFAST.
48. e-VFS Electronic Vendor Financing scheme.
48. e-DFS Electronic Dealer Financing Scheme
50. Official language meeting is held at quarterly intervals.
51. Raj Bhasha Day 14 September
52. Software used in CBS is B@ncs24.
53. Address of online Banking site is
54. Currency Chest is the property of RBI.
55. DICGC cover is available for Deposits up to Rs. 1,00,000/56. Head Quarter of SWIFT Brussels.
57. The Central Bank of USA Federal Reserve.
58. Margin of safety is Present Sales Breakeven Sales.
59. Contribution in the BEP is Sales variable cost
60. Dispute tax liabilities are classified as contingent liability.
61. The assets and liabilities can be ascertained from Balance Sheet.
62. RBI licence is necessary for opening a new branch as per S 23 of BR Act
63. Which company has pioneered successfully the concept of e-choupal ITC 64. Annual
closing of Govt account is done on 30th September
65. Political risk is covered by ECGE.
NOVEMBER. 67. UCPDC new version UCPDC 600
68. Name of the our Hindi Magazine Prayas 69. Current account for fee collection- Power
Your Interview, Shrabana Kumar Nial


Banks achievements in various fields have received national and international recognition
as enumerated below:

State bank of India the Best Bank in Asia Money FX POLL of POLLS 2014 for best
performance of FX services over the last 10 years.
SBI was ranked as the top bank in India based on Tier-I capital by the Banker
Megazine in a 2014 ranking.
Environmental sustainability Awards 2014 by BFSI Magazine

Most valuable Indian Brands 2014 by Brandz Top 50

Golden Peacock Award for CSR by Institute of Directors, New Delhi

Innovation in CSR Practices : Golden Globe Tigers Awards by World CSR Day
Excellence and Leadership in CSR : Golden Globe Tigers Awards by World CSR
Socially Responsible Bank- Magna awards15 by Business World Magazine

BRAND OF THE YEAR 2015 by the world branding forum


Women Corporate Leader Award :-Smt. Arundhati

Bhattacharya, Chairman at the 10th Indo American Trade
Excellence Awards
SAP ACE Award 2014 for best Run in HR & Pay Roll:-HRMS

Asias responsible business excellence award 2014

Asias sustainability Excellence Award 2014

Asias Banking, Financial Services & insurance Excellence

awards 2014

Asias Best CSR practices awards

Bloomberg Markets Names Smt. Arundhati Bhattacharya in its

50 most influential List , Sept. 10 2014

State Bank of India won two IDRBT Banking Technology

Excellence Awards 20143-14 for electronics Payment System and
Best use of technology for Financial Inclusion

Your Interview, Shrabana Kumar Nial


(Economic & Financial development)
Forbes names Arundhati Bhattacharya as 30th most powerful
woman in the world The Free Press Journal, May 28, 2015
Mumbai, May 27 (IANS): Forbes has named State Bank of India Chairman
Arundhati Bhattacharya in its annual 100 Most Powerful Women list, with a
ranking of 30 in the world, a statement said here on Wednesday.The Kolkataborn Bhattacharya, 59, has moved up six spots (from No.36) in the list from her
ranking last year and is the SBIs first woman chairman since October 2013.As
SBI chairman, she oversees 2,20,000 staff in 16,000 branches which service 225
million customers as Indias largest lender with offices in more than 36 countries.
Under her stewardship, the SBI with assets worth $400 billion, undertook various
initiatives in technology banking such as sbiINTOUCH digital banking outlet, BI
Tech Learning Centres for educating customers and SBI e-Pay, a payment
aggregator service.Recognising the multiple roles played by women,
Bhattacharya has pioneered a two-year sabbatical policy for female employees
taking maternity leave to extend care to their families.The Forbes 12th annual
list of the 100 most powerful women features extraordinary entrepreneurs,
visionary CEOs, politicians, celebrities, activists and philanthropists who are
transforming the world and have been ranked according to wealth, media
presence and overall impact.

Rajnish Kumar takes over as fourth MD of SBI, The Hindu ,May 27,
Mumbai, May 26 (PTI): Countrys largest lender State Bank of India on Tuesday
said the government has appointed Rajnish Kumar as the Managing Director Compliance and Risk department. The post was lying vacant since November last
year after the then Managing Director A Krishna Kumar retired. Kumar was
managing director and CEO of SBI Capital Market (SBI Caps).The other three
serving MDs at SBI are Pradeep Kumar (Corporate Banking Group), B Sriram
(National Banking Group) and V G Kannan (Associates and Subsidiaries).
For the post of fourth MD, four deputy managing directors of SBI group had
appeared for interviews in December last year. Apart from Kumar, those who had
appeared for the interview include Praveen Kumar Gupta, SBIs chief financial
officer, N K Chari, head of Medium Corporate Group at SBI, and S A Ramesh
Rangan, MD at State Bank of Patiala.It could be noted that the current SBI
chairman Arundhati Bhattacharya has also served as the MD and CEO of SBI

Your Interview, Shrabana Kumar Nial

Caps in past. Even the two former MDs- R Shreedharan, S Viswanathan and one
serving MD - VG Kannan had also come from SBI Caps.
SBI General Insurance loss up 7% at Rs 105 crore in FY15, The Economic
Times, May 23, 2015
Mumbai, May 22 (PTI): SBI General Insurance, the non-life subsidiary of State Bank of
India, today reported a 7 per cent rise in net loss at Rs 105 crore for fiscal ended March
2015 as its claims rose to around Rs 300 crore. The general insurance firm had reported
net loss of Rs 98 crore in the 2014 fiscal. "We had settled claims amounting to Rs 304
crore in FY15 against Rs 138 crore in FY14. Also, we settled claims amounting to Rs 17
crore in case of the Hudhud cyclone, impacting the bottomline. Thus we saw our losses
increasing by 7 per cent to Rs 105 crore," managing director and chief executive Bhaskar
J Sarma told PTI.
Gross written premium rose by 33 percent to Rs 1,606 crore from Rs 1,210 crore FY14,
which was the highest in the industry. "We have grown at a rate of 33 per cent
compared to the industry growth of 9.3 per cent," he said. "We are looking at achieving
break-even by the end of the current fiscal and making underwriting profit by March,
2019," he said. "We want to bring down our business coming from bancassurance
channel from current 60 per cent to 50 per cent and increase the business coming from
agencies and brokers from current 40 per cent to 50 per cent by the fiscal end," he

SBI inks pact with Snapdeal, PayPal to assist small businesses To finance
SMEs; provide payment and remittance services,T he Business Line, May 22, 2015
Mumbai, May 21: State of Bank of India on Thursday inked two MoUs one with ecommerce major Snapdeal and the other with digital payments company, PayPal. The
MoU with Snapdeal is for seller financing schemes under the e-commerce majors Capital
Assist Program.In the case of PayPal, the partnership will promote cross-border trade
and payments helping especially the small and medium enterprises. SBI has an MSME
loan book of approximately 1,70,000 crore as on December 31, 2014.
Finance scheme
Under the financing scheme, the bank will provide loans to small and medium
enterprises at easier interest rates. Data on sellers credit worthiness will be provided by
Snapdeal. Snapdeal, currently, has 1,50,000 sellers on its platform.According to
Arundhati Bhattacharya, Chairman, SBI, the seller financing scheme will help MSMEs
traders, sellers and manufacturers to scale up their operations by catering to their
working capital requirements. Rates of interest will be determined by the credit
worthiness of the seller, Bhattacharya said after signing the MoU with Snapdeal. A
special concession of 0.25 per cent will be provided to women.
Payment gateway

Your Interview, Shrabana Kumar Nial

Earlier in the day, SBI entered into a strategic partnership with PayPal where the
payment gateway service will be extended to SBI and PayPal users in India as well as
abroad. This will be SBIs first such tie-up for remittance and payments. According to B
Sriram, Managing Director and Group Executive (National Banking), SBI, is also looking
to extend the services for domestic transactions.

State Bank of India ties up with Amazon to access financing for $22
billion Indian e-commerce market, The Economic Times ,May 22, 2015
The big boy of Indian banking is entering the domain of the tiny, at least for now,
the e-commerce zone.Mumbai, May 21: In tune with changing face of the
economy, the State Bank of India which has been funding large projects is
getting into what it calls seller financing. From the Reliances, Essars, and the
Adanis, SBI is moving to fund transactions and seller's businesses on Amazon,
Snapdeal and Paypal. In a report, PWC has stated that the e-commerce market
in India should touch $22 billion by the end of 2015.SBI, on Wednesday signed a
memorandum of understanding with Amazon. The bank is set to ink similar
agreements with domestic e-commerce players such as Snapdeal and Paypal,
three people familiar with the matter told ET."Today, we are in a digital age," said
Arundhati Bhattacharya, chairman, SBI told media persons at a conference.
"Giving people (customers) the best experience in buying and selling is what we
are looking at. There are thousand ways to bring each other clients under this
Overdraft facility against FD for SBIs online customers, The Business Line
May 20, 2015
Mumbai, May 19: State Bank of India on Tuesday launched an online
facility for Overdraft against Fixed Deposit, whereby customers holding
fixed deposits in a single name can avail of up to 90 per cent of the FD
amount as an overdraft to meet emergency and other needs.As an
introductory offer, SBI is charging an interest rate of only 0.5 per cent
more than the linked FD. This is among the lowest in industry.While the
core product has been available at SBI branches for a while now, the
online facility is part of SBIs endeavour to take products and services
onto the digital platform, SBI said in a statement.The OD is created
instantly without the need to visit a branch. This facility is now available
to all Internet banking users through the OnlineSBI portal. In the
coming days, it will also be extended to the State Bank Anywhere mobile

SBI launches Contactless Card Payment technology, The Business

Line, May 15, 2015

Your Interview, Shrabana Kumar Nial

Mumbai, May 14:State Bank of India (SBI), Indias largest bank, has
introduced contactless card payments technology that allows payments
by waving or tapping of the cards near the machines.The bank, and its
credit card subsidiary SBI Card have launched the sbiINTOUCH
Contactless Debit Card and SBI Signature Contactless Credit Card for
quick, secure and hassle-free payments at merchant outlets. Contactless
cards use the near-field communication (NFC) technology, enabling
users to make payments by waving or tapping the card near the
contactless reader instead of swiping or dipping it,SBI said in a
statement.At present, customers can make payments up to Rs. 2,000 per
tap and pay transactions at select point-of-sale (POS) machines.
Reducing the risk of card loss and fraud, the customers can tap or wave
the card at the POS machine, enter the pin, and complete the payment
transaction at busy locations, the bank said.Contactless cards are
designed to replace the use of cash in busy retail environments such as
supermarkets, convenience stores, petrol stations and quick-service
restaurants.The contactless logo will be visible on all contactless cards
as well as point of sale (POS) terminals enabled by NFC technology.
Adding to consumer safety, the Signature Contactless credit cards will
come with emergency card replacement facility anywhere in the world
and fraud liability cover of Rs. 1 lakh, the bank said.The card can also be
used as a regular debit or credit card.
SBI Foundation SBI to soon launch company for CSR push, The
Economic Times, May 15, 2015
Mumbai, May 14: State Bank of India (SBI) will soon launch SBI
Foundation, a company that will undertake activities pertaining to
corporate social responsibility (CSR) on behalf of the group. The bank
has received approval from the Reserve Bank of India for setting up the
company, which is likely to be launched on July 1, the foundation day of
the bank. Confirming the move, SBI chairman Arundhati Bhattacharya
told ET, CSR activity is a very important activity for us. To give it a
sharper focus, we have decided to float a separate entity. As per the
revised Companies Act, corporates have to mandatorily set aside 2 per
cent of their net profit of the previous year for CSR activity. The rule,
however, is not applicable to commercial banks as they are governed by
the Banking Regulation Act, which does not mandate this.
For several decades, SBI has been setting aside 1 per cent of its net
profit for activities related to CSR.SBI Foundation will be formed under
Section 8 of Companies Act that applies to not-for-profit companies.
Now, we plan to hire professionals for the company, she said. In
the last fiscal year, the bank had spent nearly Rs. 115 crore on activities
Your Interview, Shrabana Kumar Nial

related to CSR. The five associate banks of SBI and several of its
subsidiaries are also likely to undertake CSR activity through the SBI
Foundation. Some of SBI's big subsidiaries- SBI Capital Market, SBI Life,
SBI General and SBI Mutual Fund and SBI Gilts will have to set aside 2
per cent of net profit for CSR as they are governed by the Companies
Act. Resources of all associate banks and subsidiaries could be Rs.200
Rs.250 crore for this fiscal year. "The SBI Foundation will essentially
focus on skill development, women's empowerment, sanitation and
education," said Vinod Pande, chief general manager at SBI in charge of
Bandhan Financial Services inches closer to a Bank Licence with Rs.
1,020-crore equity boost ,The Economic Times, May 12, 2015
Kolkata, May 11: Bandhan Financial Services has moved one step closer
to becoming a bank after it completed raising Rs 1,020 crore equity from
International Finance Corporation, Singapore's sovereign wealth fund
GIC and state-run Small Industries Development Bank of India, its
chairman and managing director Chandra Shekhar Ghosh told ET on
Monday. Many believed that expansion of capital was the last hurdle for
Bandhan to getting the final banking licence from the Reserve Bank of
India. "We have received the fund. We can now expect the RBI to issue
the final licence," Ghosh said. Bandhan had sought final clearance from
the RBI in January after investors committed to infuse about Rs 1,600
crore equity in it.The latest Rs 1,020-crore equity infusion would take its
net worth to Rs 2,616 crore. These investors are committed to invest
another Rs 500 crore in Bandhan after it turns itself into a bank, Ghosh
GIC has invested Rs 640.87 crore while IFC has pumped in Rs 344 crore
into Bandhan, which is India's first microfinance lender to get an inprinciple approval to set up a bank, Ghosh said. Sidbi has invested Rs 35
crore afresh. GIC is a first-time investor in Bandhan while IFC's
shareholding in the company will be raised from 10.9%. Ghosh did not
divulge the latest shareholding structure. Sidbi is also an existing
shareholder with nearly 10% interest.
SBI open to inducting new partner for its credit card business, The
Economic Times, May 8, 2015
Mumbai, May 7: State Bank of India (SBI) is open to inducting a new
partner for its credit card business if its partner GE Capital decides to
exit India. Financial service provider GE Capital recently said it would
exit financial service business globally. SBI has a joint venture with GE
Capital for credit card business known as SBI Cards since 1998 wherein
Your Interview, Shrabana Kumar Nial

the bank has 60% and the balance is with GE. Speaking to media at the
launch of State Bank RuPay Platinum Card SBI chairman, Arundhati
Bhattacharya said, "We will see whether we will do it alone or bring in
some other strategic partner... It could be either of the two." State Bank
of India is the third largest issuer of cards with close to 30 lakh active
user of its credit card after HDFC Bank and ICICI Bank. She said that no
decision is taken as yet. "There is no big hurry. GE Capital is very clear
about it that they are not here to destroy value. So, it will only happen
when everybody is comfortable with the whole thing," she said.
However, she said GE Capital has hinted to the bank officials about their
intention to exit from the business as a part of their global plans.
Word Ranking: Top two Indian Companies are Reliance Industries (142)
and State Bank of India (152)
New York, May 7 (PTI): India is home to 56 of the worlds 2,000 largest
and most powerful public companies, according to the Forbess annual
list which is topped by the US with its share of 579 companies. Mukesh
Ambani-led Reliance Industries Ltd leads the pack of 56 Indian
companies in the 2015 Forbes Global 2000 list.The list gives a snapshot
of the worlds largest companies, and shows the dominance of the US
and China in the current global business landscape. The two countries
split the top 10 spots for a second year in a row. Forbes said that for the
first time, Chinas four biggest banks own the top four spots and the
South Asian giant is home to 232 of the worlds largest companies,
adding more spots than any other country in the world and surpassing
Japan for the first time.With 218 companies, Japan slid to the third spot.
India has added two companies to its last years tally.
The other Indian companies on the list are Oil and Natural Gas Corp. Ltd
(ONGC) ranked 183, Tata Motors Ltd (263), ICICI Bank Ltd (283), Indian
Oil Corp. Ltd (349), HDFC Bank Ltd (376), NTPC Ltd (431), Tata
Consultancy Services Ltd (485), Bharti Airtel Ltd (506), Axis Bank Ltd
(558), Infosys Ltd (672), Bharat Petroleum Corp. Ltd (757), Wipro Ltd
(811), Tata Steel Ltd (903) and Adani Enterprises Ltd (944).

This years Global 2000 companies hail from 61 countries and

account for combined revenues of $39 trillion, profits of $3 trillion, with
assets worth %162 trillion, and a market value of $48 trillion. The total
market value of Global 2000 companies, owing to a bull market, grew
9% year-over-year, Forbes said. The UK kept its fourth place with 95
Your Interview, Shrabana Kumar Nial

SBI Life Profit Rises 11% to Rs 820 Crore in FY15, The Press Trust of
India, May 4, 2015
New Delhi, May 4: SBI Life Insurance, a subsidiary of State Bank of India
(SBI), on Monday reported an about 11 per cent increase in net profit at
Rs 820 crore for the fiscal year ended March 2015, on account of new
business growth.The life insurer had earned a net profit of Rs 740 crore
in the previous fiscal year. Individual new business premium increased
to Rs 3,757 crore as against Rs 3,217 crore in the previous fiscal year,
recording a growth of 17 per cent, SBI Life Insurance said in a
statement.Regular new business premium increased by 11 per cent to Rs
3,331 crore as compared to Rs 2,998 crore in 2013-14, it said. Gross
total premium earned during the fiscal year was Rs 12,867 crore, of
which the new business premium accounted for Rs 5,529 crore and
renewal premium accounted for Rs 7,338 crore.During the previous
fiscal year, the company earned a total business of Rs 10,739 crore, Rs
5,066 crore and Rs 5,673 crore, respectively. Total assets under
management grew by 22 per cent to Rs 71,339 crore as on March 31,
from Rs 58,480 crore at the end of March 2014. "We attribute our
growth to our strong multi-channel distribution system, innovative new
products and good customer service. We continue to grow consistently
and will be entering our 15th year in the insurance business," SBI Life
managing director and CEO Arijit Basu said.
More than 50% Jan Dhan Yojana bank accounts remain empty, The Mint,
May 5, 2015
Among the accounts opened, over 85 million accounts, or 58%, were
tagged zero balance
Mumbai, May 4: Nearly nine months after the Prime Ministers Jan Dhan
Yojana (PMJDY) was launched, more than half the accounts do not have
any balance.According to data available on the PMJDY website, till 31
March, 2015, banks had opened 147.1 million accounts under the
financial inclusion scheme. State-owned banks opened 115 million
accounts, rural regional banks, 25 million, and private sector banks, the
rest.Among the accounts opened, over 85 million accounts, or 58%,
were tagged zero balance, or those where there are no deposits. The
share of zero balance accounts to total accounts has come down from
67% as on 31 January, 2015.
The data on the website showed that Rs.15,670 crore worth of deposits
were collected under the PMJDY. This would mean that the average
balance in each account that is not classified as zero balance is
Rs.2,523.Banks, though, have issued Rupay debit cards for over 130
Your Interview, Shrabana Kumar Nial

million accountholders under the scheme.On 15 August 2014, prime

minister Narendra Modi announced the financial inclusion mission.In a
presentation he made in September 2014, Reserve Bank of India
governor Raghuram Rajan said the target for financial inclusion should
be universality and not just the speed with which accounts were opened.
He said the financial inclusion mission would be a waste if there are
duplicate accounts, coverage is not fully achieved, or if the accounts are
not used.
SBI joins hands with NICL to offer non-life cover under PMSBY, The
Business Standard, May 1, 2015
Mumbai, May 1 (PTI): Country's largest lender State Bank of India today
entered into a tie-up with the National Insurance Company (NICL) to
offer non-life cover to its Savings Bank Account holders under the
Pradhan Mantri Suraksha Bima Yojana (PMSBY). The bank will offer
personal accidental death and disability cover of Rs 2 lakh under the
scheme, it said in a release. The customer will have to pay an annual
premium of only Rs 12. All the savings account holders in the age group
18 to 70 years will be eligible for the cover.
Prepare small banks for merger with large Public Sector Banks: Finance
Ministry panel , The Business Line, April 21, 2015
Mumbai, April 20: Small public sector banks, with assets of less than Rs.
2-lakh crore, should be readied for merger with five large PSBs, a
Finance Ministry-appointed panel has recommended.PSBs with less than
Rs. 2 lakh crore assets (loans plus investments) include Andhra Bank,
Bank of Maharashtra, Dena Bank, Punjab & Sind Bank, Vijaya Bank, and
United Bank of India.The large PSBs, with the capability to acquire
include Bank of Baroda, Bank of India, Canara Bank, Punjab National
Bank and Union Bank of India.
Ahead of the consolidation, the small PSBs will need to reorient their
portfolio and improve operational efficiencies over the next one year.
The Working Group on Consolidation and Restructuring of PSBs has
proposed that as a means to improve profitability by leveraging
economies of scale and avoiding duplication, all PSBs should share
infrastructure, including back-office space, IT backbone and telecom
contracts through a shared service organization. escription for Health
Loan portfolio of small PSBs needs to be reoriented
Small banks must exit areas where they are not strong or are
Your Interview, Shrabana Kumar Nial

Potentially, 5 PSBs have the capability to acquire smaller banks

State Bank of India had kick-started the process of consolidating its
associate banks almost seven years ago. In 2008 and 2010, Indias
largest bank took over State Bank of Saurashtra and State Bank of
Indore. Currently, it has five associate banks.
Reasons for consolidation
Most smaller public sector banks are caught in the middle. Having little
differentiation, they focus on the same customer segments and have
similar offerings. Compared with private sector rivals, their net nonperforming assets are four times more and the return on assets is just a
third.The banks will need to raise almost Rs. 4.50-lakh crore in Tier 1
capital (which includes Rs. 2.40-lakh crore equity capital) by March 2018
under Basel III norms. The Working Group has suggested that over the
next one year all PSBs focus on four areas improving risk
management capabilities, shifting to profitability-linked performance
metrics, leveraging technology to reduce costs, and developing capitallight business models.
To rapidly reorient smaller PSBs, a performance assessment of their loan
portfolio will be made so that they can exit areas where they are not
strong or are unprofitable. The next step for these banks would be to
define the target customer segments. After that, the large PSBs will
identify the relevant acquisition targets based on complementary
businesses and synergies. However, the panel suggested that any
consolidation should be driven by market forces and decisions taken
independently by the board of each bank. There are 27 public sector
banks, including State Bank of Indias five associate banks, in the
country. As at March-end 2014, their share in total deposits and total
advances was 77.22 per cent and 75.74 per cent, respectively.
SBI Composite Index inches up to 58.2 in April 2015, Source: IRIS
Online, April 16, 2015
Mumbai, April 16: In continuation to the launch of the SBI Composite
Index on Dec. 9, 2014, State Bank of India (SBI) herewith releases
yearly as well as monthly Composite Index value for the month of April
2015.The yearly SBI Composite Index for April 2015 has reached a 61month high at 58.2 (High growth) from 54.6 (Moderate growth) in March
2015, aided by low base value of April 2014. In contrast, the Monthly
Index that inched up from 47.6 in February 2015 (Low decline) to 58.5
in March 2015 (High growth) has shown a month on month poor
performance of 46.8 (Low decline) in April 2015.
Your Interview, Shrabana Kumar Nial

Weak performance of the Month on Month Index suggests that the buildup in manufacturing momentum is still patchy and erratic. The recent
RBI OBICUS survey in fact points out capacity utilization as well as new
orders are still a laggard. We believe while the medium term
fundamentals look sound and promising, we need to take some
corrective steps in the short term. For example, over the medium term
the successful completion of the coal and telecom auctions will provide a
possible blip in bank lending books (early indications are positive).
Added to this, recently, there was a successful completion of the bidding
process for a large road sector project. Going forward, this may also be
an added source of traction for bank lending.
In the short term, Infrastructure and Construction industry executing
major infrastructure projects which are facing financial crisis should be
given special attention. A thorough review and corrective measures are
therefore immediately required as is being done. The huge amount of
claims due to cost and time overruns to be paid to these firms need to be
released immediately. Presently, they have been blocked into disputes
and time consuming litigations whereas the practice world over is to
settle such matters through Dispute Resolution Boards so that the
project work or the contractors do not suffer. The Index captures two
components of the manufacturing cycle namely month-on-month and
year-on-year growth on a scale of 0 to 100. Index above 50 implies
growth over previous respective period and less than 50 will suggest a
contraction over respective period.

SBI to introduce assessment system to identify non-performers

among its senior age group, The Economic Times ,April 6, 2015
Kolkata, April 5: State Bank of India is set to introduce an assessment
system that will identify chronic non-performers among its senior age
group employees and stop offering them the now-guaranteed two-year
extension, which allows every staff to work until 60 years of age. The
new human resources policy also seeks to reward high performance with
cash incentives, three people familiar with the matter said. The new
system will be IT-based and evaluate employees based on how they
conduct everyday tasks, such as account opening. Boston Consulting
Group has advised SBI on this. SBI, the country's largest lender,
employs about 2.30 lakh people at present and a good chunk of them are
on the verge of retirement. In a note to all regional offices, the SBI
management said the project is to identify efficient people and build
competitive environment among employees, and not meant to identify
low performers.
Your Interview, Shrabana Kumar Nial

2.30 lakh people employed by SBI

A good chunk of them on the verge of retirement
New IT-based HR policy to evaluate employees based on their
performance in everyday task
Project Saksham, framed with inputs from Boston Consulting Group,
to grade employees in five groups: AAA, AA, A, B and C
It intends to reward high performance with cash incentives
Promotion to be based on an employee's grade
Employees with lower grade for 3 consecutive years not to get nowguaranteed service extension beyond 58 years of age

SBI may also link transfers to productivity, another first in the lender's
history. Currently, transfers and placements are mutually decided
between the management and the employee federation. Employees up to
general manager may be assessed under the new system. "The project
has not been rolled out as yet. Discussions are going on at various
levels. We have also given our suggestions. So, at this stage, we don't
like to comment," said Y Sudarshan, general secretary of the All India
State Bank Officers' Federation. The policy will be effective from this
fiscal year but some nuances are still being worked out, a senior official
said. BCG suggested that SBI measure performances or productivity
based on how much time one takes to conduct a particular transaction.
For example, it suggested that account opening should not take more
than 2.9 minutes. A monthly view will be taken on all budgetary and
measurable roles.
A senior SBI official said the project aims to bring in objectivity in the
evaluation system. For all roles, 70% of marks will be based on key
result areas and 30% on assessment by supervisor. Key result areas
have been standardised across officers or clerical categories assigned
with the tasks of similar nature. Employees with similar work profile will
be compared with each other. Employees will be graded in five groups:
AAA, AA, A, B and C. The system, called Project Saksham, proposes that
if an employee, who has completed 20 years of service or aged 55, gets
the lowest grade for three consecutive years, his service will not be
extended beyond 58 years. Promotion will be based on what grade an
employee gets. According to SBI's service convention, employees are
hired to work until 55 years of age and then they get extension twice:
first to 58 years and then up to 60.
SBI to dilute stake in its general insurance venture to 49%, The Press Trust
of India, March 26, 2015
Your Interview, Shrabana Kumar Nial

New Delhi, March 26:State Bank of India (SBI) on Thursday said it will dilute its
stake in its general insurance venture SBI General to 49% in favour of its foreign
partner, with the enactment of insurance legislation.SBI General is a 74:26 joint
venture between SBI and Insurance Australia Group (IAG) of Australia.The
Executive Committee of the Central Board (ECCB) "has on March 25, 2015
decided to initiate the necessary action as per JV agreement for dilution of SBI's
stake in SBI General Insurance from 76% to 51%... "... with corresponding
increase of stake of IAG from 26% to 49%, including appointment of a valuer to
facilitate valuation and price discover," the country's largest bank said in a
statement.Earlier this month, Parliament had passed the Insurance Laws
(Amendment) Bill, 2015 which seeks to increase foreign investment in private
sector companies to 49% from existing 26%, among other things.
The proposal to increase stake comes in the backdrop of capital requirement of
the company."There will be a substantial capital requirement by next fiscal", SBI
General Insurance Deputy CEO Steve Hollow had said.The company pegs a total
premium of Rs 1,600 crore by March 2015 as compared to Rs 1,200 crore
premium registered last year. Meanwhile, SBI shares were trading 0.83% down
at Rs 263.15 per scrip during morning session on the BSE.
SBI Life Insurance Co, State Bank of India to lower stake in BNP
venture, The Business Standard, March 21, 2015
The move comes after Parliament voted to increase the amount foreign investors can
own in the nation's insurers to 49 per cent from 26 per cent

Mumbai, March 20 (Bloomberg): State Bank of India (SBI) is planning to cut its
stake in its life-insurance venture with BNP Paribas Cardif, in a move that would
raise the French partner's holding to 49 per cent, said people familiar with the
matter.The reduction would precede an initial share sale in SBI Life Insurance Co
- 74 per cent-owned by SBI - that might happen in the financial year starting
April 1, the people said, asking not to be identified as the information is private.
BNP Paribas Cardif is interested in raising its stake and will discuss terms, Lilian
Goh, a Hong Kong-based spokeswoman for parent BNP Paribas SA, said in an
email.The move comes after Parliament voted on March 12 to increase the
amount foreign investors can own in the nation's insurers to 49 per cent from 26
per cent. While majority ownership and control in the joint ventures will remain
with resident Indians, the Bill allows overseas companies to expand their
presence in the world's second most populous country.
The sources didn't disclose whether SBI would sell shares to BNP Paribas Cardif
or whether the French insurer would make additional investments in SBI Life to
raise its 26 per cent stake. The venture had net income of Rs 620 crore in the
nine months to December 31, according to the filings.M K Rekhi, a Mumbai77
Your Interview, Shrabana Kumar Nial

based spokesman for SBI, didn't immediately respond to phone calls and an
email seeking comment.
SBI General Insurance Co
Insurance Australia Group Ltd (IAG), SBI's partner in SBI General Insurance Co,
wants to raise its stake in the venture, though it hasn't yet decided to what level,
the people said. The Sydney-based company owns 26 per cent of the
venture."Clearly we've flagged that we'd be keen to increase our stake," Amanda
Wallace, a spokeswoman for IAG, said by phone Friday. "We are in discussions to
that effect. It's just too early to say at this point in time. We are absolutely
interested and we are talking to them."The insurance Bill, which requires
presidential assent to become law, could lure about Rs 20,000 crore ($3.2 billion)
of investment, SBI Chairman Arundhati Bhattacharya said last week.

MUDRA to start out as SIDBI unit: The Business Standard , March 14,
It will later be converted to a full fledged bankthrough an act of
Mumbai, March 13: Financial Services Secretary, Hasmukh Adhia said on Friday
that the proposed Micro Units Development Refinance Agency (MUDRA) Bank will
be set up soon, first as a subsidiary of Small Industries Development Bank of
India (SIDBI), and then as a bank through an act of Parliament.MUDRA will start
off as a subsidiary of SIDBI. It will later be converted to a full fledged bank
through an act of Parliament, Adhia said at the Roundtable on Financing of
Innovations, chaired by President Pranab Mukherjee, and attended by chiefs of
banks and financial institutions.
Adhia added that Prime Minister, Narendra Modi will launch MUDRA soon, but did
not give details. In his 2015-16 budget speech, Finance Minister, Arun Jaitley had
announced the creation of MUDRA with a corpus of Rs 20,000 crore and a credit
guarantee corpus of Rs 3,000 crore, with with the aim of providing loans to the
entrepreneurs find it difficult, if not impossible, to access formal systems of
credit, Jaitley had said. He also promised lending priority to enterprises owned
by scheduled castes and scheduled tribes. A survey of the National Sample
Survey Organisation has revealed that of 5.77 crore such micro enterprises, 65
per cent are owned by SC/ST and OBC members.
Speaking at the event on Friday, Adhia also said that existing commercial banks
have not been adequate for financing needs to these micro enterprises as the
Your Interview, Shrabana Kumar Nial

owners have not been able to provide mortgage. Of the 5.77 crore small
enterprises in India, which employee around 12 crore people, the availability of
capital is about Rs 11 lakh crore. Of this amount, only about 4 per cent comes
from institutional sources, he said.Later, at the same event, President Mukherjee
said that innovations in the country were "languishing" for want of financial
support and asked banks to open dedicated counters across India to meet the
capital requirements for entrepreneurs.
"Innovations in different segments, at different levels and for different sections
will aid this process (of Indias growth) in no small measure", he said, adding
that the role of the banking system is paramount in the entire innovation valuechain since financing of innovation is a critical step. I would like to draw your
attention to the financial needs of our ingenious youth, both in rural and urban
areas that are yet to be adequately met by the banking sector, the President
said, adding that there were many instances of innovations that are languishing
for want of financial support. Mukherjee said the banking system, in collaboration
with the National Innovation Foundation, can help create a pool of mentors in
every district to assess and meet the financial needs of innovators.
"Bankers have to take the initiative to reach out to innovators, mentor them, and
wherever possible, connect them with their other clients who may help them in
expanding their market. This role of creating linkages between creative people
and successful clients could be a game-changing institutional innovation," he
Jan Dhan overdraft eligible for priority sector lending: RBI
The Financial Express , February 26, 2015
Mumbai, February 25: In a move that could potentially put Rs 66,000 crore into
banks priority sector classification, the Reserve Bank of India has allowed the
credit given under the overdraft facility to be classified as priority sector lending
by banks.It has been decided that overdrafts extended by banks up to Rs 5,000
under Pradhan Mantri Jan-Dhan Yojana (PMJDY) accounts will be eligible for
classification under priority sector advances (others category) as also weaker
sections, said RBI in a notification on Wednesday.
However, the classification would be allowed only if the borrowers household
annual income does not exceed Rs 60,000 in rural areas and Rs 1,20,000 in nonrural areas.Banks have already opened 13.2 crore accounts under the scheme
that targets a bank account for every Indian. Back-of-the-envelope calculations
show that this could translate into Rs 66,000 crore of credit included in priority
sector. The banking systems priority sector loans were an outstanding Rs 19.55
lakh crore.Bankers said that this may potentially boosts their ability to easily
meet the priority sector norms. We have opened around 80 lakh accounts and
Your Interview, Shrabana Kumar Nial

assume every account has Rs 5,000 overdraft, we could have potentially Rs

4,000 crore under the priority sector, said VR Iyer, Bank of India chairman and
managing director. Bank of Indias priority sector advances were an outstanding
Rs 92,497 crore as of December 31.
Under the RBI guidelines, banks are expected to lend 40% of adjusted net bank
credit to priority sector, which includes agriculture and allied activities, small and
micro enterprises and education and home loans up to a certain limit.But some
bankers said the move may not stack up big numbers as typically small loans
taken towards consumption would be classified under the priority sector norms.
The overdraft is basically a credit for consumption purposes. Already such loans
are classified as priority sector, so, this is not going to change the landscape,
said SKV Srinivasan, IDBI Bank executive director.
The PMJDY was launched by Prime Minister Narendra Modi in August 2014. The
banks were told to open at least one account of an adult member in every
household. Along with an account, other benefits like RuPay Debit Cards with Rs
1 lakh accidental insurance is to be provided. An overdraft of Rs 5,000 to a
member of family, preferably a woman, will also be provided after observing
satisfactory transactions in the account for six months.
Rewarding the efficiency:Government to Infuse Rs 6,990 crore in 9
public banks: The Press Trust of India, February 7, 2015
SBI leads the pack with a capitalisation of Rs 2,970 crore.
New Delhi, February 7: The government will soon infuse Rs 6,990 crore in nine
public sector banks, including SBI, Bank of Baroda (BoB), Punjab National Bank
(PNB), for enhancing their capital and meeting global risk norms. This is the first
tranche of capital infusion for which the government had allocated Rs 11,200
crore in the Budget for 2014-15.Among the beneficiaries, largest public sector
lender SBI leads the pack with a capitalisation of Rs 2,970 crore, followed by BoB
Rs 1,260 crore, PNB Rs 870 crore and Canara Bank Rs 570 crore. "Out of the
current year's budget, the Government of India has decided to infuse Rs 6,990
crore in nine Public Sector Banks (PSBs) for which orders are being issued," an
official statement said.
This year, it said, the government has adopted new criteria in which the banks
which are more efficient would be rewarded with extra capital so that they can
further strengthen their position. The capital infusion has been decided based on
the performance of the bank. Better the performance higher will be the infusion.
"The methodology for arriving the amount to be infused in these banks has been
based on efficiency parameters. First of all, weighted average of return on assets
Your Interview, Shrabana Kumar Nial

(ROA) for all PSBs for last three years put together was arrived at and all those
who were above the average have been considered," it said.
The second parameter that has been used is return on equity (ROE) for these
banks for the last financial year. Those who have performed better than average
have been rewarded, it added. Besides, Syndicate Bank will get Rs 460 crore,
Allahabad Bank Rs 320 crore, Indian Bank Rs 280 crore, Dena Bank Rs 140 crore
and Andhra Bank Rs 120 crore.The government is in the process of deciding on
remaining Rs 4,210 crore capital infusion. The entire fund infusion will be
completed before March 31. Public sector banks require equity capital of Rs 2.4
lakh crore by 2018 to meet global Basel III norms on capital adequacy. For the
current fiscal, the government has allocated Rs 11,200 crore for bank
Finance Minister Arun Jaitley in the Budget speech had said that "to be in line
with Basel-III norms there is a requirement to infuse Rs 2,40,000 crore as equity
by 2018 in our banks. To meet this huge capital requirement we need to raise
additional resources to fulfil this obligation". While preserving the public
ownership, the capital of these banks will be raised by increasing the
shareholding of the people in a phased manner through the sale of shares largely
through retail to common citizens of this country, the minister had said.The
government has infused Rs 58,600 crore between 2011 to 2014 in the stateowned banks. The statement further said that the government is conscious of the
fact that a lot of reforms are required in the state-owned banks. With a view to
crystallise ideas for reforms, recently a two-day Retreat of heads of public sector
banks and financial institutions called 'Gyan Sangam' was held, it said.
"This Retreat generated an agenda in which banks themselves were supposed to
undertake certain activities individually or jointly and there were certain things
which were supposed to be done by the government," it added. One of the
general principle adopted during the retreat was that efficient banks should be
encouraged, it said.For the last few years, it said, the government has been
infusing capital to those banks whose equity erosion has taken place. "Therefore,
this year, the Government of India has adopted this new criteria in which the
banks which are more efficient would only be rewarded with extra capital for
their equity so that they can further strengthen their position," it added.

Reliance joins hands with SBI for Payments Bank Licence: The
Hindustan Times, February 3, 2015
Mumbai, February 2: Reliance Industries Limited (RIL) on Monday said it has
applied for a Payments Bank licence, where the company will be the promoter
and State Bank of India will be its joint venture partner with an equity
investment of up to 30%.Reliance in its statement said that the partnership is in
Your Interview, Shrabana Kumar Nial

accordance with the guidelines for Payments Bank issued by RBI and subject to
grant of licence by the central bank.The partnership brings together the
combined strengths of two of Indias Fortune-500 corporations committed to
making a transformative impact on Indias financial inclusion landscape, the
Reliance statement said.The Payments Bank will leverage SBIs nationwide
distribution network and risk management capabilities along with the substantial
investments made by Reliance Industries in its retail and telecom businesses.The
joint venture will use state-of-the-art technology, build scalable infrastructure
and create extensive branch and business correspondent network in order to
provide last-mile access and intuitive user experience to all sections of
society.Both the partners see formation of the Payments Bank as an opportunity
to lead and co-create an eco-system for accessible and affordable banking
solutions. The statement also said that the proposed payments bank will digitise
payments and act as a catalyst towards a cashless society.
SBI to raise Rs. 15,000 crore additional capital from market this year;
The Business Line, January 28, 2015
Mumbai, January 27: State Bank of India, the countrys largest bank, has
decided to raise up to Rs. 15,000 crore additional capital from the market in the
year ahead.SBIs committee of directors for capital raising have an enabling
approval from the shareholders for raising additional equity capital up to Rs.
15,000 crore by way of public issue (i.e. follow-on public issue) or rights issue or
private placement, including qualified institutional placement (QIP) / global
depository receipts (GDR) / American depository receipts (ADRs) and/or any
other mode or a combination therefore, SBI said in a filing with the Bombay
Stock Exchange and National Stock Exchange on Tuesday.The government has
said it would allow its stake in State-owned banks to fall to 52 per cent. At
present, the Government holds 58.6 per cent in SBI.SBI last raised equity capital
to the tune of Rs. 8,032 crore, with the Life Insurance Corp. of India (LIC)
subscribing to over 40 per cent of the issue in January last year.The committee
has also decided to seek the Government of India or Reserve Bank of Indias
approval for raising capital under the State Bank of India Act.
HDFC Bank, SBI now among top 50 most-valued global banks: The
Business Standard, January 19, 2015
New Delhi, January 19: Two Indian banks, HDFC Bank and State Bank of India
(SBI), now figure in a list of the top 50 global banks in terms of market
capitalisation. HDFC Bank, Indias second-largest private lender in terms of asset
size, ranks 45th, with a market capitalisation of $39 billion, Bloomberg data
show. With a market capitalisation of $38 billion, SBI is ranked 46th.ICICI Bank,
ranked 53rd, is the only other Indian entity to figure in the list of the 100 most
valued global banks. The market capitalisation, or value, of an entity is calculated
by multiplying the total number of its shares outstanding by its stock price. The
Your Interview, Shrabana Kumar Nial

huge leap in the rankings of Indian lenders is due to a sharp rally in their stocks
in the past year. During this period, shares of HDFC Bank gained 50 per cent,
while those of SBI nearly doubled. ICICI Bank added about 70 per cent. A year
ago, no Indian bank featured among the 60 most valued global banks. At 65,
HDFC Bank had the best ranking among Indian lenders.
The BSE Bankex, a barometer of the performance of banking stocks, has been
one of the best-performing sectoral indices in the past year. It gained 75 per
cent, against a 33 per cent rise in the benchmark Sensex. The rise in bank stocks
was in anticipation of a revival in domestic economic growth, led by a reform
push by the new government. Expectation that the domestic economy will
revive has contributed to gains in the Indian stock market. Monetary policy
action and hopes of government reforms have led to an improvement in investor
Broking.Industrial and Commercial Bank of China (ICBC) tops the list of global
banks, with a market capitalisation of $285 billion, over seven times that of
HDFC Bank. Chinese banks dominate the list of the top 10 global banks, with
Bank of China ($212 billion), China Construction Bank ($208.1 billion) and
Agricultural Bank of China ($202 billion) also figuring in the list. Wells Fargo
($263 billion) and JP Morgan Chase ($205 billion) are other major global banks,
ranked second and fifth, respectively.
Experts say no Indian bank figures in the top 10 list because the countrys
banking sector is quite fragmented, with a large number of players. Compared
to India, many Asian economies have fewer banks. China, for instance, has only
four major banks. This gives an opportunity to these banks to grow in size. Also,
the size of the economy is a factor. The economies of China or the US are much
bigger in size than Indias, said Ashvin Parekh, managing partner at Ashvin
Parekh Advisory Services.While the gross domestic product (GDP) of the US, the
worlds largest economy, is about $17 trillion and Chinas $9.2 trillion, Indias is
$1.9 trillion. Analysts say typically, bank assets grow at about two times the
economic growth rate. In terms of asset size, Indian banks have a lot of catching
up to do. HDFC Bank, for instance, has assets of $84 billion, only a fraction of
ICBCs $3 trillion. At $400 billion, SBI has the highest assets among Indian
lenders, though it is still a far cry from $2.4 trillion, the average asset size of the
top five global banks.
Gyan Sangam's PSU reform
The Business Standard, January 12, 2015
In my last piece, I had raised just a few of the many questions that Prime
Minister Narendra Modi could have asked bankers at the "Gyan Sangam"- the
Bankers' Retreat in Pune. What came out of the meeting? In a mishmash of
hyperbole and management jargon, the prime minister announced that this was
Your Interview, Shrabana Kumar Nial

the "first step towards catalysing transformation informal discussions helped

achieve meeting of minds, which in turn enabled strategic goal-setting".The
prime minister then went on to praise the banks in successfully implementing Jan
Dhan Yojana, which he curiously claimed "would help redefine goal-setting
among banks, due to enhanced confidence levels following the success of the
programme". After this follow two of the most important statements of the meet.
First, the government banks would be run professionally, and there would be no
interference. But accountability was essential, said the prime minister. According
to him, "the government had no vested interest, and public sector banks can
derive strength from this fact".Second, while there will be no political
interference, it will continue to mean political intervention, "in the interest of the
people". After all, "India is a democracy" where the voice of the common man
has to reach such institutions. According to Mr Modi, this can happen only
through "political intervention". In these words lies Narendra Modi's approach to
running the public sector enterprises. If this government puts out a white paper
on PSU (public sector undertakings) reforms ever (most unlikely), I think it
would contain the following subtext:
The government is in absolutely no hurry to bring down its stake and
relinquish control over the PSUs or to give them complete freedom to
The PSUs will be given day-to-day functional "autonomy" even though they
will be firmly tied to the apron strings of their respective ministries.
The PSUs are extended arms of the state. Hence, they will be pressed into
service to implement government policies and programmes such as Jan
Dhan Yojana and Swachh Bharat Abhiyan.
They will be made accountable for government policies, and their
performance - possibly in that order.
The Modi government came to power in May 2014. The first Budget, two months
later, was a disaster, set against the high hopes generated by Mr Modi's preelection slogans on governance. Instead, to the surprise of Mr Modi's supporters
who wanted to see a rapid dismantling of state enterprises that illogically
continue to run businesses like airlines and hotels, the government has continued
with the same principle- of PSUs being extended arms of the state.At the Gyan
Sangam, Mr Modi asked banks to move to the second phase of Jan Dhan promote financial literacy by encouraging competitions in schools, much like
mock Parliament competitions. He also instructed the public sector banks to
develop common strengths in software and advertising, help develop 20,00025,000 "swachhta entrepreneurs" a bank, offer loans to students (despite huge
bad loans on this account) and avoid "lazy banking"- whatever that means. The
prime minister also told the bankers that "as part of corporate social
responsibility, banks should take up one sector each year to play a positive role".
Your Interview, Shrabana Kumar Nial

In short, it is business as before, with politicians ordering managers in PSUs what

to do with their business, no matter how ludicrous their instructions sound.
In the Budget last year, the government had provided for around ~60,000 crore
of disinvestment. Eight months later, only one disinvestment has happened. This
is a bogus case of disinvestment - a sale of five per cent stake in Steel Authority
of India Ltd to Life Insurance Corporation, another government-owned
organisation.In all fairness, I have no doubt that the government means well. Mr
Modi will not use the PSUs- and especially public sector banks- to push personal
interests. There will be fewer phone calls to bankers to favour "x" or "y", as has
happened with all regimes in the past. Indeed, the department of financial
services promptly followed up on Mr Modi's promise and issued a release to bank
and insurance chiefs assuring them of freedom, of non-interference in
commercial decisions, transfers and postings, etc. It directed them to take
decisions in the best interest of the organisation without any fear or favour. It
even warned them they should use this freedom fairly and would be held
accountable if they didn't. Possibly, the government will choose the right people
to lead them. There may also be administrative moves to appoint better people
to the boards.
But this is no reform. This is pushing for administrative and operational efficiency
within the current structure, something that every leader from Indira Gandhi
onwards has tried - and failed. This is not to say that Mr Modi will fail, too.
Indeed he will succeed far more than previous prime ministers.But Mr Modi's
philosophy of governance was embodied in statements such as "minimum
government, maximum governance" and "the government has no business to be
in business". If Mr Modi has to live up to these words, he will have to make a
radical departure from the past, not offer us mere operational efficiency while
continuing to treat the PSUs as extended arms of the government.The Bharatiya
Janata Party leaders have asserted at various times that they will do whatever is
in "the interest of the nation". This has been the favourite phrase of all sorts of
leaders - fascist, communist, capitalist and benevolent dictators, believing in
"democracy"- if run by a single party. Most thoughtful people will be unimpressed
with such statements of intent from politicians. They will rather look for
institutional reform of the PSUs based on sound economic principles that dictate
the right kind of ownership, competition, incentives and exits. They will not find
any of these principles being applied in India anytime soon.
State Bank launches SBI Quick for mobile inquiries
The Business Line,January 12, 2015
Mumbai, January 11: State Bank of India has launched the SBI Quick facility to enable
customers to get their balance or a mini statement of their accounts on their mobile
phones.To avail of the facility, customers have to register by sending an SMS

Your Interview, Shrabana Kumar Nial

(REG<space>account number) to 9223488888 from the mobile number of the

customer available in the banks records for savings bank/ current account/ overdraft/
cash credit accounts. They will get an instant confirmation through SMS, the bank said
in a statement.
Thereafter, a customer can send an SMS or give a missed call on a mobile number to get
the balance in the account or a mini statement containing the last five transactions.
Information is sent through SMS.Customers can call on 9223766666 or send SMS BAL
for balance inquiry. Call can be made to 9223866666 or send SMS MSTMT to get the
mini statement. Instant reply will be sent through SMS.In addition to this, a customer
can also block his or her ATM Card by sending an SMS -- BLOCK<space>xxxx (xxxx
represents last 4 digit of the card number) -- to 567676, the statement said.
Enquiries for home loans, car loans
HOME, CAR and HELP respectively
SMS advising about the features of
in the case of a home or car loan, it

and SBI Quick can also be made by sending SMS as

to 9223588888. The customer will receive instant
the service, followed by a call from the banks team

State Bank of India floats plan to merge UTI Mutual Fund with asset
management arm SBI Mutual Fund, ET Bureau Jan 7, 2015,
State Bank of India has initiated a proposal to acquire UTI Mutual Fund and merge it
with its asset management arm SBI Mutual Fund, three people familiar with the staterun banking behemoth's plans have told ET.SBI had made the proposal to the
department of financial services, which in turn has forwarded it to the department of
economic affairs for consideration. Both departments are part of the finance ministry,
whose view on the matter is still to be firmed up.
NEW DELHI: State Bank of India has initiated a proposal to acquire UTI Mutual Fund and
merge it with its asset management arm SBI Mutual Fund, three people familiar with the
state-run banking behemoth's plans have told ET. SBI had made the proposal to the
department of financial services, which in turn has forwarded it to the department of
economic affairs for consideration. Both departments are part of the finance ministry,
whose view on the matter is still to be firmed up.A merger of UTI Mutual Fund, for long
India's pre-eminent fund manager, with SBI's own fund management business could
potentially provide plenty of synergy opportunities to the bank, although it's not clear
whether other shareholders, especially T Rowe Price, will play ball. It was not
immediately available for comment.
"T Rowe Price has the right to retain 26% stake in the company. In case it decides to
stay put, it will have to invest fresh money in the merged entity or SBI may buy its stake
at a fair price," a second source said. Another source said LIC too could be keen to
acquire UTI Mutual Fund and bolt it on to its own mutual fund business, noting that the
ball was now in the government's court since it was ultimately the owner of both
entities. SBI will also have to reckon with the views of its partner in the fund
management business European asset management company Amundi SA, which owns
37% of SBI Funds Management that runs SBI Mutual Fund. Sources said a major reason
for the merger proposal was to create a fund management behemoth in which Indian
entities would have a majority stake and complete control. "The new entity will be strong
enough to venture out in developed markets such as the US," said one of the persons
cited above, noting that SBI's move was a departure from the earlier thinking in the

Your Interview, Shrabana Kumar Nial

previous government to dilute Indian financial institutions' stake in UTI Mutual Fund by
way of a market listing.
"That would have given an impression that T Rowe Price would have got control over the
country's oldest mutual fund, which may have attracted criticism from the swadeshi
brigade," this person said. If a deal does get consummated, SBI Mutual Fund and UTI
AMC will have combined assets under management of Rs 1.6 lakh crore, ahead of the
biggest fund house, HDFC AMC, which had some Rs 1.5 lakh crore worth of assets in the
December quarter. The size of India's mutual fund industry is around Rs 11 lakh crore.
The combined entity will be the strongest company in terms of net worth (Rs 950 crore)
and rank second in terms of profitability. Industry leader HDFC Mutual Fund had a net
worth of Rs 901 crore and profit before tax of Rs 522 crore at the end of March 2014.
Earlier, the finance ministry was keen on UTI AMC listing on the bourses to serve the
twin purposes of drawing retail investors to the primary market as well as helping UTI
AMC investors to monetise non-core investments. But now the proposal has been pushed
for a later date. UTI Mutual Fund was carved out of the erstwhile Unit Trust of India, the
country's first mutual fund, as a Sebi-registered mutual fund from February 1, 2003,
through the Unit Trust of India (Transfer of Undertaking & Repeal) Act, 2002.

PM assures public sector banks of zero interference

The Business Standard,January 5, 2015
To consider Gyan Sangam blueprint on empowerment of boards,
reducing govt stake to less than 51%
Pune, January 3: In a watershed moment for public sector banks, the
government on Saturday assured them of zero interference in their operations. It
also promised to consider the sector's blueprint for reform which, among others,
suggested greater autonomy to these banks.Briefing the media at the end of the
two-day Gyan Sangam here on Saturday, Hasmukh Adhia, secretary, Department
of Financial Services, said, "The Prime Minster has assured bankers there will be
no interference from the government in the internal workings of any bank. He
said 'you will never get a phone call from even the PMO, let alone anyone else'."
Earlier, Finance Minister Arun Jaitley said there was need for more autonomy in
public banks, which often faced contradictory directions from the Reserve Bank of
India (RBI) and the government. Speaking on the sidelines of the retreat,
organised by the finance ministry, he said public sector banks needed more
autonomy to improve efficiency. "Banks have to be given a sufficient amount of
leeway to deal with commercial issues with a commercial mindset there is a
need for bringing greater autonomy into them," Jaitley said.At the retreat, PSBs
had suggested the government cut its stake in these entities to less than 51 per
cent over a period of time and empower the boards of individual banks. During
the two-day Gyan Sangam, aimed at identifying steps to kick-start long-pending
reforms in the banking sector, bankers told the government PSBs needed to shift
from being state-owned to state-linked.
Your Interview, Shrabana Kumar Nial

On its part, the government said it would consider the suggestions and take a
decision on the matter soon. "There are a series of steps the government has
taken and now, there is a need for the banking system in India to finance
infrastructure and infuse liquidity in a big way," Jaitley said.In a nutshell, bankers
suggested the government adopt the recommendations of the PJ Nayak
committee, set up by Reserve Bank of India (RBI) Governor Raghuram Rajan to
improve governance in PSBs. The Nayak panel had said for a healthy banking
system, the government should give up its control in PSBs.While government
stake reduction has been envisaged in the long run (after a period of two years),
it has been proposed a 'bank bureau' be set up in the interim to support the
creation of independent, high-performing boards. Also on the cards is a bank
investment company, in line with the Nayak committee's proposals, which will
help the government cut its stake in PSBs.According to the blueprint presented
to the prime minister, who attended the concluding session on Saturday, banks
have identified measures they have to implement, as well as another set of steps
the government should take.

Recommendations by Banks
What Government Should Do
Move from state-owned to state-linked
Fully empower banks on HR decisions
Strengthen and ensure implementation of legal framework in cases such as debt
recovery tribunals/wilful defaulters
Enable infrastructure for digital banking
Create an environment to defend right decisions and minimise interference
Eliminate market distortions such as debt waivers
Strengthen and simplify the process of credit insurance
What Banks Need To Do
Differentiate strategic focus and build on specific niches to optimise capital
Build people capabilities
Strengthen risk management to ensure early warning signals
Digitise top 30 processes, deepen mobile banking and focus on big data and
Introduce and strengthen partner/non-bank channels to reach the financially
Create/strengthen credit bureaus
Provide infrastructure support to better manage business correspondents
Source: Finance ministry

Banks have agreed they need to reorient their portfolios, particularly smaller
ones, so that they can focus on niche areas to build capabilities and optimise
capital. They have sought the government's interference in their affairs be
minimal, which the prime minister and the finance minister acknowledged. Banks
also requested market distortions such as debt waivers and interest rate caps be
done away with, and sought a stronger legal framework.On the issue of
consolidation, another important point of discussion at the two-day retreat, the
Your Interview, Shrabana Kumar Nial

finance ministry has said proposals in this regard should come from the banks
concerned. Hasmukh Adhia, secretary in the Department of Financial Services,
said while decisions in this field should be taken by banks, the government would
sensitise banks about such needs, given the country needed large banks to
support infrastructure development.
Adhia said the prime minister had, during his address to banks, emphasised the
need for size and scale of Indian banks. The government and the central bank
have also agreed on the need to shore up banks' capital base. "The capital base
of banks might need to be enhanced," a finance ministry release said, quoting
RBI Governor Rajan.Rajan also stressed the need to consolidate ownership and
improve in governance. "PSBs need to recruit young talent, train and retain
them. And, the government needs to re-look at campus recruitment, currently
banned because of a Supreme Court ruling," he said.
New-look Planning Commission,
The Financial Express,January 3, 2015
The replacement of the Planning Commission with the NITI Aayog( National
Institution for Transforming India) is, prima facie, quite pragmatic at a time when
we need to resolve several issues between the Centre and states. While we do
have institutions like the Finance Commission to channel funds by statute there
is also the finance ministry there needs to be constant dialogue between states
and the Centre to ensure smooth functioning, given the federal structure of our
government. In this case, there is an institutional representation of all states
through their chief ministers, with specialists also serving full-time or part-time,
and that should help get important dialogue started. While there is already a GST
Council to discuss issues pertaining to GST, there are several issues that go
beyond GST that could be of interest to all states and need to be resolved by
discussion states pulling back on VAT credits or high rates of VAT on aviation
turbine fuel (ATF) are some current examples. Of course, if the chief ministers
dont attend these meetings, a large part of NITI Aayogs USP will disappear.
Whether NITI Aayog delivers on its other promise to help decentralise decisionmaking and to help states find the solutions best for them remains to be seen. In
a sense, NITI Aayog is supposed to be a repository of best practices in all
manner of sectors. To a certain extent, this is replicating the role of think tanks
such as NIPFP, NCAER, ICRIER and CPR, but the fact of having a full-time
secretariat implies there will be a history of institutionalised knowledge-building
that is critical. The big danger here, of course, is that we like to create new
structures even if it means duplicating efforts. While it is always good to have
more ideas from more people, in this case, we are creating a new structure
which entails a huge cost and we are dismantling an institution with a trackrecord, even if patchy. The travails encountered by the prime minister when he
Your Interview, Shrabana Kumar Nial

was the chief minister of Gujarat was one of the ostensible reasons for doing
away with the Planning Commission. But for the new edifice to succeed, we need
to be clear about its mandate and we need to have a buy-in from all the states,
which will ensure that the charter laid down is followed. And, as FE has pointed
out on various occasions, the rigid and top-down nature of central schemes has
more to do with line ministries than it has to do with the Planning Commission.
Gyan Sangam:

Bank CMDs asked to think out of the box to reform economy

Pune Mirror, January 3, 2015
Two-day retreat,bankers asked to further govt's reform-centric agenda
Pune, January 2: Arriving in Pune from Mumbai in humble private buses, India's
top bankers and financial experts have been asked to come up with out-of-thebox ideas. The two-day bankers' retreat, Gyan Sangam, has been held to further
the government's plans of instituting reforms in the financial sector. Growth and
changes in the financial sector, it was felt, need to be in tune with the
development taking place.Inaugurating the sessions on Friday afternoon,
minister of state, finance, Jayant Sinha, said this could be a ground-breaking
workshop with the capability to reform the entire economic structure of the
country. "The changes in the economic environment are taking place at a rapid
pace and appropriate reforms need to be taken up urgently," he said.
Dr Hasmukh Adhia, secretary of the ministry of finance services, then urged the
bankers to come up with out-of-the-box ideas to bring about desired reforms in
the banking sector and to replace old wisdom with new ideas. Adhia, while
talking to the assembled media, said the rationale behind organising such a
retreat is to provide an informal academic environment that will also bring the
best creative ideas from the minds of professionals and regulators. "The chief
executives of all these banking organisations, given all their years of experience
in the financial sector, have many ideas about what reforms and objectives are
needed. The professionals, regulators and the government now need to arrive at
a common understanding to help us make the most of the current economic
situation," he added.
To this end, Adhia said, these banking gurus have been divided into six groups
keeping in view outcomes related to access, efficiency, stability, profitability and
value creation. The six groups have then been exposed to six main themes
where they will have group discussions over subjects like 'achieving universal
financial inclusion', 'leveraging technology and digitisation to improve banking
operations efficiency', 'rethinking priority sector lending', 'improving risk
management, asset quality recovery', 'building a robust people strategy for PSBs'
and 'consolidation and restructuring'.
Your Interview, Shrabana Kumar Nial

The bankers were also shown best international practices through a presentation
made by financial consultancy firm McKenzie, so that new innovative measures
that overseas bankers are adopting can be emulated in India as well. "All groups
will hold discussions and finalise their reports and present them before the Prime
Minister on Saturday," he added.On Saturday, Prime Minister Narendra Modi,
finance minister Arun Jaitley and Reserve Bank of India governor Raghuram
Rajan will interact with the bankers to discuss the reforms. Among the CMDs, are
attending the two-day retreat in NIBM campus, are Arundhati Bhattacharya,
chairman of State Bank of India, Rajeev Rishi, CMD of Central Bank of India,
Sadhuram Bansal of Corporation Bank, Brahmaji Rao, executive director of
Punjab National Bank, RK Gupta from Bank of Maharashtra, SK Roy, chairman of
LIC, etc.
Yoga to Help Bankers Unwind
To ensure all work and no play doesn't make India's top bankers dull people, the
organisers of Gyan Sangam have arranged talks on yoga.
Talks and light practice of yoga asanas will be delivered by Dr Hasmukh Adhia,
secretary of finance and himself a PhD in yoga.
Following this, there will also be talks on leadership and change management by
Swami Sukhabodhanandaji, known as a corporate guru and founder of the
Prasanna trust.
Adhia said both sessions will be optional and those who wish to participate can
join in on Saturday morning. A senior official with the finance ministry said the
bankers spent most of Friday engrossed in group discussions to prepare reports,
which is likely to have fatigued them. The talks are designed such that they get
refreshed before Saturday's meeting with Prime Minister Narendra Modi.
3 Modi mantras for PSU banks: less capital, more autonomy, productive
staff,The FirstPost Online, December 30, 2014
The Prime Minister, the Finance Minister and the Reserve Bank Governor are
expected to attend a banking retreat near Pune on 3 January, where a key part
of the agenda is to figure out how to fix public sector banking. The meet is being
organised by the National Institute of Bank Management (NIBM).
Public sector banks are the engines of economic growth as they account for 75
percent of the banking industry, but these engines have been stalling of late as
bad loans have swamped their books. As the RBIs Financial Stability Report,
released yesterday (29 December), pointed out, gross non-performing assets of
Indian banks (including public sector ones) were 4.5 percent of total advances as
Your Interview, Shrabana Kumar Nial

at the end of September 2014, and stressed assets were 10.7 percent. This
means nearly 15 percent of bank assets are bad or have the potential to go bad,
but the figure is much higher for public sector banks.
Public sector banks are thus inefficient users of manpower and capital, as they
buckle under political pressure and lend to unworthy crony capitalists or to
segments of the population where the cost of delivering banking services is very
high. Their balance-sheets are thus under acute strain.
The essential problems that need addressing by Narendra Modi, Arun Jaitley and
Raghuram Rajan when they meet on 3 January are thus three: how to make
public sector banks guzzle less capital even while having to raise more capital in
the short run; how to make the banking workforce more productive; and how to
make top managements accountable so that public sector banks can compete
better with private bankers.
The three sources of capital are government infusions, raising money from the
secondary market, and more internal generation of surpluses to shore up capital.
HDFC Bank, for example, has raised almost no new equity for more than a
decade. Its capital needs are generated from profits. On the other hand, the
State Bank of India seems to require capital infusions from the government
almost every year.
In the short run, public sector banks should thus be allowed to raise more equity
from the markets, as government holdings are comfortably above 52 percent in
most banks. But, over the next three years, as this leeway gets used up, the
government will have to dilute its stake below 52 percent. To raise more money
from the markets and yet retain control, government will have to issue a new
class of shares with differential voting rights for its own shares. Or it will have to
accept privatisation.
Big banks like State Bank of India can also raise capital by selling minority stakes
in their subsidiary banks and insurance offshoots.However, the real remedy for
public sector banks is to improve their profitability by better management. As
economist Ajay Shah observed in an earlier blog:If a bank is unable to fund its
own growth by increasing net worth through retained earnings, there is reason to
be concerned about the health of the core business. If a PSU (bank) cannot grow
its balance-sheet, odds are the problem lies within: it needs to become a better
run business and thus grow the balance-sheet using retained earnings. Such
PSUs are precisely the ones who are the least deserving to gain fresh capital.
He compares the performance of HDFC Bank and Bank of Baroda over a decade
to show the difference.From 1999-2000 to 2010-11, there has been a sharply
Your Interview, Shrabana Kumar Nial

superior performance by HDFC Bank. At the start, it was a small bank - with a
balance-sheet of just Rs 11,731 crore while BoB was roughly five times bigger.
By the end, HDFC Bank was at a balance-sheet size of Rs 277,429 crore while
BoB was at Rs 358,397 crore. What is more, HDFC Bank did this while being
more prudent: they deleveraged in this period: They went from a leverage ratio
of 15.33 to a leverage ratio of 10.93. In contrast, BoB stayed at a much higher
leverage (18.12 at the start and 17.07 at the end). The bottomline: BoB grew
net worth by 6.5 times and the balance-sheet by 6.11 times. HDFC Bank grew
net worth by 33.17 times and the balance- sheet by 23.65 times.The point is
simple: public sector banks must become more efficient users of capital. They
cannot remain capital guzzlers and be run the way they are. So what are the
Managerial autonomy:
Quite clearly, they need good managers at the top, and good managers may
need better pay and perks than what they currently get. This is not to say
existing public sector managers are not good, but if they are good, they also
need to be paid better and allowed the freedom to run their banks efficiently. The
government should specify the deliverables from the top management and then
leave it alone for, say, five years, to work on the plan. Performance alone should
determine the selection of who will run public sector banks and not just seniority.
The best way to achieve this is to shift all government shareholdings in banks to
a fully-owned bank holding corporation, whose job will be to maximise the value
of the governments stake in banks. The selection of bank chiefs and top
managers should be made autonomous of the normal government processes,
with their heavy political biases.
Another way would be for the government to offer top managements higher
compensation through equity based on performance parameters achieved.
The key focus area for autonomous managers will be employee productivity.
Here, they will end up colliding with the bank unions, which tend to be powerful.
So the changes have to be implemented in stages, so that natural attrition and
voluntary retirements takes care of the deadwood.
Employee productivity:
The key difference one notes between efficient foreign and private banks and
not-so-efficient nationalised banks is their officer-to-total manpower ratio. Put
simply, nationalised banks use too many low-skilled employees bunched under
the categories of clerks and sub-staff, data released by the RBI yesterday show.
Your Interview, Shrabana Kumar Nial

For example, foreign banks have 92 percent of their total staff as officers. HDFC
Bank, Axis Bank and Axis Bank have nearly 100 percent of staff in the officer
category. As opposed to this, nationalised banks have only 46 percent in the
officer category, and the State Bank group even less (36 percent).
Is it any wonder public sector banks are inefficient? Having more non-officer staff
also means more unionism.
But fear of job losses needs to be addressed head-on. Indias 1.15 million
bankers are not going to lose jobs just because of the likely down-sizing that will
happen with greater efficiency. In fact, with the creation of new kinds of banks
payment banks, small banks, etc. the banking industry is going to explode in
terms of jobs and growth potential. But the growth will happen only in highskilled jobs. The real job in the nationalised banking sector is upskilling of the
younger staff, and generous voluntary retirement payments for the older staff
who cant change with the times.
Indian banking needs new thinking, and the Prime Minister should use the
banking retreat in Pune to push big changes in how public sector banks are
managed. Even if privatisation is off the agenda, autonomy and marketdetermined pay and performance assessments ought not to be.
After 20 years, Rs.1 paper notes to make a comeback
The Business Line, December 26, 2014
Reports of coin shortage may have prompted the move
New Delhi, December 25: One rupee may not buy you much today, yet the
Government is keen to start printing 1 notes after a gap of almost two
decades.The Government has notified Printing of One Rupee Currency Notes
Rules, 2015, which will come into effect from January 1, 2015. Due to higher
cost and for freeing capacity to print higher denomination notes, printing 1 note
was discontinued in November 1994, followed by Rs.2 in February 1995, and
Rs.5 in November 1995. Since then, only coins have been issued for these
denominations. However, old notes are still in circulation and remain legal tender.
As before, the new one rupee note will have the signature of the Finance
Secretary. Apart from the one rupee note, all other paper currency (Rs.2, Rs.5,
Rs.10, Rs.20, Rs.50, Rs.100, Rs.500 and Rs.1,000) have the signature of the RBI
Governor, as these are issued by the Reserve Bank of India, whereas 1 is issued
by the Government of India.The new 1 note will be different in terms of colour,
too. It will be predominantly pink and green. Earlier, the 1 currency note had a
predominantly indigo colour. Also, the new note will have Bharat Sarkaron its
masthead, with Government of India printed below that. All other currencies
have Bhartiya Reserve Bank and Reserve Bank of India printed on them. While
Your Interview, Shrabana Kumar Nial

the notification does not give any reason for resuming the printing of 1 notes, it
is believed that reports of coin shortage and the rising incidence of melting coins
might have prompted the move. The notification does not mention how many
notes will be printed and issued.
Business hours extended for RTGS transfers
The Business Line, December 16, 2014
Mumbai, December 15: Now, get more time to make your online fund transfer
through RTGS as in another boost to online banking, the Reserve Bank of India
has decided to advance the working hours starting from 8 am to 8 pm.It has
hence been decided to advance RTGS business hours to 8:00 hours from 9.00
hours and extend closing time of RTGS to 20.00 hours on week days. RTGS
business window will be open from 8.00 hours to 15.30 hours on Saturdays, RBI
said in a notification.The new working hours will be with effect from December
29, 2014.Currently, the RTGS service window for customer's transactions is
available to banks from 9.00 hours to 16.30 hours on week days and from 9.00
hours to 14:00 hours on Saturdays for settlement at the RBI end.RTGS (Real
Time Gross Settlement) is an electronic real-time fund transfer settlement
individually, primarily meant for large value transactions. The minimum amount
to be remitted through RTGS is Rs 2 lakh with no upper limit.The launch of the
new RTGS system in October 2013 was one of the steps taken by the Bank for
catering to the growing volume and to provide liquidity saving and other features
of the new system to the members, RBI said.It added, Of late there has been a
market demand for extending business hours of the RTGS system to facilitate
customer and inter-bank transactions as also to facilitate other market
obligations to settle in the RTGS system. Accordingly, the RTGS business hours
are being revised to meet the market expectation.
Kisan Vikas Patra: a re-launch with very few justifications
The Hindu, December 1, 2014
Despite some criticism and misgivings in certain quarters, the government has
decided to re-introduce the Kisan Vikas Patra (KVP), a savings instrument that
was discontinued three years ago. Positioned as a savings instrument in line with
other continuing small savings schemes such as the Public Provident Fund (PPF)
and the National Savings Certificates (NSCs), the new KVP, like its predecessor,
has certain advantages as well as disadvantages over these. Most ordinary
investors will compare the new KVP with bank deposits and other debt
Broad features of the new KVP:
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Interest: 8.7 per cent.

Tenure: eight years and four months (100 months).
Investment doubles in 100 months.
Minimum lock-in period two years and six months.
Can be encashed in eight equal monthly instalments after the lock-in period
Can be transferred to another person by endorsement and delivery
Can also be given as collateral for loans by banks
Minimum investment Rs.1,000. Thereafter, in denominations of Rs.5,000,
Rs.10,000 and Rs.50,000. There is no maximum limit.
Taxability: fully taxable
Mode of investment: cash or cheque
Know your customer (KYC) norms: PAN not required but identity/address proof
Will be sold initially through post offices across the country, but later through
some government-owned banks also

SBI plans to become a global banking giant

The Daily News & Analysis, November 24, 2014
The bank aims to grow its asset book which would comprise 50% of
such local lending in foreign markets
Mumbai, November 23: State Bank of India (SBI), the country's largest lender, is
taking a much bigger stride for its international business and looks all set to grow
as a global banking giant. The bank, which has $39 billion worth of outstanding
assets in its international book, is planning to double its local lending in foreign
markets.The bank, which has struck deep roots in the domestic market with its
inclusive banking plans, will take more exposure in foreign companies -- who
have no Indian corporate connections, to garner more local business rather than
lending only to Indian subsidiaries and associate companies.
Your Interview, Shrabana Kumar Nial

SBI's international loan book, which contributed about 20% to the bank's total
net profit, has already seen a surge in local deals. Such deals account for a
quarter of its total lending in global markets. A Krishna Kumar, managing director
and group executive in charge of international operations of the bank, told dna,
"We would like to increase our local lending rather than just lend to Indian
companies. We ultimately aim to grow the asset book which would comprise 50%
of such local lending."The bank is also expanding to new geographies like Korea
and Milan with a branch and a representative office in Sao Paolo taking its total
branches and offices to 193. The bank has 7 subsidiaries in the foreign offices.
Arundhati Bhattacharya, chairman, SBI, said in a press conference just a week
ago, "We will do a lot more of local funding as we plan to take part of the local
risk to expand our presence."
"There is a lot of competition in the international markets for lending, and
companies are finding it easy to procure finance," said a senior SBI official.
During the second quarter (July-September), the bank's advances grew at a
tepid pace of 9.7% year-on-year with domestic advances growing at 6.9% yearon-year and international advances growing at 20% year-on-year.The official said
funding Tata Steel of over $1 billion was a big earning for the bank during the
second quarter. "Even in this quarter, we will have a few deals that will see the
growth in the international book. We will be closing a deal of $150 million for an
oil company."Angel Broking said in a report, "SBI's SME book grew by just 1% yo-y while the mid-corporate segment de-grew 3% y-o-y, as companies continue
to struggle due to pile-up of receivables and highly leveraged balance
sheets."Deposits outpaced advances with a growth of 14% y-o-y for the quarter.
As a result, the NIM went down by 2 basis points (one basis point is equivalent to
one-hundredth of a percentage) quarter-on-quarter and 7 bps y-o-y to 3.11% in
the quarter under review. Cost of deposits increased by 3 bps q-o-q and 9 bps yo-y to 6.31%, as term deposits grew faster at 16.1% y-o-y as against CASA
deposits growth of 12.5% y-o-y.

SBI reclaims most-valued bank status, The Business Standard,

November 22, 2014
SBI reclaimed its position as the country's most valued bank surpassing
private sector player HDFC Bank
Mumbai, November 21: State Bank of India (SBI) today reclaimed its position as
the country's most valued bank with a total market valuation of over Rs 2.25
lakh crore, surpassing private sector player HDFC Bank.At 1008 hours, shares of
SBI gained 2.2% to Rs 304 on BSE, taking its market value to Rs 2,26,734 crore,
making it the overall sixth most valued company.
Your Interview, Shrabana Kumar Nial

On the other hand, shares of HDFC Bank up 1% to Rs 926 have the market
capitalisation (m-cap) of Rs 2,23,699 crore, BSE data shows.Market capitalisation
or the value of a listed company is arrived at by multiplying the total number of
its shares with its stock price on a particular day or time.Shares of SBI, the
countrys largest public sector lender trading at its four-year high, has gained
4.5% in past two trading sessions after the stock turned ex-stock split. The bank
had subdivided the face value of its equity shares to Re 1 from Rs 10.
Meanwhile, the stock has outperformed the market by gaining 11% since
November 13 after the bank said its asset quality was stable during JulySeptember 2014 (Q2). The benchmark S&P BSE Sensex was up 1% during the
same period.The banks gross non-performing asset (NPA) as a percentage of
total advances was at 4.89% in Q2FY15 against 4.9% in Q1FY15. Net NPA was at
2.73% against 2.66% sequentially. Gross and Net NPA stood at 5.64% and
2.91% respectively in September 2013.
SBI stock split: All you want to know about stock splits
November 20, 2014, Business Standard
Share price of State Bank of India closed at Rs 2920.9 on Wednesday and on Thursday it
closed at Rs 297 after the stock split. A number of retail brokers received calls from their
clients, who do not own the share, if they should buy SBI now that the price has come
down. At the same time brokers are having a tough time explaining to their clients who
are shareholders of SBI, on why the stock price has gone down sharply and why were
they not informed about it? Price adjustments due to stock splits and bonus issues are
concepts that a broker finds it difficult to explain to his client. For a retail investor, the
sharp fall in share price makes the stock affordable, at the same time, it leaves a feeling
of loss of respectability for its existing holders.
The main reason a company announces stock split is to attract more investors, especially
retail ones. Institutional investors generally see through the game plan and is more
concerned about the value at which the stock is available rather than the price. Assume
there are two investors Ajay and Vijay. Both wanted to make an investment of Rs 30,000
in SBI. Ajay bought the shares on Wednesday, the last day before the split date. Ajay
ended up buying around 10 shares, at Rs 2,900 per share, with some change left from
his available funds of Rs 30,000. Vijay thought he was smarter and waited for the stock
to split and bought it on Thursday. For the same amount of Rs 30,000, he could buy 100
shares at Rs 290 per share.
Value wise, both have bought the same amount of shares though temporarily it might
look like Vijay has more shares. But by the end of the week when the two investors
compare their demat statement, identical shares will be reflected. Ajays share holding
would show that he holds 100 shares of SBI rather than the 10 he bought but his holding
value will be the same as that of Vijay. This is because shares of all the shareholders
would be split in the same ratio without impacting the value of holding, irrespective of
the date of purchase. Fundamentally speaking, value of the company or market
capitalisation does not change on account of a stock split. Financial ratios get adjusted

Your Interview, Shrabana Kumar Nial

according to the bloated number of shares. Thus if a stock had an earnings per share
(EPS) of Rs 90 before announcing a 10:1 split (10 shares for every one held), the new
EPS will be Rs 9. Similarly dividend for every share will also reduce proportionately. The
only reason stock splits are done is to attract new investors and increase liquidity of the
shares in the market. Value of the company does not change.

Kotak Bank buys ING Vysya for Rs 15,000 cr in biggest merger

The Tribune News Service, November 21, 2014
New Delhi, November 20 (PTI): Kotak Mahindra Bank today decided to acquire
mid-sized lender ING Vysya Bank in an all-share transaction to strengthen its
position ahead of entry of new players. The Uday Kotak-run bank said the
consolidation was founded on leveraging significant complementaries that exist
between the two banks. The merger would be done through a share swap in
which 725 equity shares of Rs 5 each of Kotak Mahindra will be issued for every
1,000 shares of Rs 10 each held in ING Vysya Bank.Post amalgamation,
shareholders of ING Vysya Bank will receive shares of Kotak Mahindra Bank in
the aforementioned ratio, resulting in change in shareholding of the Kotak
Mahindra Bank, a statement from Kotak Mahindra Bank said. The transaction
would be subject to approval of shareholders of both the banks and statutory
approval from RBI and the Competition Commission of India, it said.
Netherlands-based ING holds 42.73% stake in ING Vysya Bank through two
investment vehicles routed through Mauritius. ING Vysya Bank shares closed
7.15% higher at Rs 814.20 on the BSE ahead of the announcement which came
after trading hours. Kotak Mahindra Bank too jumped by 7.28% to close at Rs
1,157.05 per unit at the BSE.The statement further said:This revenue synergy
led and growth-oriented amalgamation, adopting the best practices of the
banking, governance and prudence from both banks is expected to result in a
superior platform benefiting from efficiencies of size and scope over time for all
shareholders, customers and employees.I am excited to announce the merger of
Kotak Mahindra Bank and ING Vysya Bank, subject to approvals. We will work to
create stakeholder value, Kotak Mahindra Bank managing director and vicechairman Uday Kotak tweeted. We hope to get regulatory approvals for
acquisition of ING Vysya Bank by April 1, said Uday Kotak. Kotak Mahindra Bank
was founded in 2004. It has 605 branches and 1,103 ATMs across the country.
Bangalore-based ING Vysya Bank has about 677 branches. Following the
acquisition, Kotak Banks number of branches would more than double. This is
Kotak Mahindra Banks first ever acquisition of any bank. The last merger in the
banking space took place in 2010 when ICICI Bank amalgamated Bank of
The Leading Global Thinkers of 2014
Your Interview, Shrabana Kumar Nial

Arundhati Bhattacharya among two Indian Women , The News Agencies,

November 20, 2014
Bangalore, November 20: Foreign Policys Top 100 Global Thinkers list 2014 is
out and 2 Indian women CEOs, Arundhati Bhattacharya, SBI's Chairman and
biopharmaceutical company Biocon's chief Kiran Mazumdar Shaw have made it to
the list of 'The Leading Global Thinkers of 2014'.FP Top 100 Global Thinkers list is
conducted by Foreign Policy magazine on the basis of responding readers' ballot.
The objective behind the formation of such a list is to determine the 100 most
important public intellectuals who are still alive and active in public life.
Arundhati Bhattacharya is the first women to be Chairman of State Bank of
India. In 2014, she was listed as the 36th most powerful woman in the world by
Forbes. She is the first woman to lead an India based Fortune 500 company.
She has held several positions during her 36-year career with the bank including
working in foreign exchange, treasury, retail operations, human resources and
investment banking. This included positions like chief executive of the bank's
merchant banking arm-State Bank of India Capital Markets; chief general
manager in charge of new projects. She has also served at the bank's New York
On the other hand, Kiran Mazumdar Shaw is the chairman and managing director
of Biocon Limited and the current chairperson of IIM-Bangalore. As of 2014, she
is listed as the 92nd most powerful woman in the world by Forbes. Mazumdar
Shaw is an active philanthropist; in 2009, she established a 1,400-bed cancer
care center, the Mazumdar-Shaw Cancer Centre, at the Narayana Health City
campus in Bangalore.Mazumdar-Shaw speaks openly about the importance of
improving India's infrastructure, emphasizing the need to address issues such as
efficient governance, job creation, and food, water, and health insecurity. Other
business leaders who made through the list include the likes of Alibaba founder
Jack Ma, Russian oil tycoon Gennady Timchenko, and Xiaomi co-founder Lei Jun.
SBI launches barcode based passbook printing kiosk
IRIS News Service, November 13, 2014
Mumbai, November 13: State Bank of India (SBI), the largest public sector
lender, today announced the launch of barcode based passbook printing kiosk
named 'SWAYAM'. The facility was launched by Arundhati Bhattacharya,
chairman, State Bank of India.Swayam enables customers to carry out passbook
printing in self service mode using barcode technology. Speaking on this
occasion, Bhattacharya said, ''Swayam, which is another milestone of the bank
with the use of technology, will go a long way to enhance customer experience.''
Swayam will be rolled out at more than 2,500 branches of the Bank. Customers
can print their passbooks of Savings, Recurring Deposit as well as PPF account
through the facility round the clock, even after branch timings.
Your Interview, Shrabana Kumar Nial

SBI's Arundhati Bhattacharya Most Powerful Indian Woman in Business:

Fortune Magazine, The Press Trust of India, November 9, 2014
New Delhi, November 9: Arundhati Bhattacharya, the chairman of State Bank of
India (SBI), has been named as the most powerful woman in business in India
by Fortune magazine.ICICI Bank's Chanda Kochhar and Shikha Sharma of Axis
Bank follow Ms Bhattacharya at the second and the third places, respectively. In
the Fortune India list of 50 most powerful businesswomen, there are as many as
eight new entrants. Two first timers, Ms Bhattacharya and Nishi Vasudeva, the
chairperson and managing director of HPCL (4th), have made a cut into the top
10.Ms Bhattacharya, chairman of India's largest lender, made to number one
spot "due to her relentless fight against bad loans", Fortune India said. "Since
she took over a year or so ago, she has improved assets quality, cut costs and
recapitalised SBI (State Bank of India). That's no mean feat when you consider
that SBI has 190 foreign offices, a market cap of Rs. 1.9 lakh crore and 2,22,033
employees," the magazine noted.
These powerful women represent various sectors such as banking, finance,
healthcare, media, fashion and entertainment. Other new entrants include
Shahnaz Husain, founder of Shahnaz Group of Companies, Zarin Daruwala,
president-wholesale banking at ICICI Bank, Archana Hingorani, CEO and
executive director at IL&FS Investment Managers, Vani Kola, managing director
at Kalaari Capital, and Valerie Wagoner, managing director at Zipdial."The
country's most powerful women in business once again show that people may
change, but the idea of power does not," the magazine further said. The other
women who figure in the top 10 include Zia Mody, co-founder of AZB Partners,
Mallika Srinivasan, CEO of TAFE, Aruna Jayanthi, CEO of Capgemini India,
Preetha Reddy, managing director at Apollo Hospital Enterprise, Kiran Mazumdar
Shaw, chairperson and managing director at Biocon.

Govt to bring down stake in PSU banks to 52%: Jaitley

The Press Trust of India, November 9, 2014
New Delhi, November 9: Finance Minister Arun Jaitley today said the Government
is planning to bring down its stake in public sector banks to 52 per cent so as to
meet Rs 3 lakh crore capital requirement.We are also trying to bring down the
government equity in the banks to about 52 per cent so that a large amount of
capital, almost close to Rs 3 lakh crore, can be introduced into banks itself, so
that they have a lot more resources for financial inclusion, he said.In 2010, the
then Cabinet had approved a proposal to keep the minimum shareholding of
government to 58 per cent in the public sector banks in order to provide buffer
Your Interview, Shrabana Kumar Nial

for the future. As per law, government holding at any moment must not come
below 51 per cent to maintain the public sector character of PSU banks.
At present, government shareholding in various banks varies between 56.26 per
cent (Bank of Baroda) and 88.63 per cent (Central Bank of India). Public sector
banks require equity capital of Rs 2.4 lakh crore by 2018 to meet Basel III
norms. For the current fiscal, the government has allocated Rs 11,200 crore for
bank capitalisation. The government had infused an amount of Rs 58,600 crore
between 2011 and 2014.Finance Minister Arun Jaitley in the Budget speech had
said that to be in line with BaselIII norms there is a requirement to infuse Rs
2,40,000 crore as equity by 2018 in our banks. To meet this huge capital
requirement we need to raise additional resources to fulfil this obligation. While
preserving the public ownership, the capital of these banks will be raised by
increasing the shareholding of the people in a phased manner through the sale of
shares largely through retail to common citizens of this country, the minister had
Service book of every Government Employee to include Aadhaar number,
The Business Line, November 4, 2014
New Delhi, November 3: The unique identity number Aadhaar will be included in
the service book of every Government servant. According to an office
memorandum of the Department of Personnel & Training of the Central
Government, The e-Service Book format already provides fields for Aadhaar
number of the Government servant. All Ministries and Departments of the
Government of India are requested to ensure that the Service Books of all
employees have an entry of the employees Aadhaar number. The attached and
subordinate offices under their control may also be suitably instructed for
compliance.Although, no reason has been given for this decision, the
Government seems to be aiming to curb the number of ghost employees in
various departments as also ensuring that benefits reach the right person.
Aadhaar is a 12-digit individual identification number issued by the Unique
Identification Authority of India (UIDAI) on behalf of the Government. It contains
various biometrics, such as iris or finger prints and serves as proof of identity
and address anywhere in India.
However, it does not confer citizenship. So far, 70 crore Aadhaar numbers have
been issued in the country. As per the provisions of the Supplementary Rules
199, every step in a Government servants official life must be recorded in his
service book and each entry attested by the head office. Heads are also
supposed to obtain the signatures of Government servants as proof of their
having inspected their service books annually.There is another set of rules, called
CCS (Pension) Rules 1972, which provide for issuing a communication on
completion of 18 years of service, as part of preparatory work for sanctioning
pensions. The service books at present contain the bio data, posting details,
Your Interview, Shrabana Kumar Nial

qualifying service, security details, HBA, CGHS, CGEGIS, LTC, etc of an

employee.From October 1, the Centre has launched an Aadhaar-based system to
track attendance of Government employees. The system, part of the Digital India
campaign and developed by the National Informatics Centre, ensures that the
attendance of all Government employees is visible real-time on the common
attendance portal, ensuring transparency and accountability and usher in
Governments plan to grant new bank licences to companies poses risks
in the banking sector: S&P, The Business Standard, October 29, 2014
The ratings agency says there's a chance the new entrants could be lax
about loan standards
Mumbai, October 28 (Reuters): Government's plan to grant new banking licences
to companies could increase risks in the banking sector given the chance that
new entrants could be lax about loan standards, Standard & Poor's said in a
report on Tuesday.The Reserve Bank of India (RBI) is cautiously opening up
India's banking sector to companies. The RBI awarded two new licences in April
after a gap of 10 years in a country where only one household in two has access
to formal banking services.
The central bank will come out with fresh set of guidelines for companies
applying for on-tap bank licences, or rolling applications that are assessed as
they come, in the current fiscal year ending March. "The sector's stability or risk
appetite could be hit if any of the new players relax their underwriting standards
or undercut prices to gain market share," said S&P.The rating agency also
highlighted the risks from a prolonged weakness in Indian banks' asset quality,
which could hurt economic recovery. S&P said it expects gross non-performing
loans to rise to 4.5% by the end of March 2015 from 4 percent in the previous
year.However, Indian banks fare better on potential economic risks compared
with Brazil and China due to a conservative central bank, stringent capital
regulations under Basel III, and moderate inflation-adjusted real estate prices,
S&P said.The rating agency recently upgraded the outlook for India's "BBBminus" rating to "stable" from "negative", citing the prospect of government
SBI unveils mPassBook facility on smartphone
The Business Line, October 23, 2014
Mumbai, October 22 (PTI): State Bank of India (SBI) launched a facility called
mPassBook today, on its State Bank Anywhere mobile application, for its retail
banking users.Launching the facility, SBI Chairman Arundhati Bhattacharya, said
that mPassBook is an electronic application of a physical passbook for savings
Your Interview, Shrabana Kumar Nial

bank and current accounts.The facility is currently available on Android phones

but would soon be available on iOS and Blackberry phones too.The facility
empowers users to view their transaction history on their smartphone and
maintain an entire years historical data on it.
SBI to carry on in UK despite crackdown on foreign banks
The Economic Times, October 21, 2014
London, October 20 (PTI): State Bank of India is determined to carry on retail
banking operations in the UK despite a recent crackdown by the Bank of England
on the operations of foreign-owned banks in the country. SBI, which has been
operating in the UK for 95 years, said it is prepared to set aside 100 million
pounds in ring-fenced capital and restructure its operations if that is necessary to
keep operating on the high streets.
Mrutyunjay Mahapatra, the UK head of the bank, told 'The Times' newspaper that
the bank will keep serving retail customers in Britain as well as open new
branches. "Our intention is to continue to do business in the UK. We have been
here for 95 years. We're too deep rooted here," he said. The Prudential
Regulation Authority (PRA) of the Bank of England had recently issued an
ultimatum to the British operations of foreign-owned banks taking deposits of
more than 100 million pounds to restructure with their own ring-fenced capital or
end retail operations. SBI, which has over 900 million pounds of deposits in
Britain, is among those affected. Bank of Baroda, which has 10 branches in
Britain, and Bank of India, with seven, could also be hit.
A consultation launched in February by the PRA, responsible for supervising
individual banks, concluded in September. Under the new rules, banks from
outside the European Economic Area (EEA) must offer only minimal retail
services. Analysts suggest Isbank of Turkey and Overseas Chinese Banking
Corporation of Singapore are also likely to be affected. They would either have to
shut down their retail banking operations in Britain or convert from branch status
to full UK subsidiary - an expensive and cumbersome process. The new rules
mean it will be easier for wholesale foreign banks, which cater to other financial
institutions and large corporations rather than retail customers, to open nondeposit taking branches, which would not face size limits but are likely to make it
very difficult for some retail bank branches to operate.
The euro zone is slipping again, The Mint, October 20, 2014
The problem this time could be more serious as the unease is emanating
from Germany
Financial markets went into a bit of a tizzy recently as concerns once again
started to emerge from Europe. While the single currency zone is struggling with
Your Interview, Shrabana Kumar Nial

the risk of an outright deflation, markets are now also concerned about
weakening economic activity. The problem this time could be more serious as the
unease is emanating from Germany, the largest economy in the euro zone.
German exports declined by 5.8% in August, the biggest fall since 2009.
Economic institutes in Germany have collectively cut their growth forecasts for
both the current and the next year.
The joint forecast is that the German economy will grow at a pace of 1.3% this
year and slow down to 1.2% next year. Output in the largest economy in the
euro zone contracted by 0.2% in the second quarter, and if it shrinks in the third
quarter as well, technically, Germany will slip into a recession. The problem is
that if economic activity stalls at the core, the risks to recovery in the euro zone
will only magnify.The International Monetary Fund (IMF) in its October edition of
the World Economic Outlook (WEO) has also noted that if economic activity
falters in the euro zone, it will be a key issue for the global economy. There is a
risk that the recovery in the euro area could stall, that demand could weaken
further, and that low inflation could turn into deflation...should such a scenario
play out, it would be the major issue confronting the world economy, noted the
IMF. It expects the euro area to expand by 0.8% in the current year against a
contraction of 0.4% in 2013.
Citibank and SBI experimenting human-less digital banking experience
at the mall, The Economic Times, October 16, 2014
Mumbai, October 16: It's still early in the day at Phoenix Market City, one of the
largest malls in crowded Mumbai. Da Milano, Debenhams, Vera Moda and
Samsung have surprising company a State Bank of India (SBI) branch. And its
unlikely location is not the only surprise.For all appearances the branch is more
of a gallery or retail outlet no tellers in cages, no withdrawal forms or deposit
slips. Instead, there are swank interiors, impressive looking gadgets, a space for
hosting events, tablets and kiosks for banking functions, and... no staff in sight.
At Palladium, another mall in upmarket South Mumbai, Citibank has a similar hitech, fully automated branch. "There are no human beings. And if you need to
talk to someone, they are probably on the screen," says one impressed
customer. "We want to attract youngsters," says S K Mishra, deputy managing
director (corporate strategy and new business initiatives), SBI, referring to both
the location and features of the new branch, branded InTouch. "Everything was
designed and built keeping in mind the target segment, Gen Y."
Adds Aman Bhargava, director, Grant Thornton India: "The mall is an ideal
location (for such automated branches) because of the high number of footfalls,
affluent audience, and predominantly young crowd with spending power."
Human-less Banking
Your Interview, Shrabana Kumar Nial

These branches offer a near human-less banking experience. Almost every

banking transaction, including opening an account, can be performed with
virtually no human intervention. At the Citibank branch outlet, for instance, a
machine performs the role that a teller typically does in a bank counts the
cash, deposits and dispenses it. "There is no need for manual reconciliation at
the end of the day," says Anand Selvakesari, consumer banking head, ASEAN &
India, Citibank.At SBI, a person who walks into the branch can open a zero
balance account in 15 minutes. A machine allows any of the approved KYC
documents to be scanned, the signature to be captured on the machine using a
stylus, and biometric verification to done with a finger scan to authenticate the
person's ID with the Aadhaar database. A machine next to it can print your debit
card instantly. The instant service and gratification is paying off in terms of
winning new customer accounts. When Sorab Patel (name changed) walked into
the Citibank branch at Palladium, he was looking to avail of the 20% off offer for
Citibank cardholders on high-end Samsung phones at a store in the mall. He was
able to get the card the same day at the branch, which had an instant card
printing and embossing machine, and then buy the phone. He now holds a
current account with the bank, says Vineeta Suri, the branch manager. These
branches are also open on holidays and follow the timings of the mall.
Ezetap ties-up with SBI to launch PoS and ATM solution Chota ATM
Oct 6th, 2014,
Bangalore-based point of sale (PoS) startup Ezetap has partnered with the State Bank of
India to launch Chota ATM, a solution that can double as an ATM device as well as a PoS
terminal that can accept payments from any debit and credit card. Targeted at
neighborhood Kirana shops, the solution will be offered to merchants for a nonrefundable deposit of Rs 499 along with a monthly fee of Rs 150 and a commission of Rs
5 per cash-back transaction. Sanjay Swamy, Managing partner of AngelPrime (which
incubated Ezetap) writes that merchants can sign up for this service by opening a zero
balance current account with SBI and use this solution over an Android or Windows
phone or tablet with an active data connection. Its worth noting that SBI had earlier
selected Ezetap to deploy 500,000 PoS terminals in the next 5 years for the customers of
SBI and its five associate banks.
Cash Withdrawal limits & commission
Through this solution, credit and debit card holders can swipe their card to carry out
three types of transactions Sale, Sale + Cash withdrawal and Cash withdrawal only. As
per SBIs Chhota ATM FAQs (pdf), cash can be withdrawn in multiples of Rs 100. There is
a minimum daily withdrawal limit of Rs 100 per card holder and a maximum daily limit of
Rs 1,000 per card holder, in line with the RBI guidelines. There is also an additional 1%
charge on customers having State Bank group debit cards to a minimum of Rs.7.50 and
maximum of Rs 10 per transaction. For other bank holders, this charge will be decided
by their respective banks. As for merchants, they will receive a commission of Rs 5 per
cash withdrawal transaction.
Other developments

Your Interview, Shrabana Kumar Nial

In January last year, Ezetap had partnered with Citibank to launch a mobile payment
solution for merchants targeting credit and debit card holders in India. As part of the
partnership, merchants were expected to receive real time information during the
payment and collection process, when customers transact using Ezetap. Citibank had
then claimed to have partnered with companies like Shoppers Stop, Bajaj Allianz,
Flipkart, BookMyShow and Vodafone to deploy this solution for payment and
collection.The company had also launched a debit card supporting mobile PoS solution in
July last year and had acquired Hyderabad-based loyalty platform Clinknow in June this
year to launch an integrated payments and loyalty solution for merchants across India.
Ezetap has raised around three rounds of investments until now a strategic
undisclosed investment from American Express in March this year, a $8 million
investment in Series B funding led by Helion Advisors with participation from existing
investors Chamath Palihapitiyas The Social+Capital Partnership and Berggruen Holdings
in February this year and $3.5 million in series A funding from Peter Thiel, Chamath
Palihapitiya, Nicolas Berggruen and David Sacks in November 2011.

Standard & Poors outlook upgrade reflects our inherent strengths: SBI
Chairman, The Press Trust of India,September 27, 2014
Mumbai, September 27: State Bank of India (SBI) said international rating firm
Standard and Poor's decision to upgrade its outlook to stable from negative
reflects the top lender's inherent strengths. "The upgrade in outlook is a
reflection of the inherent strengths of SBI. In particular, SBI is strategically
poised to take advantage of an economy recovering from a sharp downturn."With
a robust CASA (current & savings account) ratio and a pan-India presence, the
bank is in relentless pursuit of excellence through a judicious augmentation of
technology, risk management and transformation of HR practices," SBI Chairman
Arundhati Bhattacharya said in a statement.The US-based firm has also raised
the rating outlooks on 10 other Indian banks and financial institutions to stable
from negative. These included, Bank of India, HDFC Bank, ICICI Bank, IDBI
Bank, Indian Bank, IDFC, Kotak Mahindra Bank, Kotak Mahindra Prime and Union
Bank of India.The upgrade followed S&P's revision yesterday in India's credit
rating outlook to stable on the back of strong political mandate helping fiscal and
economic reforms.
State Bank of India board approves 1:10 share split Face value of each
equity share reduced to 1 rupee from Rs 10, The Business Standard,September
25, 2014
Mumbai, September 24: Country's largest lender State Bank of India (SBI) will
split its one equity share of face value Rs 10 into ten shares of Rs one each to
increase liquidity of the stock. "The central board of SBI at its meeting has
approved to reduce the face value of equity shares of the bank from Rs 10 per
share to Rs 1 per share and to increase the number of issued shares in
proportion thereof," the bank said in a statement today.Shares of the bank closed
Your Interview, Shrabana Kumar Nial

2.68% down at Rs 2,487.40 per share of Rs 10 each) on the Bombay Stock

Exchange. The following decision would be reflected in the reduction in face value
of equity shares in existing Global Depositary Receipt (GDR) programme, it said.
The decision is subject to regulatory approvals, including from Government of
India.SBI chairman Arundhati Bhattacharya said the decision to split stock will
enhance broader investor participation, specifically retail participation and
increase in demand will enhance Price/Earnings Ratio. Earlier this month, public
sector lender Punjab National Bank and private lender ICICI Bank had also
announced share split. Both the banks have approved sub-division of one equity
share into five.
Now, SBIs education loans come with credit cards Will help in staying
connected with students: SBI Chief, The Business Line September 22,
Mumbai, September 21: State Bank of India is offering credit cards along with
education loans to students to stay connected with them and to keep bad loans
down. Indias largest bank is expecting the usage of the credit card and payment
of dues by students to build up credit history, giving it a clue on the borrowers
credit behaviour.SBI Chairman Arundhati Bhattacharya said, We were having a
lot of non-performing assets (NPAs) in education loans. So, now we have created
a credit card along with the education loans. The credit card has a credit limit of
Rs.5,000 which is guaranteed by the parent, she added. Now what happens is
the child starts using the credit card. He learns to use the credit card and repay
the loan. And also, through the credit card we remain connected with him, said
Bhattacharya.She pointed out that earlier once the bank gave the education loan
it was no longer in the scene and the student forgot all about the bank. But if
there is a credit card, there is a monthly bill, so we remain connected with that
person, said the SBI chief. And even when the student-borrower completes his
education and takes up a job, the bank hopes that he/she will continue to use
the card. So, we can continue to track him. And in the meanwhile, he is building
up a credit history which will enable use to give credit once he goes into a job,
said Bhattacharya.As at June-end 2014, SBI had an education loan portfolio of
Rs.14,945 crore, up 7.21 per cent year-on-year.
Overdraft facility
Meanwhile, parents, who open accounts under the banks two recently launched
savings bank products for children, can avail themselves of an overdraft to the
extent of the childs fee and repay it in six months.Now we thought that this is a
good thing to do because many schools are insisting on upfront payment either
every quarter or twice a year. This becomes a major burden on parents because
the school fees have gone up, said Bhattacharya.

Your Interview, Shrabana Kumar Nial

8 Indians led by Chanda Kochhar in Fortune's list of powerful AsiaPacific women, PTI | Sep 21, 2014, 11.19 AM IST
NEW YORK: As many as eight Indian women, led by ICICI bank chief Chanda Kochhar,
have made it to the Fortune list of 25 most powerful women "shaping the new world
order" in the Asia-Pacific region. Kochhar, ranked highest among Indian women, is
second across the region, while three others SBI's Arundhati Bhattacharya (4th),
HPCL's Nishi Vasudeva (5th) and Axis Bank's Shikha Sharma (10th) have also made it
to the top 10. The list is topped by Australian banking major Westpac's chief Gail Kelly.
Other Indians on the top-25 list include Biocon chief Kiran Mazumdar-Shaw (19th),
National Stock Exchange CEO Chitra Ramkrishna (22nd), HSBC's Naina Lal Kidwai (23rd)
and TAFE chairman and CEO Mallika Srinivasan (25th). Releasing the latest rankings, the
Fortune magazine said that women around the world are continuing to win the top jobs,
so much so that more than a third of the women on this Asia-Pacific list are making their
debut in the coveted list, including two from India. The two Indian new entrants are
Bhattacharya and Vasudeva. "More and more businesswomen are taking tougher jobs
and helming bigger firms. More than a third of the women on our Asia-Pacific list are
making their MPW (most powerful women) debut," Fortune said. Among Indians,
Bhattacharya is ranked second after Kochhar and is the first woman to hold the threeyear post at SBI, who oversees a 208-year-old institution with $400 billion in assets and
218,000 employees dispersed among 16,000 bank branches across India. On the other
hand, Vasudeva, 58, became the first woman to head an Indian oil company and is "and
one of only four women to helm a Global Fortune 500 firm in the Asia-Pacific region".
NSE's Ramakrishna is the only woman on the list heading a stock exchange. Meanwhile,
PepsiCo's India-born CEO Indra Nooyi has been ranked third among world's most
powerful business woman by Fortune in its worldwide list. Nooyi is only Indian-origin
woman on this year's global list, which has been topped by IBM Chairman and CEO Ginni
Rometty and General Motors CEO Mary Barra.

SBI, ICICI Bank, Axis Bank to get China Exim Bank credit
The Business Line, September 19, 2014
Mumbai, September 18: State Bank of India and ICICI Bank on Thursday signed
framework agreements with the Export Import Bank of China (China Exim Bank)
for Lines of Credit (LOC) amounting to $1.8 billion and $1 billion respectively.
The LOC will be utilised for projects involving import of Chinese raw materials,
energy, equipment, mechanical and electronic products, complete sets of
equipment, new and high-tech products, energy projects, infrastructure and
construction projects and any other projects mutually agreed on by the two
banks, the banks said in their respective statements.
Axis Bank, Indias third largest private bank, also signed an MoU with China
Development Bank for an undisclosed amount to support its corporate clients by
funding them at competitive rates.The deal will also give the bank the
opportunity to work closely with Chinese companies in meeting their
requirements in India.SBI, in the statement, said that the agreement is expected
Your Interview, Shrabana Kumar Nial

to be an important building block in the push to the infrastructure sector initiated

by the new Government, which is expected to require an investment of over a
trillion dollars over the next few years.
Paid Govt Cheques need not be Returned Back to Departments
The Press Trust of India, September 18, 2014
Mumbai, September 18: Easing norms to enhance efficiency of cheque clearing
system, the Reserve Bank starting next month will do away with the requirement
of returning back paid government cheques to the concerned departments.
Presently Cheque Truncation System (CTS) is used to clear cheques that
facilitates presentation and payment of cheques without their physical
movement. However, with regard to government cheques, they need to be sent
back in physical form after the payment has been made to the government
departments. "The matter relating to dispensation of this requirement was taken
up with the government and... the Controller General of Accounts, Ministry of
Finance has given approval to our proposal of doing away with the requirement
of returning paid government cheques back to government departments
concerned," RBI said in notification.
The revised guidelines would be effective from October 1, 2014, RBI said.
Accordingly, RBI said the government cheques would be paid in CTS clearing
based on their electronic images. If any drawee bank wants to verify government
cheque in physical form before passing it for payment, the image would be
returned unpaid under the reason 'present with documents'. "The presenting
bank shall ensure that the instrument is presented again in the next applicable
clearing session without any reference to the account holder," RBI said. Among
others, RBI said both the presenting and draweee banks need to preserve the
cheques for a period of 10 years.
"In case some specific cheques are required for the purpose of any investigation,
enquiry, etc., under the law, they may be preserved beyond 10 years." Also,
government cheques paid by a drawee bank across its counter by cash
withdrawal or transfer also needs truncation and preserved for 10 years and the
drawee bank should continue to send the payment scrolls, monthly DMS, to
government department. "They should ensure that the mistakes/discrepancies
pointed out are rectified as per procedure, missing images of paid cheques are
submitted immediately, the copies of the scrolls duly verified by the PAO are kept
on its record." Further, it said government may require any paid cheque in
physical form for reconciliation, enquiry, investigation, and they can approach the
drawee bank.
Pradhan Mantri Jan Dhan Yojana (PMJDY)

Finance Ministry finalised premium payment for life cover

The Business Standard, September 18, 2014
Your Interview, Shrabana Kumar Nial

New Delhi, September 17 (PTI): The finance ministry, in consultation with the
Life Insurance Corporation of India (LIC) has finalised the arrangement for
payment of premium towards life insurance cover under the Pradhan Mantri Jan
Dhan Yojana. It has been decided to set aside Rs 50 crore from the Social
Security Fund, managed by LIC and worth about Rs 1,800 crore, sources
said.This would be a revolving fund and LIC would manage it, sources said,
adding that Finance Minister Arun Jaitley is likely to approve the arrangement
soon. A Social Security Fund (SSF) was set up in 1988-89 for providing social
security through group insurance schemes to the weaker and vulnerable sections
of society. The SSF is administered by LIC for meeting insurance requirements of
the segment. Under the Jan Dhan Yojana, anyone who opens an account before
January 26, 2015, would get Rs 30,000 life insurance cover. This benefit was
added by the Prime Minister Narendra Modi when he launched the scheme on
August 28.
Under the scheme, banks have opened 30.2 million accounts as of September 8,
2014, and mobilised about Rs 1,500 crore. Of the total accounts opened, 18.9
million are in rural areas and 11.3 million are in urban areas. Banks have
collected deposits of Rs 1,496.51 crore under the scheme so far which works out
to Rs 495 per account. In order to spread financial inclusion, banks have been
asked to open 75 million accounts by January 26. The scheme envisages to
provide one account to 150 million unbanked households across the country in
the first phase. For this, banks have been asked to set up camps from 8 AM to 8
PM on every Saturday to facilitate the opening of accounts.Two helplines
1800-180-111 and 1800-110-001 have been set up to answer queries related
to the scheme. The new scheme, sources said, is a significant improvement over
the UPA's financial inclusion programme. The earlier scheme had no focus on
households and no emphasis was given on urban financial inclusion, according to
some experts. Besides, they maintained there was a cumbersome Know Your
Customer (KYC) formality, restricting account opening.
Other deficiencies cited include lack of credit disbursement and 47 per cent of
business correspondents being untraceable, resulting in inactive accounts. The
new scheme, sources said, has tried to address all the possible deficiencies and
its monitoring would be done at state and district levels. The 'mission mode'
approach has been envisaged with the finance minister as head of the mission.
SBI launches multi-currency international debit card
The Business Line, September 9, 2014
Mumbai, September 8: State Bank of India (SBI) in tie-up with MasterCard on
Monday launched its first multi-currency international debit card to allow
consumers to use a single card to pay in multiple currencies.To begin with, the
Your Interview, Shrabana Kumar Nial

prepaid debit card will enable customers to load four currencies US dollar, euro,
Great Britain pound and Singapore dollar. More currencies will be added going
forward as the card has the facility to be loaded up to 12 currencies, S K Mishra,
Deputy Managing Director, SBI, said.
Mishra added that outbound travel from India is growing with 35 million people
travelling outside India. This is expected to grow to 50 million in 2020.
Consumers expect smart products to address their travel needs. The multicurrency foreign travel card gives an option to load currencies of choice at SBIs
branch network, he said.At present, the card can be issued at an annual fee of
Rs. 100 without any interchange fee to customers. Customers will have to pay
the traditional ATM withdrawal charges of $1.75 in the US, 1.5 in Europe, 1.25
in Britain and S$2 in Singapore.
The card is aimed at corporates and professionals, tourists and students
travelling abroad and will be available at 100 SBI branches in four major
cities.The chip and pin security card also has additional features of a call centre
and complimentary emergency assistance and is backed by MasterCards network
of nearly 36 million merchant establishments and 1.9 million ATMs globally.
Fitch retains rating of SBI, ICICI, BoB, PNB and other banks PTI Sep 3, 2014,
Fitch Ratings today reaffirmed long- term issuer default ratings (IDRs) of nine banks,
including State Bank of India (SBI), Bank of Baroda (BoB), Punjab National Bank (PNB)
and ICICI Bank among others at 'BBB-' and also retained their credit rating as 'stable'.
The other banks include Axis Bank, Canara Bank, IDBI Bank, and Bank of Baroda New
Zealand (BOB NZ), a Fitch release said. Fitch has also retained its rating on the state-run
Indian Bank at 'BB+'. Retaining the ratings, Fitch said that the banking sector faces a
challenging economic environment, although the new government's clear electoral
mandate gives it the ability to pursue far-reaching economic reforms. Uncertainties and
risks remain in implementing key policies necessary to achieve the government's growth
and fiscal deficit targets, the release said. While retaining the ratings, Fitch said the
viability eatings (VRs) of SBI, ICICI Bank and Axis Bank are at the same level as their
IDRs and thus act as drivers for their long-term ratings, the release said.
SBI, ICICI Bank and Axis Bank are the only banks among Fitch's rated domestic banks
to have investment-grade VRs of 'BBB-', reflecting their superior stand-alone credit
profiles. SBI, whose financial metrics are not as strong as ICICI Bank and Axis Bank,
benefits from its large scale and status as a quasi-sovereign entity, which results in a
solid funding profile and strong access to capital markets. The VRs of Bank of Baroda,
Canara Bank and Punjab National Bank are rated one notch lower at 'bb+', although
Bank of Baroda's performance has been better than the other two in terms of
capitalisation and exposure to stressed business sectors.
Capital buffers, or mandatory capital that financial institutions are required to hold in
addition to other minimum capital requirements, for all three banks remain stretched,
particularly at Canara Bank and Punjab National Bank, which was a key factor in VR

Your Interview, Shrabana Kumar Nial

downgrades of all three banks in 2013 and 2012, the release said. Punjab National
Bank's capital buffers are thinner compared with its stressed assets stock of around 15
per cent of total assets, the highest among the rated banks. The bulk of the stressed
assets are restructured loans, the release said.

State Bank of India launches Pehla Kadam and Pehli Udaan

The Financial Express, September 6, 2014
SBI has launched personalised savings account for children.
Mumbai, September 5: Pehla Kadam and Pehli Udaan, two new savings bank
products for children, was launched by Arundhati Bhattacharya, Chairman, State
Bank of India (SBI) and Vice Admiral A R Karve, Chief of Staff at the Navy
Children School, Mumbai today.Pehla Kadam is a savings bank account for
minors of any age operated jointly with his/her parent/guardian while Pehli
Udaan' is a single operated savings bank account for a minor aged 10 years and
above who can sign uniformly.
Specially branded passbook, cheque-book have been designed for these
products. All the account holders will be given an exclusively designed
personalised photo ATM-cum-debit card.
Other features:
Internet Banking with limited transaction facilities like bill payment, opening of
fixed deposit, recurring deposits, etc. with per day transaction limit of Rs. 5,000.
Mobile Banking with limited transaction facilities like bill payment, top-ups with
per day transaction limit of Rs. 2,000.
Auto sweep with a minimum threshold of Rs. 20,000 and in multiple of Rs
1,000 with a minimum of Rs. 10,000.
While launching the products on Teachers' day, Bhattacharya highlighted the role
of teachers in everyones life. She emphasised the importance of cultivating
savings habits from childhood, managing and spending money wisely and also
stressed upon the importance of inculcating good spending habits early in life.
RBI eases norms, 1 photo ID proof to open bank account
TNN | Aug 29, 2014, 03.56AM IST
CHENNAI: Reserve Bank of India has, as part of Prime Minister Narendra Modi's push for
financial inclusion, relaxed 'know your customer' (KYC) norms to open new bank
accounts. RBI said there would be no need for applicants to submit separate documents
for address and identity proof to open a savings account. The central bank has directed

Your Interview, Shrabana Kumar Nial

banks to accept a single document, like a driving licence, which contains the applicant's
photograph and address to open an account. "Officially valid documents for KYC include
passport, driving licence, voter ID card, PAN card, Aadhaar letter issued by UIDAI and
job card issued by MNREGA and signed by a state government official," RBI said. It also
announced several other relaxations. Modi's Jan Dhan Yojana seeks to provide a bank
account for every household, especially the poor, under which banks will offer their
services to households currently outside the ambit of financial services. An estimated
40% of the population currently does not have access to the banking system. To make
the process of opening an account easier, banks will be treat information containing
personal details like name, address, age, gender and photographs made available by
UIDAI as a result of e-KYC process as officially valid documents, RBI said. Applicants will
not need to submit separate proof for current address. "If the current address is
different from proof of address submitted by the customer, a simple declaration about
the current address will be sufficient," RBI said. Customers will also not need to submit
separate KYC proof for transfer of a bank account from one branch to another. Banks will
open small accounts for people without officially valid documents. A person can open a
small account with a self-attested photograph and signature or thumb print in the
presence of a bank official. RBI has limited the credit in such accounts to Rs 1 lakh a
year, withdrawals to Rs 10,000 per month and account balance to not more than Rs
50,000 at any point in time. These accounts will be valid for 12 months, within which the
customer can submit officially valid documents to open a regular savings account. The
customer can, alternately, renew the small account with proof of application for officially
valid documents. RBI has increased the time interval to update KYC proof for low,
medium and high risk customers to 10 years, eight years and two years, respectively.
Banks will give foreign students a month to furnish proof of local address.

RBI amends Basel III norms for banks,The Mint, September 2, 2014
The minimum maturity period of such bonds have been reduced and banks have
been allowed to tap retail investors
The Reserve Bank of India (RBI) on Monday introduced a number of changes in
bonds issued under Basel III international banking norms as a way to make it
easier for banks to raise capital and also to make such bonds attractive for
investors.As part of the changes, the minimum maturity period of such bonds
have been reduced and banks have been allowed to tap retail investors.
There are two kinds of debt papers under the Basel III norms. One boosts the
core capital of banks, also known as tier-I capital debt, and another that boosts
the secondary capital of bonds, known as tier-II instruments.Earlier banks were
not allowed to issue tier-I bonds to retail investors. They could only issue tier-II
bonds that had a fixed maturity. However, on Monday, RBI said banks can issue
any kind of papers to retail investors, including tier-I bonds and tier-II perpetual
bonds, provided they made sure that such bond buyers fully understand the
complexity and risks of such investment.Under Basel III norms, an international
accounting norm for capital adequacy, bonds issued to boost capital have a
Your Interview, Shrabana Kumar Nial

feature under which the investors may have to take a cut on their investment in
case a bank is in financial trouble.
This loss-absorption clause makes such a bond costly for the bank to issue as
they have to pay extra interest to cover the additional risk borne by investors.
For example, Bank of India in July raised Rs1,250 crore through Basel III bonds
at 11%, about 2% more in coupon than what it could have raised the money at,
if it was not a Basel III bond.Even then, demand for Basel III bonds is limited
and in Asia only a handful of banks have managed to raise such bonds in the
international markets, a route that Indian banks will eventually have to take if
they hope to raise larger amounts of capital.
Several Indian banks have explored international issuances of Basel III bonds but
are yet to issue such securities as investors sought more clarity from the
regulators, particularly on the issue of loss to be borne by them in case of a
failure. Indian banks rating in the international market is just above the junk
grade.To broaden the investor base, the RBI on Monday halved the maturity of
the bonds from 10 to five years, paving the way for the local lenders to raise
money through such bonds in the international market.
The central bank also said banks can now convert the bonds, raised as part of
the banks core capital, into equity capital or allow a temporary write down of the
principal value of the bond. Earlier, the rule was to convert the bonds into
common shares or permanently write down the loss, in case the bond issuer
bank is in trouble.However, in case the bank reaches the point of non-viability,
then the write-down should be permanent, RBI said.In case of a perpetual bond,
the call option, or the freedom given to banks to buy back the bonds, was set at
10 years. RBI now says that banks can offer to buy back the instruments after
five years.
Also, the RBI said that if a bank has met its minimum capital requirement
already, the lender will be free to admit as much of additional capital through
these instruments as they can raise. Earlier, RBI had imposed a limit on raising
such additional capital.To meet Basel III norms, Indian banks will require an
additional Rs5 trillion of capital by 2019. Out of this, non-equity capital will be
Rs3.25 trillion and equity capital will be Rs1.75 trillion.While all of the non-equity
capital will come from Basel compliant bonds, a significant part of the equity
capital will also have to come from tier-I Basel bonds considering that the
government is cash starved to put capital in its banks.
PM to launch Jan Dhan Yojana on Aug 28

One Crore Bank Accounts on Day-1, The Free Press Journal, August 27,
Your Interview, Shrabana Kumar Nial

New Delhi, August 26: The government plans a mega launch of the Pradhan
Mantri Jan Dhan Yojana (PMJDY) by Prime Minister Narendra Modi on August 28,
which is likely to see opening of one crore bank accounts on the first day itself.As
many as 76 mega functions are being organised at different places to mark the
launch of the scheme, under which the new account holders will be provided
RuPay debit cards with an inbuilt insurance cover of Rs 1 lakh. The Prime Minister
has already sent 7.25 lakh emails to bank officers informing them about the
financial inclusion scheme PMJDY, which he had announced in his Independence
Day address to the nation. Public sector banks, according to an official release,
will organise more than 60,000 camps in rural and urban areas on the launch
day.The mega functions to be organised by state capitals and major district
headquarters will be attended by Union Ministers and state Chief Ministers.The
PMJDY has been conceived as a national mission on financial inclusion with the
objective of covering all households in the country with banking facilities and
having a bank account for each household.
PF Interest Rate Retained at 8.75 Per Cent for 2014-15
The Press Trust of India, August 26, 2014
New Delhi, August 26: Employees' Provident Fund Organisation (EPFO) trustees
on Tuesday decided to retain interest payment on provident fund deposits for
2014-15 at 8.75 per cent. "It has been decided to pay 8.75 per cent interest in
the current fiscal," Central Provident Fund Commissioner (CPFC) K K Jalan told
PTI after a meeting of the Central Board of Trustees (CBT), the apex decision
making body of retirement fund body EPFO.The EPFO has about 5 crore
subscribers and the decision will have a bearing on their retirement funds. The
decision to retain the interest rate on the provident fund deposits at last year's
level was taken despite some protest by the trade union members of the CBT,
sources said.The final notification for payment of the interest rate for the current
fiscal year will be issued by the Finance Ministry later. The EPFO had provided a
rate of interest of 8.75 per cent on PF deposits for 2013-14, which was higher
than 8.5 per cent paid for the previous fiscal year.
T M Bhasin, CMD of Indian Bank elected as IBA Chairman
Arundhati Bhattacharya elected as Honorary Secretary of IBA
The Business Standard, August 21, 2014
Mumbai, August 20: The Indian Banks' Association (IBA) today elected T M
Bhasin, chairman and managing director of Indian Bank as IBA chairman for
2014-15 in its annual general meeting here today.The other IBA office-bearers
elected were Arun Kaul, chairman and managing director of UCO Bank, S L
Bansal, chairman and managing director of Oriental Bank of Commerce, and
Chanda Kochhar, managing director and chief executive of ICICI Bank as deputy
chairmen. Further, Arundhati Bhattacharya, chairman of State Bank of India was
elected as Honorary Secretary of IBA for 2014-15.
Your Interview, Shrabana Kumar Nial

PF deposit limit raised to Rs. 1.50 lakh, Finance Ministry has amended the
Public Provident Scheme, The Business Line, August 20, 2014
New Delhi, August 19: You can now deposit up to Rs. 1.5 lakh a year in the
public provident fund (PPF). The Finance Ministry has amended the Public
Provident Scheme following this years Budget announcement enhancing the
investment limit for tax benefits under Section 80C of the Income Tax Act.The
new limit can be used for tax benefits in the current fiscal year itself. Any change
in investment limit under Section 80C automatically reflects in life insurance
polices, national savings certificates, equity-linked savings schemes and
contribution to Employees Provident Fund, but not in PPF, which is an
independent scheme with different features. PPF, a 15-year savings scheme,
carried an annual interest rate of 8.7 per cent in 2013-14. The interest, which is
revised annually, is yet to be announced for the current financial year.The
minimum amount that can be deposited in a PPF account is Rs. 500, which, if not
paid even for one year, invites a penalty. Unlike other instruments, the interest
earned in this scheme is tax-free. Although, the normal maturity period is 15
years, one can withdraw partially from the seventh year of opening an account.
Also, in the third year, it can be used as a pledge for a loan. The account cannot
be attached under a court decree order.

Modi promises access to banking for India's poor

The Reuters, August 15, 2014
New Delhi, August 15 (Reuters): Prime Minister Narendra Modi promised on
Friday greater access to financial services for nearly 500 million (50 Crore)
Indians who do not have a bank account, many of whom are now at the mercy of
money lenders who charge extortionate interest.Even though India has grown to
become Asia's third-largest economy, thousands of poor farmers commit suicide
every year because they cannot repay loans. "He takes a loan from a money
lender that he cannot return and dies," Modi, 63, said in his Independence Day
address. "For his daughter's marriage, a poor man takes a loan from the money
lender that he cannot return."
Modi's push to achieve greater financial inclusion among India's population was
one of the few initiatives he announced in the landmark annual address delivered
from the ramparts of Old Delhi's 17th century Red Fort. India counted 1,46,373
suicides by farmers between 2004 and 2012, according to government
estimates. The toll has been on a declining trend in recent years but typically
spikes in years when there is drought.Modi plans to open up to 75 million (7.5
crore) new bank accounts in rural and urban areas by 2018, officials say, helping
banks expand credit and insurance services to low-income groups so far excluded
Your Interview, Shrabana Kumar Nial

from the financial system. "Under the new policy, the people will get a debit card
and insurance coverage of Rs 1 lakh for the family," said Modi.
The new scheme is named Jan Dhan Yojana - or the Scheme for People's Wealth
- and would extend banking and accident insurance coverage to poor people in
both rural and urban areas.Of India's 1.27 billion people, nearly two-fifths lack a
bank account, a greater share than in Bangladesh, Sri Lanka, Iran and South
Africa, the World Bank estimates.
Raghuram Rajan, governor of the Reserve Bank of India, has also promised
support for financial inclusion. Since taking charge in 2013, he has encouraged
banks and mobile phone companies to form alliances, and liberalized regulations.
The mobile money payment systems popular in Africa have failed so far to take
off in India.Analysts say private and foreign banks- mostly focused on urban and
corporate clients have little incentive to reach poor households with small
savings. Over 40 percent of Indians live on less than one dollar a day. The
previous Congress government sought to achieve financial inclusion by setting up
an ambitious biometric database. Modi's Bharatiya Janata Party had criticized the
scheme in the past but now plans to develop it.The government currently spends
$43 billion a year or more than 2 percent of gross domestic product on food,
fertilizer and fuel subsidies that are widely criticized as wasteful and prone to
Top 5 richest Indians have half of nations billionaire wealth
The Press Trust of India, August 13, 2014
New Delhi, August 13: The top five Indian billionaires led by Reliance Industries
chairman Mukesh Ambani collectively control $85.5 billion (about Rs 5,23,897
crore) in personal wealth, accounting for nearly half of the countrys total
billionaire wealth, a new study said today.According to the analysis by wealth
research firm Wealth-X of Indias richest individuals, Mukesh Ambani remains the
richest man in the country with an estimated net worth of $24.4 billion (about Rs
1,49,474 crore).
Ambani is followed by steel tycoon Lakshmi Mittal, drugmaker Sun Pharmas Dilip
Shanghvi, IT giant Wipros Azim Premji and Tata Sons shareholder Pallonji
Shapoorji Mistry among the top-five wealthiest individuals from India.The five
billionaires collectively control $85.5 billion in personal wealth, accounting for
47.5% of Indias total billionaire wealth, Wealth-X said.
Observing that entrepreneurialism is the key to attaining financial success in the
worlds largest democracy, the study further said these five entrepreneurs have
made their fortunes through their businesses in sectors such as oil and gas, steel
and pharmaceuticals.In comparison, Indias wealthiest actor, Bollywood star Shah
Rukh Khan, is worth $600 million, while Indian cricket legend Sachin Tendulkar
Your Interview, Shrabana Kumar Nial

retired in November 2013 with a personal fortune of at least $160 million, it

added.Steel tycoon Lakshmi Mittal takes second place on the list with a personal
net worth of $17.2 billion.
Govt restores compassionate appointments in public sector banks
The Business Line, August 12, 2014
Thiruvananthapuram, August 11: The Centre has restored a scheme of
compassionate appointments in public sector banks. The Department of Financial
Services in the Union Ministry of Finance has conveyed its approval in a
communication to the Indian Banks Association (IBA) dated August 7.The
scheme will be on a par with the one available to Central Government
employees, and is effective from August 5.
Ex-gratia scrapped
While restoring compassionate appointments in public sector banks, the
communication said that the extant provision of ex-gratia would be scrapped.
The Government also advised the IBA to take appropriate action to circulate the
scheme to all public sector banks for adoption with the approval of the respective
boards.MV Murali, Convenor of United Forum of Bank Unions (UFBU), said the
compassionate appointments scheme was unilaterally withdrawn by the Indian
Banks Association (IBA) a decade ago. Since then the workmen unions and
officers associations under the UFBU umbrella had been demanding its
Main demands
UBFU had included the issue as one of the prime demands it had bargained for in
earlier wage revisions. A decision had been hanging fire after it was escalated to
both the IBA as well as the Government.In the meanwhile, banks had, at the
instance of the IBA, introduced at random payment of ex-gratia lumpsum in lieu
of compassionate appointment. The issue was then brought into the as-yet
inconclusive 10th bipartite talks with the IBA for wage settlement.After prolonged
discussions, the IBA agreed to forward to the Government recommendations for
restoration of the scheme on par with the one available to Central Government
employees. This amounts to a modification of its earlier notification for payment
of an ex-gratia lumpsum, Murali said.
Payments bank could cause regulatory arbitrage: SBI, The Times of
India, June 13, 2014
Mumbai, June 12: The payments bank proposed to be allowed by Reserve Bank
of India will hurt existing "universal" banks as they will offer products which are
cross-subsidizing other services. SBI Chairman Arundhati Bhattacharya said that
Your Interview, Shrabana Kumar Nial

there would be an element of regulatory arbitrage as a payment bank would

invest only be investing in government bonds. Speaking at a conference on
banking and financial service organized by SBI Capital Markes, Bhattacharya
said, "There is an element of cross-subsidy in services provided by a bank. The
payments bank will not have to provide the cross-subsidy. We will have to find
ways to work with that." In terms of what has been proposed for by the Nachiket
Mor committee on financial inclusion payment banks will provide largely
transaction services. At present regular banks do not charge for a host of
services, however they recover their costs through the spread they earn over
funds lying in savings account. "We do not know what will be the reserve
requirements for the payment banks, but since they will have to invest all their
deposits in government bonds, it is likely there will be regulatory arbitrage," said

Payments banks to come soon: RBI, The Mint, June 13, 2014
Payments banks can start operations with a capital of just Rs.50 crore,
while full-service banks require an entry capital of Rs.500 crore
Mumbai, June 12: Indias first payments bank, which will provide deposit and
payment services but not extend loans, will be ready soon, H.R. Khan, a central
bank deputy governor, said at a banking conference. The concept of payments
banks was first proposed by a Reserve Bank of India (RBI) committee led by
board member Nachiket Mor.Payments banks, which will bring financial services
to unbanked areas of the country, can start operations with a capital of just
Rs.50 crore, since all their money will be invested in safe government securities.
In contrast, a full-service bank requires an entry capital of Rs.500 crore. They
will be required to comply with all RBI guidelines for commercial banks.
The Mor committee had also recommended permitting existing banks to create
subsidiaries to operate payments banks.Later, Mor had clarified that payments
banks may be created by converting prepaid payment issuers (PPIs). These
companies provide cards that customers can use to make payments with the
money stored in them. There are 27 PPIs in the country, including Itz Cash Card
Ltd, Oxigen Services (India) Pvt. Ltd and Airtel mCommerce Services Ltd.The
entry of payments banks is also seen as a step closer to moving towards a
differentiated banking licence regime, where the central bank issues licences to
new banks to undertake specific banking operations.
In April, while issuing in-principle approval for IDFC Ltd and Bandhan Financial
Services Pvt. Ltd to set up commercial banks, RBI governor Raghuram Rajan had
indicated that the central bank would kick off the process of issuing differentiated
banking licences soon.The apex bank will also issue licences on a continuous
basis to qualified aspirants instead of opening the licensing window after long
intervals, Rajan had said.The payments bank route is critical for India Post, which
Your Interview, Shrabana Kumar Nial

failed to secure a banking licence. While issuing the licences in April, RBI had
said that it would consider India Posts application separately in consultation with
the government. On 22 May, governor Rajan said that India Post could begin as a
payments bank.
Promoting financial inclusion, or the process of spreading banking services, is
critical in India, where more than half of the adult population still do not have
access to banking services.RBI first introduced a three-year financial inclusion
programme in April 2010 that saw banks opening outlets in 200,000 villages.
Subsequently, it launched the second phase of the programme for 20132016.Khan also said RBI is in discussion with the government to revamp
inflation-indexed bonds to attract more retail investors. Inflation-indexed bonds
were introduced last year by the central bank but were not well received due to
its complex structure. We had launched inflation-indexed bonds that were not
successful. We are coming out with the revised version, Khan said.

SBI signs up Reliance Money Infra as business

correspondent April 29, The Hindu Business Line
State Bank of India has signed up Reliance Money Infrastructure (RMIL), an Anil
Ambani Group company, in a business correspondent deal to source a range of
banking services. The deal was concluded on February 25 but has been made effective
with retrospective effect from October 5, 2013. SBI strategy The deal authorises RMIL
to identify borrowers; collect, process, and submit loan applications; promote credit
groups; take up post-sanction monitoring, followup, and recovery. As the service
provider, RMIL will also collect small-value deposits; sell microinsurance, mutual fund
and pension products; and receive and deliver small-value remittances. An industry
analyst called this a mother-of-all-business-correspondent agreement, part of an SBI
strategy to outsource listed services for facilitating business growth. It is particularly
significant since it comes after the latest round of issuance of banking licences in which
Reliance Capital, another group company, was an applicant but failed to make the
grade. Products list Among products the service provider will dabble in are: no-frill
savings bank accounts through kiosk banking model; home loans/loans against
property; auto loans; gold loans; SME loans; general purpose credit card; kisan credit
card; current account; savings bank account (other than no-frill account); term deposit;
recurring deposit; and mutual fund on a referral basis. Additional products may be
added by mutual consent. Products may be also amended from time to time. The
agreement binds RMIL to the Fair Practices Code for lending as also its own code for
collection of dues. In the absence of such a code, it should abide by the Indian Banks
Association code for collection of dues and repossession of security. The agreement
specifies that it is essential that the service provider refrains from action that could
damage the integrity and reputation of the bank. It shall not resort to intimidation or
harassment of any kind, either verbal or physical, against any person in debt collection
efforts, including making threatening or anonymous calls or making false and
Your Interview, Shrabana Kumar Nial

misleading representations. Performance standards The service provider shall also

adhere to performance standards in respect of services and products set by the bank,
which will be entitled to inspect and audit records maintained by the service provider.
Persons authorised by the Reserve Bank of India also shall have the right to obtain
copies of records and information in possession of the service provider. The agreement
shall be valid for a period of one year from its execution and shall stand automatically
renewed for another year unless specifically terminated by either of the parties.

Nayak panel's PSU banks report

The Moneycontrol Bureau Published on May 14, 2014

Mumbai, May 14: An RBI-constituted committee led by PJ Nayak Tuesday

submitted recommendations to improve the governance structure of state-owned
banks and also to help private sector banks attract more capital. Following are
the key commendations of the panel:
Give poor asset quality and low productivity, either privatise PSU banks or
transform governance structure to make them efficient.
Reduce government stake in PSU banks to less than 50 percent
Remove dual structure of both Finance Ministry and RBI regulating PSU banks.
Give all regulatory authority to RBI
Improve quality of PSU bank board discussions; focus on key areas like business
strategy, financial reports, risk, and compliance.
The government should transfer its stake in PSU banks to a holding company
termed Bank Investment Company
Government should reduce its stake in BIC to under 50 percent and appoint a
professional management for BIC
For better accountability, BIC should be governed by The Companies Act 2013,
and not the Bank Nationalisation Acts of 1970 and 1980
Ownership functions to be transferred by BIC to the bank boards. Appointments
of directors, CEO to be the responsibility of bank boards.
Have uniform bank licensing regime across all broad-based banks, and niche
licenses for banks with more narrowly defined businesses
Allow mutual funds, pension funds, PE funds to hold 20 percent in private sector
banks, without having to take RBI approval
Allow promoter investors to hold up to 25 percent in private sector banks, against
the 15 percent ceiling currently
Ensure a minimum five-year tenure for bank Chairmen and a minimum three
year tenure for Executive Directors
Private equity funds, including sovereign wealth funds, be permitted to take a
controlling stake of upto 40 per cent in distressed banks.
Allow voting rights in proportion to the stake held
Your Interview, Shrabana Kumar Nial

Bank officers guilty of ever-greening loans (offering new loans to repay old ones)
should be penalized financially

President dedicates India's own payment gateway 'RuPay' to

nation The Press Trust of India Published on May 8, 2014
New Delhi, May 8: India today launched its own payment gateway RuPay,
equivalent of Visa and Mastercard, which will work on ATMs and mechant
outlets and help in reducing cash transactions.President Pranab Mukherjee
unveiled the indigenous card at a function in Rashtrapati Bhavan. Dedicating
it to the nation, Mukherjee said India is one of the few countries in the world
to have its own card payment gateway. The RuPay platformdeveloped by
National Payments Corporation of India (NPCI)-- is being used by certain
banks like ICICI, State Bank of India, Punjab National Bank, among others,
for clearing and settlement.
RuPay, which works on three channelsATMs, Point of Sales (POS) and
online sales, is the seventh such payment gateway in the world.A variant of
pre-paid RuPay card would shortly be launched by IRCTC, which will help in
booking railway tickets. RuPay will not only reduce dependence on cash, but
will offer users diverse set of payment option within the country, Mukherjee
said. NPCI Chairman Balachandran M said the NPCI board plans to take
RuPay card overseas and is already in talks with Discover Financial Services
in the US and JDC in Japan for partnership.Speaking on the occasion,
Financial Services Secretary G S Sandhu said RuPay would be available at a
cost which is much less than those of international cards. For clearing and
settlement of each transaction, banks will have to pay 40 per cent lower fees
in RuPay platform compared to other international platforms.The public
sector banks have already installed 25,331 RuPay cards enabled ATMS and
9,000 more ATMs would be installed in the current fiscal, Sandhu said. The
RuPay card is accepted at all ATMs (1.6 lakh plus), 95 per cent of PoS
terminals (9.45 lakh plus) and most of the eCom merchants (about 10,000)
in the country.

SBI rolls out tab banking service

The Business Line Published on April 16, 2014
Mumbai, April 15: State Bank of India on Tuesday launched Tablet (Tab)
Banking service for opening Savings Bank accounts and giving in-principle
housing loan approval at the customers doorstep.Indias largest bank also
launched e-KYC (Know your Customer) service. The three digital banking
Your Interview, Shrabana Kumar Nial

services will be rolled out across the SBI network in a phased manner.Under
Tab Banking, the banks sales staff will visit the customers at their home and
using the tablets get complete formalities for account opening like details of
KYC and photographs of applicant.
The account opening details will be loaded on the CBS (core banking
solution) platform and the account number will be sent to the customer
through SMS/e-mail. This will provide convenience and time saving to the
customer for opening accounts with SBI.When it comes to home loans, the
Home Loan Sales Team will visit the applicant and capture on the tablet KYC
details, information on the income and deductions and details of the
proposed property purchase (House/Flat), the bank said in a statement.
Based on the income data furnished and cost of the project, the applicant
will be advised on the approximate housing loan amount eligible and the EMI
amount.The applicant will get in principle approval for the proposed Housing
Loan through email. The actual loan will be processed subsequently subject
to usual formalities.Under the e-KYC facility, e-KYC certificate is generated
as an identity document. Fingerprints of the customer are captured and sent
to UIDAI (Unique Identification Authority of India) for authentication of
identity and address proof.On successful verification from UIDAI, the e-KYC
service will respond to display demographic details like [Name, year/date of
birth, Gender, Address, Phone, email (if available)] and photograph.The eKYC facility also has a provision to print and issue an e-KYC certificate which
is embossed with Quick Response (QR) Code to avoid duplicate printing of
the certificate by third party. The certificate will be used to open an account
subject to satisfying other account opening requirements.

Ponzi Scheme All you wanted to know about

The Business Line Published on April 8, 2014
A week ago, the President of India signed into law a new ordinance giving
SEBI more powers to crack down on Ponzi schemes. The move brings into
focus the need to check investment schemes designed to part savers from
their money from the SpeakAsia scam in India, to Bernie Madoffs hedge
fund in the US. Such frauds are called Ponzi schemes.
What is it?
A Ponzi can be any scheme in which the returns to promised to older
investors are paid from the money collected from new investors, and not
actual profits from the investments. Ponzi schemes were named after
Your Interview, Shrabana Kumar Nial

Charles Ponzi, a clerk in Boston who, almost a century ago, duped thousands
of investors into speculating on phenomenal returns from the humble
postage stamp.Those running a Ponzi scheme reel in their first set of
investors by introducing them to a great opportunity. They may even pay up
the fanciful returns out of their personal funds. But once investors begin to
bite, they build a house of cards, using money from the stream of new
entrants, to pay the older patrons. Even if profits are made from the
investments, more often than not, the scheme operators siphon it off to
private accounts. As long as new investors are willing to sign up, the Ponzi
scheme works. But when the flow of fresh money dwindles, the house of
cards collapses.
Why is it important?
Because it is one of the easiest ways to lose your money. Take last years
Saradha scam, which was built along Ponzi lines. This illegal chit scheme
promised returns of 15 to 50 per cent.Attempts to regulate Ponzi schemes in
India have taken the form of SEBIs collective investment scheme
regulations. By law, any scheme that amasses more than Rs. 100 crore
requires SEBIs permission. But several such schemes have simply gone
ahead and raised money without SEBIs nodNow, what the ordinance does is
to allow SEBI to take action where it comes across an illegal collective
investment scheme. To apprehend Ponzi scheme perpetrators, the watchdog
can comb through phone records and conduct search-and-seizure
Why should I care?
Ponzi schemes can take many forms, from your informal neighbourhood
fund that pools money from friends, to pyramid marketing schemes.And
often enough, its cold comfort when these fraudsters are brought to book.
Usually, those who orchestrate a ponzi scheme dont have the cash to pay
back investors, leave alone offer any return. So when schemes fall to pieces,
even if regulators appear on the scene, your money is not going to make its
way back into your bank.Watch out for tell-tale signs. High returns is one,
especially if they are promised to be consistently high, no matter what the
market conditions are. No regulatory stamp of approval, minimal
documentation, no information about where the returns will come from and
outlandish investment avenues are other hints that a scheme is a potential
Your Interview, Shrabana Kumar Nial

Dont let someone else make off with your savings and live it up in the
Bahamas. If an investment offers unbelievably great returns, its equally
unbelievable that you will get back your capital.

IDFC, Bandhan first to get new bank licences , The Hindustan

Times Published on April 3, 2014
New Delhi, April 2: Ending months of speculation and regulatory scrutiny,
the Reserve Bank of India (RBI) on Wednesday said that it has given inprinciple approval to Mumbai-based non-banking finance company IDFC
and Kolkata-based microfinance organisation Bandhan Financial Services to
set up new banks in the country.The approval, which will remain valid for
18-months, comes a day after the
Election Commission allowed the RBI to go ahead with the process as it did not
violate the model code of conduct that prevents authorities from taking decisions
that can influence voters ahead of polls.
RBI said the application of state-run India Posts to set up a commercial bank
will be considered separately after consulting the government.HT had first
reported in February that IDFC and India Posts were among those that could
be the first ones to receive a licence to set up a bank. The RBI took a view
of the fit and proper status of the applicant, the central bank said adding
that the approvals have been given based on the recommendations of a
four-member external panel headed by former RBI governor Bimal Jalan.
We are very happy 13 years of hard work has paid off we are serving
the people and we will continue to do that, Chandra Shekhar Ghosh,
chairman and managing director of Bandhan told HT. Bandhan will be the
first micro-finance institution to set up a bank. Ghosh said the company has
capital reserve of Rs. 1,100 crore while as per RBI norms, applicants needed
a minimum capital reserve of Rs.500 crore.The RBIs objective to allow new
banks aims to spread financial inclusion in a country where more than four
out of 10 adults do not have bank account. Financial inclusion has a direct
correlation with growth. As banks opened up branches in remote areas after
nationalisation in 1969, Indias savings and investment rate rose from 13%
to 23%.
Bank licenses are critical for financial inclusion, Chandrajit Banerjee,
director general, CII, told HT. Yes Bank and Kotak Mahindra Bank were the
Your Interview, Shrabana Kumar Nial

last ones to get bank licences in 2003-04. RBI received 27 applications in

July 2013 including IFCI, Reliance Group, Aditya Birla Group, L&T Finance
Holdings and Muthoot Finance among others. Tata Sons and Videocon Group
later withdrew their applications.

e-Gallery will change the life , The Free Press Journal Published on
March 25, 2014
e-Gallery is also an answer to 5-day-week, soon to be introduced by the
Reserve Bank of India
Indore, March 24: The Bank of India is all set to take up certain steps to
revolutionise banking sector in the State. e-Gallery is one of them. This
one-stop banking solution will provide service 24X7.
e-Gallery is also an answer to 5-day-week working in banking sector, soon
to be introduced by the Reserve Bank of India (RBI), says General Manager
of Bank of India Arihant Kumar Jain in an exclusive interview with this
correspondent.Jain was on an official visit to Indore. Despite hectic schedule,
he shared his views on various issues concerning banking sector. Throwing
light on BOIs innovative measures, Jain says: To march towards Next
Gen Banking our bank is opening e-Gallery at different locations in the
country to provide hassle free 24X7 banking services to customers.
Talking about advantages of e- Gallery, the GM said: It provides user
friendly & hassle free services without manual participation in areas like cash
deposits, cash withdrawals, cheque deposits, passbook printing, printing of
account statements, on-line account opening, making request for cheque
book, debit cards, credit cards, mobile banking, address updation, assisted
hot-line service through live interaction with call centre executive etc. are
available 24X7 through KIOSKs. Beside to these there will be a coin vending
machine too, which will provide solution to the problem of shortage of
coins.Jain said the new initiative would change the banking experience of
customers. He said Gesture Controlled Interactive Digital System eGallery is a unique initiative for customers, which is first of its kind installed
by any bank in India.The Gesture Control system provides facility to the
customers to interact with the screen to get information on the Banking
facilities, Banks different schemes, Rate of Interest, Foreign Currency
Exchange rates etc. on real time basis. It also provides on- line feed- back
facility to the customers.
XLRI to award SBI chairman Arundhati Bhattacharya The Press Trust of India
Published on March 18, 2014
Your Interview, Shrabana Kumar Nial

Kolkata, March 18: Recognising her efforts on handling gender issues in the
banking sector, SBI chairman Arundhati Bhattacharya would be awarded at
the convocation of the premier XLRI-Xavier School of Management,
Jamshedpur. At its 58th annual convocation to be held on March 22,
Bhattacharya will be conferred the prestigious Sir Jehangir Ghandy Medal for
industrial and social peace. The award is given to heroic leaders who have
contributed towards the growth of their organisations and also impacted the
growth of our nation in a significant way.
XLRI director E Abraham said in a statement today that Bhattacharya, the
first woman chairman of the State Bank of India (SBI), has always been
sensitive and empathetic to gender issues in the bank. He said that she had
introduced a sabbatical facility upto two years for women employees in SBI
Capital markets while she was MD and subsequently in the bank after she
took over as the chairman. Bhattacharya has also been a member of the
expert committee of bankers to prepare a blueprint for the first all-women
bank. Last year, the medal was conferred on Shiv Nadar, founder and
chairman of HCL and Shiv Nadar Foundation.

SBI launches online aggregator service ,The Business Line

Published on March 14, 2014
Mumbai, March 13: State Bank of India has launched SBIePay, an online
aggregator service, to facilitate e-Commerce/ m-Commerce transactions
between merchants, customers and various financial institutions for all kinds
of payments.The service (domain name: will provide
payment facilities to a large number of customers for undertaking online
transactions. SBIePay is also in the process rolling out Electronic Bill
Presentment and Payment platform (EBPP) and IVRS for making payment
over phones.
As a bank and payment aggregator, SBIePay will bring in additional payment
modes, new merchant categories, with a special focus on Government merchants
i.e., Central, State Departments and Municipal Corporations, the bank said in
a statement. SBIePay will leverage the Banks own Payment Gateway to
process all credit/debit card transactions and the internet banking platform
of the State Bank Group.SBIePay is already in the process of tying up with
more than 40 banks in order to process their Internet Banking payments.
SBIePay will provide business information and analytics to the merchants
and banks for all transactions as an add-on feature. Arundhati Bhattacharya,
Chairman, State Bank of India launched SBIePay at the Corporate Centre,
Your Interview, Shrabana Kumar Nial

SBIePay: State Bank of India becomes first Indian bank to

have own payments aggregator The Press Trust of India Published
on March 13, 2014

Mumbai, March 13: State Bank of India (SBI) chairman Arundhati

Bhattacharya launched its online electronic payments aggregator service 'SBIePay' at its corporate centre here today in the presence of its top
management. She said the possibility for other bank customers to use the
facility would ensure more ecommerce activity and also help banks increase
usage of alternate channels.
The payment intermediary, which would act as an aggregator to facilitate
payments to multiple merchants from different bank accounts, would make
SBI the first lender in the country to have a payment aggregator of its own
in a space dominated by private players like Billdesk and CCAvenues.Existing
players have targeted specific merchant categories and created their own
niche segments, but SBI's service called 'SBIePay' plans to target newer
spaces, especially government bodies' payments, SBI sources said.
"SBIepay aspires to bring in additional payment modes, new merchant
categories, with a special focus on government merchants like central, state
departments and municipal corporations," the source said.
In the next three years, it aims to become a "dominant player" in the
aggregator space by being a one-stop solution for processing all online
payment modes, sources said. It would provide business information and
analytics to merchants as well as banks for all transactions as an add on
feature and is already in talks with 40 banks for tie-ups, sources
said.Between 2008 and 2012, electronic payments grew at 32 percent per
annum and have touched Rs 47,349 crore, and added that online travel
bookings as well as online retail sales are the two major segments. At
present, debit card and Internet banking form around 45 percent of
transactions, while 43 percent come from credit cards.The government
space, which the SBI targets, currently does not have any online mode of
payment at present and operates through authorised bank branches,
collection centres and drafts.
Now open, the first bank for women ,The Business Line Published on
November 20, 2013
Will address gender-related finance issues;
Usha Ananthasubramanian appointed Chairperson
Your Interview, Shrabana Kumar Nial

New Delhi, November 19: Only 26 per cent of women in India have a bank
account. Since fewer women than men have bank accounts, fewer women
are able to get loans. Per capita credit in the case of women is 80 per cent
lower than in the case of men. Hence, the need for a bank that
predominantly serves women from selfhelp groups and small business
women to working women and high net worth individuals, said Finance
Minister P Chidambaram.He was speaking after Prime Minister Manmohan
Singh inaugurated the countrys first public sector bank focussed exclusively
on catering to the financial needs of women. UPA Chairperson Sonia Gandhi
and Agriculture Minister Sharad Pawar were also present.
Bharatiya Mahila Bank (BMB) kicked off operations on Tuesday by offering
higher interest on savings bank deposits, in the process becoming the first
public sector bank to do so. While all other public sector banks offer 4 per
cent, the Bharatiya Mahila Bank (BMB) will offer 4.5 per cent on Savings
Bank balances up to Rs 1 lakh and 5 per cent on balances above Rs 1
lakh.Chidambaram said that It makes a lot of sense to have a bank for half
of India (comprising women) Though BMB will predominantly serve women
customers, it will serve men too. Who knows, men may find that they are
privileged customers in the womens bank.
Govt appoints first chief of Bharatiya Mahila Bank ,The Business Line
Published on November 12, 2013
Ananthasubramanian as the first Chairman and Managing Director of the
Bharatiya Mahila Bank, the countrys first all-woman bank. She is currently
an executive director at Punjab National Bank, a leading public sector
lender.Besides a post-graduate degree in statistics from the University of
Madras, she also has a masters degree in ancient ndian culture from
Bombay University.Bharatiya Mahila Bank is expected to be formally
launched at Mumbai on November 19, which happens to be birth anniversary
of former Prime Minister Indira Gandhi.Usha Ananthasubramanian has over
Ananthasubramanian, currently the President of the Institute of Company
Secretaries of India.

RuPay Global Card: Desi alternative to VISA, Mastercard from July

The DECCAN HERALD,Published on May 2, 2013

Your Interview, Shrabana Kumar Nial

Mumbai, May 1: Come July this year, the National Payments Corporation of India
(NPCI)'s RuPay debit card will go 'global' in a strategic tie-up with an American card
issuer, Discover Financial Services (DFS) which will offer international acceptance of
the card. With this, RuPay will emerge as an alternative of international payment
gateways like VISA or Mastercard and wants to make substantial difference in payment
landscape. In an interview to Deccan Herald, NPCI Managing Director & CEO A P Hota
said both RuPay and the US firm DFS would stand to gain from this partnership due to
extended distribution network of their respective cardholders. DFS is a banking and
payments services firm that competes with payment companies such as Visa and
MasterCard, even as it owns the card company Discover, Diners Club cards and Pulse
ATM networks.
Unlike Visa and MasterCard, which partner banks to enable them issue cards with
similar features, Discover adopts a philosophy of partnering local payment networks
across the world, Hota pointed out. Also, the RuPay Card is leveraging upon EMV
technology of Discover to issue global cards. Cards, terminal and host specifications for
the RuPay global cards have already been released to the pilot-member banks.
Issuance of RuPay global cards will commence in July with two banks, he said.Further,
Hota said NPCI has spent over Rs 100 crore on RuPay card scheme infrastructure
which is geared to serve all customer segments, across payment channels and form
factors. RuPay, according to him, has clearly defined product roadmap keeping both
domestic as well as international needs of prospective customers and banks.

State ments/Interview:
Arundhati Bhattacharya, Chairman, SBI
We will focus on strengthening associate banks before
merging them The Daily News & Analysis, April 30, 2015
Mumbai, April 29: State Bank of India, the country's largest bank, may
hit the market by June to raise Rs 15,000 crore through sale of shares.
But the lender has one-year window till March 2016 to raise the money.
The bank is likely to raise over Rs 6,000 crore from the stake sale in its
insurance subsidiaries. The bank's chairman Arundhati Bhattacharya
tells Manju A B that the bank is utilising the time to consolidate and
clean the balance sheet and get set for the next phase of growth.
Excerpts from the interview:
Is the merger of associate banks on the radar?
Not at this point of time. First the focus will be to make them strong
banks in their own right. We would like to see how much of efficiencies
can be brought in before merging them. Then we will rationalise them
and see that the branches have a better reach. In the next 12 months we
Your Interview, Shrabana Kumar Nial

will be focusing on them and then we will be able to merge them very
quickly. There is no order laid down for merging associate banks. When
we merge we will do it more for the sake of strategy.
Are you selling only 10% stake in SBI Life to BNP Paribas? If valuations
are good, will the bank sell more stake?
At this stage, we are looking at a 10% sale, for which we are getting the
valuation done. We have to get it properly valued. The valuation will
take longer than earlier expected as the insurance regulator has come
with the bancassurance model which will also impact the valuation. They
anyway have the first right of refusal. The funds from the stake sale will
be ploughed back into the bank.
How much are you divesting in SBI General Insurance?
IAG (Insurance Australia Group) had the right for a full dial-up (up to
49%). They have already exercised it. They have already given us the
letter, and the valuations are underway. From SBI General, we may not
bring back the entire amount (to SBI) because the company has not yet
turned profitable. We will have to see their own requirements before we
take a call.
You have over Rs 61,000 crore of bad assets and restructured loans of
Rs 66,704 crore, and still counting. What steps is the bank taking so that
such a pile-up of bad debt does not happen in future?
At every instance a collateral is not feasible. Wherever collateral is
feasible, we are definitely taking it. We are very conscious about getting
collateral on every large exposure as any other bank in the market
would be. Pledge of their shares, personal guarantees, any fixed assets
like land and buildings. In the agri portfolio, the stress is quite high.
SBI's stress is not exactly from the agri profolio, it is from the mid
corporate accounts...
The percentage of stress is high in agri portfolio. If we had written off
corporate, then half of the accounts that you see today even some of the
better ones may not be in existence. We have seen big names being
turned around. And later on gone to do well. Wockhardt had big
problems when they got into derivatives. Traditionally, the SME
borrowers have been low on equity and as result when they scale up
they depend more on debt. And when the economy goes into a stress
situation their working capital cycles get extended because their bills
don't get paid on time. This causes a strain and they are not able to
Your Interview, Shrabana Kumar Nial

produce as much as they could or should, and this begins to show as a

stress in the balance-sheet. They do not have deep pockets. Companies
in mining, construction, steel and textile sectors are hit.
You are steering the bank at a challenging time?
We definitely see little things getting straightened, out which would in
the ultimate analysis help in investment pick-up. However, we feel that
the trigger will need have to come from the government. When you are
into an account and the stress starts showing it is difficult to exit it
unless you take a large hair cut and write it off. If you have to recoup
your money many a times you need to hand hold companies. And wait
for them to cross the hump. Unless that confidence building measure
happens it is difficult to imagine a lot of capital coming in without the
government giving that initial push. Within the bank we have used this
time to consolidate, to review our process, our products, to clean up our
balance sheet so we are better prepared to get into the growth cycle as
and when it unfolds. We have worked very very hard and set up stable
risk mitigation systems in place.
Is there any sector you are bullish about?
There is no question of being bullish about any sector. Bullishness
should not be there at all. We will take projects as they come and asses
them for their viability. We will also ensure that the promoters are in a
position to bring in their equity. Only then go ahead.
Your equity exposure had gone up by nearly 170%? How has this
A few years back the equity exposure was brought down drastically
because there was no comfort in dealing in equity. However if we
believe in the Indian story we believe we need to be part of the equity
market so the universe of stocks where our people could take positions
has also gone up. We have put in more money. Our exposure to the
equity linked mutual funds which have given excellent results have also
gone up. Equity exposure has gone up due to the confidence we have on
the Indian markets. Overall our base is very small.
At the Joint Lending Forums (JLFs), different banks were to come
together to take a call on stressed assets. But bankers say there are coordination problems...

Your Interview, Shrabana Kumar Nial

There are issues like banks not wanting to take additional exposures.
There are issues about banks not wanting to share collaterals. All of
those issues are very much there. At the end of the day there are several
banks and several boards with independence. This is definitely an issue
which the regulator is also looking at.
Smaller banks complain that bigger banks like SBI are bulldozing other
lenders in the JLF?
That is not true. Nobody can bulldoze anyone else. But yes, if some bank
has a Rs 20 crore exposure and we have Rs 200 crore then we will
definitely try and protect that exposure. That is very much there. But
that does not mean we are bulldozing anyone. Fact is that when things
are good they all come in and then there is no bulldozing, and when
things work differently they call it bulldozing. It does not work both
ways. I don't think that is fair at all.
You had some special incentive schemes
employees. Have you implemented them?




They can get two years of leave for child care or for elderly care. We
have extended to single men as well. Because those single men who
have such dependence and don't have a spouse to look after they
equally need these support mechanisms. Seniority is lost. If we take
care of that then those people who have been working all along feel
discriminated. But two years is not too much time to make up. So it is
not impossible to make it up specially if you take it towards the
beginning of your career. If you are really good you can make it up but
all the same I agree it is a detriment. But I think it is the best of a
difficult situation. Rather than dropping out of the workforce, you are
able to come back.
What about the transfer policy?
Bank has been very sensitive for a very long time. Take my case for
instance, because my husband was in IIT Kharagpur I was in and around
three branches in Midnapore district for nine years. So the bank has
taken care. However, it is challenge. There are hardly any recruits from
Gujarat, Madhya Pradesh, North East and Karnataka, people from other
states get posted there and many people get married and they want to
move and so on. After joining many of them get married and want to
move, it is becoming a very big challenge. This is a reality of the
In 2006, you were posted in Lucknow. And you wanted to leave?
Your Interview, Shrabana Kumar Nial

I look back and think I was a bit foolish. Because sometimes we imagine
difficulties where there are none. Which is why I keep telling people that
you take the plunge and the way will make itself. You don't need
necessarily see the road right to the end. The road is there, you are not
able to see it. So take the plunge and let the road to form in front of you.

Interview: Arundhati Bhattacharya, Chairman, SBI

New priority sector lending norms to help meet targets, The
CNBC-TV18, April 24, 2015
Mumbai, April 24: The Reserve Bank of India (RBI) on Thursday revised
priority sector lending (PSL) norms, adding new segments such as
micro, small and medium enterprise (MSME), social infrastructure and
renewable energy under the ambit of priority sectors, which will come
into effect with immediate effect.
SBI chairman Arundhati Bhattacharya says the new PSL norms will help
banks achieve target in a better way. She further says that increasing
the amount of home loans for PSL is a positive step. According to her,
overall asset quality pressure may ease in near-term. Below is the
verbatim transcript of Arundhati Bhattacharya's interview with Latha
Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Your comment on the entire priority sector rules, does life get
easier, will banks be better able to achieve the targets?
A: Definitely banks will be better able to achieve the target mainly
because a few things have been tweaked. The distinction between direct
and the indirect has been taken away.
A number of new things have been added such as renewables, social
infrastructure, food processing, so, that again gives us a lot more
capability to do these things. The amount that you can take for housing
loans also has been increased. It has gone up to Rs 35 lakh and Rs 25
lakh for the project cost. So, that again brings quite a large chunk of our
lending into priority sector norms.
So, overall I think a number of positives are there and we are very happy
that these things have happened because we believe we havent
done the numbers as yet, it will take a little time for us to run it and see
where we are coming but we believe we will be able to better achieve
targets now.
Your Interview, Shrabana Kumar Nial

Latha: There is in a sense that direct lending eight percent for small and
marginal farmers, would that be a challenge for banks for fewer
branches? Banks like say a Development Credit Bank (DCB) or a Federal
Bank or a YES Bank they get two years.
A: It will be a challenge for them. However, for banks like us that is not
a challenge at all. In fact our lending is much more than eight percent
whatever they have talked about. Much of our lending is to small and
marginal farmers. However, probably banks like YES Bank etc may have
difficulty. However, again this is a way in which may be if we can talk
about the inter bank participation certificates and stuff like that. So
banks that are achieving more they can exchange with those that do not
have it so that kind of a thing can happen.
Latha: Yesterday your subsidiary, State Bank of Mysore reported a fairly
deep fall, a perceptible fall in bad loans. Do you think we are nearing the
end of this bad loan problem, will things get a little better for the
industry itself?
A: If you remember, I have been telling you that we are seeing much
less stress. So, that position continues. The only proviso I want to make
is that there are few big ones so those might stilt numbers. However,
overall, we are seeing stress less. State Bank of Mysore in fact has done
very good, given a very good set of numbers. You have seen the DCR has
gone up to 69 percent. So, overall they have performed extremely well.

Interview: Arundhati Bhattacharya, Chairman, SBI

Slippages to reduce in days ahead; economy is reviving, The
CNBC-TV18, April 1, 2015
Bhattacharya did not specify a timeline for taking SBI Life public, but
said SBI will approach the market when conditions are favourable.
Mumbai, April 1: State Bank of India Chairman Arundhati Bhattacharya
sees the volume of non-performing loans easing in the coming days. In
an interview to CNBC-TV18, she said slippages defaults on restructured
loans have already begun to reduce. She said there were signs of a
recovery in the economy. Bhattacharya did not specify a timeline for
taking SBI Life public, but said SBI will approach the market when
conditions are favourable. Below is the transcript of Arundhati
Bhattacharya's interview with Latha Venkatesh on CNBC-TV18.
Q: This is the first day of the traditional slack season and the credit
policy is about six days away. What is the sense you are getting, with
Your Interview, Shrabana Kumar Nial

the slack season coming in and with some fairly poor growth numbers
that we have got, is the time ripe for us to hear about lending rate cuts
from the banking system?
A: I think you will see some rate action going forward. Everybody is
going to wait for the monetary policy I suppose because that does give
some indicators about the thinking of the regulators as to how they see
the trajectory of various economic indicators. However going forward
beyond that you will see something mainly because as you rightly said
the slack season is here, we need to get credit growth to pick up. So
given those realities, I think some kind of a rate action will follow.
Q: What is the sense you are getting in terms of the extent of cuts for
the year itself? You have some idea of your own internal analysis on
both inflation and on growth. I am asking because the public provident
fund (PPF) rate for the year has been announced, that is 8.7 that gives a
strong competition for you all in terms of deposits so how much can
money become cheap for the borrower, quarter percent, half a percent
this year?
A: All of us were waiting for April 1 because we knew the small savings
rate would be announced. I understand that they are supposed to be
linked to the 10-year G Sec yields and maybe be 25 bps above that but
even then the way the rates have been kept where they are, it is
definitely great competition for the banks.
Therefore the banks have to look at other means to raise resources in
order to lend. When we are doing that, obviously it doesnt come very
cheap. So we have to see how things work out.
At the present moment, I dont see more than maybe half a percent cut
across the year but one never know, we will have to see how things
look, how the competition pans out. A little bit will also be dependent
upon that and how banks can make their operations more and more
If the credit cost comes down, if the amount of provisioning requirement
comes down then also we may have some space in which to bring down
the lending rates but again this needs to unfold over the year. Right now
at the beginning of the year, I am not seeing very deep cut.
Q: You are making some money by selling off stakes in your insurance
units, those announcements you have made to the stock exchange itself.
So how much does that add to your capital ballpark, will that money
Your Interview, Shrabana Kumar Nial

come in the first quarter itself, the current quarter as well what about
the qualified institutional placement (QIP) plan? When does that fructify
-- again Q1 itself?
A: I dont want to give you any timelines on this. In respect of the
insurance companies, there has to be a valuation. In respect of the
general insurance company for instance, a valuer is appointed both by
the JV partner as well as by us separately and then we come to a
decision. In respect of the life company, we will have one valuer doing it
and then there has to be acceptability of that valuation and only then
there is a question of raising that money.
So I think a quarter is too smaller time, maybe over the next two
quarters is what I would expect some of these things to happen.
In respect of our own fund raising we didnt say that it would be a QIP.
It could be anything, it could follow-on public offer (FPO), it could be a
rights depending upon what we think is right at that particular point of
What we have done is we have kept all the approvals ready and we have
a one year window in which to approach the market. We will try to
approach it at a time when we think the market looks good and
therefore telling you exactly when that would be at this point of time is
not possible.
Q: Coming to non-performing loans (NPLs) and provisioning -- from
starting today you dont have restructured assets. Even those who have
registered for corporate debt restructuring (CDR) will not be eligible
right? Today it is just bad loan and good loan starting today?
A: No I think those who have already registered for CDR, they will
probably be given a 120 days window in which to complete that
exercise. That is what I was told of course I dont think we have
received the notifications as yet but probably those that are already in
CDR would continue to be treated as restructured standards.
In respect of new references, yes, they will become non-performing
assets (NPAs) and we will need provisioning of 15 percent. Our hope is
that going forward this pressure will ease. That much of the bigger
accounts at least where we were perceiving problems that they have
already been taken care of and there would be of course smaller
accounts and there would also be one-offs because restructuring again
is something that happens even in good times. So to that extent I am

Your Interview, Shrabana Kumar Nial

not seeing that the whole process will close down but definitely the kind
of volumes that we have been seeing there will definitely ease.
Q: Do you have any satisfaction that the incremental slippages will at
least inch lower in Q4 that just ended and the first quarter that just
starts? Rs 7,000 crore were your additional slippages in Q3 does it inch
lower or does it inch higher?
A: For the last four quarters, we have been showing that the slippages or
we have been seeing that the slippages are coming down. I think that
trend will continue, I do not expect that to become higher again because
on the ground also we are seeing that many of the companies are
beginning to get bills paid, they are again beginning to work. So there
are early signs that the economy is looking up. I am very positive and
optimistic on this and I think going forward we will definitely see that
the slippage rate will come down.
Q: You had a difficult case on Bhushan Steel for a whole host of reasons
but now that company wants to buy another company, will the bankers
allow that?
A: I dont have the information on this. I have also read in the papers as
you have. My people will be getting in touch with them in order to
ascertain what this is but at the end of the day we have to see whether
they can do these things from their own means. There is no question of
the bankers going overboard and supporting things which they cannot
possibly take on at this point of time.
Q: At the moment, you also have the ability to convert loan to equity at
much lower than market price and as well find a new buyer, change the
management and keep the loan standard, should we hear a lot of these
cases in Q1 -- the cases that we heard of change of management in the
quarter gone by were not very heartening? In Pipavav, the promoter just
walks away with the money that he gets from the new promoter and the
banks get only Rs 160 crore, will things be better for the banks in the
coming quarter?
A: In Pipavav, I dont think the promoter is merely walking away
because he continues to remain in the company and the money that is
coming in, I do not know where the media got it from that he is walking
away from it -- because all of it will come into the company itself. He
walks away with nothing. So it comes into the company itself.

Your Interview, Shrabana Kumar Nial

In respect of other cases as well where we have seen sales of assets etc,
we have ensured that all of the money comes into the company and that
the borrowers do not walk away with whatever they can leaving the
lenders high and dry. That has never been allowed and it will not be
Regarding this conversion of debt to equity, definitely it is another tool
in the hands of the lenders but to see a lot of stuff happening in Q1, that
is being overly optimistic.
First of all the rules around this have to be notified as yet. As you know
there has to be a fair valuation of the company. Now what that fair
valuation would entail that itself has to be notified and we need to
understand that. Thereafter we have to amend our internal policies
accordingly and then only go ahead and do things.
However, while I wouldnt say the first quarter is going to see a flurry of
activity but definitely this is again as I said something that will
strengthen our hands. Going forward, this will be another of the tools
that we will use to ensure that the lenders are fully protected and that
we can get back as much money from a company as we possibly can.

We cant be seen as a paper tiger: RBIs Raghuram Rajan, The

Mint September 1, 2014
RBI governor Raghuram Rajan talks about corporate governance, rising bad
assets and his relationship with the govt
Mumbai, August 31: The Reserve Bank of India (RBI) wants to reach its target of
limiting retail inflation to 6% by 2016, but that doesnt necessarily mean
monetary policy has to be tight all the way, governor Raghuram Rajan says. We
are trying to forecast hitting by 2016 January. If we think that we will reach
either earlier and it will stay that way, or we will go below it, then theres always
a scope (of a rate cut). But remember, it could also go the other way, Rajan
warns in an exclusive interview, in which he also speaks on corporate governance
issues in state-owned banks, rising bad assets and the central banks relationship
with the government. Edited excerpts:
Is inflation targeting as an objective of RBI acceptable to the government?
We will certainly discuss the central banks objectives with the government over
the year, as announced in the budget speech. For example, we at RBI cant
decide what level of inflation the public is going to be happy with... The elected
representative of the people speaking through the government has to tell us
that. But once it is decided, we should be left to achieve that objective. As for
Your Interview, Shrabana Kumar Nial

the process to achieve these objectives, I am sympathetic to the idea that the
governor should not be alone in making these decisions. The governor could be
flawed, could have problems, have an incorrect perception about the economy
and committees tend to be better at making decisions in some cases. So we
should go towards a monetary committee which makes the decisions. We have to
make sure that members of that committee dont have conflicts of interests.
How worried are you about the state of affairs in public sector banks, particularly
after the arrest of a bank chairman involved in taking bribe?
Its hard to tell how much corruption there is, but whatever there is, I think it is
too much. We should try and ferret out corruption ourselves, but we are not
equipped for it. I am focusing on forensic accounting training. We can punish bad
stuff when we see it, as swiftly and as hard as we can. We cannot be seen as a
paper tiger. You have seen what we did in the Deccan Chronicle case (RBI
penalized 12 banks Rs. 1.5 crore for not following norms in advancing loans to
Deccan Chronicle Holdings Ltd).
Punishment is welcome, but how does the regulator purge the state-run banking
You are demanding a huge amount of honesty in the system when you put
people in charge of Rs. 5-10 trillion of assets, give them absolute command, and
tell them they are here for one or two years. If you give them that kind of
structurelow salary, absolute command and a limited time periodyou are
creating a perverse incentive. The people who stay honest in the system are
showing that it can be done, but the system has to be such that you recognize
the temptation and you dont require somebody to be above average in terms of
honesty in order to stay honest in the system.
So governance in public sector banks is an issue?
Yes, we really have to look at the governance as well as compensation in a very
careful manner. We need a bank board which is more proactive. The allegation is,
there are a number of board members who get loans from the system. If thats
true, the board is not acting as a watchdog; its acting as a facilitator. We need to
look at the composition of the board and strengthen the presence of both the
informed as well as people who are willing to speak up, and people of integrity.
Give the MD (managing director) a longer tenure, separate the MD from the
chairman, and keep the non-executive chairman as a second layer of oversight.
Even if the government as the majority shareholder makes the decision to
appoint the MD, let the board have the power to decide on the renewal, having
seen the performance of the MD.
Your Interview, Shrabana Kumar Nial

Could privatisation of public sector banks be the solution?

I think right now PSU (public sector) banks are functioning with one hand tied
behind their back. Lets unloose that hand and let them compete. But in the
meantime, if I had absolute power, I would perhaps let one small public sector
bank be privatised and see what happens. Learn from that. Privatisation doesnt
necessarily mean selling the government stake to a promoter. It can also be a
publicly held company as opposed to a promoter-driven company. Dont pick
your worst performing public sector bank. Pick a good one where management,
governance and culture are good. To my mind, however, ownership is relatively a
small aspect if you have the right governance.
Is the worst over for bad loans?
I want to see more growth before I can be confident about the bad loan problem.
I think it will eventually diminish just because the projects that were lent to will
come on stream; some of them will be unviable, but will be taken over, the debt
recovered. The losses are not as big as the share of restructured loans by any
means and growth will help banks reduce those losses, and also because they
are growing their balance sheet the losses will reduce as a fraction of the balance
sheet. Many of these loans are with the public sector banks. Where I do worry is,
what will be the impact on the taxpayerwe shouldnt hand the taxpayer a big
bill. Thats why we should push towards resolving these bad assets very quickly.
Now that you have spent some time with two consecutive governments, what is
your take on RBIs relationship with the government?
RBI has had cordial relationships with both the governments and sometimes
theres a view in the press that there should be differences. Indeed, there are
issues where we are not on the same page, and we try to persuade. Eventually,
because decisions have to be made, one side goes along with the other.
There are, of course, occasional differences between how the government views
something and how RBI views something and those differences in horizon as well
as some differences in background will prompt discussions. The classic example
is the central banks views on growth, inflation and interest rates.
In an environment where people believe that growth is very, very important and
inflation is very, very important, but if they are not fully convinced that interest
rates are bringing down inflation, they may emphasize the adverse aspects of
inflation to growth and say lets get growth up. And the central bank responds
that inflation is still very high and if you relax now and let growth go up, you will
have to fight even harder to bring inflation down later on and so let the interest
rates do their job.
Your Interview, Shrabana Kumar Nial

At such times, the central bankers job is that of persuasion. You have to
persuade against a whole bunch of other people who are trying to persuade the
government of the opposite. Every industrialist who wants interest rates to go
down. From the publics perspective, who do you believethe industrialists who
clamour for low rates as its hurting industry or the central banker who says that
this is good in the long run?
This is where credibility matters; you have to show that you understand the
markets and having a track record helps. This is why people like (former US
Federal Reserve chairman Alan) Greenspan, who had a long track record of
making a difference, had a lot of credibility with the public and policymakers
because they have seen the markets and the industry for a long time.
But you were the harshest critic of Greenspan and his loose monetary policy.
What are your concerns at this point?
The politics are broken in many countries partly because of the deep troubles
created by the financial crisis and partly because of longer-term phenomena. The
aging of industrial country populations has brought the pension problems and the
problem in funding healthcare much closer. The governments have limited room,
and the change in technology as well as globalisation have put the jobs of many
people in the middle class and lower middle class at peril.
So, you have the stagnant income, entitlements under threat, and politicians are
paralysed. This is certainly the situation in the US, but I think similar things are
playing out in Europe too, in the background of huge government debt built up
during the crisis. With the governments not able to act in a positive and decisive
way, what you have is tremendous pressure on central banks to provide
whatever oomph is needed in the economy.
The US is keeping interest rates pretty low and housing was picking up quite
strongly till recently, but perhaps it shouldnt be picking up because the previous
problem was inflated housing and it collapsed. Is housing the answer to
everything? Are you in danger of boosting a sector which should not be pushed
up yet again? My worry is, through the low interest rates and aggressive
monetary moves, industrial country central banks are prompting asset price
bubbles, or activity in areas which are not warranted and are not letting the
economy go to the right place. Part of the reason is political paralysis, but by
over-compensating, central banks may be skewing things even more....
Another worry is that rather than creating domestic activity, the central banks
end up trying to depreciate their exchange rate with their accommodative
policies. But you cannot all depreciate against everybody and when everybody is
doing the same thing, the world gets into a low-level interest rate equilibrium
Your Interview, Shrabana Kumar Nial

where asset prices and stock markets are being boosted, but real activity is not
picking up. And, of course, exit is difficult because central banks fear raising
rates before others because they will see their exchange rate appreciate strongly.
With US interest rates set to go up, do you see money flowing out of emerging
markets including India?
Well, there will be some outflow, but I hope we are now much better protected
than we were last summer. I am hopeful we dont have a severe reaction to that,
but I do worry about the global equilibrium that we are lapsing into.
So you wont touch the policy rate till retail inflation drops to 6% by January
Let me be careful about what you just said. The objective is to reach 6% by
2016, but that doesnt necessarily mean monetary policy has to be tight all the
way. We are trying to forecast hitting by 2016 January. If we think that we will
reach either earlier and it will stay that way, or we will go below it, then theres
always a scope (of a rate cut). But remember, it could also go the other way.

Interview: Jayant Sinha, Minister of State for Finance

No government has done such fundamental banking reforms in last 45
years: Jayant Sinha, The Economic Times, January 7, 2015
New Delhi, January 6: There was a significant amount of political interference in
the operations of public sector banks under the previous government, Minister of
State for Finance Jayant Sinha said in an interview to ET. He said the new
government has set out to usher in reforms that aim to give public sector banks
operational autonomy with accountability but no political interference. Sinha
spoke to ET. Edited excerpts:
Despite the downturn, the private sector hardly has any NPAs (non-performing
assets) while it is a major problem with public sector banks. Where do you see
the problem?
Jayant Sinha: If you look at the data, price-to-book multiple for the private
sector banks is 2.35, whereas average multiple for the public sector banks is
0.67. If you look at market capitalisation, even though the public sector banks
account for 77% of the advances and 76% of deposits, they only account for
36% of market capitalisation and about a third of the profits. So while the public
sector banks dominate the banking sector in terms of assets and deposits, in
terms of profitability, market capitalisaion and multiples, the private sector banks
far outstrip them.

Your Interview, Shrabana Kumar Nial

The public sector banks face various restrictions because they are more than
51% government ownedthey by a Supreme Court order effectively are viewed
as public servants. The moment they are viewed as public sector, there are a
number of restrictions that are imposed on them in terms of their operating
autonomy, including RTI (Right to Information), CVC (Central Vigilance
Comission), CBI ( Central Bureau of Investigation), CAG (Comptroller and Auditor
General of India)they are within the purview of all of these investigative
agencies. There are civil service rules that apply to their HR policies, there are
recruitment restrictions and so on. So because they are viewed as being public
servants, instruments of state, it becomes difficult for them to compete on a
level playing field with the private sector.
Two, in the previous government, unfortunately, there was a situation where
there was a significant amount of political interference in the operations of these
banks where commercial decisions were set aside. There were decisions that
should not have been made. And these political interferences included loans, in
corporate debt restrictions, transfers, promotions and so on.
Three, what the private sector banks are able to do is to be able to very
judiciously evaluate which sectors they want to make advances to and the
sectors they do not want to. For instance, the private sector banks have far less
exposure to infrastructure than public sector banks and if there is a problem in
the economy it is because of those Rs 18 lakh crore worth of stalled projects. So
they have a disproportionately high exposure to the infrastructure sector and to
these stalled projects, which have also contributed to high NPAs and therefore
lower level of profitability.
These are the three factors that have made it difficult for the public sector banks
to compete on a level playing field with the private sector banks. When it comes
to priority sector lending, which is 40% of advances, those apply equally to the
public and private sector banks. The RBI regulates in an ownership neutral way.
Would you say that reducing the government stake to below 51% is the way
forward and how feasible is it?
Jayant Sinha: That is precisely the wrong question. The right question is how do
we take our public sector banks and enable them to be globally competitive, to
demonstrate high performance so that they can compete on a level playing field
with other financial institutions, whether they are Indian private sector banks or
foreign banks. Those are the things we have embarked on. As and when we need
to think about providing them capital, of course, the government as the majority
shareholder will provide what is necessary. But we have to consider that capital
shortage is not imminent. Most of it is required because of Basel III, because we
have taken a very prudent position unlike many other countries. It is because we
Your Interview, Shrabana Kumar Nial

want to run a very sound and tight ship. Second, capital shortage is not as
important as the talent shortage. A large number of EDs (executive directors),
MDs (managing directors) and GMs (general managers) are retiring in the next
year and we don't have people in the pipeline. We are more concerned about the
talent shortage not capital.
You mentioned how organisations like CAG and CVC can put pressure on the
banking system.
Jayant Sinha: Let me change that. I wouldn't use the word pressure. The fact
that you are a public servant and there is a possibility that 10 or 20 years from
now someone could come back and say that commercial decisions you made
were made because of the following reasons- (it) makes it difficult for people to
take unimpeded commercial decisions.
How do you get them out of this rut? What is the long-term solution?
Jayant Sinha: The Prime Minister was crystal clear at the Gyan Sangam (the
January 2-3 confluence of state-run banks). First, there will be no political
interference. The banks have operating autonomy, they should make the right
commercial decisions and apply commercial judgment. They should be
accountable for it but there would not be any interference. There was a different
regime, we know what their conduct was and why there was significant political
interference. That has ended.
Secondly, we will professionalise these institutions and ensure that we have very
capable managing directors running these banks and they will have sufficiently
long tenure. We have said that they will have a three-year tenure, we will
separate the role of the chairman and the MD. We will put professional people on
the board and have an independent empowered board. Once you are clear this is
how it will work no other regime can come and start politically interfering or turn
the clock back on professionalism.
In terms of structural solutions, bankers made a set of recommendations. Those
recommendations of the bankers are under consideration and advisement with
the government. They made a very important recommendation, which the Nayak
Committee also made, which is to create a Bank Bureau. The role of the Bank
Bureau is threefold. One, to appoint professionals on these bank boards and
ensure that they are independent and empowered. Two, be a participant in the
selection of the MD. Three, the bank bureau will assist banks in thinking through
their strategies and what they need to do as far as raising capital is concerned.
This Bank Bureau then effectively becomes a precursor to the Bank Investment
Company. We have a positive mind towards those recommendations. Now we will
work on those and see what can be implemented.
Your Interview, Shrabana Kumar Nial

Views on On Gyan Sangam & Banking Reforms

Jayant Sinha: If you think about bank nationalisation that Mrs Gandhi did in
1969, it's been 45 years before any other government has chosen to act in such
a fundamental and transformational manner as far as public sector banks are
concerned. We got everyone from the ecosystem to come in. As Arundhati ji
(CMD of SBI) said, so far no body has asked the patient what the problem is. The
process has been set in motion to transform the banking sector. The government
has agreed on two important items. One operating autonomy, which means no
political interference in day to day functioning. Two, professionalisation of banks,
which means independent board members, separation of chairman and MD. In
addition to that bankers have given a whole series of recommendations... Those
are already under consideration.
In the banking sector, the government has not clearly articulated its view on
consolidation. There are multiple small banks...
Jayant Sinha: I think this is really for the banks themselves to decide. In a
market economy you have empowered bank boards that are thinking through
what the right strategy for their banks should be. And, as and when these bank
boards get established and they think it through and they will come to these
The high leverage of big business groups and high interest rates have made
private investments difficult. Are you going to be flexible on fiscal targets to step
up public investments that even the mid-year economic review also suggested?
Jayant Sinha: Our promoter groups right now are very leveraged, and their
balance sheets are not sturdy enough to start investing in large volumes. It's
been stated in the mid-year economic outlook as per the CEA's (chief economic
adviser Arvind Subramanian) perspectives on this matter as well. Between the
NPAs and the leverage that they have on their balance sheets, it would not be
wise to expect large investment in infrastructure from these groups. Therefore,
we have to think very creatively how do we unlock public investment and bring
$25-50 billion. We are talking about Rs 2-3 lakh crore, let's say, of public
investment into the economy. Our thinking is that if we have to lift the economy
from the 6% growth trajectory it is on to 7-8%, it needs that kickstart so that it
can go from this energy orbit to the next, where it can sustainably and (in a)
non-inflationary way grow at 7-8% a year.
Does that mean we will go easy on FRBM (Fiscal Responsibility and Budget
Management Act) and fiscal deficit targets?

Your Interview, Shrabana Kumar Nial

Jayant Sinha: Obviously, those are the ways in which we are thinking about good
and creative solutions.
Would that require a tweak in our fiscal math as your tax revenues are not really
going to grow that much?
Jayant Sinha: We will have to wait and see on that.
Do you think with a tweak in the fiscal road map and aggressive disinvestment it
is possible to raise the RS 2-3 lakh crore you have talked about?
Jayant Sinha: I think it is entirely possible and the fact that we have received this
decisive mandate from the people of India is precisely to engage in this kind of
thinking and to enable this kind of public investment. So you can be sure that we
are seized of the matter and we are working very hard on that and we are doing
it within the framework of sound economic management and fiscal prudence that
we have already outlined in the budget.
There are many levers that can raise the funding for that level of public
investment. There are levers such as disinvestment and spectrum sale. Even the
coal auction, I think, is going to result in significant amount of capital coming to
us. Anything from Rs 20,000 crore to Rs 40,000 crore might come out of coal
auction. We will see how much the spectrum auction yields.
There are different ways and means through which government's vast balance
sheet and sets of assets can be unlocked to be able to generate at least Rs 2-3
lakh crore.
Whenever there is money, there is a temptation to splurge. How do you ensure
this extra money that comes from auctions is used for capital spending?
Jayant Sinha: There is no desire to splurge. We want to invest as thoughtfully as
we can in those high multiplier sectors where we can unlock growth for the
economy and create jobs. These sectors are infrastructure, construction, tourism
and housing.
When the previous NDA government was in power we understood very clearly
even then that we needed to bring down interest rates, we needed direct
investment in highways, affordable housing, construction, and we did that. If you
look at the script we followed in that government - real interest rates came
down, interest rates came down, inflation came down, GDP growth which was at
4% to 5% went up to 8.5%, investments grew. We have seen this movie before.
We know how it works. So trust us.

Your Interview, Shrabana Kumar Nial

You mentioned interest rates. The differences between North Block and the
Reserve Bank of India (RBI) on interest rates has been written about, talked
about. Do you think it's time we will see some relaxation in monetary policy?
Jayant Sinha: We are all data-driven, fact-based people and obviously the people
on Mint Street have access to very high-quality data, very high-quality analytics
and models. They will obviously look at the numbers, they will look at trends and
they will balance out a number of things and make the decision at the right time.
We have to leave it to their super-professional judgment to make the right calls.
When you look at inflation, there is a tradeoff. Certainly it benefits the economy
to have an interest rate cut which is meaningful25 to 50 basis pointsand
particularly when that interest rate cut signals a turn of the interest-rate cycle.
That is very beneficial to the economy, we all understand that. That is really the
short-term impact. But we also have to think longer term because ultimately we
are stewards of the economy for the people of India. Longer term, it is very
important for us to establish two things - independence of the central bank and
the quality of the thinking and judgment that is there. Number two, the fact that
we are determined to fight inflation in the long run as well. If we establish the
credibility of the central bank and our inflation-fighting credentials for the long
term, then we are likely to see growth of 7-8% which is non-inflationary for the
next five or 10 years. That's the price. If that's the tradeoff, we are not going to
give up those five or 10 years of really well-justified solid credentials of being
people who are going to fight inflation just to get a little boost in the short term.
We have to rely on the excellent professional judgment, the data-driven and factbased approach of the RBI to take the right call at the right time. I think this
whole discussion about North Block and MoF (ministry of finance) being on one
side and RBI on the other side is fallacious. The reality is we are one team and
our goal is to ensure that dramatic and accelerating growth of the economy.
In North Block and political figures like us obviously want growth but at the same
time we also understand you have to balance short term and the long term.
Those are all understood.
The upcoming budget is the most anticipated budget in the recent years. You get
to lay down the agenda for the next four years. What are your thoughts?
Jayant Sinha: Reforms are a continuous process. This government has come into
power with the mandate of the people to truly transform the Indian economy, to
take it from the state that we inherited sub-par growth, growth below 5%,
which had not happened in 25 years, inflation entrenched for five years, no job
creation. Indian economy was in the ditch. The mandate is to do what is
necessary to power this economy to achieve 7-8% GDP growth rate and create
Your Interview, Shrabana Kumar Nial

millions of net new jobs. You can be sure we will pursue it. In the last six
months, if you look at all the different things that we have done, they are
structural in nature and which ultimately will not just be additive in their impact
but multiplicative. GST, land ordinance, transparent auctioning and allocation of
mineral resources, Jan Dhan Yojana, Krishi Sinchayee Yojana, 100 smart cities
and so on. We have done more than what was done in 1991. Then it was done
with a gun to their head, now we are doing because we have the mandate of the
people of India.
The RBI governor has pitched for incentives for savings...
Jayant Sinha: The PM has said and the governor has said and they both are right
that we have to get household savings, which in India are quite high, and we
have to ensure that they come out of real assets like gold and land that don't
have the kind of multiplier effect and productive impact on the economy that
financial instruments do. We have to find mechanisms and ways in which we can
take household savings and put them into financial instruments so that they can
be invested profitably for growth of economy. In fact, the PM said in Pune in his
speech that we need to run major financial literacy programmes so that people
understand the benefits of putting in money into financial instruments as
opposed to gold. We need to find ways to encourage financial savings.
Would you want to go the tax incentive way for a while?
Jayant Sinha: Wait and watch.
This government has got a lot of bad press on religious conversion. Do you think
this has sent out wrong signals to foreign investors?
Jayant Sinha: If I talk to business people and investors, what I hear from them is
that what we are doing as far as GST, land acquisition, FDI in insurance, banking
reformsthose are the things that really matter to them. Because they have to
look at a business and ask, is the business going to come up quickly enough and
generate return on investments? So, when you think about those things, things
that you brought up are not that relevant. I think everybody is focused on really
substantive issues that affect the economy and that's what we are focused on.
The government has issued multiple ordinances. This risks creating further
problem in the Rajya Sabha. What is the government trying to convey through
these ordinances?
Jayant Sinha: By these ordinances we demonstrate very clearly that we have a
commitment to reform and taking forward policy in these areas. We have
demonstrated very clearly to business people, to investors, to consumers that
they elected us with a decisive mandate for change and transformation and we
Your Interview, Shrabana Kumar Nial

are following through on that even though the opposition is recalcitrant, even
though the opposition is throwing up road blocks in Parliament. Fine, we will still
do what we have to do and we need to do and which is constitutionally our
prerogative to do. Two, when the ordinance is in force, the decisions that are
made are legal and lawful. In some ways, think of it as a window of opportunity.

The New Businesses Department was created to formulate strategies for new businesses,
incubate new business initiatives, pilot them and on their stabilization, hand over the
initiatives to the Business Group concerned.
Various new businesses include:

Merchant Acquiring Business

Green Channel Counters (GCC) and Cash
Deposit Machines (CDM)
Self Service Kiosks (SSK)
SBI ePay
State Bank Any-where
Tab Banking

Various new business initiatives of the department like


Pension Fund Management,

General Insurance,
Custodial Services,
Depository Participant Services and
Online Trading have been handed over to the Business Groups concerned.

The status of present initiatives is as follows:

(a) Merchant Acquiring Business
The Merchant Acquiring Business may be understood in the context of Card used in a typical
retail purchase transaction. The transaction involves card holders and their Banks (Issuer) on
the one side, Merchants and their Banks on the other (Acquirer) and a payment network
(Visa/ MasterCard) in the middle that coordinates the flow of information and money
underlying the transaction. The merchant services industry is shaped by the relationships
between merchants and acquirers. The Merchant Acquirer is defined as the member financial
institution responsible for its merchant customers transactions and for maintaining
relationship with the payment network. The scope for Merchant Acquiring Business has
substantially increased due to a thrust on electronic receipts and payments by government,
hospitals, railways, airlines,
educational institutions etc. It promotes a cashless payment environment which is beneficial
to all stakeholders. The Merchant Acquiring Business brings the following advantages for
various stakeholders:
Your Interview, Shrabana Kumar Nial

For the card holders:

No need to carry cash.
Customers can maintain higher balances in the account, resulting in higher interest income on
Saves time and also money for transportation in visiting bank Branches / ATMs to withdraw money
and then to spend the same at merchant outlets, who again have to deposit the same in Banks.
Can avail promotional benefits on offers.

For the Merchant:

Cash handling is avoided, pure cashiers can be dispensed with in large stores.
The risk of forged notes is eliminated.
The customers have tendency to go in for higher purchases while using the card as there is no
restriction on account of carrying limited currency in their purses.
The customer stickiness to merchant increases due to the facility.

For the Bank:

The transaction costs at Branches or ATMs is avoided when cards are swiped at POS machines.
Increase in CASA deposits due to non withdrawal in bulk from ATMs prior to shopping.
The flight of business to other banks due to not offering the facility is arrested.
The card base is leveraged to facilitate customer convenience and thus facilitate stickiness.
CASA improves also because of the settlement account of the shopkeeper getting funded.

(b) Green Channel Counters(GCC) and Cash Deposit Machines (CDM)

Green Channel Counters(GCC) and Cash Deposit Machines (CDM) are innovative channels
introduced by the Bank towards changing the behavioural pattern of our customers from
traditional way of paper based banking to card based Green Banking focusing on reduction
in paper usage as well as saving transaction time. Incidentally, these initiatives save paper,
time and resources. As of now, four types of transactions have been enabled through GCC
viz. Cash Deposits, Cash Withdrawals, Funds Transfer, and Registration for Mobile Banking
Service. The maximum transaction amount has been fixed as Rs 40,000/-. In case of CDM,
cash can be deposited up to Rs. 49,900/- at any one instance. Customers can use the GCC
and CDM without waiting in queues and without taking tokens. They may simply walk to the
GCC counters / CDMs, swipe their Debit cards and execute the transaction. Also, it has been
observed that while normal branch banking transactions take 4 to 5 minutes for completion, a
transaction routed through the GCC / CDM takes less than a minute. Thus, GCC and CDM
are endeavours to offer ease of transactions to all customers especially senior citizens.
Moreover, as these facilities do not require / generate any vouchers, there is no pressure on
the operating staff at the branches for VVR checking. This saves considerable resources at
the branch which can be utilised better for cross selling of our other products and to increase
interactions with our customers at the branches.
(c) Self Service Kiosk (SSK)
Self Service Kiosk (SSK) is yet another new customer friendly initiative of the Bank. It is a
selfservice machine like an ATM through which customers can make various financial and
nonfinancial transactions using their State Bank ATM cum Debit Cards. The Kiosk solution is
user friendly and customers can navigate easily between screens. These Kiosks are having
touch screens.
Your Interview, Shrabana Kumar Nial

For performing a transaction, customers are required to insert their ATM cards and enter their
ATM PIN to authenticate. Post authentication, customers can choose one or more
transactions from the below mentioned list.
SSK Transactions
Passbook Printing, GRPT Bill Payments ,Reprinting of Passbook, NEFT , Cheque Book
Request ,Fund Transfer, Mini Statement, SBI Life Payment,Balance Enquiry ,Account
Summary ,Account Statement, Mobile Banking Registration, Stop Cheque, Payment Loan
Account Statement ,Internet Banking Registration, Revoke Stop Cheque Payment, SMS
Alert Registration, Open Term Deposit, Personal Details View
Following transactions are currently enabled on SSKs. A few more transactions will
also be added to SSKs in due course.
Advantages of Self Service Kiosks:
Decongestion of Branch counters/lobbies.
Reduction of load on the Passbook printing windows.
Increased usage of ATM Cards, reducing transaction costs at the counters.
Bill Payments will help generate revenue for the Bank.
Technology driven customer self-service will further improve the Banks image of automation,
being a tech friendly Bank etc.
When placed offsite, customers need not visit the branches.

(d) SBI ePay

E-commerce in India is set to get a big boost with the countrys largest lender State Bank of
India setting up its payment gateway SBI ePay with the objective of enrolling
government entities and municipal corporations as well as small traders in the online
marketplace. As part of the new service, the Bank will provide electronic connectivity with
various banks and financial institutions on the one hand and merchants on the other.
SBIePay has also partnered a number of banks for the service that include State Bank of
Bikaner & Jaipur (SBBJ), State Bank of Hyderabad (SBH), State Bank of Mysore (SBM),
State Bank of Patiala (SBP), State Bank of Travancore (SBT), United Bank of India, and ING
Vysya Bank.
Aggregator is an entity which has electronic connectivity with various Banks and financial
institutions on the one hand and merchants on the other, thus facilitating e-Commerce/ mCommerce transactions between merchants, customers and various financial institutions for
all kinds of payments. As e-Commerce is growing rapidly, Bank decided to establish its own
Aggregator Module. In exchange of services provided by Aggregator module, a charge is
levied on merchants / billers which are a source of fee based income. As the volume of such
transactions is large, the fee income can also be substantial. This will help us provide a full
bouquet of payment services to all the billers, merchant and government institutions which
will increase our market share. To avail our Aggregator facility, a Bank account will have to be
maintained by the merchant with our Bank, which will in turn increase CASA.SBI is the first
bank in India to start its own online aggregator services. Besides the payment gateway,
which will enable merchants accept payment by net banking, credit card, debit card and
mobile banking, SBIePay is also in the process rolling out an electronic bill presentment and
payment platform (EBPP) and IVRS phone payment. EBPP enables a payment provider to
generate the bill and receive payments while IVRS is an interactive voice response system
Your Interview, Shrabana Kumar Nial

that enables merchant receive credit card payments over the phone. SBI ePay will be brining
in new merchant categories with a special focus on government merchants such as, central,
state departments and municipal corporations and the payment gateway service will come
with a dashboard site which will provide analytics for banks and merchants to help them
boost their business. SBI ePay provides complete, simple and secure online payment
gateway services, with a realtime credit card, debit card, net banking and mobile payment
transaction validation processenabling e-commerce websites to sell products & services
online, and accept payments in realtime.
Every merchant upon registration will receive a merchant identification (MID), admin user
access to merchant account and its password. They (merchants) can add / modify / delete
bank accounts- with minimum one active accountand can also add various channels to allow
their customers to transact, including Kiosk, ATM, IVR, e-commerce, mobile, Aadhar, POS,
others. For settlements, SBIePay will follow a max T + 2 days settlement cycle wherein funds
would be transferred within two working days of capture of transaction.
SBI ePay also provides a personalised Merchant Web Panel to merchants who have
successfully signed-up with the service. Merchants can also view and download all
transaction records and bank details in their accounts. Detailed MIS reports can be
downloaded from the admin panel, to help clients to manage their orders and transactions.
Some of these include reports on successful payments, failed payments, payments in
clearing, payment sighted, settled transactions, and payout transactions, etc.
SBI is a relative late entrant in the payment gateway space. Existing players include: Times
of Money, IndiaIdeas (BillDesk), CCAvenues, TechProcess Solutions, E-Billing Solutions
(EBS), Atom Technologies, and new aggregators like PayU, Citrus, Emvantage. SBI ePay
has aggressive plans to emerge as the Leading Payment Aggregator in India. SBIs brand is
respected and trusted all over the country. It plans to leverage its existing relationships with
various merchants to offer SBI ePay services.
SBI ePay plans to leverage:
its payment gateway to process all credit/ debit card transactions.
Banks internet banking division to process all SBI and associate banks internet banking
Plan to tie up with various banks in order to process their internet banking payments.

SBI ePay wants to be the one stop solution for processing all online payment modes from all
bank accounts. It propose to develop new merchant categories (e.g. in government sector)
& nurture new merchants in existing categories and enable them to accept electronic
Bank is installing Barcode based Passbook Printing Kiosks at its various branches. Branches
which are carrying high number of passbook printing transactions have been identified for
installations of these Kiosks. These Kiosks are branded as SWAYAM.
The customers are required to approach their branch to affix a barcode sticker on the
of the passbook. The barcode number given below the barcode is required to be mapped to
the customers account number in CBS. Customer can then go to SWAYAM and print their
passbooks. Customers needs to select the language for display of instructions. In addition to
Hindi and English, customers can choose regional languages applicable to the Circle.
(Assamese, Bangla, Gujarati, Kannada, Malyalam, Marathi, Oriya, Punjabi, Tamil, Telugu).
Your Interview, Shrabana Kumar Nial

After selection of language, passbook needs to be opened at the last printed page and kept
the passbook printing slot. Kiosk will automatically pull the passbook and read the barcode
and print the transactions of the mapped account number on it. The transaction is completed.
(f) sbi INTOUCH
With an objective of becoming the pioneer in Next Generation Banking with a difference and
enhancing the value proposition for our Retail Customers, Our Bank has launched 7 stateoftheart Digital Banking outlets (DBOs) located at Ahmedabad, Bangalore (two outlets), Chennai,
Mumbai, Kolkata and New Delhi. Plan is on to expand further across the country, Digital
Banking Outlets provide banking services in an online self-service mode to the Customers
enhancing service delivery, real-time response, proactive marketing, personalised offers, etc.
A typical Digital Banking outlet comprise of Transaction Processing Stations (Self Service
zone), Information and Interaction Stations, Advisory Rooms (including Wealth
Management), etc. According to Gartners research note A digitalized bank creates value
and revenue from
digital assets. It goes beyond further rounds of process automation to transform processes,
business models and customer experience by exploiting the pervasive digital connections
between systems, places and things This requires banks to build new ways of creating value
based on prior business and technology innovations, as well as piloting new approaches to
conducting digital business.
From a technical perspective, a digital bank leverages the emerging Internet of Things.
Internet of Things forms the backbone of Digital Banking which is going to en-able the Bank
to create value for the customers through enhanced customer experience and revenue for
the bank by building intelligence into its digital assets.
The salient features of sbi INTOUCH are:
Instant opening of SB accounts with personalized debit cards. PAN card is mandatory. eKYC
Accounts are opened with an option for the customer to choose his/her/their home branch.
Home branch selection, for the time being, has been restricted to the branches in the city in which
sbi INTOUCH Branch is located. Hence, it is all the more important for the staff of the branches
located in these cities to visit the sbi INTOUCH Branch and understand its functioning so that the
aim of the Bank and the customer in focus are not lost sight of. Help the Bank to realize the target
by educating the customer visiting your branches appropriately.
Accounts are opened through kiosks in selfservice mode.
Instant enablement of Internet Banking and Mobile Banking.
Instant issuance of Debit Card.
All the above done and delivered within a time span of 10 to 15 minutes without any manual
intervention by staff.
Multi-Function-Kiosks (MFKs) to provide a range of banking services. More number of services to
be added shortly.
Smart ATM: delivers cash in denominations of customers choice. Accepts cash. More number of
services are on the anvil.
Smart Table for financial planning.
Internet Banking Kiosks.

Your Interview, Shrabana Kumar Nial

Interactive Screens for product information and assisting the customer in auto and education
loans. Housing loan assistance to be launched shortly.
Backend integration with Customer Relationship Management (CRM) Tool to capture business
leads and allocation of leads to the sales agents for conversion.

Cross-selling and Up-selling through the smart devices.

Remote advisory. Subject Matter Experts (SMEs) of the Bank and also of our Subsidiaries are
available through video for financial counseling.
Event areas to conduct events of interest to the customer, with marketing of Banks products in
DBOs, since they are in Shopping Malls and High Street locations to attract the customer to our
books, function from 10 AM to 10 PM.
Many more products/features will be introduced in due course and rollout to cover more
geographical area is being planned.

(g) State Bank Any-where

State Bank of India has always been at the forefront in adopting inter-active and incentivizing
ways to motivate customers and engage with them. The latest initiative from the Bank comes
to users in the form of a mobile smart phone application. The application State Bank
(formerly known as State Bank Freedom Plus) was launched on 15th March, 2014 (for
Android) and 7th May, 2014 (for IOS) followed by Blackberry.
State Bank Anywhere is the most efficient, effective, easy to use, secure retail internet smart
phone application for banking that makes banking easier than ever. State Bank Anywhere
has received an overwhelming response from users and it continues to grow in popularity
Your Interview, Shrabana Kumar Nial

day after day. The below numbers provide a clear testimony of its acceptance among our
users Bank is continually engaging with users through Social Media (Facebook, Twitter,
YouTube etc.) and Banks own websites, to promote this application and increase its
adoption. To reach a wider audience segment, hindi version of State Bank Anywhere in the
name has also been launched.
Account info and Mini State-ment
M-Passbook- an electronic ver-sion of a passbook available on a smart phone
Fund Transfer to accounts in SBI and other BanksCredit Card (VISA) Transfer with/without One Time
Pass-word (OTP)
Instant Term Deposits e-TDR/e-STDR and Recurring Deposits
Mobile Top-up and DTH Re-charge
Bill Pay for billers, already registered
ATM cum Debit Card hot list-ing
Cheque Book Request

(h) m-Passbook
m-Passbook is an electronic replication of our physical passbook. All transactions get synced
into the passbook. New Features in next release of m-Passbook

Support for Offline viewing

Search facility with amount, date etc.
To be made available in i-OS.
Availability in Hindi.

(i) TAB Banking

State Bank of India launched three digital banking facilities for the convenience of SBI
customers. Two at the customers door step using TAB banking - one for customers opening
Savings Bank accounts and another for Housing Loan applicants. Saving Bank Account
Opening Through TAB This customer centric technology initiative is designed to help the
Sales team to open SB Account by using Tablet PC. SBI offers its valued customers the
facility of opening accounts at their door step through Tab Banking. The staff of SBI will visit
the customers at their home and using the tablets get the formalities completed for account
opening like details of KYC and photographs of applicant. These will be loaded on the CBS
and the account number will be sent to the customer through SMS/e-mail. This will provide
convenience and time saving to the customer for opening accounts with SBI.
acilitates Opening of Saving Bank Account by reaching out to customer at the customers
residence/ Place of Work

Capture Customer Photo and KYC details in digitized form.

Incorporate CIF and other essential information to enable account opening.
Generates TCRN (Temporary Customer Reference Number) and TARN (Temporary Account
Reference Number).
Instant communication of TCRN & TARN via SMS to the customer.

HLIPA is a tablet based application to provide In- Principle approval to prospective Home
Your Interview, Shrabana Kumar Nial

customers. SBI offer TAB banking facility at the place of the Housing Loan applicant, for
inprinciple approval of home loan. The Home Loan Sales Team will visit the applicant and
capture on the tablet KYC details, information on the income & deductions and details of the
proposed property purchase (House/Flat). Based on the income data furnished and cost of
the project, the applicant will be advised on the approximate housing loan amount eligible
and the EMI amount. The applicant will get in principle approval for the proposed Housing
Loan through
email. The actual loan will be processed subsequently subject to usual formalities.
View leads captured through Contact Centre and assigned to the logged in user
Capture loan requirement details for walk in customers
Capture KYC details with images of borrower and KYC documents
Capture property details including images and geo-coordinates with location of property plotted

on map
Eligibility calculation based on all parameters
In-Principle approval communicated to customer via SMS and e-mail instantly
Data submitted through HLIPA is available in Lead Management System and can be accessed by
entering Request ID (LMS Ticket ID).
Data captured through HLIPA is autopopulated in QDE screen of LOS, upon entering the LMS
Ticket ID.

The 3rd TAB Banking initiatives is DIA-SME. DIASME is a tablet based application to conduct
and post sanction inspection of SME Advances.
Use HRMS credentials to log on to the application
Retrieve loan information from LOS system for Pre Sanction inspection by entering the LOS
application id

For post sanction inspection, data is prepopulated from CBS upon entering CIF /Account No
Capture Establishment details including images and geo-coordinates with location of property
plotted on map

The reviewer can view the reports sent for review in the Reports for Review menu
Search and e-mail inspection report using tablet interface
Link pre and post sanction inspection reports pertaining to a unit.
Receive notifications for pending inspection / insurance due for renewal to follow-up with customer
Private Equity
In view of the growing importance of private equity as an alternate asset class and
the attractive returns it offers, the Bank has decided to enter this area and has made
substantial progress in this regard. An








collaboration with Macquarie of Australia and IFC Washington, primarily aimed at investing in
the Indian Infrastructure space. All necessary regulatory approvals have been received
for operationalisation of the fund. Over US $ 1 billion has been mobilized from large and well
known International Investors including the sponsors.

Your Interview, Shrabana Kumar Nial

The Bank has also set up a general purpose Private Equity Fund jointly with sovereign
entities in Oman. Government of India has designated the Bank as the operationalising
agency for a similar sovereign fund with Qatar. Several other Funds are at various stages of

Payment Solutions

(i) Mobile Banking Services

Mobile Banking Services (MBS) offer convenient,user friendly, secured and cost effective
alternate channel of banking. MBS has been launched after RBI approval. Application
based service using SMS and GPRS facilities has been made available to the
customers. The service is also available over WAP for all mobiles having GPRS connectivity.
MBS has been rolled out to all our non-rural branches. The product is comparable to the best
available in the market.
(ii) State Bank Mobicash







also introduced a new product State Bank

Mobicash Mobile Wallet. Mobile Wallet is a virtual prepaid account accessible over
mobile phones enabled with a mobile based application which allows its users/subscribers to
make payments to any designated affiliates

appointed network of merchants. State

Bank has named its

Mobile Wallet as State Bank MobiCash.While mobile banking is a channel to access
customers savings or current account, Mobile wallet is a

payment product. A non

account holder can also take the wallet and avail the facility ffered by State Bank
MobiCash. This may also be used for financial inclusion as it enables us to extend
financial services to unbanked masses by offering a virtual pre-paid account residing on the
mobile phone.
Features of State Bank MobiCash:
State Bank MobiCash is being launched in partnership with M/s. OXIGEN Services
(India) Pvt. Ltd (Oxigen) and M/s. Sahyog Microfinance Foundation (SMF). While
Oxigen will provide Mobile Based front end application and Transaction processing
platform, SMF would bring in Customer Service Points (CSP) which will be the
Your Interview, Shrabana Kumar Nial

delivery points of services like providing applications for mobile wallets, Cash-in &
Cash-out, other assisted services, closure of mobile wallets, etc.
The responsibility of the KYC compliance would rest with the Branch. The delivery
points of services would be the CSPs. The complaint management would be done by
our Contact Centre.
Each CSP is linked to a Branch to facilitate verification of KYC documents by the
Branch officials. The Wallet holder having a GPRS based handset may avail the
application based service, while other Wallet holders may use the service over SMS.
When the service is used over GPRS, the applicant needs to download State Bank
MobiCash application from the link received via SMS at the time of registration on to
his / her Mobile. The application is menu driven and user friendly. CSP would assist
the applicant to download the application.
The messages/ information sent from the Mobile Wallet application are secure
as these are encrypted end to end.
The cost of SMS / GPRS connectivity will be borne by the Wallet holder.
Further, the applicants may opt for SMS based transactions and in that case
downloading of application will not be required. Transactions over SMS will be
carried out by using certain specified Key words.
The service under MobiCash will be carrier agnostic i.e., the service will be available
to Wallet holders irrespective of the telecom service provider for their mobiles.
The State Bank MobiCash Wallet holder will be notified of the transaction either
through the Wallet client application or through SMS.
The State Bank MobiCash will have the following features:
Cash-in: It can be topped-up by depositing cash at CSPs and / or through



Mobile Banking, Internet banking, Kiosk, etc.).Cash-out:

Withdrawal of Cash at CSPs.

Funds transfer: Transfer of funds to another State Bank MobiCash Wallet and
Bank accounts (SBI and other Banks).
Your Interview, Shrabana Kumar Nial

Enquiry services: Balance enquiry and mini statement.

Other services:Top-up of prepaid mobile and DTH and Payment of select utility bills

(f) SBI Green Remit Card [GRC]

In order to enable the branches to migrate non-home cash deposit transactions also to Green
Channel Counter and Cash Deposit Machines, SBI Green Remit Card [GRC] has
been introduced. GRC is a magstripe card mapped to a particular beneficiary account
and will contain remitters name and mobile number as also name and account number.
Green Remit Cards can be issued by all the branches of our Bank and these cards are
enabled for acceptance at all the GCC branches for non- home cash deposit
Benefits to the Bank:Making optimum use of PoS machines /Cash Deposit Machines
at branches transaction cost saving of around Rs.20/- per transaction, in addition to
reducing carbon footprint. Accuracy in transactions in addition to reducing the stress on
the operating functionaries at the branches in VVR checking and storage of vouchers.
Reduction in paper usage to the Bank as well as reduction in transaction time for staff
and customers.
Increase in volume and income To give impetus to the process of financial inclusion.
Decongestion of branches by disposing of customers quickly a separate counter can be
opened exclusively for non-home customers and these customers can get this particular
service even without entering inside the branch premises.
Branch can concentrate on HNI customers and make them feel more comfortable.The staff
members can be better utilised in marketing our other products in the available time or
increase the interactions with the customers for business development.
An eco-friendly Green initiative reaching to more


adding cleanliness



Benefits to the non-home branch customers:
Ensuring accuracy of remittance in addition to avoiding writing of vouchers as well as
reducing transaction time.

Your Interview, Shrabana Kumar Nial

Enables them to be part of Financial Inclusion drive & reap the benefit of technology
available in SBI
Enabling non-home branch customers experience the same standard of service as
home branch customers.


The New Businesses Department with a vision to Position the Bank as a Pre-eminent
Provider of Comprehensive Range of Products & Services has launched various Card
Products namely :

SBI Green Remit Card [GRC]

State Bank SME Insta Deposit Cards
State Bank Business Debit Cards
SBI eZ Pay Cards
State Bank Gift Cards
State Bank Virtual Cards
State Bank Saral Money
State Bank Achiever Cards
State Bank Imprest Cards
State Bank Smartchange Card
State Bank Multi-Currency Foreign Travel Card (SBFTC)

The features, advantages and benefits these initiatives is as follows:

(a) SBI Green Remit Card [GRC]
In order to enable the branches to migrate nonhome cash deposit transactions also to Green
Channel Counter and Cash Deposit Machines, SBI Green Remit Card [GRC] has been
introduced. GRC is a magstripe card mapped to a particular beneficiary account and will
contain remitters name and mobile number as also name and account number. Green Remit
Cards can be issued by all the branches of our Bank and these cards are enabled for
acceptance at all the GCC branches for nonhome cash deposit transactions.
Benefits to the Bank:
Making optimum use of PoS machines / Cash Deposit Machines at branches
Transaction cost saving of around Rs.20/- per transaction, in addition to reducing carbon footprint.
Accuracy in transactions in addition to reducing the stress on the operating functionaries at the
branches in VVR checking and storage of vouchers.

Reduction in paper usage to the Bank as well as reduction in transaction time for staff and
Increase in volume and income
To give impetus to the process of financial inclusion.
Decongestion of branches by disposing of customers quickly
a separate counter can be opened exclusively for non-home customers and these customers can
get this particular service even without entering inside the branch premises.
Branch can concentrate on HNI customers and make them feel more comfortable.
The staff members can be better utilised in marketing our other products in the available time or
increase the interactions with the customers for business development.

Your Interview, Shrabana Kumar Nial

An eco-friendly Green initiative reaching to more people, adding cleanliness to the environment.
Benefits to the non-home branch customers:
Ensuring accuracy of remittance in addition to avoiding writing of vouchers as well as reducing
transaction time.
Enables them to be part of Financial Inclusion drive & reap the benefit of technology available in
Enabling non-home branch customers experience the same standard of service as home branch

(b) State Bank SME Insta Deposit Card

To enable SME customers also to deposit cash into their CA / CC account(s) through CDMs,
the Bank has launched State Bank SME Insta Deposit Card. Extending this facility to SME
customers, like Traders and Service providers, will enable them to deposit their overnight
cash into their accounts safely with the Bank after banking hours / deposit the cash quickly
during the Banking hours without waiting in the queue. These Cards can be used for deposit
of Cash (INR) into the designated account(s). Maximum amount of currency notes deposited
can be upto 200 pieces with the maximum limit of Rs.49900/- per transaction. Balance
Enquiry, Mini Statement of the account, PIN Change are also permitted.
(c) State Bank Business Debit Card
Our Bank has a large commercial customer base across the country. With the objective of
adding value to this segment of customers, the Bank has launched State Bank Business
Debit Card in two variants, State Bank Pride and State Bank Premium on MasterCard
and Visa platforms. Business Current account holders i.e. proprietorships, partnerships,
public limited companies and private limited companies and Customers who have only a
borrowing relationship will be targeted for crossselling of current accounts and hence
issuance of these Debit Cards. This Debit Card will be issued to current accounts in the
names of the authorized
signatories, with the name of the company embossed on the Debit Card. At present, it is
limited to single or severally operated business current accounts. As per RBI
guidelines, Debit Cards are not to be issued to Cash Credit accounts. However, current
accounts for such customers may be opened on which these Debit Cards may be issued.
Expected Benefits to Bank:
Business Debit Cards play an important role in enhancing the utility and retention of business
current account.
Migration of our target segment which predominantly uses cash and cheques to Debit Cards will
help in achieving electronification, cost efficiency and establishing an audit trail.
Interchange earnings on commercial use of business cards where the ticket size would be usually
higher than retail transactions.
For bundling with Merchant Acquiring Business as an additional value proposition.

Expected Benefits to Customer:

Cash Deposit facility: The customer can use the Business Debit Card to deposit cash in the Cash
Deposit Machines.

Cost savings: Helps to keep spending within means, without accumulating unnecessary debt,
merchant discounts in relevant spend categories (accommodation, business travel, business
services, dining, etc.) provided by Visa and MasterCard.
Control: Helps track and monitor business expenses, limits exposure to loss by theft or robbery.
Convenience: Easier than carrying cash, enables automatic bill payment, enables internet, phone
and mail order transactions.

Your Interview, Shrabana Kumar Nial

(d) SBI eZ Pay Cards

SBI eZ Pay Cards is a Prepaid Card issued to individuals, listed companies and Government
Departments for individual payments disbursements of salaries and disbursements of social
benefits to individuals. Cards can be issued for customers/non customers. Cards have
validity of 10 years and can be loaded any number of times with a minimum reload amount of
Rs.100/-. There is no maximum reloading stipulation, but at any point of time maximum store
value can not exceed Rs.50000/-limit. Cards are issued in bulk to Listed
Companies/Government Departments for ease of distribution of Cards to employees/
beneficiaries. The Cards can be loaded by branches or Companies/Government
Departments themselves using CINB facility.Minimum Cash withdrawal from State Bank
ATMs is Rs.100 per withdrawal and maximum Cash withdrawal is Rs.40,000 per day.
Maximum Point of Sales Transactions is pegged at Rs. 50,000 per day.
(e) State Bank Gift Card
State Bank Gift Card is ideal substitute for cash/gift coupons/vouchers for giving gift of choice
to friends & relatives or to employees. It is issued for a minimum amount of Rs.500/- and in
multiples of Re.1/- thereafter with a maximum amount of Rs.50000/-. There is no restriction
on number of Cards to be issued for a customer. The card is valid for one year and can be
used at more than 5,00,000 Point of Sale (POS) terminals at various Merchant Locations.
Gift Card can easily be purchased online using banks Internet Banking facility at
or through the Branch. State Bank Gift Card is issued for Bank customers only and cash
withdrawal is not allowed.
(f) State Bank Virtual Card
Online users in India have exhibited willingness to make purchases over the Internet, which
is quite evident from the explosive growth in ecommerce and e-commerce in India is
expected to reach INR 120,000 Crores by the end of year 2015. Our Bank has already taken
several steps in promoting online usage but most of the shoppers do not shop online due to
lack of trust in transactions. This includes reasons such as risk of data being compromised or
fear of potential fraud with the Card / account. Thus, there is a felt need among customers for
a technology-based product for catering to their payment requirements while shopping
online. Hence, SBI has launched State Bank Virtual Card, a limit Debit Card, in
association with Visa, which can be created using the State Bank internet banking facility for
e-commerce (online) transactions. State Bank Virtual Card, provides an easy and secure
way of transacting online without providing the Primary Card/ Account information to the
merchant. Virtual Cards can be used at any merchant location accepting MasterCard / Visa
Cards online, without any difference from a regular plastic Card.
Benefits to Customer
Flexible and secure; for online, IVR payments.
Reduces the risk of exposing entire Credit/Debit limit, as the real card/ account number is never
communicated to the merchant.
Enables Bank customers to pay from any account and shop at any merchant flexibility.
Efficient funds management.

Benefits to Bank
Increases customer loyalty / confidence.
Interchange Revenue from every transaction (approx 1.44% of transaction value).
reduces operational cost as there is no physical card, inventory, etc.

Benefits to Merchant
No separate setup or association is required, only needs to accept MasterCard / Visa brand cards.

Your Interview, Shrabana Kumar Nial

Payer Authenticity as verified by Bank.

Guaranteed settlement and fund availability as verified by Visa and authorised by Bank.

(g) State Bank Saral Money

State Bank has launched Saral Card with an objective to tap the unbanked/ un-carded
consumer & provide a superior/alternative to cash and for enabling Aadhaar authenticated
payments with open loop Visa prepaid cards. Saral Card is a general purpose reloadable
prepaid card to be used at any of the Interoperable BC outlets besides being accepted at all
Visa accepting ATMs and merchants. The aggregate of all loads in a financial year should not
exceed Rs. 1,00,000/- and the aggregate of all withdrawals and transfers in a month should
not exceed Rs.10,000/-. Further, the value of the card should not exceed Rs.50,000/- at any
point of time. The card is valid for 5 years and it can be loaded/ reloaded at Selected State
Bank branches & Other Bank Branches/ Business correspondents, which are members of
Aadhaar Saral Money programme. It can be used at selected State Bank branches having
the Micro ATMs & other participating Bank BC/ branch having Aadhaar logo, for fund deposit,
cash withdrawal, etc.
(h) State Bank Achiever Card
Our Bank commenced issuance of Gift Cards which are in the nature of prepaid cards in
2006.The issuance of Gift Card, which is not reloadable, is currently restricted to State Bank
customers only to comply with a recent RBI directive. RBI guidelines on issuance of Gift
Cards also restrict validity of Gift Cards for a period one year leading to frequent replacement
Cards being issued. This results in large wastage of plastics and avoidable cost for the
Bank. With a view to avoiding the above wastages and so as to provide a customised
solution for the purpose, State Bank Achiever Card, a re-loadable Card with a validity of 10
years for disbursement of incentives/awards to staff members was rolled out on 24 th June,
(i) State Bank Imprest Card
SBI - Federation of Freight Forwarders Association in India (FFFAI) co-branded Imprest Card
is a co-branded open loop prepaid card, issued in association with Visa, and is proposed to
be used for meeting the following needs of Custom House Agents Associations: a)
Disbursement of petty cash expenses for their agents. As the number of agents is large and
spread all over India, Member Companies of FFFAI inclined to replace the cumbersome
process of cash/ cheque issuance with co-branded prepaid cards. b) Payments are also to
be made to shipping companies for clearing the goods on behalf of their clients (Importer /
Exporter). As the exact amount of payments viz. freight charges, warehousing charges,
payment of duties, etc. is not known in advance; Member Companies of FFFAI inclined to
replace the issuance of cash/ blank cheque with co-branded prepaid cards. The Card will be
issued to FFFAIs member companies i.e., Custom House Agents, to be given to their
employees. The Card will be funded using a corporate current account, using Corporate
Internet Banking facility, and can be used at any State Bank Group ATMs, merchant
establishments and online.
(j) State Bank Smartchange Card
With a view to provide convenience to the general public and to help them move towards a
cashless system for making payments for their day to day needs, our bank has rolledout
State Bank Smart Change Card, a new variant of rupee prepaid card, for facilitating cashless
payment in a closed user group environment. The Smart change Card is similar to the
contactless Metro Cards, which are issued instantly and are convenient and easy to use,
Your Interview, Shrabana Kumar Nial

with real-time online transactions. Further, these Cards will allow consumers to pay
conveniently at the identified outlets of partner organizations for their purchases, thus
replacing cash and particularly coins.An RFID based contactless Smart Card, with maximum
value of Rs. 3,000/- at any point oftime is a perfect alternative to small notes / coins and does
not require any KYC for issuance.Since the Card is a low value Card, just like a metro card
there will not be any refunds for the cardholder in case the Card is
lost/stolen/damaged.Currently, the Bank has partnered with two Major Milk vendors M/s
Mother Dairy in Delhi and M/s Amul in Ahmedabad for facilitating cashless transactions at
their outlets by rolling out cobranded variant of the product. The same solution, ideally, can
be promoted with other major dairies / other organizations, having large number of retail
(k) State Bank Multi-Currency Foreign Travel Card (SBFTC)
Keeping in view the rising demand for Multi- Currency Cards and to keep pace with our
competitors, Bank has introduced State Bank Multi-Currency Foreign Travel Card (SBFTC) in
4 currencies viz. USD, GBP, EUR and SGD w.e.f 8th September 2014. Presently, the Card
can be issued/ reloaded/refunded at 100 identified branches of MUMBAI, DELHI, CHENNAI
and BANGALORE Circles and can be loaded in any/ all of the four currencies. The number
of branches and currencies will be increased going forward.
Key Features
It is a product especially designed for travellers visiting multiple countries.
Convenient & smart way to carry multiple currencies on a single card.
It can carry upto 4 currencies (in the form of different wallets / purses) on a Single Card in a safe
and secured manner.

Facility to automatically detect currency based on transaction location.

Smart feature of utilizing Card Balances across purses. (i.e. if there is not enough balance in one

purse then it will utilize the available balances in other purses for the amount required, instead of
declining the request.)
Global Emergency Assistance services for the customers abroad.
It provides safe, secure & convenient way to carry foreign currency.
Can be used for shopping at 35 million+ Merchant Establishments worldwide (excluding India,
Nepal and Bhutan).
It a CHIP-based card, which stores encrypted data of the customer for enhanced security and
wider acceptance.
Provides Complimentary card replacement, Emergency Cash delivery, etc
It provides 24X7 access to your money through any ATMs, accepting MasterCard Cards.

In 2006, in the face of fierce competition, esp.from the fast expanding private sector banks,
and the consequent steady decline in market share of SBI, a wake-up call for the
employees had become a historical necessity for the Bank. Such a call was conceived as a
two day workshop resembling a training programme. Designed in-house by the training
system of the Bank, the Programme was called Parivartan, meaning the Change.
Parivartan achieved its purpose. It remains a milestone in the history of the Bank as well as
of the Banks robust training system.
Your Interview, Shrabana Kumar Nial

In 2014, the need for another corporate message to be communicated to all employees was
felt because of
threat to profitability, caused by mounting NPA and increasing operating costs
general decline in the standard of service rendered
threat to the brand image of SBI
A team of designers sat down to develop in-house a programme to be extended to all
employees, with the following specific objectives:
To make the employees aware of the need for quality and professionalism in the workplace
To bring in consciousness about our role in eliminating waste and maximising returns
To reinforce the importance of the customer and our individual and collective responsibility to the
customer and the Bank

The Programme was aptly christened Aarohan, meaning the ascendance, and had a tagline
Aim, Aspire, Achieve. Aarohan was designed as a two day multi level programme, the
target group being all employees in clerical cadre and all officers from Scale I to Scale V. The
in-house design had inputs from the eminent scientist Dr R. A. Mashelkar. The basic idea
was to motivate the employees and generate creative energy. Dr Mashelkars motivating and
thought provoking address to the participants was used in the opening module of the
Programme. This module was aptly called Orbit shifting.
The modules that followed on the first day were:
Our Bank in Future (Participants were asked to vision about the Bank on a future date.)
Team SBI (emphasising belongingness, ownership and coordination)
Customer Centricity
On the second day, the modules were:
Professionalism (different aspects and how it can be practiced in the organisation)
War or Waste (controlling wasteful expenditure, as differentiated from costcutting)
Our Present Position (the changing scenario in various walks affecting the Bank, including
comparative business figures)

Are We Doing Enough (action planning by the participants)

The concluding part of the two day programme was an inspiring address by the Chairman.
The programme was conducted across all Circles by trained SBLC trainers. After the
complete roll-out of Aarohan, a specially designed Aarohan a one day programme for
GMs and DGMs was conducted at the College and the Academy. This was followed by
another specially designed Aarohan for the subordinate staff.
The success of Aarohan can be gauged by the fact that many members of the staff are
pouring their success stories due to the impact of Aarohan in an exclusive folder created in
State Bank Times. To reinforce the learnings of Aarohan, a special module called Aarohan
Capsule has been designed. It is intended to be conducted at SBLCs as a special session in
selected training programmes and also at branches as part of the Visiting Faculty Scheme.


The Bank has launched Career Development Scheme (CDS) from 1 st April, 2015, in its effort
to set objective criteria for performance evaluation of staff members. CDS is one of the
Your Interview, Shrabana Kumar Nial

initiative under Project Saksham, the other being Man Power Planning. It is sought to
Increase business orientation through business linked key responsibility areas (KRAs) for
officers and clerical staff. KRAs across officers/ clerical staff in the same role have been
standardized for all roles to bring about fairness and consistency in appraisal. The new CDS
will help in rewarding high performers through monetary incentives and in taking decisions on
service extension and request transfers. The whole exercise is being done with a positive
outlook and not meant to identify low performers. The scheme also aims to introduce a
formal career development scheme to clerical staff.
As the scheme is oriented towards improving the performance of staff members, they will get
an opportunity to get feedback from their reporting officials at monthly and half yearly
intervals. All the roles in the Bank have been mapped into three key roles viz., budgetary,
measurable and non-measurable. For most roles, 70% marks is based on KRAs and 30% on
assessment by supervisor. Different weightages have been assigned to budgetary,
measurable and non-measurable which are evaluated through Objective metrics
(Measurable by IT systems), Subjective metrics and Supervisor discretion for different Role
and Scale based groups (Cohorts). Some of the KRAs will be fixed for each role, while the
reporting authority will have discretion to arrive at other KRAs after consulting with the staff
member. The scores obtained by a staff member under budgetary and measurable
parameters will be obtained directly from technological platform as far as possible. The new
scheme introduces a Grade based system instead of marks on 100. Five types of grades viz.
AAA Outstanding; AA Above expectations; A Meets expectations; B Short of
expectations and C Needs improvement.


At present, sanctioning of any high value advance involves multiple processes like analysis
of Financial statements, preparation/ finalisation of CMA data, assessment, appraisal,
internal risk rating, due diligence etc. which takes so many days till it reaches to sanction
stage. In present competitive scenario, delivery has become prime factor to sustain in the
market. Looking into this aspect and to overcome the problem of inordinate delay in credit
process, GITC Belapur has devised online credit processing software called Loan Lifecycle
Management System i.e. LLMS. It works on SBI Intranet only and requires Internet explorer9 or above version. Credit Risk Management Dept. (CRMD) and GITC Belapur (LLMS Team)
are the application owners. LLMS working group, with representatives from various
departments like CRMD, CPPD,CCCC Secretariat, CAG, MCG,IBG, NBG,SAMG, and LLMS
takes decisions on implementation of functionalities in LLMS. As the name indicates, it
handles all the credit processes end-to-end as prescribed by the Bank viz. Pre-sanction
process, sanction process, post sanction process.
Presently, it is in use at the Branches of CAG & MCG and have been stabilised to a great
xtent.As regards Branches of NBG, 600 branches have been identified so far for its
implementation. It covers the entire loan lifecycle from creation of new lead to generation of
final Board resolution. This LLMS process enables Credit Analyst, RMs, Risk Rater etc. to
execute a complete loan life-cycle providing quick insight into the application processes and

Your Interview, Shrabana Kumar Nial

their interdependencies. LLMS covers about 70% of Banks total advances. As stated above,
the various processes involved in LLMS are basically,
Pre-sanction Process: It covers customer information on KYC, Business profile as well as
profiles of Promoter/Director/Guarantor and also of Associate & Group companies. It also
takes care of Securities, Insurance, TIR, Valuation reports, External as well as Internal rating,
charge creation etc. All 9 CRA models i.e. 1) Non Trade Regular 2) Trade Regular 3) Non
Trade Simplified 4) Trade Simplified 5) NBFC/ HFC 6) RAMIP (Rating Model for
Infrastructure Projects) 7) Services 8) Mutual Fund and 9) RRB model are also incorporated
in presanction
process. Further, other important aspects of pre-sanction process e.g. preparation and online
submission of credit proposals (For sanction/Approval/ Confirmation), CMA data
management, Analysis of financial statements and ratio analysis, validation of CRA etc. have
been mapped to pre sanction process under LLMS.
Sanction Process: Online sanction by all credit committees in all Business groups and also
Corporate Centre.
Post sanction Process: This involves Standard assets review, SMA review, NPA review,
irregularity reports, FFR/MSOD/Stock statement analysis, various review reports, sharing of
information, Unit inspection/customer interactions, dynamic review of internal rating etc.
Application admin at GITC Belapur creates Local Admin for the Branch and provides User ID
and password. The Local Admin will in turn form a team of RM, CSO, Cr Analyst, BM, Risk
Rater, Desk Officer etc. All these roles are team specific as LLMS is based on the Team
concept. Hence, formation of team is mandatory. The teams can be created at all levels i.e
Branch, RBO, Admin Office, LHO and Corporate Centre.
Following are the special features of LLMS:

Any user (Role holder) can view the movement of proposal alongwith the queries raised by the
next authorities.
All proposals are processed on S format only devised by the Bank.
Auto generation of all documents in PDF format and maintain it permanently.
Alert to users/authorities through email & SMS
Facility to upload/download documents like Memorandum & Article of Association etc.
Online verification of PAN from NSDL and CIBIL/Other CICs.
Capture required data from CBS & HRMS
Facility to upload/download CMA data in XLS & ODS formats.
Maintain history of customer data.
Online verification of RBI Defaulters list
Role based software- access provided on need-to-know basis.

Effective implementation of LLMS will eliminate the time lag of credit process and will bring it
down to hours from days.

What does it stand for?
Your Interview, Shrabana Kumar Nial

Mudra Bank stands for Micro Units Development Refinance Agency (MUDRA). Also, Mudra,
Hindi, means currency.
Mudra Bank is being set up through a statutory enactment and will be responsible for
and refinancing through a Pradhan Mantri MUDRA Yojana. This Bank would be responsible
for regulating and refinancing all Micro-finance Institutions (MFI) which are in the business of
lending to micro/small business entities engaged in manufacturing, trading and services
activities. The Bank would partner with state level/regional level co-ordinators to provide
finance to Last Mile Financer of small/micro business enterprises.
The Bank will be set up with a corpus of Rs 20,000 crore and a credit guarantee fund of Rs
3,000 crore.
The Finance Ministry said measures to be taken up by MUDRA are targeted towards
mainstreaming young, educated or skilled workers and entrepreneurs including women
Major Product Offerings
MUDRA Bank has rightly classified the borrowers into three segments: the starters, the midstage finance seekers and the next level growth seekers. To address the three segments,
MUDRA Bank has launched three loan instruments:
1. Shishu: covers loans upto Rs 50,000/2. Kishor: covers loans above Rs 50,000/- and upto Rs 5 lakh
3. Tarun: covers loans above Rs 5 lakh and upto Rs 10 lakh
Initially, sector-specific schemes will be confined to Land Transport, Community, Social &
Personal Services, Food Product and Textile Product sectors. Over a period of time, new
schemes will be launched to encompass more sectors.
Some of the Offerings Planned for the Future:
MUDRA Card, Portfolio Credit Guarantee and Credit Enhancement

Make in India is an international marketing or manufacturing hub campaign slogan unveiled
by the Prime Minister of India, Narendra Modi on September 25, 2014 to attract companies
from around the world to invest and manufacture in India. The major objective behind this
initiative is to focus upon the heavy industries and public enterprises while generating
employment in India. It is a major new national program initiative designed to facilitate
investment, foster innovation, enhance skill development, protect intellectual property and
build best-in-class manufacturing infrasture.
The highlights and purpose of Come, Make in India are

The campaign, Make in India is aimed at making India a manufacturing hub and economic
transformation of India while eliminating the encumbered laws and regulations, making
bureaucratic processes smoother, easier and shorter, and subjecting the government to respond
in more transparent, responsible and accountable manner.
The government emphasized upon the framework which includes the time-bound
clearances through a single online portal which will be further aided by the eight-member team

Your Interview, Shrabana Kumar Nial

dedicated to answering investor queries within 48 hours and addressing key issues including
labour laws, skill development and infrastructure.
This campaign basically gives hope to the unemployed millions to find a decent job if not big jobs
as manufacturing leads to creation of lot of industry and service sector activities. However, India
will have to make sure to focus on quality education as also skill development. It is also expected
that this is a precursor to change in labour laws that would make investing in manufacturing more
attractive to Indians as well as to other nations.


Reduction of commuting needs for the workforce multiple Central Business Districts (CBDs) and

Industrial zones; Integration of land uses encouraging mixeduse; affordable Workers Housing
located near the industrial zones.
High access mass transit corridors; Encouraging cycling & pedestrian modes.
Recycling and reuse of water and solid wastes.
Energy sufficiency through use of renewables.
Conservation of better agricultural land & protection of sensitive natural environment (Coastal
zones, forests, sanctuaries).
Integration of existing villages into the new cities.
SMART City IT based real time Control and Governance.

Focus sector:
The need to raise the global competitiveness of the Indian manufacturing sector is imperative
for the countrys long term-growth. The National Manufacturing Policy is by far the most
comprehensive and significant policy initiative taken by the Government. The policy is the
first of its kind for the manufacturing sector as it addresses areas of regulation, infrastructure,
skill development, technology, availability of finance, exit mechanism and other pertinent
factors related to the growth of the sector.
1. Employment-intensive industries like textiles and garments, leather and footwear, gems
and jewellery and food processing industries.
2. Capital goods industries like machine tools,heavy electrical equipment, heavy transport,
earthmoving & mining equipment.
3. Industries with strategic significance like aerospace, shipping, IT hardware & electronics,
telecommunication equipment, defence equipment and solar energy.
4. Industries where India enjoys a competitive advantage such as automobiles,
pharmaceuticals & medical equipment.
5. Small & medium enterprises.
6. Public sector enterprises.
7. Development of 64,340 kms of National Highways under various programmes such as The
National Highway Development Project (NHDP), Special Accelerated Road Development
Program for the North-east region and Left Wing Extremist (SARDPNE), National Highways
Interconnectivity Improvement Project (NHIIP).
8. Launch of the Ultra Mega Power Project (UMPP) scheme through tariff-based competitive
Strengths of Indian Manufacture Sector
India has already marked its presence as one of the fastest emerging economies of the world.
The country is expected to rank amongst the worlds top three growth economies and amongst
the top three manufacturing destinations by 2020.

Your Interview, Shrabana Kumar Nial

Favourable demographic dividends for the next 2-3 decades. Sustained availability of quality
The cost of manpower is relatively low as compared to other countries.
Responsible business houses operating with credibility and professionalism.
Strong consumerism in the domestic market.
Strong technical and engineering capabilities backed by top-notch scientific and technical
Well-regulated and stable financial markets open to foreign investors.

Five challenges that the Make in India mission could face.

1. Creating healthy business environment will be possible only when the administrative
machinery is efficient. India has a notorious stigma of red-tapism, when it comes to
procedural and regulatory clearances. A business-friendly environment will only be created if
India can signal easier approval of projects and set up hasstle-free clearance mechanism.
2. India should also be ready to tackle elements that adversely affect competitiveness of
manufacturing. To make the country a manufacturing hub, the unfavourable factors must be
done-away.India should also be ready to give tax concessions to companies who come and
set up unit in the country.
3. Indias small and medium-sized industries can play a big role in making the country take
the next big leap in manufacturing. India should be more focused towards novelty and
innovation for these sectors. The government has to chart out plans to give special sops and
privileges to these sectors.
4. Indias make in India campaign will be constantly compared with Chinas Made in China
campaign. The dragon launched the campaign at the same day as India seeking to retain its
manufacturing prowess. India should constantly keep up its strength and leverage its
manpower so as to outpace Chinas supremacy in the manufacturing sector.
5. India must also encourage high-tech imports, research and development (R&D) to
upgrade Make in India to give edge-toedge competition to the Chinese counterparts
campaign. To do so, India has to be better prepared and motivated to do worldclass R&D.
The government must
ensure that it provides platform for such research and development. Make in India is now at
a nascent stage and may take some years till the infrastructure inputs are set up. We may
have to wait till then to see the outcomes or returns or benefits of the mission. This also
depends on political will and stability in the country. External factors such as global economy
and multilateral forums such as SAARC, OPEC, BRICS, and G-20 etc may have certain
impact on the mission.


According to the latest UNFPA report, number of the Indians above 60 years is projected to
rise to 55% by 2050. The demographics also indicate an increasing longevity with a more
active lifestyle after retirement owing to betterment in medical facilities. While this is good
news, it also means that tomorrows retirees will have a longer retirement and must,
therefore, accumulate a bigger corpus for their sunset years. Retirement planning involves
disciplined saving and vigilant investment to build a sufficient retirement corpus.All these
concerns were taken into account when the National Pension Scheme was rolled out for all
citizens of India by the Pension Fund Regulatory & Development Authority (PFRDA), from
Your Interview, Shrabana Kumar Nial

May 01, 2009. The NPS is a regulated, transparent and flexible scheme which has laid down
prudent investing norms for fund managers, and their performance and portfolios are
regularly monitored by the NPS Trust under the supervision of the PFRDA. As a step towards
instituting pension reforms, Government of India moved from a defined benefit pension to a
defined contribution based pension system. This scheme would also help government of
India to reduce its pension liabilities. Unlike existing pension fund of Government of India that
offered assured benefits, NPS has defined ontribution and individuals can decide where to
invest their money.
Key stakeholders of the National Pension System
1. Point of Presence (POP): Points of Presence (POPs) are the first points of interaction of
the NPS subscriber with the NPS architecture. The authorized branches of a POP, called
Point of Presence Service Providers (POP-SPs), acts as collection points and extend a
number of customer services to NPS subscribers.
2. Central Recordkeeping Agency (CRA): The recordkeeping, administration and customer
service functions for all subscribers of the NPS are being handled by the National Securities
Depository Limited (NSDL), which is acting as the Central Record keeper for the NPS.
3. Pension Funds (PFs)/ Pension Fund Managers (PFMs): The six Pension Funds (PFs)
appointed by PFRDA manage the retirement savings funds under the NPS.
4. Trustee Bank: The Trustee Bank appointed under NPS facilitates fund transfers across
various entities of the NPS system viz. PFMs, ASPs, Subscribers, etc. Bank of India (BoI)
has been appointed as the Trustee Bank.
5. Annuity Service Providers (ASPs): ASPs would be responsible for delivering a regular
monthly pension to the subscribers after his exit from the NPS.
6. NPS Trust: A Trust, appointed under the Indian Trusts Act, 1882 is responsible for taking
care of the funds under the NPS in the best interests of subscribers.
7. Pension Fund Regulatory and Development Authority (PFRDA): An autonomous body set
up by the Government of India to develop and regulate the pension market in India.
Eligibility for joining the NPS:
A citizen of India, whether resident or nonresident can join the scheme, subject to the
following conditions:
I. An individual should be between 18 60 years of age as on the date of submission of his
application to the POP (Point Of Presence).
II. He/ she should comply with the Know Your Customer (KYC) norms and all the documents
required for KYC compliance need to be mandatorily submitted. Under the NPS, each
subscriber opens an account with Central Recordkeeping Agency (CRA) which will be
identified through a unique Permanent Retirement Account Number (PRAN). The unique
Permanent Retirement Account Number (PRAN) is issued by the CRA to each subscriber of
the NPS.
The scheme is structured into two tiers as under:
I. Tier I account An account where subscribers contribute their savings for retirement into a
non-withdrawable account, and
II. Tier II account - A voluntary savings account from which subscribers are free to withdraw
their savings whenever they wish to. An active Tier I account is a pre requisite for opening of
a Tier II account The pension contributions of Central Government employees covered by the
National Pension System (NPS) are invested by professional Pension Fund Managers in line
with investment. A majority of State Governments have shifted to the defined contribution
Your Interview, Shrabana Kumar Nial

National Pension System.

Investment choices for the subscribers:
Under NPS, a subscriber has the choice of choosing these functionaries Point of Presence
(POP), Pension Fund Manager (PFM), and the Annuity Service Provider (ASP), for
administration of investment of his funds: For the convenience of those subscribers who
are not in a position to choose a particular investment scheme/option, the NPS provides
default options of asset allocation for safeguarding the interests of the subscribers. The NPS
offers two approaches to invest your money:
Active choice - Individual Funds: A subscriber will have the option to actively decide as to
how his NPS pension fund is to be invested in the following three options: Asset Class E investments in predominantly equity market instruments. Asset Class C- investments in fixed
income instruments other than Government securities. Asset Class G - investments in
Government securities.
Auto choice - Lifecycle Fund: In this option, the investments will be made in a life-cycle
fund. Here, the fraction of funds invested across three asset classes will be determined by a
predefined portfolio. At the lowest age of entry (18 years), the auto choice will entail
investment of 50% of pension wealth in E Class, 30% in C Class and 20% in G Class.
The ratio of investment remains fixed for all contributions until the participant reaches the age
of 36, where after, the weight in E and C asset classes will decrease annually and the
weight in G class will increase annually till it reaches 10% in E, 10% in C and 80% in G
class at an age of 55.
Tax benefits of NPS:
Employee as well as employers contribution to the account of employee is eligible for tax
exemption as per the Income Tax Act. Employee contribution to NPS upto 10% of basic plus
DA is permissible deduction under section 80 CCD(1) within overall limit of Rs. 1 lakh per
annum. The print out of the Statement of Transaction (SOT) could be used as a document for
claiming Tax benefit. Employers contribution to NPS upto 10% of basic plus DA is allowed
deduction under section 80CCD (2) and excluded from the limit of Rs.1 lakh per annum
Employers can also claim tax benefits for the amount contributed towards pension of
employees. Up to 10% of the salary (basic and dearness allowance) of employers
Contribution can be deducted as Business Expense from their Profit & Loss Account.
Other Benefits of NPS:
1. It is voluntary - NPS is open to every Indian Citizen. A subscriber can choose the
amount he wants to set aside and save every year.
2. It is simple - A subscriber has to do is to open an account with any one of POPs and get a
3. It is flexible - Subscribers can choose their own investment option and pension fund and
see their money grow.
4. It is portable - Subscribers can operate their account from anywhere in the country, even
if they change the city, job or their pension fund manager.
Swavalamban Yojana (or NPS Lite):
NPS-Lite or Swavalamban Yojana is a scheme under which for each NPS account opened,
Government will contribute Rs. 1000 per year for the next three years, subject to the
condition that the persons have made a minimum contribution of Rs.1,000 per annum in Tier
I account and a maximum of Rs. 12,000 per annum, for both Tier I and II taken together. The
NPS-Lite is basically designed with the intention to secure the future of the people who are
economically disadvantaged and who are not financially well to do. NPS Lite system is a low
Your Interview, Shrabana Kumar Nial

charge structure and is based on group servicing model. The people forming part of this low
income groups will be represented through their organizations known as Aggregators who
would facilitate the subscriber in registration, transfer of pension contributions and subscriber
maintenance functions. Subscribers in the age group of 18 to 60 can join NPS - Lite through
the aggregator and can contribute till the age of 60.


Objective of Pradhan Mantri Jan-Dhan Yojana (PMJDY) is ensuring access to various
financial services like availability of basic savings bank account, access to need based credit,
remittances facility, insurance and pension to the excluded sections i.e. weaker sections &
low income groups. The deep penetration of banking facility at affordable cost is possible
only with effective use of technology. PMJDY is a National Mission on Financial Inclusion
encompassing an integrated approach to bring about comprehensive financial inclusion of all
the households in the country. The plan envisages universal access to banking facilities with
at least one basic banking account for every household, spread of financial literacy, access
to credit, extension of insurance and pension facility. In addition, the beneficiaries would get
RuPay Debit card having inbuilt accident insurance covers of Rs. 1 lakh. The plan also
envisages channelling all Government benefits (from Centre / State / Local Body) direct to
the beneficiaries accounts and pushing the Direct Benefits Transfer (DBT) scheme of the
Union Government. The technological issues like poor connectivity and glitch on on-line
transactions will be addressed on priority basis. Mobile transactions through telecom
operators and their established centres as Cash Out Points are also planned to be used for
Financial Inclusion under the Scheme. Also an effort is being made to reach out to the youth
of this country to participate in this Mission Mode Programme.
Scheme Details
Pradhan Mantri Jan-Dhan Yojana (PMJDY) is National Mission for Financial Inclusion to
ensure access to financial services, namely, Banking/ Savings & Deposit Accounts,
Remittance, Credit, Insurance, Pension in an affordable manner. Account can be opened in
any bank branch or Business Correspondent (Bank Mitra) outlet. PMJDY accounts are being
opened with Zero balance. However, if the account-holder wishes to get cheque book,
he/she will have to fulfill minimum balance criteria.
The Yojana has been implemented in two phases:-Phase-I from 15th August 2014:
(i) Universal access to banking facilities for all households across the country through a bank
branch or a fixed point Business Correspondent (BC) called Bank Mitra within a reasonable
distance except areas with infrastructure & connectivity constraints.
(ii) To cover all households with atleast one Basic Banking Account with RuPay Debit card
facility and inbuilt accident insurance cover of Rs.1 lakh. Further an overdraft facility upto
Rs.5000 will also be permitted to Adhaar enabled accounts after satisfactory operation in the
account for 6 months.
(iii) Financial literacy programme which aims to escalate necessary information upto village
level. Financial literacy: A combination of financial awareness, knowledge, skills, attitude
and behaviour necessary to make sound financial decisions and ultimately achieve individual
financial wellbeing.
(iv) The Mission also envisages expansion of Direct Benefit Transfer under various
Government Schemes through bank accounts of the beneficiaries.
Your Interview, Shrabana Kumar Nial

(v) The issuance of Kisan Credit Card (KCC) as RuPay Kisan Card is also proposed to be
covered under the plan.
Phase-II :

Providing micro insurance to the people.

(ii) Unorganised sector Pension schemes like Swavalamban through the Business
The Yojana is being monitored in a Mission Mode with the Finance Minister being the Head of the
It is estimated to cover 7.50 crore households with at least one account under the Yojana and also
a large number of dormant accounts would be activated
Electronic Transfer of subsidies under various schemes of Government would be enabled.

Documents required to open an account under Pradhan Mantri Jan-Dhan Yojana

1. If Aadhaar Card/Aadhaar Number is available, then no other document is required. If
address has changed, then a self certification of current address is sufficient.
2. If Aadhaar Card is not available, then any one of the following Officially Valid Documents
(OVD) is required. Eg: Voter ID Card, Driving License, PAN Card, Passport & NREGA Card.
If these documents also contain your address, it can serve both as Proof of Identity and
3. If a person does not have any of the officially valid documents mentioned above, but it is
categorized as low risk by the banks, then he/she can open a bank account by submitting
any one of the following documents:
Identity Card with applicants photograph issued by Central/State Government Departments,
Statutory/Regulatory Authorities, Public Sector Undertakings, Scheduled Commercial Banks
and Public Financial Institutions.
Letter issued by a gazetted officer, with a duly attested photograph of the person.

Special Benefits under PMJDY Scheme

Interest on deposit.
Accidental insurance cover of Rs.1.00 lac
No minimum balance required. However,for withdrawal of money from any ATM with Rupay Card,

some balance is advised to be kept in account.

Life insurance cover of Rs.30,000/Easy Transfer of money across India.
Beneficiaries of Government Schemes will get Direct Benefit Transfer in these accounts.
After satisfactory operation of the account for 6 months, an overdraft facility upto Rs.5000 will be
permitted to only one account per household, preferably a lady of the family.
Access to Pension, insurance products.
Account holders will be provided zerobalance bank account with RuPay debit card, in addition to
accidental insurance cover of Rs 1 lakh. RuPay card holder within the age group 18-70 years is
eligible for accident insurance benefit. Account holder needs to inform respective bank within 30
days of the accident to get the benefits

Atal Pension Yojana (APY) Details of the Scheme.

Your Interview, Shrabana Kumar Nial

The Government of India is extremely concerned about the old age income security of the
working poor and is focused on encouraging and enabling them to join the National Pension System
(NPS). To address the longevity risks among the workers in unorganised sector and to encourage the
workers in unorganised sector to voluntarily save for their retirement, who constitute 88% of the total
labour force of 47.29 crore as per the 66th Round of NSSO Survey of 2011-12, but do not have any
formal pension provision, the Government had started the Swavalamban Scheme in 2010-11.
However, coverage under Swavalamban Scheme is inadequate mainly due to lack of guaranteed
pension benefits at the age of 60.
The Government announced the introduction of universal social security schemes in the
Insurance and Pension sectors for all Indians, specially the poor and the under-privileged, in the
Budget for the year 2015-16. Therefore, it has been announced that the Government will launch the
Atal Pension Yojana (APY), which will provide a defined pension, depending on the contribution, and
its period. The APY will be focussed on all citizens in the unorganised sector, who join the National
Pension System (NPS) administered by the Pension Fund Regulatory and Development Authority
(PFRDA). Under the APY, the subscribers would receive the fixed minimum pension of Rs. 1000 per
month, Rs. 2000 per month, Rs. 3000 per month, Rs. 4000 per month, Rs. 5000 per month, at the
age of 60 years, depending on their contributions, which itself would be based on the age of joining
the APY. The minimum age of joining APY is 18 years and maximum age is 40 years. Therefore,
minimum period of contribution by any subscriber under APY would be 20 years or more. The benefit
of fixed minimum pension would be guaranteed by the Government. The APY would be introduced
from 1st June, 2015.

Benefit of APY

Fixed pension for the subscribers ranging between Rs. 1000 to Rs. 5000, if he joins and
contributes between the age of 18 years and 40 years. The contribution levels would vary and would
be low if subscriber joins early and increase if he joins late.

Eligibility for APY

Atal Pension Yojana (APY) is open to all bank account holders. The Central Government
would also co-contribute 50% of the total contribution or Rs. 1000 per annum, whichever is lower, to
each eligible subscriber account, for a period of 5 years, i.e., from Financial Year 2015-16 to 2019-20,
who join the NPS between the period 1st June, 2015 and 31st December, 2015 and who are not
members of any statutory social security scheme and who are not income tax payers. However the
scheme will continue after this date but Government Co-contribution will not be available.
The Government co-contribution is payable to eligible PRANs by PFRDA after receiving the
confirmation from Central Record Keeping Agency at such periodicity as may be decided by PFRDA.

Age of joining and contribution period

The minimum age of joining APY is 18 years and maximum age is 40 years. The age of exit
and start of pension would be 60 years. Therefore, minimum period of contribution by the subscriber
under APY would be 20 years or more.
Focus of APY

Mainly targeted at unorganised sector workers.

Your Interview, Shrabana Kumar Nial


Enrolment and Subscriber Payment

All bank account holders under the eligible category may join APY with auto-debit facility to
accounts, leading to reduction in contribution collection charges. The subscribers should keep the
required balance in their savings bank accounts on the stipulated due dates to avoid any late
payment penalty. Due dates for monthly contribution payment is arrived based on the deposit of first
contribution amount. In case of repeated defaults for specified period, the account is liable for
foreclosure and the GoI co-contributions, if any shall be forfeited. Also any false declaration about
his/her eligibility for benefits under this scheme for whatsoever reason, the entire government
contribution shall be forfeited along with the penal interest. For enrolment, Aadhaar would be the
primary KYC document for identification of beneficiaries, spouse and nominees to avoid pension
rights and entitlement related disputes in the long-term. The subscribers are required to opt for a
monthly pension from Rs. 1000 - Rs. 5000 and ensure payment of stipulated monthly contribution
regularly. The subscribers can opt to decrease or increase pension amount during the course of
accumulation phase, as per the available monthly pension amounts. However, the switching option
shall be provided once in year during the month of April. Each subscriber will be provided with an
acknowledgement slip after joining APY which would invariably record the guaranteed pension
amount, due date of contribution payment, PRAN etc.

Enrolment agencies

All Points of Presence (Service Providers) and Aggregators under Swavalamban Scheme
would enrol subscribers through architecture of National Pension System. The banks, as POP or
aggregators, may employ BCs/Existing non - banking aggregators, micro insurance agents, and
mutual fund agents as enablers for operational activities. The banks may share the incentives
received by them from PFRDA/Government, as deemed appropriate.


Operational Framework of APY

It is Government of India Scheme, which is administered by the Pension Fund Regulatory and
Development Authority. The Institutional Architecture of NPS would be utilised to enrol subscribers
under APY. The offer document of APY including the account opening form would be formulated by

Funding of APY

Government would provide (i) fixed pension guarantee for the subscribers; (ii) would cocontribute 50% of the total contribution or Rs. 1000 per annum, whichever is lower, to eligible
subscribers; and (iii) would also reimburse the promotional and development activities including
incentive to the contribution collection agencies to encourage people to join the APY.

Migration of existing subscribers of Swavalamban Scheme to APY

10.1 The existing Swavalamban subscriber, if eligible, may be automatically migrated to APY with
an option to opt out. However, the benefit of five years of government Co-contribution under APY
would not exceed 5 years for all subscribers. This would imply that if, as a Swavalamban beneficiary,
he has received the benefit of government Co-Contribution of 1 year, then the Government cocontribution under APY would be available only 4 years and so on. Existing Swavalamban
beneficiaries opting out from the proposed APY will be given Government co-contribution till 2016-17,

Your Interview, Shrabana Kumar Nial

if eligible, and the NPS Swavalamban continued till such people attained the age of exit under that
10.2 The existing Swavalamban subscribers between 18-40 years will be automatically migrated to
APY. For seamless migration to the new scheme, the associated aggregator will facilitate those
subscribers for completing the process of migration. Those subscribers may also approach the
nearest authorised bank branch for shifting their Swavalamban account into APY with PRAN details.
10.3 The Swavalamban subscribers who are beyond the age of 40 and do not wish to continue
may opt out the Swavalamban scheme by complete withdrawal of entire amount in lump sum, or may
prefer to continue till 60 years to be eligible for annuities there under.

Penalty for default

11.1 Under APY, the individual subscribers shall have an option to make the contribution on a
monthly basis. Banks are required to collect additional amount for delayed payments, such amount
will vary from minimum Rs. 1 per month to Rs 10/- per month as shown below:

Rs. 1 per month for contribution upto Rs. 100 per month.
Rs. 2 per month for contribution upto Rs. 101 to 500/- per month.
Rs. 5 per month for contribution between Rs 501/- to 1000/- per month.
Rs. 10 per month for contribution beyond Rs 1001/- per month.

The fixed amount of interest/penalty will remain as part of the pension corpus of the subscriber.



Discontinuation of payments of contribution amount shall lead to following:

After 6 months account will be frozen.

After 12 months account will be deactivated.
After 24 months account will be closed.
Operation of additional amount for delayed payments

12.1 APY module will raise demand on the due date and continue to raise demand till the amount is
recovered from the subscribers account.
12.2 The due date for recovery of monthly contribution may be treated as the first day /or any other
day during the calendar month for each subscriber. Bank can recover amount any day till the last day
of the month. It will imply that contribution are recovered as and when funds are available any point
during the month.
12.3 Monthly contribution will be recovered on FIFO basis- earliest due instalment will recovered
first along with the fixed amount of charges as mentioned above.
12.4 More than one monthly contribution can be recovered in month subject to availability of the
funds. Monthly contribution will be recovered along with the monthly fixed due amount, if any. In all
cases, the contribution is to be recovered along with the fixed charges. This will be banks internal
process. The due amount will be recovered as and when funds are available in the account.

Your Interview, Shrabana Kumar Nial


Investment of the contributions under APY

13.1 The amount collected under APY are managed by Pension Funds appointed by PFRDA as per
the investment pattern specified by the Government. The subscriber has no option to choose either
the investment pattern or Pension Fund.

Continuous Information Alerts to Subscribers

14.1 Periodical information to the subscribers regarding balance in the account, contribution credits
etc. will be intimated to APY subscribers by way of SMS alerts. The subscribers will have the option to
change the non financial details like nominees name, address, phone number etc whenever
14.2 All subscribers under APY remain connected on their mobile so that timely SMS alerts can be
provided to them at the time of making their subscription, auto-debit of their accounts and the balance
in their accounts.

Exit and pension payment

15.1 Upon completion of 60 years, the subscribers will submit the request to the associated bank
for drawing the guaranteed monthly pension.
15.2 Exit before 60 years of age is not permitted, however, it is permitted only in exceptional
circumstances, i.e., in the event of the death of beneficiary or terminal disease.

Age of Joining, Contribution Levels, Fixed Monthly Pension and Return of
Corpus to the nominee of subscribers
16.1 The Table of contribution levels, fixed minimum monthly pension to subscribers and his
spouse and return of corpus to nominees of subscribers and the contribution period is given below.
For example, to get a fixed monthly pension between Rs. 1,000 per month and Rs. 5,000 per month,
the subscriber has to contribute on monthly basis between Rs. 42 and Rs. 210, if he joins at the age
of 18 years. For the same fixed pension levels, the contribution would range between Rs. 291 and Rs.
1,454, if the subscriber joins at the age of 40 years.


The scheme will be a one year cover, renewable from year to year,Accident Insurance
Scheme offering accidental death and disability cover for death or disability on account of an
accident.The scheme would be offered / administered through Public Sector General
Insurance Companies (PSGICs) and other General Insurance companies willing to offer the
product on similar terms with necessary approvals and tie up with Banks for this purpose.
Participating banks will be free to engage any such insurance company for implementing the
scheme for their subscribers.
Scope of coverage: All savings bank account holders in the age 18 to 70 years in
participating banks will be entitled to join. In case of multiple saving bank accounts held by
an individual in one or different banks, the person would be eligible to join the scheme
Your Interview, Shrabana Kumar Nial

through one savings bank account only.Aadharwould be the primary KYC for the bank
Enrollment Modality / Period: The cover shall be for the one year period stretching from 1 st
June to 31st May for which option to join / pay by auto-debit from the designated savings
bank account on the prescribed forms will be required to be given by 31 st May of every year,
extendable up to 31st August 2015 in the initial year. Initially on launch, the period for joining
may be extended by Govt. of India for another three months, i.e. up to 30 th of November,
2015. Joining subsequently on payment of full annual premium may be possible on specified
terms. However, applicants may givean indefinite / longer option for enrolment / auto-debit,
subject to continuation of the scheme with terms as may be revised on the basis of past
experience. Individuals who exit the scheme at any point may re-join the scheme in future
years through the above modality. New entrants into the eligible category from year to year
or currently eligible individuals who did not join earlier shall be able to join in future years
while the scheme is continuing.
Benefits:As per the following table:


Table of Benefits
Total and irrecoverable loss of both eyes or loss
of use of both hands or feet or loss of sight of
one eye and loss of use of hand or foot

Sum Insured
Rs. 2 Lakh
Rs. 2 Lakh

Total and irrecoverable loss of sight of one eye

or loss of use of one hand or foot

Rs. 1 Lakh

Premium: Rs.12/- per annum per member. The premium will be deducted from the account
holders savings bank account through auto debit facility in one installment on or before 1 st
June of each annual coverage period under the scheme. However, in cases where auto debit
takes place after 1st June, the cover shall commence from the first day of the month following
the auto debit.
The premium would be reviewed based on annual claims experience. However, barring
unforeseen adverse outcomes of extreme nature, efforts would be made to ensure that there
is no upward revision of premium in the first three years.
Eligibility Conditions:
The savings bank account holders of the participating banksaged between 18 years
(completed)and 70 years (age nearer birthday) who givetheir consent to join / enable autodebit, as per the above modality, will be enrolled into the scheme.
Master Policy Holder: Participating Bank will be the Master policy holder on behalf of the
participating subscribers. A simple and subscriber friendly administration & claim settlement
process shall be finalized by the respective general insurance companyin consultation with
the participating Banks.
Your Interview, Shrabana Kumar Nial

Termination of cover: The accident cover for the member shall terminate on any of the
following events and no benefit will be payable there under:
1.On attaining age 70 years (age nearest birth day).
2.Closure of account with the Bank or insufficiency of balance to keep the insurance in force.
3..In case a member is covered through more than one account and premium is received by
the Insurance Company inadvertently, insurance cover will be restricted to one only and the
premium shall be liable to be forfeited.
4..If the insurance cover is ceased due to any technical reasons such as insufficient balance
on due date or due to any administrative issues, the same can be reinstated on receipt of full
annual premium, subject to conditions that may be laid down. During this period, the risk
cover will be suspended and reinstatement of risk cover will be at the sole discretion of
Insurance Company.
5.Participating banks will deduct the premium amount in the same month when the auto debit
option is given, preferably in May of every year, and remit the amount due to the Insurance
Company in that month itself.
The scheme, subject to the above, will be administered as per the standard procedure
stipulated by the Insurance Company. The data flow process and data proformawill be
provided separately.
It will be the responsibility of the participating bank to recover the appropriate annual
premiumfrom the account holderswithin the prescribed periodthrough auto-debit process.
Enrollment form / Auto-debit authorizationin the prescribed proforma shall be obtained and
retained by the participating bank. In case of claim, the Insurance Companymay seek
submission of the same. Insurance Companyreserves the right to call for these documents
at any point of time.
The acknowledgement slip may be made into an acknowledgement slip-cum-certificate of
The experience of the scheme will be monitored on yearly basis for re-calibration etc., as
may be necessary.
Appropriation of Premium:

Insurance Premium to Insurance Company: Rs.10/- per annum per member

Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.1/- per annum per member
Reimbursement of Administrative expenses to participating Bank: Rs.1/- per annum per member

The proposed date of commencement of the scheme will be 1 st June 2015.The next Annual
renewal date shall be each successive 1st of June in subsequent years.
The scheme is liable to be discontinued prior to commencement of a new future renewal date
if circumstances so require.
Your Interview, Shrabana Kumar Nial


The scheme will be a one year cover, renewable from year to year, Insurance Scheme
offering life insurance cover for death due to any reason. The scheme would be offered /
administered through LIC and other Life Insurance companies willing to offer the product on
similar terms with necessary approvals and tie ups with Banks for this purpose. Participating
banks will be free to engage any such life insurance company for implementing the scheme
for their subscribers.
Scope of coverage: All savings bank account holders in the age 18 to 50 years in
participating banks will be entitled to join. In case of multiple saving bank accounts held by
an individual in one or different banks, the person would be eligible to join the scheme
through one savings bank account only. Aadhar would be the primary KYC for the bank
Enrolment period: Initially on launch for the cover period 1st June 2015 to 31st May 2016,
subscribers will be required to enroll and give their auto-debit consent by 31st May 2015.
Late enrollment for prospective cover will be possible up to 31st August 2015, which may be
extended by Govt. of India for another three months, i.e. up to 30th of November, 2015.
Those joining subsequently may be able to do so with payment of full annual premium for
prospective cover, with submission of a self-certificate of good health in the prescribed
Enrolment Modality: The cover shall be for the one year period stretching from 1st June to
31st May for which option to join / pay by auto-debit from the designated savings bank
account on the prescribed forms will be required to be given by 31st May of every year, with
the exception as above for the initial year. Delayed enrollment with payment of full annual
premium for prospective cover may be possible with submission of a selfcertificate of good
health. Individuals who exit the scheme at any point may re-join the scheme in future years
by submitting a declaration of good health in the prescribed proforma. In future years, new
entrants into the eligible category or currently eligible individuals who did not join earlier or
discontinued their subscription shall be able to join while the scheme is continuing, subject to
submission of self-certificate of good health.
Rs.2 lakhs is payable on members death due to any reason.
Rs.330/- per annum per member. The premium will be deducted from the account holders
savings bank account through auto debit facility in one installment, as per the option given,
on or before 31 st May of each annual coverage period under the scheme. Delayed
enrollment for prospective cover after 31st May will be possible with full payment of annual
premium and submission of a self-certificate of good health. The premium would be reviewed
based on annual claims experience. However, barring unforeseen adverse outcomes of
extreme nature, efforts would be made to ensure that there is no upward revision of premium
in the first three years.
Eligibility Conditions:
Your Interview, Shrabana Kumar Nial

The savings bank account holders of the participating banks aged between 18 years
(completed) and 50 years (age nearer birthday) who give their consent to join / enable autodebit, as per the above modality, will be enrolled into the scheme. b) Individuals who join
after the initial enrollment period extending up to 31st August 2015 or 30th November 2015,
as the case may be, will be required to give a selfcertification of good health and that he /
she does not suffer from any of the critical illnesses as mentioned in the applicable Consent
cum Declaration form as on date of enrollment or earlier.
Master Policy Holder:
Participating Banks will be the Master policy holders. A simple and subscriber friendly
administration & claim settlement process shall be finalized by LIC / other insurance
company in consultation with the participating bank.
Termination of assurance: The assurance on the life of the member shall terminate on any
of the following events and no benefit will become payable there under: 1) On attaining age
55 years (age near birth day) subject to annual renewal up to that date (entry, however, will
not be possible beyond the age of 50 years). 2) Closure of account with the Bank or
insufficiency of balance to keep the insurance in force. 3) In case a member is covered under
PMJJBY with LIC of India / other company through more than one account and premium is
received by LIC / other company inadvertently, insurance cover will be restricted to Rs. 2
Lakh and the premium shall be liable to be forfeited. 4) If the insurance cover is ceased due
to any technical reasons such as insufficient balance on due date or due to any
administrative issues, the same can be reinstated on receipt of full annual premium and a
satisfactory statement of good health. 5) Participating Banks shall remit the premium to
insurance companies in case of regular enrolment on or before 30th of June every year and
in other cases in the same month when received.
The scheme, subject to the above, will be administered by the LIC P&GS Units / other
insurance company setups. The data flow process and data proforma will be informed
separately. It will be the responsibility of the participating bank to recover the appropriate
annual premium in one installment, as per the option, from the account holders on or before
the due date through auto-debit process. Members may also give one-time mandate for
auto-debit every year till the scheme is in force. 3 Enrollment form / Auto-debit authorization /
Consent cum Declaration form in the prescribed proforma shall be obtained and retained by
the participating bank. In case of claim, LIC / insurance company may seek submission of
the same. LIC / Insurance Company reserves the right to call for these documents at any
point of time. The acknowledgement slip may be made into an acknowledgement slip-cumcertificate of insurance. The experience of the scheme will be monitored on yearly basis for
re-calibration etc., as may be necessary.
Appropriation of Premium:
Insurance Premium to LIC / insurance company : Rs.289/- per annum per member 2)
Reimbursement of Expenses to BC/Micro/Corporate/Agent : Rs.30/- per annum per member
3) Reimbursement of Administrative expenses to participating Bank: Rs.11/- per annum per
member The proposed date of commencement of the scheme will be 1st June 2015.The next
Annual renewal date shall be each successive 1 st of June in subsequent years. The scheme
is liable to be discontinued prior to commencement of a new future renewal date if
circumstances so require.

Your Interview, Shrabana Kumar Nial

Sukanya Samriddhi Account

Government recently launched Sukanya Samriddhi Account Saving scheme is for girl child. This scheme
is specially designed for girls higher education or marriage needs. Lets go through detail of Sukanya
Samriddhi account.

Eligibility SSA may be opened by the natural / legal guardian in the name of a girl child from the
birth of the girl child till she attains the age of ten years and any girl child who had attained the age of
ten years, one year prior to the commencement of SSA Rules 2014 shall also be eligible for opening of
account. i.e. any girl child born after 01.12.2003.
Natural/ Legal guardian may open two accounts in the name of two girl children. Third
account in case of twin girl as second birth or if first birth itself results in three girl children.
ii) Documents:
Birth Certificate of a girl child and KYC of the guardian.
iii) Deposits: Initial deposit Rs.1000/- thereafter any amount in multiples Rs.100/-.provided
Minimum Deposit in a year is Rs.1000/- and Maximum is Rs.150,000/-.
iv) Duration of deposits in account .
Minimum deposit mandatory till 14 years from the date of opening.
v) Interest on Deposit
(i) Cumulative, compounded yearly till maturity.
(ii) Non- cumulative, Monthly interest payment on complete thousands by
credit to Savings Bank Account. The balances in fraction of
thousands will continue to earn interest at prevailing rate.
(iii) Interest rate to be decided by GoI , presently 9.2 % .

vi) Withdrawal
Withdrawal allowed only after the girl child attains 18 years of age. Amount of withdrawal upto
50% of the balance at the credit at the end of preceding financial year.
vii) Transfer of account
Account is transferable anywhere in India if the girl child in whose name the account stands
shifts to a place other than city or locality where the account stands.
viii) Premature closure :
(i) Death of account holder on production of Death Certificate
(ii) By explicit orders of Central Govt , in case the operation of account causes hardship to account
(iii) Marriage of Girl Child after 18 years of age.

vii) Maturity The account shall mature on completion of 21 years from the date of opening
the account. In case the account continues after maturity / not claimed on maturity, interest at
the prevailing rate will be payable till final closure.

Features of Sukanya Samriddhi Account

Sukanya Samriddhi account can be opened on girl child name by her biological parents of legal

Your Interview, Shrabana Kumar Nial

Per girl child only single account is allowed. Parents can open this account for maximum two girl
child. In case of twins this facility will be extended to third child.
Maximum age limit for opening this account is 10 years. One year relaxation available this year.
Minimum deposit amount for this account is 1000 Rs/- and maximum is 1,50,000 Rs/- per year.
If minimum amount is not deposited, there will be fine of 50 Rs/- every year of default.
Money to be deposited for 14 years in this account.
Money can be deposited by cash or cheque.
Maturity date is 21 years from date of opening or marriage date of girl child whichever is earlier.
Interest rate of this account is 9.2% for FY 2015-16.
One can withdraw 50% money for higher study of girl child after her age of 18 years.
Account can be opened in post office or in Authorized bank branches.
This account can be operated by parents of child till girl attains age of 10 years. On attaining
age of ten years, the account holder that is the girl child may herself operate the account.
This account can be closed in case of death of girl child.
Passbook facility is available with Sukanya Samriddhi account.
The pass book shall be presented to the post office or bank at the time of depositing money in
the account and receiving payment of interest and also at the time of final closure of the
account on maturity.
Document required for opening Sukanya Samriddhi account: Birth certificate of girl child
Address proof
Identity proof


Financial Inclusion:
Financial inclusion is about (a) the broadening of financial services to those people who do
not have access to financial services sector ; (b) the deepening of financial services for
people who have minimal financial services; and (c) greater financial literacy and consumer
protection so that those who are offered the products can make appropriate choices. The
imperative for financial inclusion is both a moral one as well as one based on economic
efficiency. It aims to give everyone the tools and resources to better themselves, and in doing
so, better the country.
Business Correspondent Model:
With the objective of ensuring greater financial inclusion and increasing the outreach of the
banking sector, scheduled commercial banks including Regional Rural Banks (RRBs) and
Local Area Banks (LABs) have been permitted to use the services of intermediaries in
providing financial and banking services through the use of Business Correspondent Model
Guidelines for engaging Business Correspondents (BCs): Due diligence may be carried out
on the individuals / entities to be engaged as BCs prior to their engagement. The due
diligence exercise may, inter alia, cover aspects such as (i) reputation/market standing, (ii)
Your Interview, Shrabana Kumar Nial

financial soundness, (iii) management and corporate governance, (iv) cash handling ability
and (v) ability to implement technology solutions in rendering financial services. Eligible
individuals/entities: The banks may
engage the following individuals/entities as BC.


Individuals like retired bank employees, retired teachers, retired government employees and exservicemen, individual owners of kirana/medical / Fair Price shops, individual Public Call Office (PCO)
operators, agents of Small Savings schemes of Government of India Insurance Companies,
individuals who own Petrol Pumps, authorized functionaries of well run Self Help Groups (SHGs)
which are linked to banks, any other individual including those operating Common Service Centres
NGOs/ MFIs set up under Societies/ Trust Acts and Section 25 Companies ;
Cooperative Societies registered under Mutually Aided Cooperative Societies Acts/ Cooperative
Societies Acts of States/Multi State Cooperative Societies Act;
Post Offices; and
Companies registered under the Indian Companies Act, 1956 with large and widespread retail outlets,
excluding Non Banking Financial Companies (NBFCs).

While a BC can be a BC for more than one bank, at the point of customer interface, a retail
or a sub-agent of a BC shall represent the bank which has appointed the BC. However, it has
now been decided to permit interoperability at the retail outlets or sub-agents of BCs (i.e. at
the point of customer interface), provided the technology available with the bank, which has
appointed the BC, supports interoperability, subject to the following conditions:
The transactions and authentications at such retail outlets or sub-agents of BCs are carried out online;
The transactions are carried out on Core Banking Solution (CBS) platform; and

Scope of activities: The activities to be undertaken by the BCs would be within the normal
course of banking business. The scope of activities of a BC may include (i) identification of
borrowers; (ii) collection and preliminary processing of loan applications including verification
of primary information/data; (iii) creating awareness about savings and other products and
education and advice on managing money and debt counselling; (iv) processing and
submission of applications to banks; (v) promoting, nurturing and monitoring of Self Help
Groups/ Joint Liability Groups/Credit Groups/others; (vi) post-sanction monitoring; (vii)
followup for recovery, (viii) disbursal of small value credit; (ix) recovery of principal/collection
of interest; (x) collection of small value deposits; (xi) sale of micro insurance/ mutual fund
products/ pension products/ other third party products and (xii) receipt and delivery of small
value remittances/ other payment instruments.
KYC Norms: The banks may, if necessary, use the services of the BC for preliminary work
relating to account opening formalities. However, ensuring compliance with KYC and AML
norms under the BC model continues to be the responsibility of banks.Customer
confidentiality: The banks should ensure the preservation and protection of the security and
confidentiality of customer information in the custody or possession of BC. Distance
Criterion: With a view to ensuring adequate supervision over the operations and activities of
the retail outlet/sub-agent of BCs by banks, every retail outlet/sub-agent of BC is required to
be attached to and be under the
Your Interview, Shrabana Kumar Nial

oversight of a specific bank branch designated as the base branch. The distance between
the place of business of a retail outlet/sub-agent of BC and the base branch should ordinarily
not exceed 30 kms in rural, semi-urban and urban areas and 5 kms in metropolitan centres.
Ultra Small Branches:
For furthering financial inclusion, banks may establish outlets in rural centres from which BCs
may operate. These BC outlets may be in the form of low cost simple brick and mortar
structures. Every BC is under the oversight of a base branch. Accordingly, the base branch
will have to provide oversight to the BC outlets which will include periodic visits by officers of
the base branch to these outlets as well as to other places of functioning of BCs.
With expanding access to banking services, it is also important that quality services are
provided through the ICT based delivery model. Thus it would be necessary to have an
intermediate brick and mortar structure (Ultra Small Branch) between the present base
branch and BC locations so as to provide support to a cluster of BC units at a reasonable
distance. These Ultra Small Branches may be set up between the base branch and BC
locations so as to provide support to about 8-10 BC Units at a reasonable distance of 3-4
kilometres. These could be either newly set up or by conversion of the BC outlets. Such Ultra
Small Branches should have minimum infrastructure such as a Core Banking Solution (CBS)
terminal linked to a pass book printer and a safe for cash retention for operating large
customer transactions and would have to be managed full time by bank officers/ employees.
It is expected that such an arrangement would lead to efficiency in cash management,
documentation, redressal of customer grievances and close supervision of BC operations.
These could be satellite offices or regular branches as the case may be.
BCs can operate from such Ultra Small Branches as their association with the branch will
increase their legitimacy and credibility in the area and give people increased confidence to
use their services. However, banks should ensure that such an arrangement does not result
in BCs limiting operations to serving customers at such branches only, if, due to geographical
spread, such arrangements may lead to BC services not being easily available in the entire
area of their operations. Finally, as engagement of intermediaries such as Business
Correspondents involves significant reputational, legal and operational risks, due
consideration should be given by banks to those risks.


The long awaited five year Foreign Trade Policy(FTP) announced on 2 nd April 2015 unrolled
two new incentive schemes for goods & services exports with a focus on labour intensive
and high potential sectors. To ensure stability in the policy regime, the centre has opted for a
mid- term review instead of an annual one. The policy was looking at certain systemic
changes in addition to extending through subsidies and interest subvention. The schemesMerchandise Exports from India Scheme (MEIS) and Services Exports from India Scheme
(SEIS) will replace a lethora of existing ones and reward exporters on the basis of the
importance attached to the xported items and the targeted market. The new five year FTP
provides a framework for export of goods & services as well as generation of employment
and increasing value addition in the country, in view of the MAKE IN INDIA vision of our
Prime Minister.
Your Interview, Shrabana Kumar Nial

The ease of doing business and digitisation were among the key focus areas in the new
Trade policy. Although the FTP has not set an annual export target for the new fiscal, it has
fixed a long term target of exporting goods and services worth $9000 billion annually by
2020, which is almost double the current level. The policy also spells out measures for
increased digitisation of exports and imports with the aim to gradually move towards a
paperless office and self certification by established exporters and importers. Special
economic zones (SEZs), suffering from a loss of investor interest after the imposition of
Memorandum of Alternate Tax and Dividend Distribution Tax on developers, too have been
extended benefits under the MEIS & SEIS schemes. The highest level of incentive in
services exports is for sectors such as health, education and tourism at 5 %, while for the
rest it is 3 percent or 2%. On the brighter side, the duty free incentive schemes that will be
given to exporters will be freely transferable and can be used to pay all kinds of taxes,
including excise and customs duties, and can also be sold. The Highlights of Foreign Trade
Policy in detail are as under:
Export from India Schemes:
1. Merchandise Exports from India Scheme (MEIS)
a. Earlier there were 5 different schemes (Focus Product Scheme, Market Linked Focus
Product Scheme, Focus Market Scheme, Agri. Infrastructure Incentive Scrip, VKGUY) for
rewarding merchandise exports with different kinds of duty scrips with varying conditions
(sector specific or actual user only) attached to their use. Now all these schemes have been
merged into a single scheme, namely Merchandise Export from India Scheme (MEIS) and
there would be no conditionality attached to the scrips issued under the scheme.
b. Rewards for export of notified goods to notified markets under Merchandise Exports 2
from India Scheme (MEIS) shall be payable as percentage of realized FOB value (in free
foreign exchange).
2. Service Exports from India Scheme (SEIS)
(a) Served From India Scheme (SFIS) has been replaced with Service Exports from India
Scheme (SEIS). SEIS shall apply to Service Providers located in India instead of Indian
Service Providers. Thus SEIS provides for rewards to all Service providers of notified
services, who are providing services from India, regardless of the constitution or profile of the
service provider.
(b) The rate of reward under SEIS would be based on net foreign exchange earned
3. Chapter 3 Incentives (MEIS & SEIS) to be available for SEZs also
4. Duty credit scrips to be freely transferable and usable for payment of custom duty, excise
duty and service tax.
5. Status Holders:
The nomenclature of Export House, Star Export House, Trading House, Star Trading House,
Premier Trading House certificate has been changed to One, Two, Three, Four, Five Star
Export House. The criteria for export performance for recognition of status holder have been
changed from Rupees to US dollar earnings. The new criteria is as under:
Status category
Export Performance FOB / FOR (as
converted) Value (in US $ million) during
current and previous two years
Your Interview, Shrabana Kumar Nial

One Star Export House

Two Star Export House
Three Star Export House
Four Star Export House
Five Star Export House


6. Approved Exporter Scheme Self certification by Status Holders

Manufacturers who are also Status Holders will be enabled to self-certify their manufactured
goods as originating from India with a view to qualify for preferential treatment under different
Preferential Trading Agreements [PTAs], Free Trade Agreements [FTAs], Comprehensive
Economic Cooperation Agreements [CECAs] and Comprehensive Economic Partnerships
Agreements [CEPAs] which are in operation. They shall be permitted to self-certify the goods
as manufactured as per their Industrial Entrepreneur Memorandum (IEM) / Industrial Licence
(IL)/ Letter of Intent (LOI).
1. Reduced Export Obligation (EO) for domestic procurement under EPCG scheme: Specific
Export Obligation under EPCG scheme, in case capital goods are procured from indigenous
manufacturers, which is currently 90% of the normal export obligation (6 times at the duty
saved amount) has been reduced to 75%, in order to promote domestic capital goods
manufacturing industry.
2. Higher level of rewards under MEIS for export items with high domestic content and value
addition. It is proposed to give higher level of rewards to products with high domestic content
and value addition, as compared to products with high import content and less value
1. Online filing of documents/ applications and Paperless trade in 24x7 environment
a) In order to move further towards paperless processing of reward schemes, it has been
decided to develop an online procedure to upload digitally signed documents b) Henceforth,
hardcopies of applications and specified documents would not be required to be submitted to
RA, saving paper as well as cost and time for the exporters
It is proposed to have online inter-ministerial consultations for approval of export of SCOMET
items, Norms fixation, Import Authorisations, Export Authorisation, in a phased manner, with
the objective to reduce time for approval. As a result, there would not be any need to submit
hard copies of documents for these purposes by the exporters.
Exporter Importer Profile: Facility has been created to upload documents in Exporter/Importer
Profile. There will be no need to submit copies of permanent records/ documents (e.g. IEC,
Manufacturing licence, RCMC, PAN etc.) repeatedly with each application, once uploaded.
Online message exchange with CBDT and MCA: It has been decided to have on line
message exchange with CBDT for PAN data and with Ministry of Corporate Affairs for CIN
and DIN data.
Online applications for refunds: Online filing of application for refund of TED is being 11
introduced for which a new ANF has been created
DGFT is currently working on the following EDI initiatives:
Your Interview, Shrabana Kumar Nial

Message exchange for transmission of export reward scrips from DGFT to Customs.
Message exchange for transmission of Bills of Entry (import details) from Customs to DGFT.
Online issuance of Export Obligation Discharge Certificate (EODC)
Message exchange with Ministry of Corporate Affairs for CIN & DIN.
Message exchange with CBDT for PAN.
Open API for submission of IEC application.
Mobile applications for FTP
EOUs, EHTPs, STPs have been allowed to share infrastructural facilities among themselves
Inter unit transfer of goods and services have been allowed among EOUs, EHTPs, STPs,
and BTPs EOUs have been allowed facility to set up Warehouses near the port of export
STP units, EHTP units, software EOUs have been allowed the facility to use all duty free
equipment/goods for training purposes which helps in developing the skills; 100% EOU units
have been allowed facility of supply of spares/ components up to 2% of the value of the
manufactured articles to a buyer in domestic market for the purpose of after sale services
NFE completion can be extended by one year. Time period for validity of Letter of
Permission (LOP) for EOUs/EHTP/ STPI/BTP Units has been revised
At present, EOUs/EHTP/STPI units are permitted to transfer capital goods to other EOUs,
EHTPs, STPs, SEZ units. Now a facility has been provided that if such transferred capital
goods are rejected by the recipient, then the same can be returned to the supplying unit,
without payment of duty
.(h) A simplified procedure will be provided to fast track the de-bonding / exit of the STP/
EHTP units. This will save time for these units and help in reduction of transaction cost.
(i) EOUs having physical export turnover of Rs.10 crore and above, have been allowed the
facility of fast track clearances of import and domestic procurement. They will not have to
seek procurement permission for every import consignment.
Validity of SCOMET export authorisation has been extended from the present 12 months to
24 months. It will help industry to plan their activity in an orderly manner and obviate the
need to seek revalidation or relaxation from DGFT
Normal export obligation period under advance authorization is 18 months. Export obligation
period for export items falling in the category of defence, military store, aerospace and
nuclear energy shall be 24 months from the date of issue of authorization
Goods falling in the category of handloom products, books / periodicals, leather footwear,
toys and customized fashion garments, having FOB value up to Rs.25000 per consignment
can be exported in manual mode through Foreign Post Offices at New Delhi, Mumbai and
In order to encourage manufacturing of capital goods in India, import under EPCG
Authorisation Scheme shall not be eligible for exemption from payment of antidumping
duty, safeguard duty and transitional product specific safeguard duty
Calicut Airport, Kerala and Arakonam ICD, Tamil Nadu have been notified as registered ports
for import and export.
Your Interview, Shrabana Kumar Nial


India has already extended duty free tariff preference to 33 Least Developed Countries
(LDCs) across the globe. This is being notified under FTP.
In an endeavor to resolve quality complaints and trade disputes, between exporters and
mporters Committee on Quality Complaints and 18 Trade Disputes (CQCTD) is being
constituted in 22 offices and would have members from EPCs/ FIEOs/APEDA/EICs.
TOWNS of EXPORT EXCELLENCE: Government of India has already identified 33 towns
as towns of export excellence for which these two have also been added through Foreign
Trade Policy.

India is a growing market for global remittances. The Indian community is spread worldwide
and they are remitting money using different Money Transfer modes to India. MoneyGram
(MG), one of the large money transfer organization in the world, is operating from over
321,000 locations spread over 198 countries. They operate in India under a RBI license.
Foreign remittances come into India as per RBI guidelines covered under Money Transfer
Service Scheme (MTSS). To tap into this business of Money Transfer, our Bank has entered
into an agreement with Thomas Cook India Ltd (TCIL) a Principal Agent for MoneyGram.
The Money Transfer Service Scheme (MTSS)
MTSS is a quick and easy way of transferring cross-border personal remittances, such as,
remittances towards family maintenance and remittances favouring foreign tourists visiting
India. Donations/contributions to charitable institutions/trusts, trade
remittances, remittance towards purchase of property, investments or credit to NRE
Accounts shall not be made through this arrangement. No outward remittance from
India is permissible.RBI has formulated guidelines for providing Money Transfer Services
Scheme to the general public, which will be applicable to this MoneyGram remittance
business as well. As per RBI guidelines:
Maximum limit per transaction is USD 2,500.
A beneficiary can receive a maximum of 30 transactions in a calendar year.
Remittances can be committed only for personal use.
Maximum cash amount paid out to the receiver is Rs.50,000.00. If the amount exceeds
Rs.50,000.00 then amount shall be paid by means of account payee cheque/ demand
draft/ payment order, etc., or credited directly to the beneficiary's bank account only.
However, in exceptional circumstances, where the beneficiary is a foreign tourist, higher
amounts may be disbursed in cash. Full details of such transactions should be kept on
record for scrutiny by the auditors/ inspectors.
Under MTSS the remitters and beneficiaries are individual only.

Your Interview, Shrabana Kumar Nial


01.Mudra Bank - new regime, old philosophy
For some strange reason, every new government wants to launch a new bank, or
a major financial institution and multiple financial products. Previous
governments have been responsible for superfluous organisations like IDFC with
headquarters in Chennai, the Bharatiya Mahila Bank in 2013, the Rajiv Gandhi
Equity Scheme, etc. The Narendra Modi government, following the same path,
may well outdo previous governments, because Mr Modi, like Indira Gandhi,
believes the government alone can "fix" the many problems India has. In just 10
months, the government has launched Jan Dhan Yojana with a lot of fanfare and
a financial product called the Sukanya Samriddhi Scheme in January this year.
On April 8, probably with as much fanfare and full-page ads in newspapers, the
government will announce the launch of the Micro Units Development and
Refinance Agency (Mudra) Bank.
Is there a need for Mudra Bank? Well, arguments can always be cooked up to
support a direct government intervention to solve any one of our many chronic
problems. One such problem is inequitable availability of finance. Too much of
capital goes to large companies and too little to small businessmen. This is
unfortunate because study after study has proved that not only are smaller
borrowers more honest in repaying debt, but collectively they have a huge
economic impact. To believers of state intervention, like Mr Modi, the answer to
this is a strong government initiative. How else can you break the stranglehold of
"greedy" moneylenders and "lazy" bankers to provide money to the small guy?
This sounds "equitable" in theory and, therefore, an irresistible as a policy action.
Except that whatever Mr Modi is trying today, has been tried before and has
failed miserably.
Remember, it is this same desire to ensure equity through determined
government action that drove the socialist Indira Gandhi to nationalise banks and
force them to lend to "priority sectors" that include small businesses and micro
units. Not only did such "directed credit" not work, but government control over
banks led to large-scale corruption and repeated recapitalisation through
taxpayers' money. This further reduced the money available for small businesses.
It is a bizarre irony that 35 years later, Mr Modi, the darling of the Indian right, is
responding to the same chronic problem with the same failed socialist solution of
Indira Gandhi: a government bank for the small borrowers with a breathtakingly
large remit.
Mudra Bank will be a Rs 20,000-crore institution, which would "primarily be
responsible for refinancing all micro-finance institutions which are in the business
of lending to micro and small business entities". It will be supported by an
Your Interview, Shrabana Kumar Nial

additional Rs 3,000 crore from the Budget to create a credit guarantee corpus to
guaranteeing loans being provided to the micro enterprises. It would partner with
state-/regional-level coordinators to provide finance to the "last-mile financier" of
small and micro business enterprises. Not to forget that it will "primarily be
responsible for laying down policy guidelines for micro/small enterprise financing
business; registration, regulation and accreditation/rating of MFI entities; laying
down responsible financing practices to ward off indebtedness and ensure proper
client protection principles and methods of recovery".
It would also be "responsible for the development of a standardised set of
covenants governing last-mile lending to micro/small enterprises; promoting
right technology solutions for the last mile; formulating and running a credit
guarantee scheme and creating a good architecture of last-mile credit delivery to
micro businesses under the scheme of Pradhan Mantri Mudra Yojana."Phew! So
Mudra Bank will be a lender, consultant, regulator, think tank and an agent of
social change, all rolled in one. Unfortunately, if this is what Mudra Bank is
supposed to be, it will suffer from a congenital defect at birth: too many
conflicting objectives - something that beset Unit Trust of India earlier and still
affects government-controlled banks and insurance companies. This is how all
public sector units used to be conceived. Clearly, the babus who have drawn up
the Mudra Bank seem to belong to the 1970s, too, not just the idea.
But wait a minute. What can Mudra Bank do that can't be done now with some
tweaking of the existing system? I dug around a bit and discovered, to my
horror, that successive governments have focused on micro-lending for decades.
As a result, the Modi government has already inherited a massive bureaucracy
and welfare system meant for small businessmen. This includes:

Small Industries Development Bank of India

National Small Industries Corporation
National Bank for Agriculture and Rural Development
Credit Guarantee Scheme
Priority sector lending by all banks
Regional rural banks
Bharatiya Mahila Bank
National Scheduled Castes Finance and Development Corporation
National Scheduled Tribes Finance and Development Corporation
National Backward Classes Finance and Development Corporation
State Financial Corporations
State Industrial Development Corporations
Microfinance programmes
Assistance to Entrepreneurship Development Institutes
National Innovation Foundation
Your Interview, Shrabana Kumar Nial

A Rs 10,000-crore









Mudra Bank will be backed by a Rs 3,000-crore credit guarantee scheme. But a

credit guarantee scheme is already functioning for the past decade. Till August
31, 2014, cumulatively 15,99,128 proposals from micro and small enterprises
have been approved for guarantee cover for aggregate credit of Rs 79,647.15
crore.There are at least three ministries now involved in helping small business in
some way or the other: finance; micro, small and medium enterprises; and a
new ministry of skill development and entrepreneurship; apart from ministries
like tribal affairs and social justice running their own sectarian schemes for
tribals and scheduled castes, respectively. I may have missed a few more
organisations and the many departmental schemes that try to put money
extorted from taxpayers, into the pockets of chosen people.
This array of government companies, schemes and initiatives overseen by a vast
bureaucracy, based on some warped but failed notion of government-delivered
equity, was not enough for Mr Modi. He had to set up a new bank, another new
bureaucracy, borrowing ideas of the 1970s, even as there is no accountability for
taxpayers' money already wasted on numerous initiatives to "support" small
businesses of various kinds. And this from a regime that had promised minimum
government. What a shame!

02.Another Gold Hunt

The Centres proposed gold monetisation scheme is superior in some ways to
existing ones for mobilising the yellow metal. The new scheme lowers the
minimum gold that can be deposited from 500 grams to 30 grams thereby
widening its appeal. Ideally, there should have been no prescribed minimum, but
given that banks will incur transaction costs, this is a workable mid-path.
Processing time has been reduced from around three months to just a few hours
and the tax incentives in the existing schemes have been retained. The scheme
attempts to achieve a dual objective helping those with idle gold in family
vaults earn some tax-free interest and meeting the insatiable demand for gold
from jewellers.
But there are some factors that may prevent the new scheme from becoming a
big success. One, those with inherited gold jewellery, which means most Indians,
are too attached to part with it, even for an interest. Since the monetised gold is
lent to jewellers, all deposits have to be melted down and converted into a purer
form (standard 99.5 purity). Another drawback in the scheme is that it does not
meet the needs of those who sell gold to raise funds for exigencies. Currently,
this class of people turn to small jewellers who buy at below the market rates.
Your Interview, Shrabana Kumar Nial

The Centre could launch an ancillary scheme to buy gold from those wishing to
sell it, thus bringing more gold into circulation.
The draft proposal follows the suggestion of the KUB Rao Committee report in
letting banks decide the interest rate to be offered. It is imperative that the rate
is attractive, at least 3 per cent per annum, to persuade customers to part with
their gold. The centres that test gold purity, a process that is required to open a
deposit account, should be made accessible. Today, there are only 350 such
centres. Since most of them are in the metros, it will be difficult for those in rural
areas to avail themselves of this scheme. With around 65 per cent of the gold
stock in rural India, the reach of the project will be limited unless more testing
centres are set up. But the real test of this scheme and perhaps any gold
monetisation scheme will lie in assuring depositors that they will not be
harassed by income tax queries about how they came by the gold. The bald, if
somewhat unpalatable, truth is that the Centre will have to shut its eyes to the
source of funds used to purchase deposited gold if it wants to make the scheme
a success. Like it has done for the Kisan Vikas Patra scheme, the Centre could
consider scrapping the KYC requirement altogether. Such an approach may not
be a great advertisement for a government that is ostensibly committed to
eradicating black money. But the truth is, gold is largely unaccounted and if the
Centre wants the scheme to succeed, it has to find a suitable way of making it

03.Post Bank of India: All You Need To Know,

New Delhi, May 24: Communications and Information Technology Minister Ravi
Shankar Prasad on Friday said the proposed Post Bank of India will be a "game
changer". It will take financial inclusion to a new level, he said while addressing
the heads of circles of the postal department. Here's all you need to know about
the Post Bank of India:
1. "Post offices must gear up for this," Mr Prasad said on Thursday. His comments hint at
the fact the India Post could be close to earning a banking licence from the Reserve Bank
of India (RBI).
2. Last year when the RBI invited licences for opening banks, India Post was one of the
applicants. However, it was not given a banking licence in the first round where only
IDFC and Bandhan finance were granted licences in April 2014.
3. Once the Post Bank is set up, the government plans to take it public or gradually
increase public participation to raise funds after converting the vast post office network
into a commercial bank.
4. India Post has 1.4 lakh rural branches, while all other banks put together have about
35,000 rural banks most of which are not in rural panchayat towns.
5. Prime Minister Narendra Modi had set up a task force in 2014 to leverage the postal
network in India and to enhance the role of India Post in financial inclusion, among other
services like delivery of goods for e-commerce firms.

Your Interview, Shrabana Kumar Nial

6. The task force's report suggested that the government should set up a holding company
under the Department of Posts for immediate roll out of banking, insurance and ecommerce services by the 1.55 lakh strong postal network.
7. The panel suggested establishing Post Bank of India as a separate entity with a branch in
each district in the first three years with initial capital of Rs 500 crore to be funded by
the government.
8. Post Bank of India and the Jan Dhan financial inclusion scheme can complement each
other, former Cabinet Secretary TSR Subramanian, who headed the task force, had said.
9. The idea of Post Bank of India was first mooted in 2006, when it was announced that
India Post would open a bank to erase its Rs 1,000 crore deficit during the 11th Five
Year Plan.
Of India Post's 1.55 lakh post offices, more than 1.39 lakh are in rural areas. On
an average, a post office serves an area of 21.21 sq. km and a population of 7,175

Coal has been a red-hot topic ever since the infamous coal-gate scandal, as the
media named it, was flagged by the Comptroller and Auditor General of India
(CAG) in March 2012. The Supreme Court is set to rule on one of the aspects of
the case today. After a long saga that involved the Prime Ministers Office,
Central Bureau of Investigation and many hearings, the Supreme Court has
already declared two weeks ago that all the coal blocks allocated between 1993
and 2012 were illegal.
What is it?
Coal-gate is the moniker attached to the irregularities unearthed by the CAG in
the allocation of coal blocks to private parties. The story goes like this. The
Central government has a monopoly over all coal reserves in the country, as per
the Coal Mines Nationalisation Act of 1973.However, with Coal India struggling to
produce coal from the 1980s, power producers and industries such as steel and
cement were in pain. So a new policy was announced in September 1993 to
allow private and public sector companies to mine coal for captive use.
The new policy set up a screening committee to recommend who got the blocks,
based on certain guidelines. Around 70 coal blocks were allocated between 1993
and 2005 and over double this number were allocated in the next four
years.Even as allocations slowed post 2009 and there were rumblings of
controversy, a CAG report in March 2012 added fuel to the fire. The CAG said
that the mode of allocation of coal blocks to private parties was subjective and
lacked transparency. It also held that the ad-hoc allocations (in place of
transparent auctions) of coal blocks to private firms, had caused a whopping loss
of Rs. 1.8 lakh crore to the exchequer. A new policy based on auctions was duly
Your Interview, Shrabana Kumar Nial

adopted in September 2013, but controversy continued to cloud the older blocks
and the issue went to Court.
Why is it important?
A transparent mechanism to pep up coal output is vital to keep the economic
engine chugging. Although India ranks fifth in the world when it comes to coal
reserves, output has suffered. In 2013-14, for instance, Indian output of 566
million tonnes (mt) was less than the demand of over 720 mt. Importing burns
up precious foreign exchange the coal import bill has more than doubled in the
last five years to Rs. 95,175 crore in 2013-14.The cost of coal has a crucial
bearing on inflation too, via industries such as power, steel and aluminium.
Having a dependable coal resource close to where it is consumed will reduce
overall costs. Hence, coal resources must be handed out with a eye to greater
national interest.
Why should I care?
As a citizen, lack of transparency and favouritism when dealing with precious
natural resources is a cause for concern. Also, as a consumer, it is not fair that
private power companies that won access to low priced coal were not passing on
the benefits to power buyers. You have plenty of reason to worry about coal if
you are a stock market investor. For scores of private sector power, aluminium
and metal companies are mixed up in coal-gate. Many of their projects could
become unviable without captive coal.
The bottomline
Coal-gate is a reminder that if youre doing business in India and dealing with the
Government, the long arm of law can dig up issues even after decades.

05.NITI Aayog
The winds of change sweeping across the corridors of power since Narendra Modi
took charge at the Centre have dislodged not just bureaucrats, but also
institutions once regarded as key pillars of governance in the country. Among the
big moves of the government was to consign to history the more than six
decades old Planning Commission, and to usher in its place a brand new NITI
Aayog. Earlier this month, the NITI Aayogs governing council held its first
What is it?

Your Interview, Shrabana Kumar Nial

For starters, NITI Aayog is a catchy acronym in keeping with the Centres
penchant for alphabet soups pregnant with symbolism. NITI is short for National
Institution for Transforming India. In Sanskrit and Hindi for which the new
dispensation has a soft spot, NITI means policy and Aayog means commission.
Ergo: the Planning Commission has been replaced by the Policy Commission.
But the change in the NITI Aayogs functioning isnt restricted to a new name.
This new economic think-tank, manned by domain experts, has been constituted
to provide strategic and technical advice to the Centre and the State
governments on key policy matters. The Planning Commission also did this but
allegedly in a heavily centralised, big-brother way suited to a command economy.
With the Indian economy becoming more market-driven and individual States
requiring a nuanced policy framework, the NITI Aayog has the mandate to give
individual States much more say in their planning and development process. It
hopes to replace the one way Centre-to-State flow of policy with cooperative
federalism. The NITI Aayog will now recommend policies. Their implementation
will be up to the governments. Importantly, unlike the Planning Commission, the
NITI Aayog does not have the power of allocating central funds to States. This
will now be done by the finance ministry.
The governing council of the NITI Aayog has on board the chief ministers of all
the States and lieutenant governors of the Union Territories. This council, in its
first meeting, decided to undertake a review of centrally sponsored schemes
whether they should be continued, transferred to States or scrapped.
Why is it important?
A distinguished think-tank with strategic vision and expertise and the courage to
offer objective advice to the government is imperative in any democratic setup.
This is especially so for India given its mind-boggling complexity and diversity.
The NITI Aayog, by giving States more control, may also prevent ivory tower
policymaking and give it a greater grassroots flavour.
Why should I care?
Its almost always about the economy, stupid. Government policies touch our
lives in a myriad ways. More jobs, better salaries, less inequality, lower prices,
more choice as consumers, old-age benefits all this and much more depends
on the decisions and policies of the powers-that-be. Sane, logical advice based
on unbiased data and ground realities enhance the quality of these decisions and
Your Interview, Shrabana Kumar Nial

Whether you call it the NITI Aayog or the Planning Commission, the proof of the
pudding will be in the eating. Most of Indias problems originate not from the lack
of elaborate plans, but for the lack of seriousness in implementation.

06.What is a payments bank

It is aimed at enabling payments and remittances to migrant labour workforce,
low income households and small businesses that do not have access to regular
banking branches. The maximum deposit that a payment bank can accept from
an individual customer is Rs. 1 lakh. A payments bank can issue you a debit and
ATM cards for easy transactions. However, it cannot undertake any lending
How is a small bank different?
Small bank can do everything that a large bank can do but at least 50 per cent of
its loan portfolio should constitute loans and advances of less than Rs. 25 lakh.
Big names in the fray
RIL-SBI, Vodafone, Idea Cellular-Aditya Birla Nuvo, Bharti Airtel, Videocon,
Future Group, IIFL, UAE Exchange
What is a smart city ?
Here are 10 attributes that may well describe a smart city
The National Democratic Alliance (NDA) government has certainly focused India's
attention on the urbanisation imperative and got the "smart city" concept
buzzing. As things stand, the urbanisation agenda is in three parts:

urban renewal of 500 cities;

rejuvenation of heritage cities (like Varanasi), and
the implementation of 100 smart cities; understood to be both "greenfield"
and "brownfield".

While renewal and rejuvenation are relatively easier to grasp, there appears to
be only an evocative imagination in the public mind as to what the contours of a
smart city could be.
So, here are 10 suggested attributes that may well describe, and to some extent
define a smart city.

Your Interview, Shrabana Kumar Nial

(i) Information, communication,

and technology (ICT)-enabled
governance: The international and domestic big daddies of the information
technology (IT) world have, with their aggressive presentations, virtually
hijacked the smart city definition to only mean IT-enabled administration and
governance. While such a restrictive definition is undesirable, enabling ICT is
clearly one of the more important planks. Often referred to as "smart
government", the use of integrated technology platforms that are easily
accessible across various devices is certainly key to providing access,
transparency, speed, participation and redressal in public services. For example,
on December 10, 2014, the President launched the Karnataka Mobile One app in
Bengaluru that would provide citizens a range of e-governance services over
mobile phones.
(ii) Efficient utilities - energy, water, solid waste and effluents: This area
is often the most talked about after IT. Smart meters, renewable energy, energy
conservation, water harvesting, effluent recycling, scientific solid waste disposal
methods et al are all clearly the hallmark of a smart city.
(iii) Meaningful PPPs: The creative use of public-private partnerships (PPPs) is
a key attribute of the smart city concept. PPPs are to be used not only as a
source of much-needed capital but also for the efficient delivery of utilities with
agreed service-level standards. PPPs could range from health care to street
lighting; and be used wherever there is a clear connection between the provision
of a service and the ability to charge for the same - directly or even indirectly.
(iv) Safety and security: This aspect is high in public consciousness, especially
with disconcerting news on the safety of women, road rage, robbery attacks on
the elderly and juvenile delinquency. Clearly, networks of video-cameras, brightly
lit public areas, intensive patrolling and surveillance, identity-verified access, and
rapid response to emergency calls are all on the expectations list.
(v) Financial sustainability: The 74th Amendment to the Constitution (1992)
enjoins towns and cities to "take charge of their own destinies". Nowhere is this
more important than financial independence. This is only possible with elaborate
and extensive tapping of all sources of revenue - property taxes, advertisements
et al; coupled with astute collection of user-pay charges across the full range of
utilities. It also has to do with the elements of fiscal discipline that would enable
the raising of long-term debt like municipal bonds.
(vi) Citizen-participative local government: The enthusiastic participation of
citizens in local issues needs careful designing of electoral and participative fora.
The current apathy towards civic elections needs comprehensive reversal.

Your Interview, Shrabana Kumar Nial

(vii) Sufficient social capital: Smart cities cannot be devoid of the appropriate
levels of social infrastructure - like schools, hospitals, public spaces, sporting and
recreational grounds and retail and entertainment venues. Along with a brain
that works, and hands and legs that move, it must also have a heart that beats
to the joys of daily living.
(viii) Transit-oriented habitats: "Walk-to-work" is the dream solution here.
Nevertheless, conveniently networked public transportation with first- and lastmile connectivities in place, reduced motivation to use personal vehicles, use of
electric cars, and bicycle paths are all in the expectation matrix.
(ix) Green features: Minimising the carbon footprint and eco-friendliness are
de rigueur. Parks and verdant open spaces, absence of pollution, use of
renewables, conservation and recycling are mandatory.
(x) Minimum population criteria: Towards the end of November 2014,
Panasonic Corporation announced the opening of its new business vector - the
sustainable smart town (SST) at Fujisawa in Japan. It has rooftop solar energy,
electric cars and electric-powered bicycles. However, it comprises only 1,000
homes over 47 acres that will have a population of 3,000 people. This kind of
project is at best a smart enclave, and clearly, in the Indian context, cannot be
included in the definition of a city. India has 5,545 urban agglomerations. Class 1
towns (called cities) are those with a population of 100,000 and above. This
should be the minimum population cut-off for a smart city.
Achieving all the 10 attributes may well be Utopian. So, maybe even if seven out
of the 10 attributes are achieved, we should have no hesitation in declaring an
urban habitation as a smart city.

07. Make in India - beyond the slogan

Last Friday, the governor of the Reserve Bank of India (RBI), Raghuram Rajan,
fired off another clever but misdirected argument, this time about "Make in
India". A few weeks ago he blamed various businesses and bad laws - but not
public sector bankers themselves, or the RBI - for allowing bad loans to balloon.
This time he pointed out that Narendra Modi's "Make in India" campaign should
be suitably modified to "Make for India". His short point was that if the "Make in
India" slogan is supposed to mean pursuing export-led growth, that will not be
easy because of slow global growth. "Indeed in the last decade, even as China
developed on the back of its exports to industrial countries, other emerging
markets flourished as they exported to China. Emerging markets now have to
rely once again on domestic demand."
While this may be correct in a narrow, immediate sense, it is an irrelevant
argument from the policy perspective. Manufacturing for exports or for domestic
Your Interview, Shrabana Kumar Nial

markets are merely outcomes of the way the government manages the economy.
If the economy is mismanaged, specific policies that try to boost either of them
will not work.
Indian businesses need not be told to "Make for India". They will anyway do that.
That's their business. Domestic demand is what they service and all domestic
players are operating in the same local cost structure. If costs rise, they will all
try to pass on the costs to buyers and carry on as before.
Indeed the real issue is neither Make in India nor Make for India. It is the cost of
doing business. If that is high, domestic buyers pay too high a price and the
market does not expand, depriving businesses of economies of scale, which can
push down costs further. The same high cost of doing business makes exports
uncompetitive - whether the global market is conducive to it or not.
So we need to shift the debate beyond this slogan or that, and discuss long-term
prescriptions for boosting manufacturing - whether for exports or for domestic
demand. The answer to both is the same: lower costs to doing business.
Businesspeople need the freedom to make or service anything easily, anywhere,
at a reasonable cost in a competitive environment. If this happens, Indian
business will boom, jobs will be created and exports will rise. "Reasonable cost at
a competitive environment" is almost entirely influenced by macroeconomic
decisions. The question is, has the government even acknowledged this and
started to move in this direction? The most charitable answer is, we don't know.
Since this government is not exactly reticent, we can even conclude nothing
much has happened so far.
We all know that government dominates our lives in every possible way. The
result is that the main factors of production are made expensive by the
government, making India a high-cost economy. Take a look at these three
Human resources
India's education system is a mess. India needs millions of skilled workers,
coming out of thousands of Industrial Training Institute-type of establishments not run by the government. When people come out of college, they are
unemployable. They may be repaying a big education loan, too, which has to be
built into the compensation, pushing costs up again. We also need good quality
basic education. All these are directly influenced by the government - often by
the state government. There is no game plan to set all this right - while the
government is distracted by many irrelevant issues. Skill development is being
talked about, but there is little progress.
Your Interview, Shrabana Kumar Nial

Real estate
While reams have been written about the problems of the land acquisition Act,
this is a problem only for expansion and large new businesses. A much bigger
contribution to high cost of operations comes from the exorbitant cost of real
estate in India, relative to its level of development. Millions of businesses have to
buy either a high-cost property or pay high rent, making their products costlier.
There is no game plan to bring down real estate prices, which will be the biggest
boost for consumers and businesses alike.
Foreign companies can bring their capital and large Indian companies have
access to lower-cost capital from local and global sources. But everybody else,
including consumers, have to borrow at high rates from Indian banks. Here, the
government is keeping the cost of capital high in two ways. One, by not insisting
that the RBI allow many more banks to come in, which will create competition to
supply capital and lower the cost of capital. Two, by remaining the biggest
borrower of capital, setting a benchmark of sorts for high interest rates.
These are mere pointers. There are many other ways the government is making
Indian companies uncompetitive. Without the Modi team making a thorough
analysis of this and taking publicly declared corrective steps, "Make in India" or
"Make for India" will remain empty slogans.

08.Mission 2020: Banks Need to be Cautiously Optimistic

By 2020, there will be a need for at least 40,00050,000 additional

branches and 1,60,000 ATMs
The top 5 percent households, mostly in the metros and Tier I cities, will
account for 30 percent of the total disposable income.
Bank mortgages will cross Rs 40 trillion.
With increased access to Internet, mobile banking will come of age
Investment banking will grow 10 times.

The above predictions about Indian banks in 2020 are based on a study by the
Boston Consulting Group (BCG) and Federation of Indian Chambers of Commerce
and Industry (FICCI) Indias apex chamber representing over 500 industry
associations. There is an indication of growth, but underlying it is the need for a
new business model that would ensure satisfactory services for the next-gen
customers. Driven by the potential of technology and increased pressure for
prioritising convenience and needs of smart age customers, banks have got to
prepare themselves for a new-age hi-tech banking.
Your Interview, Shrabana Kumar Nial

Challenges 2020
There is a need to evaluate both opportunities and challenges. The BCG study
highlights two fundamental challenges that threaten to impair the growth of
banks in the coming decade- Financial inclusion and Human resource challenge in
the public sector.Prime Minister Narendra Modi on August 15 this year announced
a national mission of financial inclusion called Pradhan Mantris Jan-Dhan Yojana,
a program that envisions bank accounts for all Indians. By 2015, the target is 75
mn accounts.
There are millions of families who have mobile phones, but no bank accounts.
We have to change this. The change will commence from this point, he said.If
banks have to create a business model for financial inclusion, they need to take
into consideration the economic policies. For them, a lot depends on rural
infrastructure and economic growth. They cant act in silos.
The BCG study states that banks initiatives have to be supplemented with
comprehensive public sector initiatives for rural infrastructure development.
NABARD could be repositioned for this role.RBI governor Raghuram Rajan feels
that for financial inclusion to be a success, banks must offer products that are
relevant for the poor. In order to draw in the poor, the products should address
their needs a safe place to save, a reliable way to send and receive money, a
quick way to borrow in times of need or to escape the clutches of the money
lender, easy to understand life and health insurance and an avenue to engage in
savings for the old age.
Overall, it requires collaborative efforts and analysts say there is a need for
transformation in the thinking.By far the biggest challenge is one of altering the
mindset of banks, policy makers and bank customers, both potential and
existing, says writer C. R. L. Narasimhan in The Hindu.
Another challenge the banks need to deal with is the shortage of skills. The BCG
study warns against the growing number of retiring senior and middle
management employees by 2020. That leads to the need for re-skilling and
retaining fresh talent. Unless banks gear up with relevant training and efforts
towards hiring the right talent, they will certainly be left far behind in the
Significance of tech: Biometric credit cards
Raghuram Rajan says that banks need to think over using technology to make
their Products, Price and Protection relevant for their customers. Technology may
help in understanding customer profiles and keeping customers informed. On the
use of biometric technology in the IDRBT to establish the identity of individuals,
Your Interview, Shrabana Kumar Nial

he said the biometric technology can help in making transactions with bank cards
relatively safe. Right now, there is a fear off the debit/cards getting into the
hands of wrong person very easily.
Mobile transactions
Gartner says that Indian banking and securities companies will spend Rs 47,000
crore on IT products and services in 2014, an increase of more than 10% over
2013.That indicates how banks are coping with rising mobile banking trends. The
BCG study says even if 2530 percent of mobile users have GPRS / 3G activated;
there would be 250 million to 300 million customers who would access banking
services over the mobile.From June 2013 to June 2014, we have more than
tripled our per month value of transactions from Rs. 3,332 million to over
Rs.10,000 million which is the first for any bank in India, says an ICICI
spokesperson in an article by Wharton university.Technology has given an edge
for banks to take their services forward, but at the same time, they need to be
cautiously optimistic.

09.Lessons from Indias debt crisis

Cronyism and regulatory forbearance are reasons behind the debt
Over the past year, this newspaper has highlighted the worsening debt profile of
Indian companies. Recent data show that there has been only a slight
improvement this year, and Indias bad debt burden continues to be the
economys Achilles heel, preventing a rapid recovery. But rather than pushing for
quick fixes, policymakers need to acknowledge and correct the mistakes of the
past which has led to the debt pile-up.At first glance, Indias debt problem
appears to have become less acute. But as a recent Mark to Market column by
Mobis Philipose pointed out, the concentration of debt in stressed sectors such as
steel, power, and infrastructure remain worryingly high. A year ago, nearly one in
three companies had a net debt exceeding their market capitalization. Less than
one in five belong to that category today but they account for a whopping 57%
of the total debt of all firms for which data was available. Corporate debt levels in
India are among the higher side in Asia, and bank balance sheets among the
most strained.
Indias external debt figures are also worrying. According to the annual report of
the Reserve Bank of India (RBI), Indias external debt-to-GDP (gross domestic
product) ratio rose 1.3 percentage points to 23.3% in the year ending March
2014 over the previous year. Short-term debt (by residual maturity) as a
proportion of overall debt was 40%, as of March. It is likely that the level of
external debt has gone up in the current fiscal year owing to an overseas
borrowing binge by companies. Many of these firms, particularly in the power
Your Interview, Shrabana Kumar Nial

and utilities sector may not have hedged their positions adequately, posing
systemic risks, a recent report by the Bank of International Settlements warned.
Both Indias domestic and external debt vulnerabilities are concentrated in a
handful of large conglomerates in the power, materials, and infra sectors which
expanded at breakneck speed during the boom years. It does not appear to be a
coincidence that many of these firms are politically connected, and that the bulk
of the bad debt burden has been shouldered by state-owned banks, which have
been vulnerable to manipulation by New Delhi. But cronyism is only one reason
for the bad debt problem. Regulatory forbearance in the immediate aftermath of
the great financial crash in 2008 is also to blame, since such forbearance merely
postponed the day of reckoning for indebted firms and hid the true leverage
Even now, it is very difficult to take the reported debt numbers at face value
given that banks still have a lot of leeway to postpone recognition of bad debt.
An examination of United Bank of Indias balance sheet by analysts at Barclays
Capital showed that there were no signs of stress before the sudden spike in bad
assets of the bank earlier this year.There are three key takeaways from Indias
debt crisis. First, the governance and management of banks in India need urgent
overhaul. Banks must follow more transparent accounting standards, and RBI
must take a closer look at their lending mechanisms. State-owned banks need
special attention, and they must be insulated from political pressures. The Nayak
committee recommendations on reforming state-owned banks should be taken
up without further ado.
Second, rules for promoters have been far too soft for far too long, and that
needs to change. RBI has already tightened norms for wilful defaulters, and
according to a recent Business Standard report, the capital markets watchdog,
Securities and Exchanges Board of India might join force to make it difficult for
such defaulters to access the capital markets. Such steps are welcome but we
need more.Third, we must resist the temptation for any kind of bailouts, whether
it is through special packages for stressed sectors or through state owned asset
reconstruction companies. It does not take long for private debt problems to turn
into public debt problems, and we must avoid that trap. The deterioration in
asset quality of state owned banks means that the heavy burden of refinancing
them has already fallen on the taxpayers shoulders. It will be unfair to burden
the taxpayer further.

10.How will workplaces in India look like in 2022?

By 2022, workplaces in India are likely to be characterised by virtual offices,
employing highly skilled or specialised individuals, on a contractual or flexible
basis. Three-fourth of the respondents from India want to work for an
Your Interview, Shrabana Kumar Nial

organisation with a powerful social conscience, while over two-thirds said they
want to retire before 60 years.
The survey by consultancy firm PwC, Future of Work: A journey to 2022,
quizzed 10,000 people across China, India, Germany, the UK and the US on the
future of work and what it meant for them. 1,898 of these respondents were
from India.
A snapshot of workplace priorities of India's Gen-next in 2022
39% Would want to work in an organisation whose values match their own
42% Would want to ideally work for themselves
19% Want to work in an elite organisation that employs only the best
57% Indian employees feel that technological advances will play the most important
part in transforming the way they work in the next 5-10 years
81% Willing to completely re-train to remain relevant
56% Feel that traditional employment won't be around in the future
76% Are prepared to be always available (via technology) in return for secure
39% Want a virtual work-place, where they can log in from any location (including
75% Want to work for an organisation with a powerful social conscience

Current retirement plan:

37% Retirement before 60 years
63% Retirement after 60 years

Future retirement plan:

68% Retirement before 60 years
32% Retirement after 60 years

Your Interview, Shrabana Kumar Nial

11.Full convertibility is on its way,

While it appears the RBI is paving the way for capital account
convertibility, does it presage boom-time for Money-Launderers?
The RBIs executive director, G Padmanabhan, is the latest to express the view
that Indias move towards capital account convertibility (CAC) is inevitable. This
follows similar statements expressed by the minister of state for finance, Jayant
Sinha, as well as the governor, Raghuram Rajan.These views surprised many,
given the fragile corporate balance sheets, the state of Indian banks, the
vulnerability of the currency and the external sector once US starts hiking
interest rates, and the threat of black money. While there is no denying that
these factors will impede a move towards full CAC in the next couple of years,
the RBI and the finance ministry are laying the ground for the long term.
Over the last few years, the building blocks for full CAC have been put in
place.Rules governing exchange traded currency derivatives have been tweaked
to encourage greater participation, interest rate futures and offshore rupee bonds
have been issued, and an offshore financial centre will soon be set up in the
country. It is obvious that the RBI governor knows what he wants. Even in his
first speech, Rajan had talked about internationalisation of the Indian rupee as
one of his goals.
The driving factors
The reason why the RBI and the finance ministry are pitching for currency
convertibility is not difficult to see. India is expected to record among the fastest
rates of economic growth in the next two decades. According to data put out by
the US department of agriculture, India will be the third largest economy by
2030, at $6.6 trillion, after the US and China. When a country is gearing up for
this, full CAC will be one of the driving factors. But we are still years away from
complete CAC. So what are the pre-conditions for this change?
Internationalization of the rupee: Most economies with full CAC have currencies
that are used internationally to trade and settle monetary transactions, held not
just by residents of the country but by citizens of other nations too.
Internationalization wards off a steep sell-off in a currency since it is held widely
and investors would not want the value of their holding to erode. For instance,
China is one of the largest holders of US treasury securities. So China would
think twice about dumping dollars, even if it expects the dollar to depreciate, as
it would affect the value of its holding of US treasury securities. It is only in the
last few years that the rupee is becoming more acceptable as a medium of
Your Interview, Shrabana Kumar Nial

exchange in transactions involving residents. Making other nationals use the

rupee as a medium of exchange will, therefore, take time.Setting up an IFC: The
development of an offshore financial centre helps a currency move towards
internationalisation faster. As global companies and investors set up shop in
offshore financial centres located within the country, their familiarity and comfort
level with the country increases, making them more willing to use it as a medium
of exchange. The government has set the ball rolling on this front with the GIFT
city being set up in Gujarat. But it will take at least five years before it achieves
the scales of other successful IFCs such as Hong Kong or Dubai.Overseas market
for rupee bonds: Rupee bonds issued overseas will also help increase the holding
of rupee-linked or rupee-denominated instruments in the hands of overseas
The RBI has taken the first step in setting up this market by allowing Indian
companies to raise offshore rupee bonds. Indian Railways has been among the
first to queue up. The International Finance Corporation issued Masala Bonds in
November 2014 that are linked to the rupee but settled in dollars.A strong
derivative market: The exchange traded currency derivative market has been
around since 2008 but it has not grown to a desirable extent thanks to undue
restriction on trading in this segment.A knee-jerk reaction to the currency crisis
in 2013, with an increase in trading margins and limiting participation of banks,
also dealt a blow to this segment. The RBI has recently allowed FPIs to trade to a
limited extent in this segment. The interest rate derivate futures market too is in
its nascent stages and will take a few years to really grow and meet its desired
objective of acting as an instrument for hedging risk.Besides these, the black
money angle needs to be given considerable attention. CAC will give citizens the
freedom to convert their assets to foreign assets at will.
This will be a freeway for money launderers.

12.Economic reforms: Looking back & ahead,

Unfortunately, the debate on the Land Bill got embroiled in controversy and
seems to pitch industrial growth against agricultural growth. The progress of
agriculture and industry can be complementary to each other.
States matter
The effort is to build a development model that is more consensual and
cooperative and strengthens the resolution of the 73rd and 74th Constitutional
amendments of 1992.In generally accepting the recommendations of the
Fourteenth Finance Commission (FFC), the government clearly followed the
policy to strengthen and empower states.The key policy assumption of FFC was
that all governments in the country, be it the Union, state or local, have the
wisdom to spend optimally.Each tier of the government should be considered
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equally accountable and responsible not only by the public but also by the Union
Government. Another important and clearly delineated philosophy of the FFC has
been that transfer of fiscal resources to the states from the Union should be on
trust rather than on conditions.
The first year of the Prime Minister at the helm of policy making in India has truly
been momentous. The country has witnessed a number of initiatives on the
economic front since he assumed the august office after more than a decade of
experience as a chief minister of a fast-developing Gujarat. The reforms, under
the PM's stewardship, spanned different aspects of the economy industry mainly
micro, small and medium enterprises; monetary and fiscal policy, social security;
skill development; and employment generation.On the economic policy, an
important and historic measure was implementation of Jan Dhan Yojana for
extending bank accounts to unbanked. In less than a span of six months, more
than 12.5 crore accounts were opened, which are nearly one-seventh of the
existing number of accounts in the banking system.
Coverage of households
The coverage of households with bank accounts has increased to nearly 98 per
cent and of these nearly 50 per cent of the accounts are actively operational.
Public sector banks have played a significant role in the success of the Jan Dhan
Yojana and to further facilitate banking usage are installing additional 20,000
ATMs. The bank account opening drive, supervised by the PM, established his
commitment in obtaining results, when he personally wrote to the banks to
ensure success. This is historic because since 1955, after the nationalisation of
State Bank of India, political rhetoric emphasised financial inclusion but without
achieving results.
The vision of the new government, enunciated in the Budget in February 2015, in
sharp contrast to the traditional Garibi Hatao is to provide a house for each
family in India, implying completion of 2 crore houses in urban and 4 crore
houses in rural areas by 2022. The first full year Budget covered issues like social
security, employment opportunities for the young demographic nation, black
money, provisioning of 100 smart cities, and roadmap for goods and services tax.
To encourage youth to create jobs, government conceived establishing a technofinancial incubation and facilitation programme to support start-up business.
Focus on make in India
To encourage Make in India, Micro Units Development Refinance Agency
(MUDRA) Bank was inaugurated, with the objective of providing funding to the
unfunded as of nearly 6 crore enterprises, only 4 per cent get institutional
financial support in the country. MUDRA Bank with the corpus of Rs.20,000 crore
Your Interview, Shrabana Kumar Nial

will refinance and assist those financial institutions that finance micro units in
India.The business cover under MUDRA Bank includes small manufacturing units,
repair shops and artisans with financing requirements of up to Rs 10 lakh.
The government also proposed monetising gold stocks through various schemes,
including minting of coins. The minting of gold coins in India, would lead to
higher employment and retention of related profits within the country. In view of
the fact that about 30 per cent of gold held by the public is for investment
purposes, this at least is expected to be monetised easily. The government is
making efforts to encourage recycling of gold within the country and reducing the
pressure on imports that finally impacts the current account deficit. In the
context of social security, the PM announced three schemes with the flagship Atal
Pension Yojana (APY) aiming to provide old age income security to the working
poor in the unorganised sector. The Jeevan Jyothi insurance scheme provides a
one year cover, renewable annually, offering life insurance for death. The third
scheme, Suraksha insurance scheme, renewable annually, provides insurance to
cover death or disability on account of an accident. These three schemes will
ensure financial inclusion, enhanced business opportunity for banks and higher
insurance penetration, thus providing economic security to people in the
unorganised sector. Economic security will also ensure stability in consumption
pattern and ability to weather income shocks, implying a steadier path of growth
for the economy.
Empowering states
The PM, during the year, clearly followed a policy to strengthen and empower
states. The Planning Commission was declared dead on August 15, 2014 and the
birth of a new body called National Institution for Transforming India (NITI) was
announced. In setting up NITI Aayog, the government aims to reap the benefits
of creative energy across the country that emerges from states, regions and local
bodies. The effort is to build a development model that is more consensual and
cooperative and strengthens the resolution of the 73rd and 74th Constitutional
amendments of 1992. Second, in generally accepting the recommendations of
the Fourteenth Finance Commission (FFC), the government clearly followed the
policy to strengthen and empower states. The key policy assumption of FFC was
that all governments in the country, be it the Union, state or local, have the
wisdom to spend optimally. This is an important principle of equality amongst
fiscal peers that needs to be upheld in all inter-government deliberations. The
above principle implies that each tier of the government should be considered
equally accountable and responsible not only by the public but also by the Union
Government. Another important and clearly delineated philosophy of the FFC has
been that transfer of fiscal resources to the states from the Union should be on
trust rather than on conditions.

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The government is successfully pursuing the implementation of goods and

services tax, aiming at a uniform rate across the country and thereby integrating
the national market. The success of GST would be a landmark decision in the
history of taxation and political economy of India. The Prime Minister has also
been extensively interacting with leaders from various important countries to
enhance trade, business, and opportunities for growth and employment in India.
The increased economic and regional cooperation that has been noted in the last
one year is expected to yield results in the future. The government has also been
successful in engaging Russia, USA, China and Japan along with other advanced
countries like Germany and France as well as immediate neighbours to help
maintain the power balance in the region. This balanced strategy will also benefit
the Make-in-India approach, providing an impetus to employment, and growth.

The Make-in-India strategy, with focus on micro and small industries will help in
the process of urbanisation and generating employment for the young dynamic
population. Increase in industrial output would also ensure higher volume of high
quality of exports yielding higher foreign exchange earnings.
Unfortunately, the political debate on Land Bill got embroiled in controversy and
seems to pitch industrial growth against agriculture growth. In fact, progress of
agriculture and industry can be complementary to each other. The agriculture
sector provides manpower, food and raw materials to industry, while industry
reciprocates with employment opportunities and manufactured goods which get
absorbed in the rural areas. The higher purchasing power with higher income
growth in both rural and urban areas enhances economic welfare in society and
is mutually beneficial. Illustratively, higher growth in the industrial sector has
resulted in the price of food grains and agriculture products rising faster than
industrial output over the last few years, providing larger benefits to the farmers.
The most important development in the last year is the reversal in the
investment climate and expectations in the capability of the economy. The
industry which had been suffering from policy paralysis suddenly found hope in
the new political regime. The hopeful mood helped in generating a positive
impulse conducive for growth. The year goneby has been packed by economic
events but the general approach towards economic reforms has been
reconciliatory and continuity in policy which has inspired confidence in the
international community. However, the government, given its strong mandate
could have done significantly more on some select challenging issues. One such
menace is corruption, impacting India's global image and ease of doing business,
as at grass-root level it is still rampant. In literature of political economy, the
most significant justification and cause of corruption is election funding. The
other challenge is crime against women which has economic implications in
terms of female workforce participation and tourism. The third is farmer suicides
Your Interview, Shrabana Kumar Nial

due to financial distress on account of crop failures. The government could

consider establishing stringent zero-tolerance standards in all these cases.
Building consensus for reforms
The success of the 1991 reforms was partly attributed to careful crafting,
cautious implementation, and appropriate sequencing of measures. In addition,
and more importantly, there was widespread consultations and building of
consensus not only amongst policy makers but also the general public. This role
was ably undertaken by eminent economists, occupying different advisory
positions, through wider consultations and deliberations and by organising and
participating in seminars, workshops and conferences. Further, as the
government constituted the expenditure management commission to review the
major areas of central government expenditure, there is also need to examine
other economic issues like monetary policy framework, governance issues in
banks, and trade and gold policy. A team of professional economists would not
only help in completing these tasks but in the process get groomed to shoulder
international assignments when global opportunities arise.
Translate hope into growth
Did all this hope and conducive environment, that marked Modis focus on
altering the investment climate translate into growth? Yes and no. Yes, while the
global growth is wobbling, India's robust growth outlook is positive and upward
looking. No, because results are not commensurate with heightened hope and
expectations. However, it is important to understand that transmission of hope
takes time to transform into output, as all outputs have gestation lags, especially
after such a long spell of policy inertia. Also, there could be an emerging a gap
between policy announcement and implementation which is probably evident in
the slower industrial production. In fact, the ecosystem to generate growth
needs to be revisited to revive industrial production. Similarly, recent banking
results, including non-performing assets, are not encouraging.

13.Why the govt. took a U-turn on public debt office,

Several theories are floating around the central governments sudden change of
heart on setting up a public debt management office (PDMA) outside the Reserve
Bank of India (RBI).The Budget for 2015-16 had announced the setting up of
PDMA amid opposition from RBI, but the government dropped the provisions
from the Finance Bill on Thursday. In addition, contentious issues such as
amendments of Section 45U and 45W of the RBI Act have also been withdrawn.
These would have taken away money market regulation from the central bank.
People in the know say one of the strongest reasons for the U-turn is a
recognition that there is a lack of capability within the government to
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immediately take over a function the central bank has been performing for
years.To manage the governments borrowings, which is increasing every year (it
was Rs 6 lakh crore last year) without any market volatility, that is, keeping the
yields under control, is seen as a mammoth task and something that needs
experienced hands. The debt management office in the finance ministry, which
compiles data and acts as a coordinating agency between various stakeholders,
still has officials on deputation from RBI.
This is something even RBI Governor Raghuram Rajan was concerned about. In
an interview to Business Standard in 2013, he had said the question wasnt who
manages the debt, but who was capable of doing the task. To my mind, the
conflict of interest issues are overblown on either side. If it is in RBI, there will be
some conflicts of interest; if it is in the finance ministry, there will be some other
conflicts of interest. The precise location of the DMO is not the central issue. The
issue is to get the capabilities to man that office. And, I believe, right now, the
capabilities lie with RBI. RBI personnel will be involved in manning that debt
office, at least for the foreseeable future. When capabilities emerge in the
government or the finance ministry, there could be a discussion on who mans
that office, Rajan had said.
The government seems to have listened to the governor. There were other
reasons, too. Central bank staffers wrote a strong letter to members of
Parliament as well as chief ministers of various states highlighting the problems if
RBI was stripped of such powers.In the letter to chief ministers, they raised the
issue of managing states debt since RBI also manage states debts and the PDMA
is not very clear on what happens to that function.The PDMA, if it materialises,
will look after the central governments debt. The Budget is silent on state
governments who will look after them. The central government before taking
such proposal did not consult the state governments. By not doing the required
consultation, the states have been bypassed in such a vital matter, the letter
The letter went on to say the changes had been proposed in haste, without
proper application of mind and without building a national consensus. Central
bank watchers say such an important issue should not have been just annexed in
the Finance Bill and should have been done through a separate Bill. The merit of
this argument, they say, dawned on Finance Minister Arun Jaitley, one of the
sharpest legal minds in the country. It seems bureaucrats are in a hurry to push
a few things but the law makers later realised certain issues need greater
consultation. There are three recent examples: One, the Income Tax Returns
form; two, the minimum alternate tax on foreign institutional investors; and
three, the taking away of the RBIs powers to regulate money market
instruments, said a central bank watcher.
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Once the dust settles on the PDMA issue, the focus will shift to the formation of
the monetary policy committee another contentious issue which the government
and RBI will need to resolve.RBI wants more of its representatives on the
committee, which will decide interest rates and will be accountable for its actions.
while the government will like to have more say. A committee appointed by RBI,
which was headed by one of its deputy governors, Urjit Patel, suggested a fivemember panel, three of whom (including the RBI governor who is the chairman)
should be from the central bank. The government was not keen on such a
framework. The government appears to have listened to RBIs concerns on PDMA
and government securities regulation but, in return, it might want to have more
say in the monetary policy committee. That, many say, is the compromise
formula that has been worked out between the two.

14.Inflation is bad, but is deflation good?

The decline in the rate of inflation began in November 2013 (which was the
month when both CPI inflation and WPI inflation had peaked). The decline has
been secular, and in November 2014, WPI inflation touched zero. The numbers
published in March 2015 estimated WPI inflation at (-)2.33% and CPI inflation at
Happy urban consumer
None is happier than the consumer, especially the urban consumer. The happiest
person is the head of the household because she is the one who buys most
goods and services needed by the family. She is still unhappy that prices of some
food articles are elevated: the current rate of year-on-year inflation in cereals is
2.32%, milk and milk products is 8.35%, vegetables is 11.26%, fruit is 7.41%,
and meat, fish and poultry is 5.11%.Behind every product or service, there is a
producer or service provider. While consumers are generally happy, producers
are in distress.
The worst affected are the farmers. Barring a few (who have managed to keep
large holdings despite land ceiling laws), most farmers are small landholders and
are poor. According to the Situation Assessment Survey of Agricultural
Households (December 2013), published by the National Sample Survey Office,
40% of the households of the country are classified as agricultural households.
The estimated number is 90.2 million and does not include agricultural labour
(i.e. landless) households. The Survey estimated that 70% of agricultural
households own less than one hectare.
The small landowner (less than one hectare) will always remain poor unless
he strikes oil or gold in his land. He needs help. He needs to supplement his farm
income with non-farm income. He needs help to migrate (or enable his children
to migrate) to the non-agricultural sectors. His children need to acquire an
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education and non-farm skills. Given a choice and this is very sad he will
give up farming. But the vast majority of farmers do not have that choice. What
will they do tomorrow if they give up farming?
Unhappy producer-farmer
Besides, the rest of the country needs them to continue to do farming and will be
horrified if they abandoned farming. Who will produce the 96 million tonnes of
wheat, 103 million tonnes of paddy, 18.4 million tonnes of pulses, 355 million
tonnes of sugarcane, and 35 million bales of cotton that the country produced in
the last agricultural year?The farm sector is in deep trouble because of a fall in
prices. Take a look at the table sourced from the Centre for Monitoring of Indian
Economy. It contains the monthly average wholesale prices (that is what the
producer can expect to get) across various markets in India during March 2014
and March 2015.
The decline in prices has left the producer-farmer poorer and deeper in debt.
Compounding his woes are unseasonal rain, drought, thunderstorm (in Bihar on
April 22), and the threat of a deficient monsoon as per early forecasts. The
government has added to his woes by a paltry increase in Minimum Support Price
(MSP), inefficient procurement, increase in prices of fertilisers, poor
compensation for lost crop etc.
This situation did not emerge suddenly. Every government has grappled with
these problems. The UPA tried to address them in different ways: introduction of
MGNREGA in 2006 to supplement farm income/wages; farm loan waiver in 2008
to give partial relief from past debt; and generous increases in MSP between
2004 and 2014. The Food Security Act, 2013 was an indirect supplement to
income. The Land Acquisition, Rehabilitation and Resettlement Act, 2013, was to
give the small landholder an opportunity to exit willingly and migrate to other
sectors of the economy. These efforts paid off and agricultural growth during
2009-2014 recorded a historic high of 4.06%. Yet much remains to be done, and
every successor government is obliged to help the producer-farmers.
Deflation and its consequences
The decline in the rate of inflation could be attributed to many reasons. Presently,
it is mainly due to the steep fall in the world prices of crude oil and commodities.
Lack of adequate demand is another reason. Increase in productivity could lead
to increase in supply and contribute to decline in prices, but there is no evidence
of a sudden rise in productivity in the agricultural or manufacturing sectors. Most
commentators agree that there is inadequate demand: indicators of that are low
growth rate of bank credit (12.6% in 2014-15), decline in merchandise exports
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($310 billion in 2014-15 as against $314 billion in the previous year), and the
widely acknowledged fact of absence of new investments.
Consumers need to change their outlook towards producers. Producers must
make reasonable profits; if they make losses, they will stop producing. It is
profits which sustain production, employment and more investment. Reasonable
price increases are the only way to reward producers, especially farmers, and if
that means a reasonable level of inflation, consumers must accept it as a
necessary concomitant of development.Deflation is not an unmixed blessing.
Sometimes it can be more calamitous than inflation.

15. Ways to deliver good customer service

Putting a well-oiled machinery in place will go a long way
Customer service is core to any organizations success. Businesses create
products to attract customer attention. However, their long-term success largely
gets driven by the service delivery architecture that businesses create for their
customers to experience what the business has to offer.Mapping customer
expectations is the first step towards developing strong customer service
protocols or a strong service delivery architecture.
The most important element within the framework is accessibility. Customers
today use multiple screens, which give businesses multi-modal opportunities to
enhance accessibility economically. Traditional brick-and-mortar touch points
attract huge investments and hence an innovative technique through adoption of
technology is paramount.
The second important element is responsiveness.
We need to understand that it might not be always possible for businesses to
prevent all problems, however they need to know how to recover from such
situations and perform to expectations of their customers. To achieve this, there
are five key areas of focus.
Mine customer problems and develop strategies to address them: Businesses
need to talk about customer problems internally and analyse them well. The
focus should be to identify fail points and work towards changing process which
helps remove such fail points. There is nothing that fits forever. The flexibility to
change and managing the change internally to facilitate process re-innovation is
the direction that businesses should focus on. This will also help businesses to
anticipate customer recovery needs and train personnel to act timely and

Your Interview, Shrabana Kumar Nial

Create a process that helps them act fast: Customers want their problems to be
addressed fast. Defining what is fast is the next step. The answers lies with the
customers themselves and hence mapping customer expectations with problems
will help organisations to develop protocols and service delivery mechanisms that
can move fast. Businesses need to analyse the processes with respect to three
key components.Process elements which are above the line of interaction These
are core touch points through which customers interact with the business. These
are parts of the process which deliver experience to customers based on which
customers assess if their experience was good or bad. They learn about the
process through interaction with employees and who gave them commitment on
Process elements which are between the line of interaction and line of visibility.
These are elements through which the customers do not interact, but see how
their problem is being addressed. These are also a part of the front end, though
there no direct interactions. Based on what they see here, they decide whether
commitments made to them will be fulfilled or not.
Process elements which are below the line of visibility These are process
elements which are purely back end and customers have absolutely no idea
about them, but might have perceptions about them or will draw perceptions
based on the quality of final delivery. They learn about progress through regular
updates that businesses share with their customers.Businesses need to work
towards refining processes to ensure that they deliver to customer expectations.
This approach will help them locate the fail points and how they should address
them. Essentially, the focus is to act fast.
Train and empower people, especially the front line personnel: Training is an
ongoing process, the effectiveness of which largely depends on how well an
organisation consumes and acts on customer experiential data. Developing a
customer-centric culture is what organisations should strive for. Employees need
to understand that not only the front line staff, all employees need to work and
contribute towards improving customer service. To achieve this businesses need
to develop a customer connect programme, which will help all employees to
experience customer expectations directly. There is a need to sensitise all
employees, which will ensure that there is believability in processes and there is
quick adoption of change that is brought in to improve service delivery. Results of
problem-mining and redress strategies should be a key part of the training
The employees need to be empowered to act. Clear protocols should be created
for all problems and the front line staff should be empowered to offer resolutions
which customers expect in their first contact with the business. Alternative
processes should be created so that the front line staff can use them depending
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on the actual situation. Not all decisions can be taken by them, of course, but
they should be empowered with at least three levels of decision-making so that
service delivery is quick.
Close the loop with the customer: Customers appreciate receiving a formal
communication from the organisation or a follow-up call to ensure that the
service was as per their expectations. The results of this exercise should also be
shared with all internal stakeholders, as it is important to close the loop within
the business as well. The final step in this process is to develop case studies
which employees should be taken through in training programmes.
Monitor continuously customer service delivery: This is the final step in the
customer service delivery process. One important point to remember here is
that, while for any organisation this is a feedback process, customers see this as
a process for them to report pain points with a clear expectation that timely
action would be taken. To ensure that this is done, businesses need to adopt
technology in the enterprise feedback management (EFM) space. It is important
that timely interventions are carried out for customers who are reporting an
unfavourable experience, which can be only done when feedback is reported and
consumed in real time. EFM empowers an organisation to do exactly this through
the following:
Multimodal data capturing capability helps customer take part in the initiative
when they have the time.
Real-time reporting of customer feedback, where results can be viewed on
automated dashboards; slicing and dicing of data further adds value
Integration of the reporting platform with the organizations CRM enables timely
A hot alert to process custodians and key business managers ensures immediate
visibility of unfavorable experience, which enables immediate timely
interventions directly with the customer. Closed look feedback mechanism further
enhances the service recovery process and helps in disseminating actions
internally. As we move forward with ever evolving customer, technology in the
customer service delivery will be an important differentiator and will support
timely service recovery actions.

16.The customer is king. Really?

If service is core, why outsource it?

Your Interview, Shrabana Kumar Nial

Business leaders and CEOs always held that customer is king. Peter Drucker, the
ultimate guru of management, emphatically stated,The purpose of a business is
to create and keep a customer.
Corporations world over spend billions in promoting/branding/ marketing their
product or service. They invest time and resources in understanding what the
customer wants, what has been their experience of using the product or service
that is on offer and how delighted they are in using it. Even with the best of the
companies, the practice hardly inspires confidence.
Recently, I received a new debit card from a well-known private bank where I
have been banking for the last decade. In order to use it, I needed a new ATM
PIN. I followed their instructions to get it at a local ATM, but no dice. So I called
their call centre and was told to try the same process at a different ATM.
Again, futile. After more attempts and wasting precious time I was finally told by
the call centre person to simply wait for a new set to be delivered to me in seven
business days. After 10 days and several rounds of back and forth mails, I
received a new password that worked. Believe me, this is a very successful
private bank. And sad as it sounds, at the end of the day, instead of being upset
at this delay, I was just happy to have actually received the PIN instead of a Our
courier found the door locked SMS from the bank.
In another instance, an airline that took my booking cancelled my HyderabadChennai flight a mere four days before my departure date. Upon speaking with
good old John at the call centre, who asked me questions from my grandmothers
maiden name to my pet dogs birth date, I was told that a refund will be posted
to my account within a few business days.After three more weeks and a dozen
phone calls, the refund was finally posted. Again, much to my relief that at least
the job was done. Perhaps while businesses have taken to heart the first part of
what Drucker stated, about, Creating customers, somehow, somewhere, they
lost track of the Keeping part.
Keeping customers
The point I am trying to make is that if the customer is truly king, why is it that
such a significant aspect of customer interface, as customer service and
interaction, is being completely outsourced to call centres that are only semiprepared to deal with the customer? Personally, I have nothing against
outsourcing. But I have been taught that one should never outsource what is
critical and core to an organisations value creation. Doing that is like outsourcing
interface time with the family. Would you? Thats what companies do, when they
outsource customer interaction to call centres. Efficient? Yes. Effective? No.
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Not core areas

I am for ruthless outsourcing of non-core even if the cost is more than doing it
within. The logic being, it is not just the internal cost vs purchase price, but the
opportunity of the top management time, which in my view is the scarcest
commodity in any organisation.What the companies in the above examples have
done is to outsource customer interface and interaction as a necessary nuisance
to be dealt with. Companies agonise over their NPS (Net Promoter Score), but at
the end of the day, they hand it off as someone elses problem.And ultimately, as
it gets passed through the ranks, it becomes the customes problem. Mostly call
centres are the easiest way to displease customers.
Call centres also represent a huge missed opportunity in gaining insights into
customer wants and needs.In a business world where Content is King, customer
data is becoming more and more important. Outsourcing them? Its like asking
my EA to attend a parent-teachers day at my daughter,s school.

17.Selling never goes out of fashion,

As the world went through various phases of stress, relevance of selling and
business development was and is being questioned endlessly. Selling has been
criticised and maligned in various ways. Some have called it as a fad, some as
the game of crooks, some as the trade of fly by night operators who have
vanished after duping gullible buyers. The financial services industries have
borne the major brunt of this impression. Volumes have been written on the
subject and best-selling authors like Michael Lewis, Nasim Taleb and others have
thrived on it. Time to examine the issue on facts and experience!
A salesman (saleswoman) has never been regarded without some suspicion or
with complete trust. Imagine yourself interacting with someone selling you a
credit card or insurance. Or, in our Bank, someone is trying to sell the Bank a
service or a new cleaning system. What we do in real life is, we take the
information from the sales person, mix it and screen it based on our information
and needs, and then decide for or against buying.
At the institution level, smart I-Bankers selling exotic derivative products or
payment protection insurance or dealers of a Bank selling false information on
LIBOR to other dealers and lenders were a little different. In them, the buyers
did not have the full information and knowledge. Mostly driven by greed and fear,
the buyers faced disastrous consequences.
The world is correcting itself. As is usual during this remediation phase, there is a
sales-phobia which has crept in. Considerable investment is being made in
upgrading risk- management systems. Compliance divisions and Auditors have
become more powerful than ever. People with operational knowledge are
Your Interview, Shrabana Kumar Nial

becoming CEOs trumping the ace salesmen. Banks are closing businesses and
product lines. Regulators are directly and indirectly asking managements to slow
down business growth. Hence the doubt; Is selling relevant today? Should we
look for business growth by putting heads in the market place ; or should we
only concentrate on improving facilities, customer service, product features and
processes so that customer experience self generates into manageable business
growth? HSBC for example, has no sales force and concentrates on the second
option above. In SBI, we focus on both sales force and product/processes to
drive business To my mind, sales as an activity could never go out of fashion.
Yes, we have to realign and re-energize sales faster and more frequently than
ever, but we could ignore sales only at our peril.
The evolution of civilisation gives us great clues. Human beings were hunters and
gatherers to begin with. When farming was not known, survival depended on
what one gathered and what one killed! If you did not go out and compete, you
were dead. After farming came, humans became clever. They tilled, seeded,
tended and harvested. They had the modern equivalent of strategy. They knew
to blend ingredients, tools and the sense of timing. As hunter gatherers human
beings lived on their toes from day to day. As farmers they knew to relax and use
their brains.
Sales is probably a combination of both the above instincts, that of a hunter
gatherer and that of a farmer. The outbound salesmen (We call them Business
Development Managers in SBI UK) are the hunter gatherers. They are our feet
on the ground, who collect not just business but market intelligence on customer
behaviour and competition. Our in branch, back office, marketing and product
development staffs are the farmers who complement and supplement the
activities of the out bound sales force. It works smoothly because we cover both
fronts and we match aptitudes of individual staff.
A few parting thoughts on Sales. Whatever be the model, it has to be realigned
continuously, probably faster than ever. The July-August issue of Harvard
Business Review carries a few articles under the heading. The new basics of
marketing. These articles point to the importance of big data, deep insights,
purposeful positioning and total experience as the foundation of selling. As I
never get tired of telling all of you, data is critical for everything and more so for
effective selling.
Remember: Selling can never go out of fashion

18.AIIB & BRICS Bank,

The World Bank and ADB now seem to be too driven by the sensibilities
of NGOs in developed countries on sustainable development issues
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On 25 January 2008, more than seven years ago, an article of mine titled "How
about an Asian Investment Bank?" was carried in this newspaper (available on
Business Standard's website). The central suggestion in that article was that
India should take the initiative, in cooperation with China, to set up an Asian
Investment Bank to fund infrastructure projects in member countries. This
thought was shared with the ministry of finance but was not heard of thereafter.
At China's initiative an Asian Infrastructure Investment Bank (AIIB) was set up
on 24 October 2014. On that date, 21 Asian countries became founder members
and participated in a memorandum of understanding signing ceremony in
Beijing. China's president chaired the event and most participating countries
were represented by their finance ministers. India was represented by a joint
secretary in the ministry of finance. The decision to send a joint secretary was
preceded by a turf battle between the ministry of external affairs (MEA) and the
ministry of finance (MOF). MEA pushed for an official from the Indian Embassy in
Beijing to represent the government. MOF staked its claim as the nodal ministry
for multilateral development banks and won that tussle. AIIB could provide longterm funds for India's infrastructure needs and going forward India should pay
considered attention to this institution.
In the past one-week, first the UK and then France, Germany and Italy have
confirmed that they will become founding members of AIIB. As per media
reports, South Korea and Australia may also decide to become AIIB members.
The US tried to dissuade its Western friends from joining AIIB but even its
closest ally the UK decided to break ranks with it. This is the first time that three
out of five permanent members of the UN Security Council (China, UK and
France) and four out of seven G7 members (UK, France, Germany and Italy)
have defied the US in the setting up a new multilateral development bank. It is
curious that Indian print media has barely covered this novel development.
As of now, there is no similar interest among developed Western countries in
becoming members of the New Development Bank (NDB) or the Contingent
Reserve Arrangement (CRA) to be set up by the five BRICS nations. China
appears to be more focussed on getting AIIB up and running. The $50 billion
AIIB will be headquartered in Shanghai like the NDB but China will be the
dominant share-holder with 49 per cent equity unlike the $10 billion NDB in
which the five founder countries have 20 per cent stakes each.
India's relations with China are complicated by sensitive bilateral and wider
strategic issues. And, there is not much that India can do if China goes slow in
making NDB operational since it is China's economic size and hard currency
reserves which could enable NDB to be a major lender. China may prefer to begin
with AIIB lending to countries in central Asia and perhaps later use NDB to lend
to African or Latin American nations. However, the resulting loan portfolios would
raise the exposure of these two institutions to high concentrations of country
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creditworthiness risk. India could keep its interactions with AIIB and NDB tied
closely to its obvious strength as the potentially largest creditworthy borrower.
The World Bank and the ADB have flourished so long because they targeted their
cost plus IBRD type lending initially to larger creditworthy borrowers such as
India and subsequently China. The poorest countries have mostly received
concessional IDA loans which are funded out of grants from developed countries.
Borrowers usually baulk at defaulting to Bretton-Woods institutions as even
short-term credit from Western commercial sources would not be rolled over, if
they did.
China, with a one-party totalitarian communist system, has shown remarkable
flexibility and competence in becoming the world's largest economy in purchasing
power parity terms (China GDP: $17.6 trillion; US GDP: $17.4 trillion in 2014.
Source: IMF). Although China's economic weight continues to grow its clout in
Asia is tempered by its territorial and other differences with several neighbouring
nations. A counterpoint is that most Asian countries have higher volumes of
trade with China than the US.
The immediately relevant issue for the US is an erosion in the dominance of the
IMF, World Bank and ADB if the CRA, AIIB and NDB grow in size over time. After
former IMF managing director Dominique Strauss-Kahn left in disgrace in mid2011, it was apparent that there were several non-G7 country candidates who
were well qualified to replace him. However, yet another European (French)
national was appointed. Since then, the US Congress has persistently stood in
the way of IMF quota reforms. The principal shareholders of these multilateral
institutions refuse to acknowledge that Asian nations are appalled by the lack of
transparency in appointments at senior levels and the way these institutions are
managed at times. For instance, the World Bank violated its Articles of
Agreement in denying India fresh loans after India tested nuclear weapons in
May 1998. As per its Articles, political issues should not influence the World
Bank's lending policies.
The US has suggested that the AIIB will not follow the high lending standards of
existing multilaterals. The World Bank's lending policies were covered in full page
advertisements in Washington DC based newspapers about 15 years back when
the bank felt it was under unfavourable scrutiny of the US Congress. These
advertisements stressed that IBRD loans are used by borrower countries for
imports from the US. As for the IMF, it has announced loans to Ukraine and
earlier to EU countries somewhat hurriedly. Irrespective of whether these lending
decisions were justified or not the IMF should follow the same procedures as it
did for Asian nations in the late 1990s.

Your Interview, Shrabana Kumar Nial

The World Bank has moved far away from when it used to proactively fund long
gestation infrastructure projects. Consequently, AIIB would try to step into that
role. The World Bank and ADB now seem to be too driven by the sensibilities of
NGOs in developed countries on sustainable development issues. This is not to
suggest that such considerations should be ignored. However, should multilateral
development banks unilaterally refuse to fund projects in the hydroelectricityirrigation, thermal and nuclear power sectors? To conclude, any initiative taken
by AIIB or NDB to be open-minded about loans for projects in such sectors, in
consultation with borrower countries, is likely to be welcomed.

19.India in "sweet spot" of lower deficits, more growth Economic Survey

The Economic Survey, the basis for India's budget for the fiscal year starting April
1, forecast growth of 8.1 percent to 8.5 percent under new calculations that
make India the world's most dynamic big economy. The forecast marks
acceleration from growth of 7.4 percent in the current fiscal year."India has
reached a sweet spot and ... there is a scope for Big Bang reforms now," the
report said, adding the country was on course to hit double-digit growth
rates.Indian stocks rallied, with the benchmark Sensex gaining 1.7 percent, on
hopes that Jaitley would deliver a business-friendly budget.At first glance the
growth outlook appears impressive. But it follows a big overhaul of India's
economic data, which previously showed the economy struggling to recover from
its longest growth slowdown in a generation.Other indicators of India's economy
are not as rosy as GDP data suggests. Earnings of the country's top 100
companies shrank by 6 percent in the last quarter, private investment and
consumer demand are weak and merchandise exports are falling.The author of
the report, economic adviser Arvind Subramanian, even said he was "puzzled" by
the new GDP figures and played down suggestions that India's $2 trillion
economy was on a roll.
"India's economy is still recovering, and not surging," Subramanian told a news
conference.Prime Minister Narendra Modi won a landslide general election victory
last May, capitalising on dissatisfaction among Indians over their economic lot
and promising 'better days' of more jobs, INVESTMENTand growth.The report by
Subramanian, a renowned development economist lured away from a
Washington think tank by Modi, suggested the economy was now building
momentum.That, above all, reflects a near halving in international prices of oil,
India's biggest import.As a result, the report predicts the current account deficit
will be below 1 percent of GDP in 2015/16, a far cry from a figure of 4.7 percent
in 2012/13 that preceded a currency crisis in India.
Your Interview, Shrabana Kumar Nial

Jaitley's first interim budget last July was widely regarded as a flop and, hobbled
by weak tax revenues, he has resorted to hurried sales of state assets late in the
current fiscal year to make his budget numbers.The government would not
overshoot its deficit target of 4.1 percent of gross domestic product in the fiscal
year just ending, the report said, reiterating a medium-term target of cutting it
to 3 percent of GDP.Shifting spending from subsidies to INVESTMENT will be the
key to keeping the budget on track, giving a further lift to growth as Modi seeks
to unblock billions of dollars in stalled INVESTMENT projects.Inflation is on a
declining trend, the report also said, and is likely to undershoot the Reserve Bank
of India's target of 6 percent by Jan. 2016 by 0.5 to 1 percentage point.That,
said economists, should create room for the RBI to cut interest rates after a first,
quarter-point cut in January. Governor Raghuram Rajan's further cuts in the
RBI's 7.75 percent policy rate will depend on further fiscal consolidation."Given
where crude is, I don't see why the RBI can't cut rates," said S. Ramasamy, chief
investment officer at LIC Nomura Mutual Fund in Mumbai.

20. Foreign direct investment (FDI) in retail sector.

Background:- The recent cabinet decision on FDI in retail has triggered protests
by opposition and key allies of the ruling United Progressive Alliance (UPA), who
are demanding a roll back of the policy. The hourlong meeting held in Parliament
House failed to resolve the logjam in the two Houses as opposition parties, led by
BJP and the Left, stuck to their stand and demanded rollback of the Cabinet
decision to allow 51 per cent FDI in multibrand retail. Though at present only 53
cities with population not less than 10 lakh in the country have been identified
for FDI As the fourthlargest economy in the world in PPP terms, India is a
preferred destination for FDI. During 200010, the country attracted $178 billion
as FDI.

This will bring modern technology to the country.
Improve rural infrastructure. It would help build infrastructure and create a
competitive market.
Reduce wastage of agricultural produce. Enable our farmers to get better
prices for their crops. Consumers will get commodities of daily use at
reduced prices.

Your Interview, Shrabana Kumar Nial

Biggest beneficiary of this would be small farmers, who would be able to

improve productivity and realize higher remuneration by selling directly to
large organized players and shorten the chain from farm to consumers.
Government too stands to gain by this move through more transparent and
accountable monitoring of goods and supply chain management systems. It
can expect to receive an additional US$ 2530 billion by way of taxes
Opening of retail can be seen as a solution for food inflation, which has been
confounding policymakers. FDI in retail would help in building much needed
back end infrastructure. Additionally, he said, INVESTMENTS in cold storage
chain infrastructure would reduce loss of agricultural produce and provide
more options to farmers.

Our interest rates today are as high as 14 per cent to 16 per cent how do
we compete with the economies which have a 4 per cent interest rate. Our
infrastructure our TRADE facilitations our labor laws, all these factors
collectively don't make India low cost. So do you want India to become a
center where we allow foreign companies to come in and set up these large
chains which eventually instead of selling domestic products out sourcing
internationally the cheapest sources and selling those products. Please
remember domestic retail normally sources domestically, international
retail sources internationally because they source from the cheapest
Even if big retail companies help the farmers in resurrecting their economy,
what plan does the government has for millions of middlemen who are part
of the business process chain that ensures manufactured products reach
end users.
We engage millions of uneducated and semi educated people at various
stages of retail business spread across towns and cities but we are afraid
that Tesco and WalMart will only engage smart and educated workforce in
small strength, comparatively. Conclusion
Government is taking this decision in good faith. Few persons and lobbies
controlling the rates of food commodities in India. And bringing more
competition in market will bring better prices for buyers as well as sellers
of commodities. Parties protesting against FDIs in retail have choice to not
allow FDIs in the states they are ruling. Government should make a
regulatory body for the COMMODITY TRADE as we have for cellular
We all know that India is a developing country.and to develop India will have to
excel in every field .. be it the competition from foreign markets...Indians are
second to none .even after so many foreign companies have started their
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business in India, Indians have not looked back.. but always stepped further. Well
everything in this World have some pros and cons and this is exactly with the FDI
. One side we talk of democracy and on the other way we are against the FDI
.FDI is going to bring technology in our country it can improve the condition of
farmers can bring the inflation rate down
Supoose in any town there are 100 shops and in these shops on an average four
person from the family of owner of shop is directly or indirectly employed
through that total become 400 employed people without requiring any
specific skill.on other hand on wallmart in town will employ maximum 40 person
and only qualified you can see employment status.and at starting
they might give lucrative rate to farmers but later on will they compromise with
quality?.no, and every farmer will be forced to sell to retailers at a price fixed by
retailers acvording to quality. only top quality will be supported and other will
suffer very badly.
With the coming of the FDI there is a lot of opportunity for the consumer there is
a lots of variety of product at cheaper rates with the coming of FDI in INDIA lots
and lots of employment is generated with it help the youth and the nation second
reason is that government will get a tax of 25 billion third reason is that it
provide a platform for the farmer where they get affordable price of their
products and minimize the role of middle man who use to take undue advantage
fourth reason it allow the foreign currency to come to india

of capital:Should government's stake in PSU

banks be divest ?
As finance minister Arun Jaitley gears up for the budget in the coming weeks,
one thorny question he will almost certainly have to address is an old one that a
number of his predecessors have faced. To what extent will the government have
to pump money into India's public sector banks?
Over the next five years, India's public sector banks, the workhorses of the
financial system, could face a major shortage of capital. A recent Reserve Bank
of India (RBI) committee looking into the governance of public sector banks has
forecast that the state-owned banks require anywhere between Rs 2,10,000
crore and Rs 5,87,000 crore by 2018, depending on how fast their loans to
corporates, individuals and farmers grow, and to what extent those loans turn
into non-performing assets, thus requiring them to be written off. Investment
banks have their own estimates Morgan Stanley, for instance, estimates that
the banks will require about Rs 2,98,300 crore by 2019.
Your Interview, Shrabana Kumar Nial

Changing Governance
Banks will require the capital for three reasons. Firstly, it is to fund growth in
loans. For each loan they make they have to set aside a proportion of capital. An
economic revival will bring in its wake strong demand for loans for investment,
and it's in the government's own interest that banks are in a position to make
those loans and have that capital on hand. But public sector banks also need
capital to write off bad loans they had made earlier.Banks will need greater funds
to implement new norms relating to how to account for loans and how much
capital they need to set aside for different categories of loans.
Public sector banks, which have weaker internal controls and face political
pressures to a greater degree than their private sector counterparts,
consequently have steeper bad loan problems, too. Finally, banks will need
greater funds to implement new norms relating to how to account for loans and
how much capital they need to set aside for different categories of loans.Raising
these funds, though, will require several steps, apart from legislative changes.
Attracting private capital into public sector banks will need at least some
governance and structural reforms. The RBI report on bank boards had
suggested several radical moves, including the repealing of existing legislation
governing public sector banks, and the creation of an independent bank holding
company, which would actually hold the government's equity stake in them.
Handling Risk
But even if this politically controversial step doesn't fructify, there are several
moves the government can make to help private sector banks improve
governance. As Rana Kapoor, founder and managing director of Yes Bank points
out, key reforms include those to the boards of public sector banks.Kapoor points
out that public and private sector banks operate within the same environment
and are subject to the same regulatory conditions, yet their performance is
different. "In private sector banks, there is a major emphasis on risk and in the
ways that bank boards handle risk and credit approvals."
He advocates that an executive credit committee comprising the chairman and
senior bank executives takes such decisions with any one such executive having
a veto over the decision. "This way there is a spirit of collective decision making
that exists," he says. He also suggests the removal of political appointees from
bank boards and the splitting of the posts of the chairman and managing
director.The RBI report points to several other constraints that public sector
banks face as opposed to those from the private sector. These include dual
regulation of such banks by the finance ministry and RBI, the short tenures of
Your Interview, Shrabana Kumar Nial

top executives, and the control exercised on banks by the Central Vigilance
Commission, which impedes any attempt to take decisions.
But the report does caution that "in private sector banks senior management is
incentivised on the basis of bank profitability, and the compensation paid out
through stock options is in substantial measure contingent on the stock price
of the bank.There is a potential incentive to evergreen assets in order that
provisions do not make a dent in profitability."However HN Sinor, a veteran
banker who served on numerous RBI committees and headed the Indian Banks
Association, says the ultimate aim should be for government to divest its stake
substantially from the state-owned banks.
Banks will need greater funds to implement new norms relating to how to
account for loans and how much capital they need to set aside for different
categories of loans."My personal opinion is that the government cannot keep
pumping in cash into these banks year after year," he said. "They have to take
the decision to reduce the stake below 51%. Any other measure will be
Simple Choice
Given the scale of capital required, Jaitley actually faces an easy choice,
especially given that the NDA government has a strong majority in parliament.
He is in a better position than most of his predecessors to push through what
economists and bankers have been demanding for years, which is for the
government to divest its stake in public sector banks, and in effect, privatise
them.Such a move would be a cataclysmic one for the banking sector as big in
its effects as the nationalisation of banks in 1969.

22.Bank Privatisation by the Backdoor

The P J Nayak Committee on the governance of bank boards has proposed that
the Bank Nationalisation Act and related legislation be repealed. It wants
government shareholding in public sector banks to be transferred to a Bank
Investment Committee that will be manned by professional bankers. The report
assumes incorrectly that ownership determines board performance and that the
quality of bank boards, in turn, determines bank performance. The key issues at
the public sector banks, in fact, are those related to management.

After some two decades of impressive growth and improvement in financial

performance, Indias public sector banks (PSBs) are under stress at the
Your Interview, Shrabana Kumar Nial

moment, thanks to a slowdown in growth and a rise in nonperforming assets

(NPAs). They need a significant amount of capital to sustain growth under
the Basel 3 norms for capital adequacy.

The P J Nayak Committee on governance of bank boards in India, constituted

by the Reserve Bank of India (RBI), has the standard remedy for all ills in
the public sector: reduce government involvement and shareholding and
eventually privatise. The committees remit was not limited to PSBs but the
focus of the report is on these banks. The treatment of governance issues in
private banks is rather superficial. This is, of course, not the first committee
to advocate the privatisation route for PSBs. That achievement belongs to
the Percy Mistry Committee report of 2007, of which little has been heard

The committee believes that the financial position is fragile (which is

something of an exaggeration going by the average return on equity, even in
the last three stressed years and not just the position at the end of 2013).
PSBs, it says, lack a sense of direction and focus on issues of strategy and
risk management. It believes that these problems have arisen because of
poor governance. Governance needs to be strengthened. This can happen
only if the government distances itself from governance functions and,
ultimately, sheds its majority ownership.

The committee provides a detailed road map for reaching this destination:
(i) The Bank Nationalisation Act and the State Bank of India (SBI) Act must be
repealed and all banks converted into companies under the Companies Act. (ii)

Government must transfer its holdings in banks to a Bank Investment

Company (BIC). Responsibility for governance thus gets transferred to the
(iii) In Phase I, until the BIC becomes operational, a Bank Boards Bureau
comprising senior bankers should advise on all appointments, including
those of chairmen and executive directors.
(iv) In Phase II, when the BIC becomes operational, the governance
functions will be exercised by the BIC.
(v) In Phase III, the BIC will transfer the governance functions to the
respective bank boards. This could be accompanied by the BIC lowering its
stake in PSBs below 50% so that PSBs are freed from constraints on pay and
from the purview of the Central Vigilance Commission and the Right to
Information Act.
Your Interview, Shrabana Kumar Nial

(vi) Although the report does not explicitly recommend this, it hints at the
possibility of governments shareholding in the BIC itself falling below 50%. If
this happens, it would amount to privatisation of the all PSBs.
In what follows, I first critique what I believe are key premises of the report.
I will then go on to the important issues in the banking sector that require
the governments attention and how these might be addressed.
Premises of Report
The report rests on a number of premises. Let me take up these one by one.
The first is that government ownership renders PSB performance inferior to
that of private banks: This contention is not supported by the empirical
research on the subject. A number of studies have pointed to convergence in
performance of public and private sector banks in the post-reform period.
Bank performance in India has been, to a large extent, ownership neutral.
The committee bases its contention on figures for a small period. The report
has charts that cover bank performance in the most recent period 2005-13.
These too show a trend towards convergence in the period 200507 and
again in 2011. It is only in the extraordinary slowdown of the 2012 and 2013
that a sharp divergence arises. Some of this is temporary in nature. We can
expect to see it reversed as economic growth improves in the next two to
three years.
It is important also to realise what has caused divergence in performance in
the stressed years. PSBs invested heavily in the infrastructure sectors that
drove growth in the golden period of 2004-08. These very sectors have run
into problems because of a host of issues, some of which are non-economic
in nature.
Some of the best performing private banks have chosen to focus on working
capital and retail finance and have ended up with rosy figures. In the very
nature of things, PSBs cannot have such a narrow focus. It would be unwise
to jump to conclusions about ownership from a comparison of numbers at a
given point in time.
Naivet about Professionals
The second premise is that the performance of banks has to do the quality of
governance or the effectiveness of boards: PSB boards, the report says, are
dysfunctional. But so are many private bank boards. Boards, in general, are
dysfunctional. Some of the biggest failures in the financial crisis were the
boards of the largest and most reputed banks in the West.

Your Interview, Shrabana Kumar Nial

It is sheer naivet to suppose, as the Nayak Committee does, that the mere
induction of professionals will bring about a sea change in the functioning of
PSBs. The Royal Bank of Scotland, the biggest banking failure in the history
of the United Kingdom (UK), had all the professional expertise that any bank
board could ask for and yet this very board was a mute witness to reckless
decisions taken by the management.
Public sector bankers will tell you that some of the best contributions to the
board come from the RBI nominee on the board. Besides, it is not as if the
government packs PSB boards entirely with incompetent persons or that PSB
boards today lack professionals. The missing ingredient in PSBs today is lack
of management depth and competence, a point we will come to a little later.
The third premise holds that board governance can improve only if
government is distanced from the board: Most people are inclined to believe
that PSBs face problems because of massive government interference in the
sanction of loans. As many PSB bankers will readily testify, such interference
has come down sharply over the years and it is possible for a bank chairman
to stand up to it.
The committees answer to the governance problem, creating a BIC headed
by a professional banker and with bankers as directors, is infeasible and
misguided. The proposal is misguided because it would vest a group of
professionals running the BIC with control over the entire set of PSBs. The
dangers of such concentration of power are so great as to make one
The proposal is infeasible because the idea that the government as the
principal stakeholder, which is accountable to Parliament, should not exercise
any control over the board is unlikely to find political acceptance. Way back
in the late 1990s, Vijay Kelkar, who was then finance secretary, had
proposed a holding company for public sector undertakings (PSUs). The idea
remained stillborn. In the case of banks, which still need government
funding and that have an implicit government safety net, it is hard to
visualise such a proposal going through.
Problems with the UK Model
In 2008, the UK government set up the UK Financial Investments (UKFI) in
order to manage its stakes in British banks which the government had bailed
out. The report cites the UKFI as an appropriate model for India. It contends
that UKFI is viewed as a buffer between the banks and politicians, and acts
as an informed shareholder.
Really? The Lex column of Financial Times recently had this to say of the UKFI:

Your Interview, Shrabana Kumar Nial

One sort of person will start shouting about how UKFI is an indecent figleaf
balanced on the angry tumescence of the states control. UKFI never votes
its shares contrary to its masters wishes. Other complainants will fume and
spit over how UKFIs ex-banker management would always approve
grotesque bonuses for their mates, if the government did not intervene (14
May 2014).
Consequent to the bailout, the UK government has had its say in the choice
of CEOs in banks under its ownership as well as the payment of bonuses.
This underlines an important truth that seems to have eluded the Nayak
Committee: the government cannot distance itself from control over banks
in which it is the majority shareholder.
The report also cites the case of UTI Bank, since changed to Axis Bank. The
government transferred its majority stake to a special purpose vehicle and
then allowed it to fall below 50%. This has generated enormous returns to
the government. UTI was a new bank and hence could do things very
differently from an existing PSB. It was a small bank, so the government
could risk relaxing its control. These are not things that can be replicated
with a whole set of larger banks: the risk to systemic stability is too high.
The report argues that repealing the Bank Nationalisation and other related
Acts and bringing PSBs under the Companies Act is preferable because the
Companies Act of 2013 has stronger provisions on governance than the
existing Acts that cover PSBs. This is a rather specious argument. The
Securities Exchange Board of India (SEBI) has strengthened clause 49 of the
listing agreement, bringing it in line with the provisions of the Companies
Act and making it stronger in some respect. PSBs, being listed entities, are
covered by clause 49.
Employee Compensation
The fourth premise is that the PSBs can fare better only if they have the
same level field as private banks with respect to employee compensation:
This is one of the most-cited arguments for privatisation anywhere in the
world. The public sector can never compete with the private sector for
talent, hence privatisation is inevitable.
This is not the place to explore the complex issue of pay and performance. It
suffices to make a few points. One, in respect of base pay, it is important to
compare cost to company (including pension benefits). When one does that,
the difference in pay may not appear as glaring as is generally supposed.
Two, in respect of variable pay, there is scope for improvement at PSBs.
However, trying to catch up with the private sector is likely to seriously
damage the cost structure of PSBs and render them uncompetitive.
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Three, in banking, one must always be alive to the link between executive
pay and systemic risk. The worlds leading banks showed great performance
in the years leading up to 2007 and they could well have claimed that it was
because they knew how to reward talent. It turned out that it was precisely
the reward system that was a cause of the crisis.
The challenge in the Indian banking system may not be just of raising public
sector pay to private sector levels. It may equally be one of reining in
runaway compensation at private sector banks. The committee has
recommended stringent penalties for private banks that resort to
evergreening of accounts to avoid provisions. Has the committee picked up
something that has not filtered into the public domain?
The fifth premise is that the PSBs requirements of capital under Basel 3 are
so onerous that government will not be able to make the contribution
required to maintain majority ownership: The committee arrives at this
conclusion on the basis of projections that veer towards the pessimistic. For
instance, it uses the return on equity of the last three years when there is
every likelihood that the outlook for the coming years will be better.
In the best case scenario, it projects an annual requirement of government
funding of about Rs 30,000 crore. Other independent forecasts put the figure
at closer to Rs 25,000 crore. This is, of course, a high figure but not one that
is beyond the capacity of the government if we assume a gradual return to a
high growth path.
That apart, there is no call to lump all PSBs together and propose a onesizefits-all solution privatisation for all of them. It would make more sense to
distinguish between the stronger and weaker banks. For some banks in the
latter category, we could consider a dilution in government ownership below
Common Governance Issues
There are a large number of issues of governance that cut across both the
public and private sectors in Indian banking. It should be possible to address
the problems at most PSBs within the framework of government ownership.
There is nothing about government ownership that comes in the way of the
board of a public sector company being professionalised and empowered.
The committee might have looked at the record of the new prime minister.
During Prime Minister Narendra Modis tenure as chief minister, Gujarat
showed that PSU boards could be professionalised and PSUs turned around
The committee says that seven key themes, including strategy and risk
management, do not get the attention they deserve at PSB boards. The
Your Interview, Shrabana Kumar Nial

committee is of the view that private banks table more relevant issues than
PSBs. It suggests that this could be a factor that private banks superior
performance (despite the fact that in both categories of bank, less than 6%
of issues tabled related to strategy and risk mitigation). This weighty
conclusion is based on a perusal of the minutes of just one board meeting at
banks in the sample.
The report even has a graph that shows a closer correlation between board
issues tabled and returns. One can wager that the committee would have
found an even better correlation between the quality of boardrooms and
bank performance!
Three Initiatives for Boards
Boards, in general, are ineffective and this has little to do with ownership or
the absence of adequate expertise or skills on the board. The way forward is
not to predicate improved governance on a change of ownership. If owners,
public or private, are not doing what it takes, the regulator must step in.
There are three initiatives the regulator might take.
One, lay down stringent fit and proper criteria for membership of bank
boards and also a broad profile of the skills or expertise needed. (There is a
certain composition the RBI now prescribes but this needs to be updated.)
Two, ensure that board members are selected by diverse stakeholders. The
central problem today is the way the boards are constituted. As long as
boards are constituted entirely by the promoter or management, boards are
fated to remain ineffective. We need genuine diversity in the boardroom with
representation for institutional and minority shareholders at the very least.
Three, introduce an objective filter in the selection of board members. The
Financial Services Authority (FSA) of the UK interviews candidates for board
positions in the financial sector and does not hesitate to reject those found
suitable. The time is ripe to consider instituting such a process here.
Central Problem of Management
The central problem at PSBs is not governance by the board. It is one of
management. Management is one of the key differentiators between public
and private sector banks. The problems are well known and were spelt out
by a committee headed by A K Khandewal in 2012.
There is, first, the complete decimation of senior and top management at
many PSBs because of the hiring freeze that operated for several years.
Second, there is poor succession planning. We have managers hopping from
one PSB to another at the executive director and the chairman and
managing director levels. Managers occupy these positions without any
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familiarity with the culture of the bank, and leave just when they have to
come to grips with it. This must stop. At the top level, the attempt must be
to select from a panel of senior officers groomed for the position over a long
period of time.
Third, there is a lack of expertise in areas such as treasury, wealth
management and risk management. In these areas, PSBs should have
freedom to hire people on contract from the market on terms that may not
fit into the public sector framework of compensation. Then, there are the
nuts and bolts of human resource development that have got neglected:
career planning and job rotation; performance management systems;
highquality training, etc.
The issues of management as well as governance at PSBs can be addressed
without being fixated on the notion that the public sector is congenitally
incapable of addressing these. What is required is a combination of political
will and decisive regulatory intervention.
The Nayak Committees proposal to privatise PSBs has little chance of going
through. It will be fiercely opposed by bank unions as well as political
parties. Repealing the various bank-related acts will be difficult, given that
the new National Democratic Alliance government lacks the numbers in the
upper house.
Not least, the dangers of handing over the banking system to a clutch of
professionals individuals who are unelected and unaccountable to
Parliament are so great that no government can contemplate such a
course with equanimity. It would be unfortunate if, in burying the
privatisation proposal, we also end up burying the live issues of governance
and management in the banking system.

23. A new framework for monetary policy

The Urjit Patel panels recommendations on institutional
reforms should be taken seriously
The merit of the Urjit Patel Committee Report to Review and Strengthen the
Monetary Policy Framework (January 2014) is its analytical rigour and clear
recommendations on improving the efficacy of monetary policy. The Patel
Report would become the locus classicus on monetary policy in India.
Key Recommendations
The key recommendations of the Committee are:
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(i) The headline Consumer Price Index (CPI) should be the nominal anchor
for monetary policy and the Reserve Bank of India (RBI) should make this
the predominant objective.
(ii)The nominal anchor for inflation should be set for a two-year horizon at 4
per cent with a band of plus or minus 2 per cent. Since the present CPI
inflation is 10 per cent the Committee recommends a glide path of 8 per
cent for January 2015 and 6 per cent for January 2016.
(iii) The Central Government needs to reduce the fiscal deficit to 3.0 per
cent of GDP by 2016-17. Administered prices, wages and interest rates are
impediments to transmission of monetary policy and should be eliminated.
(iv) Monetary policy decisions should be vested in a Monetary Policy
Committee (MPC) comprising the Governor, the Deputy Governor and
Executive Director in charge of monetary policy and two external full-time
members. The decisions of the MPC will be by voting. Members will be
accountable for failure to attain the targetfailure being defined as inability
to attain the target for three successive quarters.
(iv) The real policy rate should be positive. In the first phase the weighted
average call rate would be the operative target and the repo rate would be
the single policy rate. The funds available at the repo rate would be
restricted and increasingly liquidity would be provided at the 14 day term
repo; longer-term repo auctions should be introduced.
(v) In the second phase, the 14-day repo rate would be the operative
target and recourse to outright two-way open market operations (OMO)
would determine liquidity. OMO should not used to manage yields on
government securities.
(vi) There should be a remunerated standing deposit facility at the RBI to
sterilise excess liquidity.
(vii) With an independent debt management office, the market stabilisation
scheme and cash management bills should be phased out.
(viii) All sector specific refinance should be phased out as committed to the
Asian Development Bank in 1992.
The implications of the key recommendations are discussed below.
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Nominal anchor
The CPI inflation is quite clearly the appropriate anchor. Those apprehensive
of a strong and effective monetary policy will try to stall this
recommendation. The RBI should unequivocally emphasise, in its policy
statements, that CPI inflation would be its nominal anchor. The gliding to the
4 per cent plus or minus the CPI nominal anchor would be nondisruptive and
the RBI should, continue to stress the 8 per cent CPI inflation for January
2015 and 6 per cent for January 2016.
The Patel Committee recommends a remunerated standing deposit facility
which, unlike the reverse repo, would not require government securities as
collateral. While this would allow sterilisation of capital inflows, without any
limit it would be detrimental to the RBI balance sheet as there is no
provision in the law to ensure that all losses of the RBI will be met by the
government. In the absence of such a legislative clause it would be
hazardous to introduce a remunerated standing deposit facility.
The structure and composition of the MPC are pre-eminently suitable. The
MPC will have two external full-time members with a fixed three year
nonrenewable term. There could be some hierarchical problems about these
members questioning executive decisions. The RBI should study the
experience of Korea and other countries which have full-time members in
the MPC.
The Financial Sector Legislative Reforms Commission (FSLRC), in its Report
(March 2013), envisaged a MPC with two RBI members and five external
members nominated by the government; besides the Finance Secretary or
Secretary Economic Affairs would also be a non-voting member of the MPC.
Such a structure would make the RBI into a vassal state.
There are media headlines that the Patel Committee advocates full autonomy
on interest rates. If the RBI is to be accountable it should have some degree
of flexibility to attain its objectives. C. Rangarajan has argued that all the
autonomy the RBI needs is headroom to operate monetary policy. The RBI
would do well to recall the dictum that autonomy is never given, it is earned
and taken.
The anatomy of the RBI
The RBI could explore the scope for converting the present Technical
Advisory Committee into a five member MPC with voting by members as
envisaged by the Patel Committee, with two External Members who could be
members of the RBI Board. This could obviate the need for legislative
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changes which could take years. The Patel Committee endorses the setting
up of an independent Debt Management Office (DMO), but rightly cautions
that the RBIs OMO should be strictly limited to liquidity requirements and
not be a vehicle for enabling government borrowing at low interest rates.
The FSLRC recommendation that RBI should be a member of the DMO
Council as also the Management Committee is flawed as the Chairman of the
DMO is enjoined to obtaining unanimous decisions which would make the
RBI monetary policy subservient to the DMO.
There should be an open and constructive debate and the FSLRC Report
should not be treated as the holy grail. While the Report attempts to provide
a legislative framework, the Patel and Mor Committees set out the policy
objectives, and hence all three Reports should be examined in a coordinated

24.Nuts and bolts of financial inclusion

The Nachiket Mor panel calls for an overhaul of
the system to reach out to the unbanked.
The Committee on Comprehensive Financial Services for Small
Businesses and Low Income Households chaired by Nachiket Mor
submitted its Report on December 31. The expanse of the Report, its
vision and depth of analysis backed up by massive data, is awesome.
The instant impression could be summed up as wonderful to the
point of bewilderment.
But each of us commenting on the Report are rather like the Six
Blind Men of Hindustan. The Mor Report is far too important a
document to be consigned to the archives. The Report deserves
serious in-depth examination by policymakers and institutions which
are likely to implement its recommendations.
Facilitating financial inclusion
The Report highlights that 90 per cent of small businesses have no
link with the formal financial sector and 60 per cent of the
population does not have a functional bank account. While the bank
credit-GDP ratio is around 70 per cent of GDP, there are wide
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regional and district-wise disparities which confirms that financial

inclusion has a long way to go.
The Report stresses that savers have difficulties in accessing
institutions and with no instrument providing a positive real rate of
return on financial savings, there has been a move away from
financial assets to physical assets.
Under the Committees proposed financial structure, there would be
two types of national banks (one with branches and one with
agents), besides wholesale consumer banks, wholesale investment
banks and payments banks. The entry capital requirements would be
Rs. 500 crore for national banks and Rs. 50 crore for the wholesale
The Report recommends that the cash reserve ratio (CRR) should
apply only on demand deposits. It is envisaged that the statutory
liquidity ratio (SLR) will be phased out for national as well as
wholesale Banks but this is contingent on governments acceptance
of market interest rates on its borrowing.
Wholesale banks would not accept deposits below Rs 5 crore and
hence would be heavily dependent on inter-bank borrowing from the
national banks. Since inter-bank liabilities are not treated as
liabilities for purposes of CRR requirements, the wholesale banks
will be subjected to a much lower CRR.
Payments Bank
The Committee envisages the setting up of payments banks which
will provide payments services and deposit products to small
businesses and low income households with a maximum deposit of
Rs 50,000 per customer. These banks will be subject to reserve
requirements. In the case of the SLR, the payments banks will be
required to invest in government securities with a duration of not
more than three months.
Role of Postal Bank
The Postal Bank is proposed by the Committee as a payments bank.
It would be a serious error of policy if the Postal Bank is not granted
a fullfledged banking licence for which it has applied. Given its vast
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expanse of offices, unmatched by any other institution, the Postal

Bank has to be given a full-fledged banking licence if financial
inclusion is to be meaningful.
Financial sector reforms
The Mor recommendations will require a major revamp of the
present financial legislative framework. Governor Raghuram Rajan
recommendations of the Financial Sector Legislative Reforms
Commission (FSLRC) it will be necessary to settle on the desired
financial structure. As such, the FSLRC Report and the Mor Report
have to be examined simultaneously. Eager beavers wanting instant
implementation of the FSLRC recommendations need to be reined in
until a comprehensive examination is undertaken not only by
policymakers, opinion makers and the operational units but more
importantly by Parliament. Implementing the recommendations of
the FSLRC without Parliamentary approval would be, to say the
least, highly irregular.
Inclusion framework
The Mor Committee recommends that every resident Indian over the age
of 18 years should have a Universal Electronic Bank Account by January
2016 and every low income household and small business should have
convenient access to formally regulated lenders for credit products at
an affordable price.
By January 1, 2016, each district should have a credit-deposit ratio
of a minimum of 10 per cent, which should be raised rapidly by 10
percentage points each year to reach a minimum of 50 per cent by
January 1, 2020. Again, in each district, by January 1, 2016, there
should be a minimum total deposits plus investments to GDP ratio of
a minimum of 15 per cent which should be increased by 12.5
percentage points each year to reach a minimum of 65 per cent by
January 1, 2020.
The January 1, 2020 targets appear excessively ambitious, but the
recommendation in a sense underlines the enormity of the task. To
ensure that backward districts get preferential treatment, the
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Committee rightly suggests a weighted district-wise formula in the

attainment of the priority sector targets.
The Mor Report could be considered to be excessively ambitious, but
given the task one has to dare to be bold. I have on a number of
occasions stressed the relevance of the Rajamannar Working Group
of the Banking Commission of the 1970s which set out an elaborate
legislative framework for linking the organised financial system with
the unorganised indigenous financial sector. Not having such a link
is a serious error of policy.
Will history repeat itself?
Forty five years ago, the late R.K. Hazari, prepared a path-breaking
report on concentration of industrial licensing in the hands of a few
industrial houses. The report recommended the nationalisation of
banks. Soon after nationalisation of banks in 1969, Hazari was
inducted into the RBI as Deputy Governor. Will history repeat itself?

25. Why business groups should not own banks

Our objection to corporate ownership of banks is based on the very idea
of efficient financial intermediation
Even as the Reserve Bank of India (RBI) is preparing to give out new bank
licences in January, a parliamentary committee has reportedly questioned its
intention to give some of the permits to corporate groups. The lawmakers
have done well to voice their objections.
A committee headed by former RBI governor Bimal Jalan will decide which of
the 26 applicants that have been shortlisted by the central bank will
eventually be given permission to begin banking operations. The shortlist
includes several business houses. Former finance minister Yashwant Sinha
has called for the ongoing process to be rolled back.
India has been one among many countries that have not allowed business
houses to own banks. The ostensible reason for the bank nationalizations of
1969 and 1980 was ending the misuse of the banking system by business
groups. The Indian central bank has given new bank licences in two rounds
since the economic reforms of 1991, but has never opened the sector to
business groups. Former finance minister Pranab Mukherjee said in his 2010
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budget speech that such groups should also be allowed into the lending
Our objection to corporate ownership of banks is based on the very idea of
efficient financial intermediation. A bank is a financial intermediary that
raises money from depositors to lend to borrowers. In a country such as
India, households are a major source of deposits while companies are large
borrowers. A bank should ideally be a neutral intermediary, with no interest
in the game other than intermediation. In other words, it should neither own
a business group nor be owned by one. Else, it has strong incentives to
abandon its unbiased position as an intermediary. The new Indian banking
rules undermine this fundamental assumption.
In practical terms, a business group could have good reasons to shovel
money into group companies while holding back funds from competitors.
Financial intermediation will not be efficient. To be sure, there can be
regulations to control such practices. Australia, Germany and France restrict
the voting rights of a shareholding group. South Africa gives a lot of weight
to the reputation of the bank promoters. Hong Kong and Taiwan have strict
restrictions on inter-group lending. US has a blanket ban on industrial
companies owning banks.
There are ample ways to circumvent restrictions of lending to group companies
because of the complex holding structures of most Indian companies. Suppliers
can also be used as fronts to gain access to cheap bank funds. In a note on the
Indian financial sector released in January, the International Monetary Fund had
warned: the legal, operational, and regulatory framework for consolidated
supervision of both bank-led groups and financial conglomerates is still missing
some important elements, and it would be prudent to first put in place and gain
sufficient experience from implementing a comprehensive framework for this
purpose before even considering whether to proceed with the entry of mixed
groups and conglomerates.
Some supporters of corporate ownership of banks point out that business
groups already own other financial intermediaries such as insurance
companies. This is where the second feature of banking needs to be
highlighted. Unlike insurance companies or mutual funds, commercial banks
are highly leveraged institutions that are critically dependent on public
confidence. They suffer from contagion effects. They have other important
tasks besides lending, such as clearing financial transactions, acting as
agents of monetary transmission and (especially in a country such as India)
helping in overall financial development. It is quite likely that the Indian
central bank will consider only those business groups that have exemplary
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corporate governance, but it is also worth remembering that loss of

confidence in an industrial company has far more benign effects than a
similar loss of confidence in a bank, because the entire financial system can
be at risk in the latter case.
There are good reasons why most well-managed economies do not
encourage bank ownership by non-financial firms. RBI governor Raghuram
Rajan has also been a sceptic, arguing against allowing corporate groups to
own banks. He should act according to his convictions.

26.Wanted: An independent, accountable RBI

The market seems to be developing a love-hate relationship with new Reserve
Bank of India (RBI) governor Raghuram Rajan. On 4 September, the day Rajan
took over, BSE Ltds benchmark equity index Sensex greeted him with a 1.83%
rise. Last week, after his maiden monetary policy announcement, the Sensex
lost 1.85%. On his part, Rajan has made it clear he prefers to do the right
things, not bothering about Facebook likes. In less than three weeks since he
took over, Rajan has done quite a few right things. Apart from presenting a
smart policy, he has started moving things in RBI in a time-bound manner.
A day before the policy, RBI formally relaxed its norms for banks to open
branches in bigger citiessomething Rajan had promised on 4 September.
Similarly, the Urjit Patel committee, which is to make suggestions to
strengthen the monetary policy framework in three months, is in place. If
Rajan keeps his word, RBI will announce new bank licences by endJanuary.
Former finance minister Pranab Mukherjee had first announced the
governments intention to allow more private entities to set up banks in
February 2010.
As an institution, RBI is known for its impeccable integrity and intellectual
honesty but not necessarily for pushing things in a time-bound manner.
Many also feel it lacks accountability. Apart from ensuring price stability with
one eye on economic growth, Rajan may need to look at some of the
structural issues within the RBI bureaucracy.
A few years ago, the head of a private bank had to approach a deputy
governor of RBI as the central bank had refused to clear his salary structure
for over six months. Under the norms, the salaries and bonuses of the chief
executive officers (CEOs) of private and foreign banks need the clearance of
the regulator. RBI has every right to say no to anybody, but the practice is to
not clear these files for months without assigning any reason.
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The regulations are also not uniform. For instance, RBI has no role to play in
the selection of CEOs of private and foreign banks and their boards but the
governor heads the appointment panel that picks the CEOs of public sector
banks and RBI has its representatives on the boards of all public sector
There is no clarity either on the role of RBIs board, where the governor
the CEO of the organizationis the chairman. The committee of the central
board, which meets every Wednesday, however, has a specific role to play,
including dissecting the bank rate. Incidentally, despite the noise it makes
for autonomy, one wonders why only the ministers in power grace all RBI
functions. I cant recall a single occasion when the leader of the opposition
or, say, a former finance minister known for his intellectual acumen has been
invited for any RBI function.
An internal committee of the central bank recently said that its balance sheet
should be more transparent by including information such as employee cost
and expenses on printing of notes. RBIs balance sheet doesnt clarify many
things. In fact, the Central Bank of Sri Lankas balance sheet is more
transparent than that of RBI.
RBI, in its balance sheet, does not give details of various provisions made;
theres no classification of foreign currency assets; and there is no cash flow
statement. The Sri Lankan central bank gives the cash flow statement,
classifies its foreign currency assets including derivatives, and says how
much of these assets it is holding till they mature and how much it can
trade. It also gives a detailed presentation on how many pension, gratuity
and other employee welfare schemes it runs.
For the first time this year, the government appointed two auditors for RBI,
apparently without consulting it. Indeed, RBI is a statutory regulatory
authority and enjoys independence to carry out functions but an
independent audit can only enhance its accountability. Incidentally, the
Financial Sector Legislative Reforms Commission has recommended that the
accounts of all financial regulators shall be audited by the Comptroller and
Auditor General of India.
RBI was set up as a private shareholders bank in British-ruled India in 1935.
It was nationalized in 1949 but there has been no change in its
organizational structure. Rajan can play the role of a change agent. To start
with, he can allow lateral entry at every level. Like autonomy, accountability
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is also a perception that RBI needs to create in the collective mind of the
Snakes and ladders
Two months after the deadline for applications for new banks expired, there
have been two changes in the list of applicants. One, Value Industries Ltd, a
unit of Videocon Industries Ltd, has withdrawn its application for a banking
permit, and two, Chandigarh-based real estate and hospitality company KC
Land and Finance Ltd has sought a banking licence. The original list of 26
permit seekers, released by RBI on 1 July, did not have this name.
Many are finding the sudden appearance of a new applicant and withdrawal
of the Videocon group mysterious. Here is what happened. At some point,
Venugopal Dhoot, chairman of Videocon Industries, was tipped to get into
the board of RBI and this prompted the group to drop the idea of seeking a
banking licence to avoid any conflict of interest. Its another story that
Dhoots nomination to RBIs central board finally did not work out.
As far as KC Land is concerned, instead of carrying the application physically
to the RBI central office in Mumbai with reams of papers supporting its
credentials and explaining the banking plan, the company apparently sent a
relatively brief application through post and it was located much later.
Hence, the delay in notifying its name to the public. Those who have been
looking for some conspiracy will be disappointed.

27.India and the Age of Acceleration

We live in a world which is changing at an increasingly rapid pace.
One may call our era the Age of Acceleration, an age where the only
constant seems to be the certainty of even more change.
What explains this constant flux that now rules our lives? It is mainly the
acceleration we witness in technological advancement. The computing power
of a micro-chip in our mobile phones is equivalent to several acres of main
frame computers that would have been required a generation ago. The
volume of data and the speed with which it can move across vast spaces is
difficult to comprehend. And yet, scientists tell us, we are still far from
reaching the limits of this technology. There are other domains where
potentially disruptive technologies are in the making. These include
nanotechnology, advanced materials, bio-sciences and artificial intelligence.
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These developments are pushing the frontiers of knowledge into largely

uncharted territory.
We do not know how they will interact with social, political and psychological
systems that change only slowly. Human beings are seduced by novelty, but
they are reassured by familiarity. Technological change has altered our
global landscape. The recent global financial and economic crisis was, in a
real sense, caused by the mismatch between the scale of technological
change and the adaptability of institutions of both domestic and global
governance. What is worth noting is that recovery can never be a return to
the pre-crisis terrain. And yet that is what we seem to be seeking. Unless we
find new instruments of governance, we are doomed to suffer similar crises
in the future, perhaps even worse than the last. An altered landscape, which
is still in the throes of further change, is no longer amenable to being
managed by the tools that were fashioned to deal with an altogether
different environment. Yet our predisposition to familiarity and precedent
makes us reluctant to down these tools and look for new ones.
The emerging landscape
Let me point to some of the characteristics of the emerging landscape. It is,
in my view, dominated by three critical domains, a terrestrial domain that is
increasingly defined by the maritime space, an extra-terrestrial domain
which is space-related and lastly, extending both along the terrestrial and
extra-terrestrial, cyber space.
As a globalised economy has become more entrenched, as the
interconnectedness and integration of economies across the world continues
apace, the maritime sphere becomes a critical factor, impacting directly on
the overall security of nations. Ocean-going trade now constitutes well over
90% of total trade. The dependence on maritime trade is even more
compelling, if we consider the movement of energy resources, particularly
oil, and other strategic commodities such as iron ore, coal and, more
recently, rare earths. Resource security is now integrally linked to maritime
The maritime domain
The maritime domain is also in flux. The melting of Arctic ice due to global
warming, for example, is opening up new and much shorter sea routes
between Europe and Asia, reducing shipping distance by over 40%. From
just over 4 cargo vessels in 2010, the number using the North-East passage
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along the Russian Arctic coast reached over 200 last summer. New ports and
infrastructure are planned along the Russian and Norwegian Arctic coasts. If
the current trends continue, it is estimated that over 25% of world shipping
may be traversing this route, instead of traditional passage through the Suez
Canal by 2030.The Arctic may also hold over 40% of the worlds known
energy and mineral resources, which the melting of ice is making accessible.
The economic profile of the Arctic littoral countries, in particular, the US,
Russia, Canada, Norway and Denmark, would increase and so will their
strategic importance. Whether this will retard or even reverse the current
ongoing shift in the centre of gravity of global power to the Asia and Pacific
region, remains to be seen, but cannot be ruled out.
The critical role of the maritime domain also implies that countries which can
deploy significant maritime capabilities and which can project power over
vast ocean spaces, will be the more influential nations of the future, not
those who continue to allocate resources to large and increasingly less
effective land forces and weaponry.
The domain of space
Let me now turn to the domain of space. Much of the worlds communication
systems, its information and media infrastructure, navigation and surveillance
systems and resource survey platforms are based in space. The number of
operational satellites orbiting in space has grown from just a handful 50 years
ago to about 5,000 now. These spacebased assets are indispensable to modern
economies, but they are also vulnerable. This was brought home to the world by
Chinas unannounced ASAT test in 2007. The space domain is now completely
woven into the fabric of our lives on earth, though few of us fully comprehend
this reality. In the none too distant future, space travel may become as
ubiquitous as air travel today. The colonization of other planets, the exploitation
of rich and rare minerals that lie buried in their soil and their use as remote
platforms for future explorations of outer space, are no longer in the realm of
fantasy. It stands to reason that countries that have mastery in space sciences
and ambitions programmes for future growth, will be significant players in any
future world order.
Let me now turn to cyber space, which is a complex hybrid of both terrestrial
as well as extra-terrestrial domains. It is terrestrial in the sense that it is
dependent upon a vast and dense network of fibre-optic cables that gird our
planet, embedded both in land as well as under sea. It is extra-territorial
because it is also connected to all the space-based systems referred to
earlier. The virtual reality which cyber space creates and maintains, depends
upon both land (including maritime) based and space based platforms which
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are interconnected and enmeshed in a complex and continually expanding

system. Again, it is difficult to comprehend how much our day-to-day living
and functioning currently is dependent upon this interconnected cyber
space. And yet it is only a little over 50 years since the satellite age was
born and only 30 years since personal computers and portable phones came
into existence. The worldwide internet which created a global cyber-space is
only a little over a generation old. Many of us have lived through an era
where there were no televisions, let alone computers, mobile phones or the
internet. And yet today, we cannot conceive of a modern economy and a
modern society in which cyber space is not an indispensable and pervasive
This also implies that countries with advanced cyber-capabilities will possess
a most powerful instrument both for economic advancement and enhancing
national security. It is a resource which is unique because it is not material
or tangible. It is nevertheless a virtual network that no nation or society can
opt out of and survive as a viable entity. Interconnectedness is no longer a
choice. It is a fundamental condition of modern living and
interconnectedness is most visibly manifest in cyber space.
India, an influential actor
So where does India belong in this transformed landscape? India is, and will
remain, an influential actor in the emerging global order, precisely because it
has demonstrated capabilities in all the three critical domains I referred to.
It is already a maritime power with a strong regional though as yet modest
global reach. These capabilities are expanding, though not as significantly as
a long-term strategy would dictate. It is one of the handful of space powers
and, despite frugal resources, it has developed sophisticated capabilities
which are comparable to the best in the world. And lastly, in cyber-space,
India has a well-established and internationally acknowledged capability
which marks it out as one of the handful of countries that can deploy both
defensive and offensive capabilities. It is precisely these capabilities which
provide India with the opportunity to lead the world into creating global
governance structures that are based, not on the competitive principle, but
on an understanding that only collaborative responses will be able to deal
with the inter-linked challenges posed by these emerging domains. India has
a stake in the norms and standards which such global regimes will
eventually adopt. But, since India is, and will remain, a key player in each of
these domains, the world, too, has a stake in India being a part and parcel
of these regimes. Indias absence from these regimes will make them
ineffective. This is a powerful leverage in our hands but we will need a
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careful well thought-out long-term strategy to use it to be able to shape the

emerging global order.
I recognize that the current state of our country does not match the
potential that our capabilities in the three critical domains provide us with.
Nor is it certain that we will continue to develop these capabilities as
technologies advance to ever higher realms. I do believe, however, that it is
more likely that India will advance, though perhaps in fits and starts,
because it is a plural, diverse and extraordinarily interactive society. The
mobile, the internet and other social media, are enabling Indians to
converse and interact with one another and with citizens across borders, on
a scale that is unprecedented. The innate creativity and innovative spirit of
Indias peoples is being unleashed on an unprecedented scale. Harnessing
this extraordinary energy will require leadership which understands the
altered landscape in which we live and leads in putting in place institutions
and processes that are appropriate to this changing landscape. We have an
advantage in that we are not already locked into a pattern of energy and
resource intensive economic development model which characterises China
and much of the world today. This is a model which belongs to the past. The
future will be built upon its deconstruction. India has an opportunity to
fashion a model of development which draws upon its democratic impulses &
its store of capabilities in the new domains, and helps shape a global order
that promotes collaborative responses to cross-cutting issues, rather than
the competitive outcomes that belong to a world that no longer exists. In
becoming the thought leader in this respect, India will find its own place in
the world, its own destiny.

28.Why India's Corporate Bigwigs Want to be Bankers

From Tata, Birla and Ambani to ambitious financial services entrepreneurs,
everyone sees money in a banking licence. But cut to the core, and what
you find is a clear play on the India growth story, and not much else.
Everyone, from the mighty whales to the financial minnows of India Inc,
would like to be a banker. Whether it is the pull effect of a new opportunity
that beckons, or the push effect of an existing business model that is going
nowhere, or a mix of both, India is awash with entrepreneurs who seem to
think that a banking licence is a licence to print money. On June 30, when
the Reserve Bank of India (RBI) officially closed its window for applicants,
there were 26 in the queue, including the governments own India Post.

Your Interview, Shrabana Kumar Nial

Serving as a beacon for all comers is one outlier: HDFC Bank. On July 17,
HDFC Bank reported a 30 percent growth in net profits for the April-June
quarter. Nothing odd, it would seem, till you note that it is the 55th
consecutive quarter in which it has managed to show that kind of growth. No
bank, private or public, has ever managed to equal that feat. Given the
consistency of its profit numbers, market analysts have given the bank one
of the highest stock market valuations in the worldcurrently at over five
times book value (as on July 15). Its return on assets for 2013-14 is
estimated by Espirito Santo Securities (ESS) at 1.87 percent. Put differently,
nearly Rs 2 out of every Rs 100 lent by the bank is profit.
If HDFC Bank is the beacon that tells every aspirant that theres money in
them thar banks, the story is not restricted to one bank. As a group, the
major private sector banks have been reporting significantly higher returns
on assets (ranging from 1.5 percent to 1.87 percent of assets, against less
than 1 percent by and large for public sector banks) and forward priceearnings multiples that are twice or thrice as high as that of public sector
The secret of HDFC Banks success, as executive director Paresh
Sukhthankar told Forbes India, is that the bank has focussed on balancing
three critical variables: Growth, margins and asset quality. The bank has
consciously opted to grow in a manner which balances its growth with stable
margins and acceptable asset quality. Regardless of whether the interest
rate cycle is up or down, HDFC Banks net interest margins are stable.
In short, if youre smart, banking is among the best businesses to be in.
Theres an outlier to target, and theres the sloppy public sector to snatch
business away from.
The paradox this time around is this: Banking appears to be both the best
and worst business to be in. The world over, banks have had a few rough
years after the 2008 Lehman bust. In the US and Europe, public trust in
them has dwindled, while in emerging economies, including India, the
slowdown has impacted profits. The sticky loans of Indian banks have been
rising as even big businesses struggle to remain standing in an economy
that seems to have entered a period of stagflation.
And yet, market opportunities have increased, quality banking is still lacking
in many areas and expansion and proliferation is not well laid out, according
to H Srikrishnan, who helped set up HDFC Bank in the midnineties and Yes
Bank a decade later. The trick for the new players will be to identify and fill
Your Interview, Shrabana Kumar Nial

the gaps in the market with innovative products, says Srikrishnan, who has
now joined the board of Religare Enterprises, one of the new aspirants.
The sector is inherently attractive. There are very few businesses where
top line has grown at 18 percent and bottom line at 22 percent for an
extended period, says the spokesperson for one of the big corporate
But will the entry of new players change the nature of returns? One of the
best ways to look at this sector is by comparing the earnings yield on the
NSE banking index with 10-year government bond yields. Banking is one of
the few sectors where the earnings yield (which can also be called the yield
on equity) has been higher than bond yields for more than 52 percent of the
time, indicating that the sector was a buy for much of the past 10 years. But
things are changing now. The Bank Indexs earnings yield is now slightly
lower at 7.22 percent than bond yields at 7.32 percent.
Its possible the new banking hopefuls are looking more at the promise of
the sector than the immediate profitability. Apart from the usual suspects
Tata, Birla and Ambanithe surprise names in the list of hopefuls were a
whole host of players from broking, microfinance, nonbank finance
companies, money remitters and infrastructure lenders, among others. Past
experience suggests that few make the final cut. Fewer survive.
Of the nine players given banking licences in 1993-94 and two more in the
early 2000s, four are gone: Global Trust Bank failed; and three others,
Centurion Bank, Bank of Punjab, and Timesbank got digested when they
gave up the fight for scale in the business. The last three were swallowed,
one chomp at a time, bywho elseHDFC Bank. Only two banksKotak
Mahindra, which converted from an NBFC, and Yes Bank, floated by
professional bankerswere allowed in the next round in the mid-2000s.
Both have found lucrative niches and are flourishing.
The official reason why the RBI opened a cautious window to give wannabe
bankers a chance to try their hand at this craft is to bring a large section of
hitherto unbanked and under-banked population into the folds of the
organised financial system. For the first time, it is also going to allow big
industrial houses to come in. History suggests that private players can never
be serious about inclusion unless there is money to be made. The burden of
inclusion is largely that of the politically-driven public sector.
In 1969, when Indian banks were first nationalised, there were just 6,900 bank
branches in the entire country.
Your Interview, Shrabana Kumar Nial

Nationalisation was a determined political quest for inclusion and the

government enforced branch expansion, writes journalist Shankkar Aiyar in
his 2012 book Accidental India. In 10 years, the number of branches
increased to 57,699 as banks were forced to open four new branches in
unbanked areas for every branch they wanted in an already-covered area.
The number of village branches shot up from 1,833 to 33,014.
Between 1991, the year of liberalisation, and 2011, the banking system,
with nearly 1,800 banks, including co-operative banks, added only 30,000
branches, less than a thousand of them in rural areas. That the private
sector cannot be lured into serving the inclusion agenda without sufficient
profits is clear from the immediate post-Independence as well as recent
Aiyar writes that at the end of March 1966, banks (which were mostly owned
by big businesses) had lent only Rs 90 crore to the small scale sector as
against Rs 1,300 crore to big companies and Rs 500 crore to trade. They
had collectively lent only Rs 5 crore to agriculture. Corporate governance
was even worse. The 188 people who served as directors in 20 leading
banks held 1,452 directorships of other firms besides controlling 1,100
The trend is no different today. RBI data show that despite the regulators
insistence on lending to priority sectors such as agriculture, weaker sections and
small businesses, most banks do not meet targets. When they do, most follow
the letter and not the spirit of the regulation. For instance, only a quarter of farm
credit actually reaches small farmers. The rest is given to allied segments or
companies dabbling in the industry, lending to whom can technically pass off as
priority loans.
In its August 2011 discussion paper on new bank licences, the central bank
says: The experience of the RBI over the past 17 years has been that
banks promoted by individuals, though banking professionals, either failed
or merged with other banks or had muted growth.
The experience has not been much different with local area banks and urban
co-operative banks. They all suffered from inadequacies of scale, capital and
governance, forcing the regulator to shut down some and restrict the
functioning of others.

Your Interview, Shrabana Kumar Nial

That is why this time, when it was drafting the new rules, it kept the capital
threshold high (at Rs 500 crore), insisted on robust governance structures
and wants to make sure that eventually all of them are widely heldall good
practices followed by many other countries.
Most countries insist on well distributed ownership, some discourage
industrial houses and almost all major nations require adequate capital. In
the US and Australia, the capital requirement to start a bank is fixed on each
applicants business plan, while in Singapore you need capital in excess of Rs
5,300 crore, the highest in the world. In Malaysia, the minimum requirement
is in excess of Rs 3,000 crore and in Indonesia it is over Rs 1,600 crore. In
comparison, the RBIs base capital threshold appears generous. But there
are other norms that increase the regulatory risk.
Among other things, new banks must open 25 percent of their branches in
unbanked centres, and they must lend 40 percent of their advances to the
priority sector (agriculture, small businesses, exports, et al). They also need
to maintain cash reserve ratio and statutory liquidity ratio (CRR and SLR)
from day oneeven if they already have a huge loanbook. CRR/SLR eats up
27 percent of banks deposits right now. For NBFCs that want to convert to
banks, it means setting aside a good amount of money for their existing
borrowing in the form of debentures or loans because they will fall under
what is known in banking parlance as time liabilities.
A senior bureaucrat associated with financial policy in the Central
government says if so many applicants have come forward despite the tough
conditions laid down by the RBI, it means there is still space for viable
business. Those who have applied [like the Tatas and Birlas] are not dumb,
are they? he asks.
While one does not ask the Tatas and Birlas why they want to be in any
businessthey are big enough to want a piece of every actionat least one,
the Mahindra Group, which also runs a finance company and was expected
to apply, did not do so, citing doubtful viability given the tough rules.
There are four broad buckets in which we can categorise the new hopefuls.
The first bucket is that of the big corporates, who are in it just for the
business potential of banking. Among them are the Tatas, Birlas, Ambanis
and Larsen & Toubro. Their calculation is simple: If the economy will grow at
7-8 percent over the next 10 years, banking will grow at 15-20 percent
annually. That kind of top line growth is enticing.
Your Interview, Shrabana Kumar Nial

The second bucket comprises players who are in a focussed line of business
and want access to one of the following: Cheaper funds, or a more
diversified portfolio of assets. In this bucket one would put LIC Housing
Finance, IDFC, IFCI and Tourism Finance Corporation of India. LIC Housing
wants to access cheaper public deposits and expand its product offering;
IDFC wants to get out of the straitjacket of infrastructure lending, as this
sector is vulnerable to policy setbacks; IFCI and Tourism Finance are parent
and offspring, and thus want to balance their deadbeat development finance
The third bucket is the largestand comprises private sector non-bank
financial companies. The RBI treats NBFCs as step-children, and frequently
makes rules that work against their core business interests. Example: The
curbs put on lending against gold ornaments. These NBFCs now feel that
becoming a bank is their best bet for growth.
The last bucket is a category of one: India Post. The governments postal
service finds that it has one of the largest branch networks in the world
(over 1.55 lakh post offices, a huge workforce of nearly 5 lakh employees)
but not much business to justify the real estate. If India Post were to
become a bank, it would have more branches than the rest of the banking
system put togetherassuming each post office becomes a sort of mini
India Posts USP would be inclusive banking, but then almost all the
aspirants for a banking licence swear by inclusive banking. To be sure, there
is some commercial logic to it. According to Espirito Santo research, the
metro and urban markets are practically saturated, with the entire
population of 377 million more or less covered by 348 million banking
accounts. The opportunity is really in the rural and semi-urban areas, where
the gap between banking accounts and population is large344 million
accounts to a population of 833 million.
Another corporate spokesman whose group was keen on a banking licence,
in fact, pointed out that wealth is no longer a metro phenomenon. Rural is
not what you think it was in the past. With rising MSPs [minimum support
prices for food] and high land prices, there is a growing well-off customer
base to be serviced in rural areas.
Little wonder, most of the new entrants think this is where the moolah is. BR
Shetty, chairman of UAE Exchange, which handles millions of dollars in
remittances from the Gulf, says despite the fast growth of banking in India,
Your Interview, Shrabana Kumar Nial

there are several unmet customer needs at the bottom of the pile. He
thinks UAE Exchange is uniquely placed to cater to this segment.
Our experience is in working closely with the bottom of the economic
pyramid, which sends money in the range of Rs 15,000 to Rs 18,000.
Working with this segment of customers and bringing them into the formal
financial system is our biggest strength.
In contrast, microfinance lender Janalakshmi Financial is clear that there is
enough bottom-of-the-pyramid business in the urban areas too. Janalakshmi
wants to do more than just lend to the non-prime borrower.
VS Radhakrishnan, managing director and CEO, says his logic for becoming a
bank is to move beyond lending and serve our target customers with a full
product range. Our customer research shows that these customers need a
much broader array of financial products than just the credit products that
we offer today. Most critically, they need savings and payment products,
which we cannot offer with our current model.
Janalakshmis microfinance business is for profit, but the parent company,
Janalakshmi Social Services, started by ex-Citibanker Ramesh Ramanathan, is a
For big business groups which already cater to the rural market by supplying
either agricultural inputs such as fertiliser and pesticides, or goods such as
steel and cement, or even motorcycles and mobile telephony services, the
attraction of having a bank to serve and fund all is immense. They are
already present, and its about tapping a customer they already know.
Inclusion, though, is not always about building unviable branches in villages.
BK Modis Spice Global is one group which plans to make technology its USP
in banking. Says Preeti Malhotra, Group Executive Director at Spice Global,
whose banking application has been made in the name of Smart Global:
Technology will be the differentiator for us and we will focus on smart
mobile banking. It is the most cost-effective solution. The cost of one
physical transaction is Rs 40-60 and through a mobile it is Rs 1-1.5. An ATM
transaction costs Rs 15-20. Of our six lakh villages, only 5 percent are
covered by commercial bank branches; 46 percent of the population is still
unbanked. At the same time, almost everyone has mobile phones. They
access the internet through the mobile phone.
But then technology is a commodity. What one banker can access, everyone
else can. H Srikrishnan, a board member of Religare Enterprises, says that
Your Interview, Shrabana Kumar Nial

basic servicesATMs, online banking, etcare a given today. He believes

that there are growth areas available in sectors such as agriculture (not
necessarily farmers, but in allied segments such as traders, middlemen,
farm infrastructure providers, etc). The new players will have to offer highend products and services at a low cost. Service is the key but not the
door to success any more.
The bottleneck, some believe, will be in getting the right kind of bankers on
boardeven before getting a licence. The Religare Group of the Singh
brothers (Malvinder and Shivinder) has thus begun tanking up on talent.
Apart from Srikrishnan, it has roped in former Canara Bank Chairman AC
Mahajan and former finance secretary Arun Ramanathan.
In Religares case, as in many other cases, one plan is to morph the groups
existing non-bank finance company, Religare Finvest, into a bank. As part of
the preparations it has tied up with Philadelphia (US)-based Customers Bank
a small five-branch bank which recently expanded its network to 19as a
strategic partner. The tie-up has more to do with the learnings of the
founder of the bank than the bank itself. Customers Bank is focussed on the
SME segment, which is also a target for Religare, says Srikrishnan.
Religare Finvest, which is the lending vertical of the Singhs non-operative
holding company Religare Enterprises (REL), has a book size of around Rs
14,000 crore. It accounts for 60 percent of RELs total revenues, and broking
accounts for only 10 percent.
In most cases, it seems, the idea is to convert the existing NBFC into a
bank. The Aditya Birla Group, for example, will use its relatively small Rs
8,000 crore balance sheet of Aditya Birla Finance to convert it into a bank.
The Tatas, though applying through Tata Sons, will do the same with Tata
Finance, which has a much larger book.
Indiabulls, which has a lending book worth Rs 35,000 crore, sees banking as
a logical extension of its finance business, says Ajit Mittal, executive director
of the group. We are among the biggest in housing loans, and are also
present in the commercial vehicle and SME segments. We see ourselves as a
financial services conglomerate. With Rs 7,000 crore of surplus cash, Mittal
sees no hiccup in meeting CRR/SLR requirements from day one if given a

Your Interview, Shrabana Kumar Nial

The most difficult job will probably be that of Infrastructure Development

and Finance Company (IDFC), which will be seeking to migrate a Rs 71,000
crore balance sheet into a bankwhich means thinner margins for several
years going forward, as capital gets blocked in maintaining CRR and SLR
According to Edelweiss Capital, IDFC carries less than 10 percent of its net
demand and time liabilities as SLR securities, which will have to be raised to
27 percent (CRR plus SLR) in one go if it gets a banking licence. This means
huge capital-raising plans in the future. Since IDFC will also have to meet
priority sector lending targets (40 percent of advances), it will face a huge
strain on resources. Quite clearly, it is feeling the push effect from being a
mere infrastructure lender at a time when policy paralysis in UPA2 has
stalled most infrastructure projects. It wants to move to the safer shores of
commercial banking, never mind the medium-term pain.
According to Edelweiss, which itself has applied for a banking licence,
NBFCs seeking to convert to a bank will see a halving of return on equity
(RoE) in the initial years due to the regulatory drag caused by CRR/SLR and
priority sector lending. It will take at least four to six years to ramp up to
average lifecycle RoEs , it says.
About its own plans, Edelweiss has this to say: The proposed Edelweiss
Bank will have about 75 branches by the end of the third year of operations,
21 of them in rural locations. This will give it access to deposits of Rs 10,000
crore and advances of Rs 9,600 crore. By year six, we should have 242
branches, a deposit base of Rs 36,000 crore and advances of over Rs 29,000
Nirmal Jain, Chairman of India Infoline, says his strategy is to go where
others are not so keen. We will be different from existing banks in terms of
our focus. Our focus will be on micro, small and medium enterprises and
financial inclusion. We shall not be focusing on wholesale banking or
corporate banking which is bread and butter for most of the existing banks.
But heres the rub. Everybody says he is different, but everybodys strategy
is more or less the same: focus away from the big metros, use technology to
lower costs, expand the range of products on offer to existing customers,
and so on.
So why do they all think they are in with a chance? Jains answer: Our
strategy of growth and profit is to leverage Indias growing economy. Indias
economy, in monetary terms, is expected to grow 15 percent per annum.
Your Interview, Shrabana Kumar Nial

The banking industrys close linkage to the economy has ensured around 18
percent RoE, and sometimes even more. It is a sector that has give
consistent returns on equity in any kind of market. There are other sectors
like FMCG or two-wheelers which have delivered higher RoEs, but what is
interesting is the way banks price their risk in any kind of market, says
Prabodh Agrawal, head of research at IIFL, institutional broking.
Its clear what the new hopefuls are betting on: The India growth story. Nothing
else. And yes, the fat profits of HDFC Bank continue to be riveting.

My Customer first.
My SBI: First in customer satisfaction

We will be prompt, polite and proactive with our customers.
We will speak the language of young India.
We will create products and services that help our customers achieve their goals.
We will go beyond the call of duty to make our customers feel valued.
We will be of service even in the remotest part of our country.
We will offer excellence in services to those abroad as much as we do to those in India.
We will imbibe state of the art technology to drive excellence.

We will always be honest, transparent and ethical.
We will respect our customers and fellow associates.
We will be knowledge driven.
We will learn and we will share our learning.
We will never take the easy way out.
We will do everything we can to contribute to the community we work in.
We will nurture pride in India
Your Interview, Shrabana Kumar Nial

"HRD in State Bank is a continuous movement and direction to enable every
individual as a member of an effective team and the SBI community, to
realise and activate his potential so as to contribute to the achievement of
Bank's goals and derive maximum satisfaction thereof.

Training in State Bank is a proactive, planned and continuous process as an
integral part of organisational development. It seeks to impart knowledge,
improve skills and reorient attitudes for individual growth and organisational

Important E-Circulars
Circular No. : IT/GLOBALIT-IT/2/2015 - 16,April 08,2015.
The architecture of State Bank Connect, the Wide Area Network of State Bank of
India (SBI) and Associate Banks (ABs), has recently been migrated from a pointto-point architecture to Multi Protocol Label Switching (MPLS), with Bharat
Sanchar Nigam Limited continuing to be our principal service provider.
2. To ensure a minimum network downtime and high availability of branch
operations, it was also conceptualized that the branches will be having an
alternate MPLS link of equivalent capacity from another Telecom Service Provider
(TSP). However, the primary challenge in providing alternate connectivity on
wired media is the restricted reach of the Telecom Service
Providers other than BSNL. To overcome the challenge, the Bank decided to
include Radio Frequency (RF) on the last mile as a medium of connectivity.
3. RF is commonly used in the wireless communications industry to describe
equipment using radio frequency waves to transmit sounds and data from one
point to another. In computer networking, RF is used to describe network devices
(hubs, bridges, etc.) that transmit data signals using radio waves instead of data
cables or telephone lines. The important element of RF connectivity is that
(a) The site should be feasible for RF connectivity i.e. line-of-sight (LoS) to the
vendors base station should be available from the branch premises
(b) Setting up of a pole / mast / antenna / tower on the branch terrace for
Your Interview, Shrabana Kumar Nial

transmitting/receiving the RF signals to/from the TSPs base station.

Circular No. : NBG/PBU/HL-HOME LOANS/3/2015 -16,April 10,2015.

Each and every staff member of the Bank in Subordinate, Clerical and Supervising cadres
and in all grades, working at Branches, CPCs and Administrative Offices will be eligible to
participate in the contest,
Norms for Controllers (at Circle, Network, Module and RBO level) and for HLST & MPST
members, who are exclusively deployed for sourcing Home Loans, will bedifferent. The
Controllers can also participate in the Campaign in their individual capacity,
All establishments under Corporate Centre will be treated as a separate Circle,
The Campaign will be run in 4 Phases. Each of the 4 Phases will be launched one-by-one
during the year. However, the proposals sourced by the staff members during one phase
will be carried forward to the next phase for the purpose of assessing performance in the
next and subsequent phases,
Efforts of each of the participants in different Phases of the campaign will be recognized
and suitably rewarded as per the details given hereunder,
In addition to this, Roll of Honor will be maintained on SBI Times/RE Web Site of all
The Phase-1 of the contest has been launched on 9 th April, 2015 and will run till
Home Loans to Staff and loans with limits less than Rs. 2.00 lacs and also under Govt.
Sponsored Scheme will not be eligible for assessing performance under the campaign,
A loan will be treated as sourced if it is sanctioned by CPC/Branch. PAL will be treated as
sourced if converted to final sanction.
Performance under the campaign will be monitored centrally by RE, H & HD Department
based on LOS data and the details will be provided on SBI Times/RE Web Site, including
Score Card at Bank, Circle, Network, Module and RBO levels, on an on-going basis,
Details of Phase-1 of the Contest, Reward for the winners and other details are as
under:Phase-1 of the Campaign has been launched on 9 th April, 2015 and will initially be
valid upto 30th June, 2015. All Home Loan proposals sourced by our Staff Members
w.e.f. 10th April, 2015 will be eligible under the contest.
Phase-1 will have the following two Category of Winners:
(i) One Star Winners:
Any staff member (excluding members of HLST and MPST) who sources at least one
Home Loan Proposal will become One Star Winner.
Every member who joins this Category will be felicitated and suitably rewarded with a
Silver Coin of 10 grams and a Certificate,
Jaldi One or Fastest One: 100 members in each of the Circles who become One
Star Winners first, but in any case not later than 31.05.2015, will be rewarded with
an additional Silver Coin of 10 grams each.
(ii) Five Star Winners:

Your Interview, Shrabana Kumar Nial

The staff members (besides HLST & MPST members) who will source minimum 5
Home Loan proposals (inclusive of 1 or more proposals already sourced for One Star
category) will be declared as Five Star Winners.
Members of this category will be additionally rewarded by way of a gift card of
Rs.5000/- and a certificate. This reward will be over and above the silver coin already
received by the staff member.
Jaldi 5 or Fastest 5: 50 members in each of the Circles who become Five Star
Winners first, but in any case not later than 30.06.2015 will be rewarded with an
additional Silver Coin of 10 grams each.
Circular No. : NBG/PBU/LIMA-MBS/4/2015 16 Monday,April 27,2015..
NBG/PBBU/LI-MA e-Circular No. of 2015-16 Dated: 27.04.2015
Our Bank continues to leverage technology to achieve customer delight. In this context, we
have introduced SBI QUICK- Missed Call & SMS Banking. A Missed call / SMS, from the
mobile number of the customer registered in the account with the Bank, is accepted as an
authorized request to provide convenient, cost effective and prompt basic banking services.
Initially, following facilities have been introduced:
1. Balance Inquiry of registered account
2. Mini Statement of registered account
3. Blocking of ATM Card
4. Car/Home Loan features enquiry
Items 1-2 are available to existing SBI customers holding SB/CA/Overdraft/Cash-credit
accounts only once they register for SBI Quick. Item 3 is available to all existing customers of
the Bank without the need to register for SBI Quick. Item 4 is available to all including
general public and is being used to capture leads for these products
Customers who have an Android phone, can download the SBI Quick app from the
Google Play Store. That way they will not need to remember the various keywords and
destination mobile numbers. Post download, internet connectivity will not be needed as
communication would happen over SMS or Missed Call. Apps for Apple and Windows based
devices will be launched shortly. This service is completely in the hands of the customer with
no intervention needed from Branch officials. Branch support would be needed for:
Popularising the service, App by placing banners outside the Branch and at ATM
centers. Advertising material has been placed on SBI Times -> Media Matters.
Updating/recording customers mobile number against their accounts in CBS.
The customer will require to do a one-time registration by sending an SMS from his/her
mobile number recorded with the Bank for that particular account.
1. A customers can register for only one account at a time. For changing the A/c number,
customer will have to de-register from the first account and then register for the second
2. Customer will get a confirmation message on his/her registered Mobile Number for
undertaken activity, be it successful or failed one.
Your Interview, Shrabana Kumar Nial

3. Details of all the facilities under SBI QUICK can be received by sending an SMS HELP to
09223588888. The procedure for using SBI QUICK is as under:
1. Customer should register himself/herself (onetime) for SBI QUICK by sending an SMS
from his/her registered Mobile Number recorded with the Bank for that particular account.
The SMS format should be
REG<SPACE>Account Number to 09223488888
e.g., if a customers A/c No. is 30849924901 SMS REG 30849924901 to 09223488888
2. Customer will get a confirmation message for the above activity a. If successful then
customer can start using the other features like Balance Enquiry etc. b. If unsuccessful recheck if the mobile number from which the request is sent is the same one that is recorded
for that account with the Bank. Also check the format and destination mobile number and try
1. To De-register from SBI QUICK, the SMS format should be- DREG<SPACE> Account
Number to 09223488888
e.g., if a customers A/c No. is 30849924901 SMS DREG 30849924901 to 09223488888
2. Customer will get a confirmation message for the above activity Once a customer deregisters, he/she will not be able to use the services till he /she registers again either for the
same account or a different one.
Balance Enquiry:
1. Once confirmation is received for registration, Customer can give a Missed call or SMS
BAL to 09223766666 from the registered Mobile Number.
2. Customer will then receive an SMS mentioning the balance for the registered account
Mini Statement:
1. Once confirmation is received for registration, Customer can give a Missed call or SMS
MSTMT to 09223866666 from the registered Mobile Number.
2. Customer will then receive an SMS mentioning the mini statement containing last 5
Blocking of ATM Card:
1. Customer can also block the ATM Card linked to the registered account in case of
loss/theft by sending an SMS BLOCK<SPACE>XXXX to 567676 (XXXX represents last 4
digit of the card number).
2. On acceptance of the request for blocking, customer will get a confirmatory SMS alert that
contains the ticket number, date and time of blocking.
Car/Home Loan Enquiry:
1. Customer can get the latest features of Home loan and Car loan products by sending an
SMS HOME or CAR to 09223588888.
2. Customer will receive an instant SMS advising the features of the service followed by call
back from the Bank.
Annexure B
1. The service is currently free of charge from the Bank. There are also no limitations to the
number of daily/monthly queries. This may be reviewed at a later stage depending on the
volume of queries received.
Your Interview, Shrabana Kumar Nial

2. A call for balance inquiry or mini statement will include an IVR message of 4 seconds
which will be heard after 3-4 rings.
a. If the customer disconnects the call while ringing, no charge will be recovered from the
customer by the service provider.
b. If the customer keeps the call active till the IVR is played, he/she will be charged for these
3-4 seconds as per their mobile tariff plan.
3. Any SMS sent to 567676 e.g. for Blocking ATM Card will be charged at premium rates by
the customers service provider.
4. Similarly, for availing the benefits of this functionality by sending an SMS (as BAL, MSTMT,
REG, DREG, CAR, HOME, HELP), the customer will be charged for SMS as per their mobile
tariff pla
Circular No. : NBG/ABU/PDM-TRACTOR/8/2014 15 Wednesday,June 11,2014..
Agri Business: New Product Stree Shakti Tractor Loan (SSTL)
New variants of tractor loan with shorter loan tenor / EMI, namely Stree Shakti Tractor loanWithout Collateral and Stree Shakti Tractor loan-With Collateral with women as coborrowers are rolled out with competitive features and risk proofing. Stree Shakti Tractor
Loan (SSTL)
The loan shall be sanctioned with women as co-borrowers.
Minimum agriculture land holding of 2 acres in the name of borrower(s).
Minimum net annual income of the borrower(s) is Rs.1.50 lacs from farm activity / custom
hiring / other sources.
Income of the co-borrower(s) may be reckoned for arriving at Net Annual Income.
EMI / NMI shall not exceed 60%.
Branches should verify and ensure that cost of accessories purchased, if any, along with the
tractor is reasonable and whether they are actually required by the borrower(s).
SSTL Without Collateral security: Minimum of 50%
SSTL With Collateral security: Minimum margin 10%.
Primary security
Hypothecation of tractor & accessories.
Insurance: The tractor and accessories purchased with banks finance have to
be comprehensively insured for the full value.
Collateral Security:
Mortgage of immovable properties is not envisaged.
Security of gold ornaments, NSC, Time Deposits (advance value of gold ornaments, time deposits,
NSC) to the extent of a minimum 30% is obtained for loans sanctioned under SSTL with
Collateral. The advance value of gold ornaments will be based on the value fixed by Metals
Dept., Corporate centre, Mumbai.
SSTL Without Collateral security: Maximum 36 EMIs with 1 month moratorium.
SSTL With Collateral security: Maximum 48 EMIs with 1 month moratorium.
SSTL Without Collateral security : 1.75% above Base Rate.
SSTL With Collateral security : 1.50% above Base Rate
Penal interest during the irregularity period: 1.00% p.a.

Your Interview, Shrabana Kumar Nial

Penal interest for failure to get the vehicle registered within one month from the date of
delivery attracts: 2% for the period of default for the borrower (to be recovered by branches).
Upfront fee: Normal fee will be charged (1.25% of loan amount at present)
Circular No. : CS&NB/CS&NB-DEBITCRD/28/2014-15 Saturday,September 06,2014..

All Savings Bank and Current Account holders are eligible for issuance of ATM-cum- Debit
Card, except in the following cases:Accounts operated jointly by all the account holders ii. Minors iii. Illiterate customers
In view of demands being made by some of these customers and especially under the backdrop
of Banks Financial Inclusion initiative and now, Jan Dhan Scheme of Government of India, a
review of the restrictions on issuance of Debit Cards to illiterate customers has been carried out
and it has been decided that where accounts under Financial Inclusion (FI) products are to be
opened for illiterate customers, a corresponding Debit Card may be issued to those illiterate
customers who request for a Debit Card. Customers not requesting for any Card also need to be
told that any add-ons such as insurance, if any, with the Card will not be available to them.
In terms of RBI instructions in the matter, it is important that while opening FI accounts, the
customers need to be educated about the Debit Card, PIN and the risk associated with it. If
customer chooses not to have a Debit Card, Debit Cards cannot be forced on such customers.
The customers also need to be shown how to use these Cards at various acceptance devices
such as ATM and Point of Sale and also need to be sensitised about the precautions to be taken
with the Debit Card.
Circular No. : NBG/S&P-SP/10/2014 15 Monday, November 17, 2014..
a) Re classification of claims based on amount of claim:
Where the total / cumulative balances in the account / all the deposit accounts (of the
deceased) along with the interest to be applied till the date of payment is:
I) Up to and inclusive of Rs. 5lacs
Production of sureties may not be insisted upon while obtaining Letter of Indemnity.
Claim format signed by claimants with declaration signedby one independent person well
known to the family of the deceased but unconnected with it and acceptable to the Bank.
Stamped letter of indemnity from claimant(s).
II) Above Rs. 5 lac
Claim form signed by claimants.
Stamped letter of indemnity from claimants plus one surety good for the amount or two
sureties jointly good for the amount.
Affidavit (Stamped) from one independent person well known to the family of the deceased
but unconnected with it and acceptable to the Bank.
Any legal heir who has signed the letter of disclaimer in favour of other legal
heir(s) may stand as surety if he/she is independently good for the amount of
b) Additional disposal Options:

Your Interview, Shrabana Kumar Nial

In addition to the exsisting mode of payment of deceased deposit balances by way of

Bankers Cheque the proceeds may also be paid by way of
Credit to claimants individual account maintained with the Bank at any centre in India
through Bank transfer.
Credit to claimants individual account maintained with any other Bank in India by way of
interbank transfer through RTGS/NEFT.
c) Dispensation of Stamped Receipt:
In case deceased deposit balances are paid by way of Bankers cheque, the instructions
regarding obtention of stamped receipt shall continue to be obtained as per extant
instructions. However, if the balances are paid by way of credit to claimants individual
account, following documents are to be placed on record in place of stamped receipt as
conclusive evidence of having made the payment.
Copy of the statement of account carrying the relevant entry where credit is afforded to an
individual account of the claimant maintained with the Bank in India.
Copy of acknowledgement of electronic transfer credit where credit is afforded to
individual account of the claimant maintained with any other Bank in India.
d) Disposal of TDR issued in the form of an advice:
Where TDR is issued in the form of an advice in place of receipt, return of the discharged TDR
receipt may not be insisted upon.
e) Other Instructions:
Declaration on the Claim form regarding legal heirs of the deceased may be obtained from
any independent person known to the family of the deceased but unconnected with it and
acceptable to the Bank. Or any account holder of the Bank known to the family of the
deceased but unconnected with it. Or any Govt. Official whose signature is Verifiable by
the Bank.
However, for claims above Rs. 5lacs such declaration has to be sworn as an affidavit
before judicial Magistrate or Notary Public.
3. There will be no change in the extant instructions relating to the following:
Discretionary Powers vested as per Organisation Planning Letter No. ORG/459 dated
17/01/2013 for Disposal of assets of the deceased constituents without legal
representation for balance in accounts,
Obtention of copy of death certificate issued by the competent authority and verification of
the original one.
Obtention of Claim format (Revised) from the claimants (other than those who have
signed the Letter of Disclaimer).
Identification of claimants / sureties / person furnishing declaration or affidavit.
Making enquiries to ensure that,There are no disputes among the legal heirs and all the
legal heirs (other than those who have furnished a letter of disclaimer) join in indemnifying
the Bank and There is no reasonable doubt about the genuineness of the claimant(s)
being the only legal heir(s) of the deceased depositor. Otherwise, Bank should insist on
production of legal representation as per RBI guidelines.
Arriving at the worth of the surety/ies to ascertain whether good for the amount (as per
Obtaining of the documents duly stampedas per the stamp duty applicable to the place of
execution of documents and notarised wherever indicated.
Submission of the proposal to the Controllersfor sanction beyond discretionary powers/
Submission of Control Return as per the exsisting Format.
Recording of Documents obtained in the Branch records.

Your Interview, Shrabana Kumar Nial

Circular No. : CS&NB/CS&NB-XC/49/2014 15 Thursday,February 05,2015.. STATE BANK

Green Remit Card (GRC) is a simple magstripe, non-PIN based deposit only card that has
greatly facilitated retail non-home cash deposits for both branches as well as customers.
However, there are entities that, in normal course of their business, receive sizeably large
number of payments from various sources and forms. These entities are unable to utilize the
facilities of GCC and CDM due to various reasons like transaction limit, inability to easily
identify the remitter based on the transaction, remitters not being customers of the same
bank, etc.
2. In order to help these entities for better management of their cash flow, we propose
to introduce a new payment collection facility namely Xpress Collect. This facility is
proposed to be a complete payment collection solution and will be rolled out in phases.
The first phase is planned to be Xpress Collect Card which works on the same lines of
the immensely popular Green Remit Card (GRC) with modified transaction limits and
issuance process.
Name of the Product Xpress Collect Card
Type and Nature of Card Simple non-personalized Magstripe card
Works on SBI Green Channel Counters and Cash Deposit Machines only
Initially enabled only for Cash Deposit
Non-PIN based
Eligibility Any entity which holds an fully KYC compliant SBI account and wishing to
provide these cards to its regular remitters towards payment of their
collections/bills/fees etc., for improved payment& collection management
Card would be pre-mapped to the identified beneficiary account
Deposit Limit
For cardholders with proper PAN details Rs. 40,000/- per transaction on GCC Rs.
49,900/- per transaction on CDM No monthly limit
For cardholders without proper PAN details Rs. 49,900/- per day on GCC Rs. 49,900/per day on CDM No monthly limit
Charges Card Issuance Fee: Rs. 30/- per card
Transaction Chargesthrough GCC: Rs. 2/- per Rs. 1000/-, minimum Rs. 50/- (CBS
Transaction Charges through CDM: Rs. 30/- flat
Issuance Bank will issue cards in bulk as per the requirement to the beneficiary/entity on
Circular No. : CS&NB/CS&NB-SWAYAM/52/2014 15 Wednesday,March 18,2015..
Our Bank is installing Barcode based Passbook Printing Kiosks at its various branches.
Branches which are carrying high number of passbook printing transactions have been
identified for installations of these Kiosks. These Kiosks are branded as SWAYAM.
The customers are required to approach their branch to affix a barcode sticker on the
backside of the passbook. While affixing the barcode, branches need to ensure that the
passbook is of standard size which is as follows (Circular No. NBG/S&P-Misc/4/2007-08
Your Interview, Shrabana Kumar Nial

dated 31 March, 2008) : Height of Passbook : 18 cm Width of Passbook : 20.5 cm

The number given below the barcode printed on the barcode sticker is required to be mapped to the
customers account number in CBS (Detailed process given below in.
Customer may then go to SWAYAM and print their passbooks
Circular No. : NBG/SMEBU-SBI ABL/67/2014 15 Thursday,March 19,2015..
Target Group :-All Business Units who want to avail loan facility for manufacturing and
services activities along with selfemployed and professional individuals covered by MSMED
act 2006, wholesale/retail trade.
Purpose For build-up of current assets and fixed assets needed for business purpose,
capacity expansion, modernization, short term working capital (including shoring up of Net
Working Capital etc.
Nature of facility:-Fund Based
Type of loan :Drop-line Overdraft facility
Eligible Customers
Existing Customer already availing credit facilities from us.
New units with marketable assets to offer as security.
Takeover of existing units from other Banks/ FIs with satisfactory track record.
LTV% OF Immovable property :
For loans upto Rs 10 Crores: 60% of the realizable value
For Loans above Rs 10 Cr upto 20 Cr: 50% of the realizable value (For increasing LTV
ratio permission has to be sought from WBCC I )
Loan Amount:
Minimum loan amount: Rs 10 lacs, Maximum loan amount: Rs 20 Crores (For increasing
upper limit of loan, permission has to be sought from WBCC I)
Interest Rate
Base Rate + 175 bps (11.75%) (Including term premium)
Discretion for further reduction upto 115 bps (Up to 10.60%) (To be exercised
judiciously by the sanctioning authority not below CCC-I for all sanctions falling within
Circles power on case to case basis)
Eligible security: Immovable property (compliant under SARFAESI Act) is pertaining to Unit, its
proprietor/partners/directors or their near relatives. However Leased property cannot
be taken as security.
Properties covered under social infrastructure such as schools/colleges, hospitals,
orphanage/old age homes etc., should not be accepted for mortgage. In respect of
other securities not mentioned above sanctioning authority may decide acceptability of
such security subject to the property being SARFAESI compliant and marketable.
Agricultural land should not be considered as property for mortgage.
SEZ property not to be taken.
Open Land outside urban limits should not be considered as property for mortgage.
Open land means land which is not properly demarcated with proper boundary.
Demarcation of the property is important for its identification and possible
enforcement, if required on a later date. Hence no property should be accepted as
collateral if the property cannot be demarcated.
Your Interview, Shrabana Kumar Nial

Circular No. : NBG/ATM-NBG-NBG/2/2015 16 Tuesday,May 12,2015. INTRODUCTION OF


State Bank Cash Point is a Cash Recycler i.e. an ATM-like machine that performs dual
functions of cash withdrawal and deposit. From the customer perspective, it functions exactly
like our present day ATM and CDM. While cash withdrawals will be effected using a debit
card, customers can use their debit card/cardless function to make cash deposits. The cash
slot serves as the deposit as well as dispenser tray. As a special feature these machines
have 2 inbuilt cameras that are capable of capturing both the customers face as well as
hand movements (handling cash only). The State Bank Cash Point like our CDMs has been
configured to dispense and accept only denominations of 100, 500 and 1000. While the cash
withdrawal limit will be restricted to the debit card limit, a customer can deposit up to Rs.
49,900/- per transaction. Apart from the deposit and withdrawal facilities, customers can also
carry out other functions like Balance Enquiry, Mini Statement and PIN Change. The Cash
Recycler is an advanced machine where deposited notes are counted and authenticated for
their quality and quantity. The EJ also contains the serial numbers of the notes that have
been deposited by customers, which is an important tool in complaint resolution. All the
erstwhile instructions pertaining to ATMs and CDMs will continue to apply to State Bank Cash
Sl. No. :268/201415 Circular No. :NBG/ABU/PDM-TRACTOR/8/2014 15
Wednesday,June 11,2014.
Agri Business: New Product Stree Shakti Tractor Loan (SSTL)
Tractor finance market is dominated by private financiers, mostly NBFCs. Though SBI
pricing for tractor finance is competitive, subdued growth is recorded. To capture the
emerging opportunities and improve our market share in Tractor finance, New Tractor
Loan Scheme (NTLS) was launched during July 2012 with relaxation in minimum land
holding criteria, repayment period and lower interest rate.
In addition to this, realigning the requirement of security, margin norms and
monthly repayments with the market dynamics of tractor finance is considered
necessary to bring back the growth momentum and regain the market share in tractor
finance. The existing norms for tractor finance on loan tenor extending up to 9 years,
with half-yearly / annual repayment, result in laxity in follow-up and the resultant high
Therefore, new variants of tractor loan with shorter loan tenor / EMI, namely
Stree Shakti Tractor loan-Without Collateral and Stree Shakti Tractor loan-With
Collateral with women as co-borrowers are rolled out with competitive features and
risk proofing. The salient features of SSTL with the above in-built checks for quality
business in comparison with the existing NTLS are as follows:1 Borrower No specific criteria The loan shall be sanctioned with woman as coborrower.
Your Interview, Shrabana Kumar Nial

2 Land holding 2 acres minimum Minimum 2 acres in the name of borrower(s). Proof of
land holding required.
3 Annual Income Not specific. Minimum Net Annual Income of applicant /co-applicant
together to be Rs.1.50 lacs Without collateral security. 30% in the form of Gold
ornaments (as per advance value) /Time Deposits / NSCs.
4 Collateral security Mortgage of land Mortgage of land is not envisaged as loan
outstanding is expected to be covered by realizable value of the primary security
/collateral security obtained.
5 Margin 15% Minimum 50%. Minimum 10%.Maximum 6 Repayment Max 5 years with
a 36 months Maximum 48 months moratorium of 1 month Different repayment
periods are stipulated to ensure outstanding in the loan is fully covered by realistic /
realizable value of tractor purchased out of bank loan /collateral security throughout
the loan term. Moratorium - One month. Minimum EMI / NMI shall not exceed
60%.EMI by PDCs and standing instructions 1.75% above Base Rate p.a. 1.50%
above Base Rate p.a.
7 Rate of Interest 12% p.a For prompt repayment, further concession of interest @0.5% by
way incentive will be extended.Penal interest @ 1% p.a. for the period of irregularity
system driven.
8 Upfront fee 0.50% of loan amount. 1.25% of loan amount.
9 Turn Around Time (TAT)TAT: one week from the day of submissionof all the required
papers. TAT: 3 days from the date of submission of all the required papers.(As mortgage of
land is not involved)
Categorization: Direct agri advances.
Margin: a) SSTL Without Collateral security: Minimum of 50% b) SSTL With Collateral
security: Minimum margin 10%.Primary security:a) Hypothecation of tractor &
accessories.b) Insurance: The tractor and accessories purchased with banks finance
have to be comprehensively insured for the full value.Collateral Security:a) Mortgage
of immovable properties is not envisaged.b) Security of gold ornaments, NSC, Time
Deposits (advance value of gold ornaments,time deposits, NSC) to the extent of a
minimum 30% is obtained for loanssanctioned under SSTL with Collateral. The
advance value of gold ornamentswill be based on the value fixed by Metals Dept.,
Corporate centre, Mumbai.Repayment a) SSTL Without Collateral security: Maximum
36 EMIs with 1 month moratorium.b) SSTL With Collateral security: Maximum 48 EMIs
with 1 month moratorium.
Sl. No. :242/201415 Circular No. : CCO/CPPD-ADV/28/2014 15 Saturday,June
Please refer to Manual on Loans & Advances, Part-2, Chapter-18, para 1.3
(iii) on the captioned subject. 2. Existing Instructions:
As per the aforesaid para in Manual on Loans & Advances The pledge of
goods on the companys assets is a specific/ fixed charge. Therefore, the
relative document does not require registration with the Registrar of
Companies. Revised Instructions:

Your Interview, Shrabana Kumar Nial

As per Section 77 (1) of the Companies Act, 2013 It shall be the duty of every
company creating a charge within or outside India, on its property or assets or any
of its undertakings, whether tangible or otherwise, and situated in or outside India,
to register the particulars of the charge signed by the company and the chargeholder together with the instruments, if any, creating such charge in such form, on
payment of such fees and in such manner as may be prescribed, with the
Registrar within thirty days of its creation.
e-Circular Sl. No. : 1167/2013 14,Thursday, January 23,2014.
Issues Guidelines Transfer of Non KYC Compliant Accounts : In accounts where
KYC is incomplete, the customer should be allowed to submit the necessary KYC
documents at the transferor/ transferee branch as per his convenience. If
documents are submitted at the transferee branch, it may verify and send the scanned
copies of these documents, through its official email, to the transferor branch to enable
it to transfer the account as requested by the customer. Transfer of Inoperative
Accounts : The inoperative account should be transferred in the same way as any
other account as the inoperative status continues to be reflected in CBS at the
transferee branch even after transfer. Home branch is changed by the transferor branch
in the system and the account stands transferred, but the transferor branch omits to
transfer the CIF to the transferee branch. As a result, some activities like updation of
KYC,certain INB activities, availability of TDS certificates etc. are not permitted and
account is thus not fully functional at the transferee branch. If the customer has more
than one account at the transferor Branch, and he elects to transfer only one or some of
the accounts (but not all), he has to decide where he wants the CIF to be kept. The
customer is not aware of the implications in such cases of maintaining account in one
Branch and CIF in another Branch. A standardized Application Form for transfer of
account is enclosed as Annexure-1. In other cases, i.e. where the customer has only
one account or where he elects to transfer all his accounts, the CIF must be
mandatorily transferred to the new Branch.
Home branch is changed by the transferor branch in the system and the account stands
transferred, but the transferor branch omits to transfer the CIF to the transferee
branch. As a result, some activities like updation of KYC, certain INB activities,
availability of TDS certificates etc. are not permitted and account is thus not fully
functional at the transferee branch. In case of application submitted at Transferee
branch- a scanned copy of the account transfer request is sent by transferee branch to
transferor branch via branch official email. The transferor branch is to act on the basis
of scanned copy. The customer has to be advised as soon as the account is
SL.NO.937/2013-14 DATED 13/11/2013
It has been decided to place following restrictions in the transaction authorization process.All cheques of
Rs. 1cr and above are required to be passed physically by 2 officials at all CCPCs and

Your Interview, Shrabana Kumar Nial

Branches.The passing officials are required to take adequate due diligence while passing such
cheques, which includes referring to the drawee branch, drawer of the cheques and account status of the
payee at payees branch and their KYC status.

SL.NO.962/2013-14 DATED 21/11/2013

While reviewing the fraud cases, the Committee of Executives on High Value Frauds has desired that the
RM/FO should ensure to follow undernoted guidelines while entrusting the work of Stock Audit to the
Auditor: a) Pre-Audit discussion:
Before commencement of Stock Audit, the RM/FO should have a discussion with the Stock Auditor,
sharing detailed information on the behavioural pattern of the account and highlighting the areas of
concerns. b) Rigorous Follow-up:
RM/FO should rigorously follow-up submission of Stock Audit report and ensure adhering to the
timelines. c) Post-Audit discussion:
Post Stock Audit, audit report should be analysed by RM/FO and discussed with clients, particularly
qualifying remarks of auditor in the audit report. d) Stock Audit fees:
RM/FO should ensure that the Stock Audit fees should be reimbursed by the Bank .Other details are given in the

SL.NO. 737/2013-14 DATED 01/10/2013


The Agreement to Mortgage executed by the Home Loan borrower and the Tripartite
Agreement executed by the Home Loan borrower and the Builder contain several
undertakings/covenants, which provide the Bank with legal recourse to recover its dues
in the case of default by the borrower/builder. However, some of our operating units do
not enter the value of property financed by us in the field for Security Value in CBS at
the time of opening the loan account. As a result, a sizeable number of newly opened
Home Loans show the value of Security as NIL.
2. In view of the above, the operating units are advised to follow the undernoted guidelines to
enter the value of the underlying property:(i)
In all cases where the Agreement to Mortgage and a Tripartite Agreement has
been obtained pending creation of mortgage on the property being financed, the value
shown in the `Agreement to Sell or `Sale Agreement /`Assessed Value of the
underlying property should be entered as Primary Security in the CBS (SCR 062040
CIF: Create Collateral Details & SCR 062041 CIF: Create Collateral Property) at the
time of opening of the Home Loan Account. The Collateral Number generated for the
purpose should be recorded in the loan files for eventual creation of mortgage in the
CBS or for making any amendments thereto.
The operating functionaries should note to enter the complete details of property
and mortgage creation in CBS (SCR 062163 CIF: Create Recital) immediately on/after
creation of the relative equitable mortgage in favour of the Bank.
SL.NO.738/2012-13 DATED 01/10/2013

Our Bank maintains 2142 Currency Chests (CC) across the country on behalf of RBI
under Agency arrangement. RBI has imposed huge penalty/ penal interest on several
Your Interview, Shrabana Kumar Nial

occasions on under-noted areas for non adherence of RBI instructions a) Delayed/

wrong reporting of ICCOMS to RBI b) Non-maintenance of TE-I and TE-2 books. c)
Non-maintenance of reports/record in respect of bi-monthly/half yearly verification of
chest and non-adhering to the prescribed periodicity for bimonthly/half yearly chest
d) Shortages/detection of counterfeit notes in soiled note remittance.
RBI has reiterated in its master circulars that excuses like clerical mistakes,
unintentional or arithmetical errors, first time error, inexperience of staff etc., will
not be considered as valid grounds for waiver of penal interest.
The existing instructions are being reiterated for the benefit of the concern operating staff to
abridge the knowledge gap in the area of CC operations.

To guard against getting new facilities sanctioned despite existence of bad loans in
another branch. A new application named i-probe has been rolled out across the Bank.
Through this application, it will be possible to ascertain whether the key persons
mentioned in a new loan application are associated with any of the existing bad loans at
any of the branches of SBI. The search will be mandatory for all loan applications for
Rs.10 lac and above.
SL.NO755/2012-13 DATED 08/10/2013

It has been decided by the competent authority to launch a new loan product viz., SBI
SPECIAL FESTIVAL LOAN with the slogan Utsav ki Umang, State Bank ke Sang to
meet the credit requirement of Retail Customers in the ensuing festival season.
Purpose of loan is purchase of consumer durables and/ or Two Wheelers .Loan amount
24 Months Net Monthly Income of the employee. For School Teachers/ other staff
members of the school 12 months Gross Salary. Maximum Loan amount Rs.15.00
lacs, subject to EMI/NMI not exceeding 50%. Repayment: Maximum 60 EMIs Other
details are annexed with the circular.
SL.NO859/2013-14 DATED 29/10/2013

It has been decided by the Competent Authority to increase the repayment period of SBI
Student Loan Scheme as under:
Loan Limit
Upto Rs. 4 Lacs
Above Rs. 4 Lacs &
upto Rs. 7.5 Lacs

Existing Repayment
upto 7 years
upto 7 years

Increased Repayment
upto 10 years
upto 10 years

Your Interview, Shrabana Kumar Nial

Above Rs. 7.5 Lacs

upto 12 years

no change

SL.NO.592/2013-14/ DATED 04/09/2013


A Special OTS for Agri Term Loans has been approved by the Executive Committee of the
Central Board, which will be operational with immediate effect. The Salient features of the
Scheme are given in the captioned circular.

SL.NO.626/2013-14/ DATED 07/09/2013


It has been decided by RBI to lay down the following procedure for opening accounts of foreign
students who are not able to provide an immediate address proof while approaching a bank for
opening bank account.
Banks may open a Non Resident Ordinary (NRO) bank account of a foreign student on
the basis of his/her passport (with appropriate visa & immigration endorsement) which contains
the proof of identity and address in the home country along with a photograph and a letter
offering admission from the educational institution.
Within a period of 30 days of opening the account, the foreign student should submit to
the branch where the account is opened, a valid address proof giving local address, in the form
of a rent agreement or a letter from the educational institution as a proof of living in a facility
provided by the educational institution. Banks should not insist on the landlord visiting the
branch for verification of rent documents and alternative means of verification of local address
may be adopted by banks.
During the 30 days period, the account should be operated with a condition of allowing
foreign remittances not exceeding USD 1,000 into the account and a cap of monthly withdrawal
to Rs. 50,000/-, pending verification of address.
On submission of the proof of current address, the account would be treated as a
normal NRO account, and will be operated in terms of instructions contained in RBIs Master
Circular on NonResident Ordinary Rupee (NRO) Account No. RBI/2013-14/2 Master Circular
No.2/2013-14 dated July 1,
2013, and the provisions of Schedule 3 of FEMA Notification 5/2000 RB dated May 3,
2000 may also be kept in view.
Students with Pakistani nationality will need prior approval of the Reserve Bank for
opening the account.
SL.NO.629/2013-14/ DATED 10/09/2013

Application under Section 19 of the Recovery of Debts due to Banks and Financial Institutions
Act 1993 should be prepared in the prescribed format setting forth concisely the required details
including limitation, facts of the case, relief sought, jurisdiction of the Tribunal, interim orders if
prayed for, and other details as per the format. The application should be accompanied by the
required application fee by way of demand draft or postal order favouring the Registrar of the
Tribunal. The application should be accompanied by copies of the following documents: i.
Sanction Letter ii. Board Resolution in the case of companies

Your Interview, Shrabana Kumar Nial

iii. All the security documents executed by the borrower and the guarantors namely the loan
agreements and guarantee agreements iv. Form 8 and 13 filed before the ROC in the case of
company advances
Letter of confirmation of deposits of Title Deeds in the case of equitable
mortgage or mortgage deed in the case of registered mortgage.
Memorandum of deposit of title deed vii. Board resolution for availing
enhanced facilities viii. Sanction letter for enhancement ix. Security documents
obtained for enhancement of limits/facilities (Supplemental documents) x. Letter of
confirmation for extension of mortgage
xi. Memorandum of deposit of title deeds for extension of mortgage xii. Revival letters and
balance confirmation letters xiii. Title deeds/ title deed documents xiv. Statement of accounts up
to the date the account became NPA and unapplied interest statements for the period thereafter
up to the date of filing of the application.
xv. Legal notice and reply notice if any xvi. Wherever SARFAESI Action is initiated, copy of
section 13 (2) notice issued to the borrower and guarantors and other related correspondence
xvii. Certificate under the Bankers Book of Evidence Act.
While the aforesaid are the basic documents which are required to be filed, along with the
application before DRT, any other related document(s) necessary for the case should also be
filed depending on the facts of each case.
SL.NO.665/2013-14/DATED 19/09/2013

A committee headed by the General Manager, ZIO, Chennai, constituted to study the increased
incidence of frauds in cheque payments have noticed under noted deficiencies/ lacuna in
operations of cheque truncation system at branches/ CCPCs- i Some branches resort to
outsourcing of scanning of cheques and data entry of outward clearing.
ii Adequate numbers of digital signature of staff posted at CCPC are not provided and e-Token of
transferred staff are being used.
In view of the above, competent authority advise that all branches/ CCPCs/ operating units may be
instructed to stop the practice of outsourcing of scanning of cheques and data entry to CTS
SL.NO.669/2013-14/ DATED 19/09/2013

In view of the increase in interest costs, it has been decided by the appropriate authority to revise the
interest rate structure as under.
Existing interest rates
Revised interest rates
BR: 9.80% p.a w.e.f.19.09.2013

Base Rate i.e 9.70% p.a

Base Rate+15bps i.e 9.95% p.a

Base Rate+ 25bps i.e 9.95%p.a

Base Rate+ 40bps i.e 10.20% p.a


Base Rate+65bps i.e10.35%p.a

Base Rate+ 80bps i.e 10.60% p.a

(Wherever + or -notation is attached to the rating, the corresponding main rating category
should be reckoned for application of interest rates. For example, BBB+ or BBB- would be

Your Interview, Shrabana Kumar Nial

considered to be in the BBB rating category only). The revised interest rates will come into force
with effect from 20.09.2013 and continue till further instructions.

SL.NO.726/2013-14/ DATED 30/09/2013

CUSTOMERS WITH QUARTERLY AVERAGE BALANCE (QAB) BELOW Rs. 25,000/The service charges levied by the Bank for issuance of Savings Bank Cheque Books were last revised from 1st
January 2013. It has been decided to revise these charges w.e.f. 30 th September, 2013, as under :Item

Present Charges

Proposed charges

Issue of Savings
Bank MultiCity/CTS- 2010
cheque books

Rs.3/- per cheque leaf for all Savings Bank

Rs. 2/- per cheque leaf. First 50 a)
accounts having Quarterly Average Balance ( QAB)
leaves cheque book free.
as on previous quarter end below Rs.25,000/. First
20 leaves free.
Emergency Cheque request (10
Rs 2/- per cheque leaf for accounts having
leaves set): Rs.2/- per leaf.
QAB 25000/- and above as on previous quarter end.
First 50 leaves free.
Emergency Cheque request (10 leaves set):Rs. 3/per

The concessions given under Salary Package Accounts on issue of cheque books will continue.
SL.NO.457/2013-14/ DATED 02/08/2013
It has been decided by the competent authority to put in place the following new sanctioning structure
for these loan schemes by incorporating additional risk mitigation measures as mentioned hereunder.
Sr Category of the
Existing Sanctioning
Revised Sanctioning Authority
No. Borrower
All Salaried Employees with Branches
Branches having incumbency of
salary accounts in our Bank.
incumbency of MMGS III and SMGS IV and above.
Designated salary payment --- No Change --b
Applicants covered under
Branches/ Campus
Salary Packages viz,
Defence Salary Package Branches and other
Branches in proximity to the
Para Military Salary
(c) Coast Guard Salary Package place of work of borrowers
with incumbency not below
MMGS II incumbency.

Your Interview, Shrabana Kumar Nial

Employees of Central / State

Campus Branches / Captive
Branches / Branches located
Establishments /Deptt.
in the Project Townships /
large Corporates etc, not
/Institutions /Organizations /
Corporates / Entities etc, whose below MMGS II
salary accounts are maintained incumbency.
with our Bank.

In all other cases

Campus Branches / Captive

Branches / Branches located
in the Project Townships / large
Corporates etc, not below
MMGS II incumbency. Note:
The Branch can sanction
Xpress Credit loans only in
respect of employees
working in the Establishments
/ Deptt. / Institutions/
Corporate to whom it is linked
and not to any other category.
RACPC/RASMECCC: --- No Change -For branches in BPR
Loan Processing
Cells at
RBOs for non BPR Centers.

(ii) Additional Risk Mitigation measures to be strictly adhered to:

In respect of category of borrowers falling under (b) & (c) above, Chief Manager Loans/Rural of
the Region has to personally visit the branch by 15th of the month subsequent to that of
sanction and confirm that sanctions are in order. (ii) Creation of PB Division
Controllers will ensure that PBD Managers are posted at the ScaleIV and above incumbency
branches having Xpress Credit loans business.
(iii) Xpress Credit Loans under Railway Salary Package (RSP):
Xpress Credit loans under RSP will henceforth be sanctioned only to those employees where
the salary disbursing officer gives an unconditional letter to deduct loan instalments from the
salary of the respective employee and remits the same to the Bank for credit to the Xpress
Credit loan account. B. SBI Saral Personal Loans: Sanction of SBI Saral Personal Loans will
be done as under:
Sr. Category of the Borrower
Revised Sanctioning Authority
Branches having incumbency of SMGS-IV and
All Salaried employees with salary (i)
accounts in our Bank but not entitled for
For all other Branches
sanction of Xpress Credit Loans.
RACPC/ RASMECCC: For branches in BPR
Loan Processing Cells at RBOs for non BPR
In case of SBI Saral Personal loans The loans will continue to be sanctioned only by
where loans are to be sanctioned to RACPC/RASMECC, as hitherto.
Branches not linked to RACPC / RASMECC cannot
Self employed /Professionals.
entertain /handle loans under SBI Saral to
Professional and self-employed individuals.

SL.NO.464/2013-14/ DATED 05/08/2013

Your Interview, Shrabana Kumar Nial


Reserve Bank of India has informed vide their letters dt. 25.07.2013 that Ministry of Railway
has decided to adopt Single Window System for the reimbursement of Railway pension by the
Banks (mentioned in the circular).Branches/CPPCs are now instructed to reimburse the
Railway Pension Payment made by them relating to the period upto 30th September 2013
only. The Bank will cease to reimburse Railway Pension Payment relating to the period from
October 1, 2013 onwards.
It has been decided to introduce a new category of Customer Assistant in between the
Assistant and Senior Assistant positions. Down streaming of powers will also lead to further
job enrichment. The services of the Customer Assistants will be utilized preferably at the
Single Window Counters, customer facing desks, desks at CPCs involving exercising
passing powers.



Those Assistants who have completed atleast 1

year of service in the Bank as Assistant and are
posted at branches/CPCs and exercising
passing powers.
Passing Powers: Cash: Rs.35,000/- Transfer:
Rs.70,000/All other duties of Assistants in addition to VVR
Rs.1000/- p.m. This will also be reckoned for
D.A and superannuation benefits.
They need not be transferred from their present
place of posting merely because of their
becoming Customer Assistant.
If any Assistant, eligible for the position, does
not opt for the same, he/she will be debarred
from higher incadre and out of cadre promotion
and officiating in higher positi ons for a period
of three years from the date of such eligibility.
disciplinary/vigilance case is pending and/or
contemplated will not be eligible.
1st June every promotion year.

Duties &

Special Pay


Cut-of-date For
in CBS

Branch Manager will authorize the capability

level in CBS.
As eligible for Assistants.

Your Interview, Shrabana Kumar Nial

Revocability of
the Option

Not revocable.


01.Provision Coverage Ratio (PCR)
As per the RBI stipulation all commercial banks have to augment their PCR to 70 per cent
by this September. This hike in the provisioning level is decided with a view to enhance the
asset quality In the banking system as additional provisioning would give more cushions to
banks given a steep rise in bad loan levels in the aftermath of the financial downturn.

02. What is offshore banking unit?

Offshore banking unit (OBU) is the branch of an Indian bank located in a special
economic zone (SEZ), with a special set of rules aimed at facilitating exports from the
region. As laws define it, its a deemed foreign branch of the parent bank
situated within India, and it undertakes international banking business involving
foreign currency denominated assets and liabilities. The concept comes from the
practice prevalent in several global financial centres. Here an OBU can accept
foreign currency for business but not domestic deposits from local residents and
would be exempt from CRR, SLR and few other regulatory requirements. This was
conceived to prevent competition between local and offshore banking sectors.

03.TOBIN Tax
The idea of a tax on financial transactions, similar to one imposed by Brazil ,has
gradually gained currency in international circles. In Brazils case, this tax, also
called Tobin tax, was intended to restrict the flow of volatile capital from the
developed world, which had disturbed the stability of its economy.

04.Mobile banking
The mobile phone as an instrument for conduct of financial transactions holds immense
promise. M-Commerce (mobile commerce or mobile banking) is an area that is rapidly
changing the way people conduct financial transactions and has the potential to be
more inclusive due to the widespread use of mobile phones. Recognizing the
importance of this mode, the Reserve Bank of India issued guidelines for Mobile
Banking Transactions in October 2008. The guidelines permit banks to provide mobile
banking facilities and mandates that all transactions have to originate from one bank
account and terminate in another. The perception in certain quarters has been that the
guidelines are restrictive as they do not permit non-banking entities, especially the
mobile service providers (MSPs), to provide such services.
Your Interview, Shrabana Kumar Nial

AMC is constituted as a Company under the Indian Companies Act, having minimum
net- worth of Rs 10. Crores. AMC can do only the following business
a) Asset Management Service,
b) Portfolio Management Service, c) Portfolio Advisory Services.
06. NET ASSEST VALUE (NAV):It is the value of a MF Unit calculated on the valuation date (date of transaction) as
Net Asset of the Scheme / No. of nits Outstanding or (Market value of Investments
+Receivables+ Accrued Income + Other Assets less Accrued Expenses +Payables+
Other Liabilities) .The NAV of a mutual fund moves / fluctuates with market price
07. EQUITY DERIVATIVES:Equity derivative instruments are specially designed future contracts where an
individual can buy / sell (Call / Put) the underlying equity at a specified future date at an
agreed price. The option contract can be liquidated before maturity without taking or
giving delivery of the underlying asset.
08.Money Market Securities
All debt Securities maturing within One Year are called Money Market Securities,
examples: a) T-Bills,
b) Corporate Deposits (CDs)
c) Commercial Papers (CPs)
d) Call Money,
e) Repo
09.FINANCIAL PLANNING:Financial Planning, s the term implies would mean identifying all the financial






the identified needs into a desired

monetary goal over a identified future timeframe and making the investments with
appropriate asset allocation within the available resources and having a time frame
for investments. The objective of the financial planning is to plan ahead for
deciding the right amount of money required at right hands and at the right time in
10.Private Equity:Private Equity is an equity investment, generally, in a company which is not listed on a stock
exchange. Characteristics of private Equity are:

Attractive returns: Private equity can provide significantly high returns as compared

to other forms of investment.

Your Interview, Shrabana Kumar Nial


Commitment of Fund: In Private equity, investors make a commitment to invest. The

fund manager draws from these commitments as and when opportunities arise.

Limited liquidity: The investments being in private firms, the investments may remain

invested for as long as ten to twelve years. During this period unless an IPO or strategic
sale occurs, the investor may not get back even the principle amount.

Investment Risks In Private equity and venture capital, investment is made

in startup companies and financially leveraged companies with growth potential. The
failure risk of such companies is high.

11.Private Equity Vs Mutual Fund

Private Equity has a number of similarities and differences. a. Similarities.
Both P.E. and Mutual funds pool investment from investors.
In India, both are organized as Trusts.
Both P.E. funds and Mutual funds could have a number of schemes, although the schemes
in P.E. funds are relatively small.
Both charge a portion of the funds as Management fee. b. Differences
Investment Avenue Private Equity invests in equity or equity like instruments only
compared to Mutual Fund who invest in both debt and equity.
Size of investment - Private Equity investment is large in size compared to Mutual Fund
both for the investors and for the investee company.
Size of the portfolio A P.E. fund invests in a small number of portfolio companies
compared to Mutual Funds

12.Determinate Trust:
It is a trust registered under Indian Trust Act 1883 where the beneficiaries of the trust are
identifiable, their names and shares are stated in the trust deed and the list of
beneficiaries cannot be altered at later date.

13. Domestic Venture Capital Fund (DVCF):

Your Interview, Shrabana Kumar Nial

A fund is known as a DVCF entity, when the fund (i.e. the trust or the
company) is registered with SEBI as a Venture Capital Fund (VCF) under VCF
regulations. A DVCF gets the advantage of exemption from post-IPO lock-in
requirements in case of listing of the portfolio companies, if the shares were held
by the VCF for a period of at least one year prior to filing of IPO prospectus.

14. Foreign Venture Capital Investor (FVCI):

FVCI may be a foreign person/corporate/overseas private equity funds, incorporated
and established outside India, and registered with SEBI which is making investment in
accordance with SEBI regulations. An FVCI can invest in a VCF under the
automatic route without any prior approval from the GOI or RBI.
Investment Period:
This is the period up to which the fund invests in portfolio companies. It ranges from 4-5
Term of the Fund:
This is the aggregate life of the fund and includes the investment period, the investment
management period and the divestment period. Normally it ranges from 10-12 years.
Minimum Commitment:
It is the minimum amount (determined by the Fund Manager) required for investment by an
investor other than the sponsors.

15. Drawdown:
It describes the schedule to represent fund managers capital requirement. Investors
are asked to contribute as

per their commitments

with a predetermined

advance days notice.

16. Multiple Closings and Single Closing:

A closing of a fund refers to the declaration that the pooled vehicle is ready with
a corpus and is ready to start investing. If the fund size is small, manager can go for
single closing. If the fund size is big e.g. $ 1-5 billion, then the funds generally garner
Your Interview, Shrabana Kumar Nial

the target size through multiple closings. As funds are set up as determinant trusts
in India, in case of domestic funds, only single closing is possible.

17. Internal Rate of Return:

The IRR for an investment is the discount rate at which the total present value of
future cash flows equals the cost of the investment.

18. Hurdle rate:

Hurdle, or preferred rate, requires that the investment achieve a minimum rate of
return before the fund managers receives its carried interest. It typically ranges from 5% to

19. Base Management Fee:

It is the fee paid by the fund to its manager for efficiently managing the corpus and varies
from 1% to 2% of the corpus of the fund based on the fund size and calculated at an
annual basis.

20. Capital Raising Fees or Placement Fee :

It is the fee for raising corpus of the fund from Potential investors by various
marketing efforts. The capital raising fee is 1% to 2% of the total capital contributions
received. It is paid by the manager to the sponsors/placement agents.

21. Placement agents:

Placement agents play a marketing and client servicing role during the Fund raising
effort by fund manager. Performance Fee or Carried Interest/Carry: Carried
interest or carry is the share of the fund profits received by the manager. It is paid over
and above the hurdle rate.

22. Clawback:
Clawback or look back provision is a review of the total profit distribution from the
partnership at the end of the term. The manager may earn superior performance
allocation in the early part of the life of the fund by selling an asset at a relatively
Your Interview, Shrabana Kumar Nial

high price, if the remaining pool of the assets of the fund do not perform well till the
date of sale or till the life of the fund, a part or whole of the earlier carry
reverts backs to the fund.

23. Cherry picking:

It is a direct co-investment issue

where fund managers as individual investors

have the right, but not the obligation, to co-invest in deals made by the
partnership. It can result in a misalignment of interests as the fund manager may
focus on more attractive deals.

24. Co-Investment:
Co-investment occurs when the fund managers or investors invest








in entities

co- investment

occurs when a partnership subsequently invests in companies that have already received
money from fund managers affiliated with the partnership.

25. Defaulting Investor:

Investors who fail to make full payment of its capital contribution when it is due.

26. Mezzanine capital:

It is a form of financing

mostly in the form of partially or fully convertible

debentures that carries a higher credit risk because it is exchanged for equity that
is not secured by collateral or assets in the event of bankruptcy or default.

27. Leverage buyout:

A leveraged buy-out (LBO) is an acquisition of a company in which

the takeover

is financed predominantly by debt with minimum equity investment. Assets of

the acquired company act as collateral for the debt and interest and principal
obligations are met through cash flows of the refinanced company.

28. Exit:
The fund may exit from the investments through sale of the investments to other
investors or funds; or listing through an IPO of individual portfolio companies on an

Your Interview, Shrabana Kumar Nial

appropriate securities exchange. In India, presently, listing of Private Equity funds is not


As per the decision taken by Reserve Bank of India, banks will be switching over to a
base ratesystem of


pricing from



2010. With the objective of

providing credit to the productive sectors of the economy, bank lending rates as
well as the allocation of bank credit were closely regulated by the Reserve Bank
till the late 1980s. With the initiation of financial sector reforms in the early 1990s,
various steps were taken to deregulate the lending rates of commercial banks. The












July2010.Base rate shall include all those elements of the lending rates that are
common across all categories of borrowers. Banks may choose any benchmark to
arrive at the base rate for a specific tenor that may be disclosed transparently.
Banks are free to use any other methodology, provided it is consistent, and is made
available for supervisory review. Banks will determine their actual lending rates on
loans with reference to the base rate and by including such other customer
specific charges as considered appropriate.
With the introduction of the base rate system, all categories of loans will be
priced only with reference to the base rate with a few exceptions. The base
rate can also serve as the reference benchmark rate for floating rate loan products,
apart from other external market benchmark rates. The floating interest rate based on
external benchmarks should, however, be equal to or above the base rate at the time
of sanction or renewal.
Since the base rate will be the minimum rate for all loans, the current stipulation of
BPLR as the ceiling rate for loans up to Rs.200, 000 is withdrawn. It is expected that
this will increase the credit flow to small borrowers at reasonable rates and direct
bank finance will provide effective competition to other forms of high cost credit.
The interest rate on rupee export credit has also been deregulated.
Your Interview, Shrabana Kumar Nial

Good governance facilitates effective management and control of business,

enable the bank to maintain a high level of business ethics and to optimize
the value for all its shareholders. Objectives:
To enhance shareholders value.
To protect the interest of the shareholders including customers, employee and
society. To ensure transparency and integrity in communication and to make available
full, accurate and clear information to all concerned.
To ensure accountability for performance and to achieve excellence.
To provide corporate leadership of highest standard.
It lays down banks approach to sanctioning, managing and Monitoring
credit risk. It aims to make the systems and controls effective. It is guided by Best
practices of commercial prudence. It applies to all domestic lending. It provides for
comprehensive credit risk assessment system.Banks approach to export credit
and priority sector advances, and to specific group of advances covering
emerging opportunities, such as midcorporate, retail etc. is set out in the policy.
Maximum exposure level is set in the policy for different sectors. It lays down the
norms of take over of advances
Documentation, credit appraisal, pricing,
review/renewal etc.
It came into existence as a result of increasing awareness of the need For
controlling emissions. Kyoto protocol envisages reducing emission 5.2% of 1990
level by 2012. The green house gasses are element of fossil fuel, which contains
Co2, methane, nitrous oxide etc. Green house emission is capped and markets are
used to allocate the emissions among the group regulated sources. For reduction of
emission each operator will get assigned allocation unit of emission quota. One credit
is equal to oneton carbon. A permit that allows the holder to emit allotted carbon dioxide.
Credits are awarded to the countries or groups that have reduced their green

gasses below

international market




These credits are being sold









instrument, financial investors purchase it for trading purposes.


Your Interview, Shrabana Kumar Nial

The action of Government or an organization for selling or liquidating an assets or

subsidiary. It is withdrawal of capital from a company or organization. It helps in raising
additional capital. The objective is privatization in future. A government or a company
disinvest its assets or subsidiary as a strategic move for the company, planning to

the proceeds from divestiture to better use that guarantees higher return on

The bank should go green and play a proactive role to take environmental and
ecological aspects as part of their lending principle, which would force industries to
go for mandated investment for environmental management, use of appropriate
technologies and management system. So banking sector can play a crucial role

providing environmentally suitable and socially responsible



Green banking has two components (i) managing environmental risk (ii0 identifying
opportunities for initiative environmentally oriented financial produced. The industries,
which are making serious attempts to grow green, should be accorded priority lending
by the banks is called green banking.
It is integrated management of a company with customer as its focus. It is done for retail
banking customer.

It has three stages, namely Knowledge acquisition, behavior

modeling and product/services delivery. It is

aligned towards customersneeds


help in focusing key client base.

The project envisages deep-rooted multilevel cultural and attitudinal changes and
transformation in organization over next few years. The purpose of Citizen SBI is to free
us of this disabling inequality in functional level and help us to rediscover our essential
commonality of purpose and being. We are working in two states. One is functional
state and another is being state. At functional state, we do everything in a particular
way. There we caught by structure of life. On being state, we are in a dynamic state and
free of any binding structure. Here, we will do what is necessary to be done to meet the
purpose and automatically become responsive, imaginative and contributive. Citizen
Your Interview, Shrabana Kumar Nial

SBI initiative is that people are capable of immense amount of imagination,

strength and achievement. We have to only create environment to unlash this strength.
It is a process when an unlisted company makes its first offer for purchase to
public. That means an unlisted company raises funds by offering its shares to public
and consequently gets listed on a stock exchange. Company can either issue fresh
securities or offer its existing securities to public. If the same company comes out
with another issue to the public, it will be called Further Public Offer (FPO). Right
issue is way of raising fund from existing shareholder against consideration and bonus
issued to existing shareholder without consideration.
Deflation means that price of commodity prices are falling and no body is buying
goods and services. Due to fall in demand, it would cut production. The work will be
come down to fewer shifts, job cuts will start taking place, and less income will
go to the people and reduce the purchasing power. This wide spread downward
spiral is deflation. Deflation arises when prices are continually dropping and people
postponed consumption anticipating a further fall in prices. This vicious cycle leading
to falling output and consequent decrease in
GDP.Deflation also takes place when production are high and overall reduction of

Like computer, cello phone, electronic items etc.

This is supply side led

deflation and is not wide spread across all goods and services.
It is a general slow down in economic activity over a sustained period of

decline in

Countrys Gross Domestic Product growth for

about two


or more

consecutive quarters in a particular year. The indicators of recession are:

Decline in GDP.
Rise in unemployment.
Decrease in real income.
Slow down in industrial production or retail sales.
Fall in investment spending, fall in capacity utilization.
Inadequate aggregate demand in the economy. Recession is result of reduction in
demand; it may also associate with falling prices deflation or increasing prices
Your Interview, Shrabana Kumar Nial

inflation. Prolonged



called an


Depression .

It is

often believed that decline in GDP of more than 10% is depression (Causes:
Currency crisis, energy crisis, war, under consumption, over production, financial crisis,
For moving out of recession Government does the following
Use of expansionary Monetary Policy.
Increase in Government spending.
Tax cut to promote business capital i n v e s t m e n t.





the followers to the vision of the leader so

that they are galvanized to achieve the vision. It aims transforming people by
working with and through them on their values, beliefs, attitudes and behaviour.
Farmers are contracted to plant the contractors crop on his land. After
harvesting, and deliveries a quantum of produce to contractor as per assessment of
yield on predetermined price. The contractor also support by providing all kind
of input, technology, proper seed etc.
It is a specific internal funds transfer price mechanism evolved to supplement the
asset liability management of the bank. It helps in ascertaining the true profitability of
operating units by department.

TP bid rate (equivalent to C.O.




deposits) and TP offer rate

(equivalent to C.o. Interest rate on advances) is arrived by a method called Matched
Maturity Fund
It is auto bill payment facility to all SB/CA customers even without registration for
Internet banking. Under the scheme customer will submit a written request to the branch
for one time off line registration for payment of each type
will send






of bill.



for registration. After successful

Your Interview, Shrabana Kumar Nial

registration, the bank will start receiving the bill in electronic form directly from the
biller from next billing cycle for auto pay process. SMS will be sent to the
customer every time, a bill is received as well ashen it is paid. Benefits: After one
time registration future monthly bill will be paid through INB without any manual
intervention. It will reduce the cost of operation. Bank will earn commission from the
Auto generation SMS will improve the customer service.




financial products and increasing leveraging technology,

operational risk has increased because of

terrorism etc. So






need for Business Continuity plan to maintain a minimum

level of services while restoring the business as usual to prevent (a) loss of face, (b)
loss of revenue, (c) loss of reputation, (d) loss of opportunities and (e) loss of productivity.
It is a process by which an activity in the business is resumed after a disruptive event. It
is basically an ability to respond to an interruption in services by implementing a
well-drawn plan to restore organizations business function. Our bank has already put in
place a


Operational Management Policy



approval of




of Basel-II requirement. Process involved in Business Continuity Plan (BCP)

Identification of risks.
Risk assessment.
Business impact analysis.
It focuses on Vises customer, who will be offered customized financial planning
advice. This will not only help to retain the customers but will also generate a lot
of cross selling opportunities. The financial plan would be made by the relationship
manager (CREs/RMPBs) placed across the selected branches, with the help of the




management software.

This software

has been

developed and customized to meet all aspects of financial planning requirements of

our customers. It will not only help the customers in managing their assets through
mixed products but



them to

meet their




financial planning, tax planning, child marriage, education etc.

Your Interview, Shrabana Kumar Nial


ECB refers to commercial loans availed from nonresident lenders.




accessed under two routes, viz., Automatic Route and Approval Route. ECB
proceeds should be parked overseas until actual requirement in India. Prepayment of
ECB up to USD 100 million is permitted without prior approval of RBI.
The sprit of FBT is to tax those benefits being provided by the employer in the




FBT is payable





employer has made profit or incurred a loss from its activities. The rate of FBT is
prescribed at 30% of the value of the benefit. Different valuation norms ranging from 20
to 100% have been prescribed. The payment of the tax has to be in full for every
quarter on actual basis.
48. CFMS (Centralized Fund Management System):
It helps banks to manage their fund and whole process of CFMS is managed by
RBI. Using this system, banks are maintaining their accounts with RBI at its various
offices. Banks are in a position to know their balances at each location as also they
can transfer their funds as and when required.
GDRs are dollar denominated instruments traded in US or Europe or both. GDRs
represent a fixed ratio of Indian Shares. It helps in raising funds from international
market. It is freely tradable and can be cancelled any time. Cancelled GDRs can be
reissued. GDR holders assume exchange risks and price fluctuation risk. Holders
entitled to receive dividends but have no voting rights.
Swap is simply an exchange

of one

for the other. Interest rate swap involves the

exchange of interest rates between two parties. A simple example would be moving
over to floating rate of interest in the place of fixed rate of interest (and vice
versa) during the currency of the loan. This is done to




with prevailing market conditions. INDIA

Your Interview, Shrabana Kumar Nial





will improve the efficiency of housing finance and protect mortgage

lenders such as banks and housing finance companies in cases of borrower default.
The company would help protect primary mortgage lenders HFCs and banks in
case of borrower default.

The mortgage company would also provide guarantee

support to the investors of the securitized instruments.

51. Retail Assets Central Processing Centre (RACPC):
It covers P segment loans. The loan application will be canvassed by the identified
branches and forwarded to the RACPC. KYC responsibility is that of the branch. The
loan applications are being processed and sanctioned at RACPC. Pre sanction visit,
legal and valuation reports as required will be the responsibility of RACPC. Post



and recovery




responsibility of



Relationship Manager (ME): The branch, which has a substantial, ME business

(Medium Enterprises is a unit with a sales turnover above Rs.5 crores and upto
Rs.25 crores) will have a relationship Team headed by a Relationship Manager and a
Customer Support Officer. The team will acquire, prepare proposal recommend
sanctions, and arrange for execution of documents, subsequent administration and
monitoring. The

team will also

look after the existing ME accounts.


The BPR project undertaken by bank is working to transform in to world class
institution by proactively reaching out to acquire new customers, building deep and
lasting relationship with existing customers and providing all customers with the best
quality of services across multiple channels. . Its objective is cost reduction and output
quality improvement. It






included achieving

and improving work process in bounded time frame. Initiatives

are:- CPC, CCPC,

turn around
Inward Remittance Cell, delayering of organizational structure. Its vision is
quality improvement, time reduction and cost reduction. Benefits:
State of art of technology in the bank
Increase the sales muscle through redesigned branches
Your Interview, Shrabana Kumar Nial

Better facilities for the employee to complete their work

Multiple channels available for customers
Increased awareness built in all employees of the bank
Reduction in time and cost of transaction
It is measure of nations output. It is a measure in monetary terms of the volume of
all goods and services produced by an economy during a given period of time,
accounted without duplication.
Goods cover all possible items produced. Like Gal. Crops, live stock, fish,


products, mineral products, machinery etc

Service covers; medical and educational services, defense services, financial
services, transport services, Govt. Services, Trading services etc.

54. Home Loan Sales Team:

For selling our Home Loans in major cities / district centres. The HLST will contact
all hot / warm leads and proposals which fulfill all the required norms. This will be
forwarded to the RACPC for sanction if in order. Thereafter the sanction will be intimated to
the documentation, disbursal. The team is headed by an AGM and supported by 5 Officers
and 20 Award staff members.

55. Multiproduct Sales Team for SE Business (MPST):

To enlarge the coverage of Small Enterprises Segment to include all units (C&I/SSI/SBF)
with a turnover upto Rs.5 Crores and credit requirement falling within AGMs powers.
The team

is headed by a Manager and supported by 3 Officers 12 award staff members.

56. Trade Finance CPC (TFCPC):

Trade Finance CPC will deal with centralized operations of the Letter of Credits (Inland /
Forex), Import bills, Bank Guarantees and FORWARD Contracts. In
back office operations such as reporting to FD cover
operation on Banks Nostro account and reporting to RBI for exchange control

57. Liability CPC:

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While opening deposit accounts, branches will have to key in minimum mandatory
details and give out non-personalized welcome kit (containing 10 cheque leaves,
ATM Card, etc) to the customer. Remaining details of the customer will be keyed in
at LCPC. Pass book, personalized chequebook, ATM Card with name will be sent
to the customer through courier by LCPC. Nomination, issue of chequebooks, scanning
of signatures, opening of bulk accounts done by LCPC. There are 4 LCPCs at Delhi,
Mumbai, Calcutta, and Chennai.

58. Government Business Cell (GBC):

The Cell will take over most of the back-office transactions relating to Govt. business
and also undertake consolidation, reconciliation and reporting (CRR) of all Govt.
transactions. In effect, it will function as a single focal point branch (FPB) for the centre
with some added functions.


IFRS are standard international framework adopted by the International Accounting
Standard Board. The effects of transactions and other events are recognized when
they occur

and not

as cash


or paid





statements are prepared on the basis that an entity will continue in operation for a
foreseeable future (Going concern). It is going to be introduced from 01.04.11.It will
invoke higher challenges as f i n a n c i a l c o m p a n i e s insurers a n d NBFCs d


many off -balance s h e e t components and derivatives instruments, like

futures, options, and swaps,

having more complex disclosure and accounting

system. It will require n u m b e r of changes in the balance sheet. It consists of:

A statement of financial position
Comprehensive income s t a t e m e n t
Either a state o f change in equity (SOCE) or a statement of a recognized
income or Expenses
A cash flow statement
Notes including a summary of the significant accounting policies

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The above act was enacted in 2005. It has come into force from 15.06.2005. The
objectives of the act are:
To secure access to information under the control of Public Authorities.
To promote transparency and accountability in the working of public authority.


includes an









document, records, taking notes, extracts or certified copies.

Section 8 and 9 of this act provides certain categories of information that are
exempt from disclosures to the citizens.
The persons authorized to receive the applications are Assistant Central Public
Information Officers and Central Public information officers.
The Branch Managers are ACPIOs and GM (NW) is CPIOs.
ADRs are dollar denominated instruments traded in US. Help companies in accessing
funds from US; improve accounting and disclosure practices; and get better valuation.
It can be cancelled and re-issued (i.e. two-way fungibility is allowed). ADR holders
have no voting rights.
Most of





own and possess large properties in prime

locations. This is an accounting concept and represents a reassessment of the value

of a capital asset as at a particular date. The reserve is considered a category of
the equity of the entity. The extent to which revaluation reserves can be relied on as a
cushion for unexpected losses would depend on level of certainty that can be placed on
estimates of the market value of the relevant assets.
A well-developed debt market would help in financing the investment needs of
infrastructure and other essential sectors. It helps in reducing the intermediation cost.
It would provide scope for effective deployment of funds. Facilitate product innovation
Your Interview, Shrabana Kumar Nial

and better management of interest rate Risk. Administered interest rate, cash credit
facility and preference for shares affected its growth. Present facilitating factors:
Deregulation of interest rate; introduction of short-term treasury bills; phased reduction
in SLR; introduction of PDs; credit rating.
It is a system of

managing banks assets and liabilities













ALM depends on availability of information, existence


management system. It essentially focuses on

managing risks caused by changes in liquidity, interest rates and fluctuations in

foreign currency rates.
Apart from its normal business, the activity, other than lending, done by the bank directly
or by setting up a subsidiary is called Para banking. Eg: Debit card, credit card, Life
Insurance product,
Non-Life Insurance product, Cash management Products, BPO, Depository services,
MFs, Money Market MFs,BCs, BFs, Pension fund business etc.
The security advantage of biometric technology is that it can authenticate.An individual
by measuring


distinct physical characteristics or behavioral traits. Physical

characteristics measured by biometrics include: face, fingerprint, hand geometry and

retina etc. Some of the Biometrics techniques are Signature technology, Fingerprint
technology, hand geometry technology, and Voice technology.
Introduced in India in 1995. It is a process of determining price of shares based on
market feedback. Under this, the offer price is not determined by the issuer but by
the quotes given by the prospective buyers. Hence, it is also called price discovery
mechanism. Benefits: Evaluation of the intrinsic worth of the shares;
issue expenses;

investors have

say in




market determined pricing;

reduction in lead time.

Your Interview, Shrabana Kumar Nial


Against the back drop of deregulation, changing customerspreferences, declining






in traditional banking products and

for customer retention, this was required. To provide complete range of services to its
customers under one umbrella. General insurance is
customers. Its


is to


leverage banksassurance
Australia Group (share 76:24).





network of


branches and





signed MOU with Insurance





Our bank has


has been

the customer value proposition at our







Advantages covering the risk needs of the customers vehicle machine etc.
No capital requirement in this business like in lending
Infrastructure cost is less as most of the distribution points will be branch
Due to falling net margin it will provide additional avenue for increasing fee based


Call Money is money borrowed for shorter repayment period (1-14 days) to meet
temporary mismatch. Call market is generally a one- day or an overnight market. Major
Participants: Banks/FIs/PDs and Mutual Funds. Banks borrow/lend in call money to
meet CRR. RBI intervenes in Call Money Market through STCI & DFHI to stabilize
rate. Non-banking entities to lend lesser in call money market.


It is all about widening our development options, promoting energy security in a
manner which will not hurt our precious environment and which will not contribute
global warming.
It will enable us to take advantage of International Trade in nuclear materials, technologies
and equipments.

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Captures image of cheques and restricts their physical movement. Pilot project likely to
commenced at New Delhi. The vendor for SBI is NCR Corporation. Point of truncation is
at branch level for SBI pilot project. Uses Public Key Infrastructure



flow. One





paper instrument etentionrecommended.8years for

image retention recommended.

Facilitates quick/safe/efficient clearing

The first credit rating Agency, CRISIL, was set up in India in 1987. Credit


provides a measure of credit risk associated with specific reference to the rated
instrument. In essence, the rating is done not for a company but for the
CRISIL, CARE, ICRA and Duff and Phelps are the credit rating agencies in India. Major
Credit Rating Agencies in the world;

Moodys Investor service, Fitch


Standard and Poors Corporation.


is based





Capital Adequacy, Resources, Asset Quality, Management Evaluation, Earnings and

Credit Risk is the foremost of all risks in terms of importance. Major Credit Risks
include risk of exposure, risk of default by the borrower, risk of deterioration

standing of the


borrower. Credit risk is managed through use of covenants,

collateralization, managing concentration and Capital allocation in relation to risk,

risk return


Credit risk models, stress testing, use of derivatives and

securitization help in managing credit risk.

It is a bank for deposit of securities. Helps in holding securities in dematerialized form.
Eliminates risks of forgery and bad delivery.
No stamp duty on transfers
Reduction in transaction costs.
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Speedy transfer; reduction in paper work.

No risk of loss of share certificate in transfer.
The process of ensuring access to adequate and timely credit and financial services
to weaker section and low-income group of the society at an affordable rate. That
means it is delivery of banking services at an affordable cost to the vast section of
disadvantaged/underprivileged and low-income groups. Financial exclusion may
cause higher incidence of crime, decline in investment, difficulty in getting credit or



higher interest





countries like US, UK have framed laws towards financial inclusion. Two funds namely

Inclusion fund for meeting the




cost of

development and


financial inclusion and Financial Inclusion Technology Fund to

cost of technology adoption. RBI has taken initiatives to improve the

credit delivery mechanism and being about maximum inclusion of proper section of


SBIs no frillaccount and SBI Tiny is an attempt towards financial

inclusion. The imitations taken by RBI is:

No frill accounts permitted

KYC norms have been simplified

Issuance of General purpose Credit Card, a revolving credit limit up to Rs.25000/

without insisting security or purpose

Business Facilitator and Business Correspondent model brought

Biometric smart card introduced

Mobile hand electronic devices for receipt and disbursement of cash by BCs

Dispensing no dues certificate up to Rs.50000/

76. Qualified institutional placement (QIP):Qualified institutional

placement (QIP) is a capital raising tool, whereby a listed

company can issue equity shares, fully and partly convertible debentures, or any
Your Interview, Shrabana Kumar Nial

securities other

than warrants, which are convertible into equity shares, to a

qualified institutional buyer (QIB).Apart from preferential allotment, this is the only other
speedy method of private placement for companies to raise money. It scores over












requirements, such as the submission of pre-issue filings to the market regulator. Why
was QIP introduced?:-To enable listed companies raise money from domestic markets
in a short span of time, market regulator Sebi introduced the concept of QIP in
2006. This was also done to prevent listed companies in India from developing an
excessive dependence on foreign capital. Prior to introduction
complications associated with







the domestic markets had led

many companies to look at tapping overseas markets via foreign currency convertible
(FCCB) and global depository receipts (GDR). This has also helped issuing companys
price their issues closer to the prevailing market price.
Who can participate in the issue? The specified securities can be issued only to
QIBs, who shall not be promoters or related to promoters of the issuer. The issue is
managed by a
Sebiregistered merchant banker. There is no pre-issue filing of the placement
document with Sebi. The placement document is placed on the websites of the stock
exchanges and the issuer, with appropriate disclaimer to the effect that the
placement is meant only for QIBs on private placement basis and is not an offer to
the public. 77. Qualified Institutional Buyer (or QIB),

law and finance,

sophisticated and


a purchaser of securities that

is deemed financially

is legally recognized by security market regulators to need less

protection from issuers than most public investors. Typically, the qualifications for this
designation are based on an investors total assets under management as well as
specific legal conditions in the country where the fund is located.



placements of stock and bonds are made available only to Qualified Institutional
Buyers to limit regulatory restrictions and public filing requirements The Securities
and Exchange Board of India has defined a Qualified Institutional Buyer as follows:
[3] Qualified Institutional Buyers are those institutional investors who are generally
perceived to possess expertise and the financial muscle to evaluate and invest in the
capital markets. In terms of clause 222B (v) of DIP Guidelines a qualified institutional
buyer shall mean. a) Public financial institution as defined in section 4A of the
Your Interview, Shrabana Kumar Nial

Companies Act, 1956;

b) Scheduled commercial banks;
c) Mutual funds;
d) Foreign institutional investor registered with SEBI;
e) Multilateral and bilateral development financial institutions;
f) Venture capital funds registered with SEBI.
g) Foreign Venture capital investors registered with SEBI.
h) State Industrial Development Corporations.
i) Insurance Companies registered with the Insurance Regulatory and Development
Authority (IRDA).
j) Provident Funds with minimum corpus of Rs.25 crores
k) Pension Funds with minimum corpus of Rs. 25 crores


Indian power sector has the fifth largest installed capacity in the world.
Renewable energy sources account for only 12% of total installed capacity
India needs to add about 135 GW of power generation capacity, before 2017, to
satisfy the projected demand.
Cloud computing is a style of computing where massively scalable IT enabled
capabilities are delivered as a service to external customers using internet
Cloud computing is a relatively eco-friendly technology as IT resources for multiple
customers can be centrally managed, thereby reducing overall energy consumption
levels Clouds are deployed as private, community, public or hybrid models.
Issues of security of data are a major concern in cloud computing.
A Current Account surplus increases a countys net foreign assets by the
corresponding amount and a Current Account deficit does the reverse.
A country can reduce its CAD by increasing the value of its exports relative to
thevalue of imports. This is generally accomplished directly through import
restrictions,quotas or duties or by promoting exports through subsidies, customs duty
exemptions etc

Your Interview, Shrabana Kumar Nial


The Committee was formed with a term of reference frame a clear and detailed
vision for financial inclusion and financial deepening in India.
Its various recommendations include, by 1st January 2016 full service electronic
bank account for all adult residents, sufficient number of electronic payment access
points such that every resident would be within a 15 minutes walking distance from
such points, full-range of suitable credit products at an affordable price,
suitable investment and deposit products and suitable insurance and risk
management products.
It has recommended two broad banking designs (a) Horizontally Differentiated
Banking System (HDBS) & Vertically Differentiated Banking System (VDBS). Across
these designs, ten existing and potential banking designs were identified by the
Committee. These are: National Bank with Branches, National Bank with Agents,
Regional Bank, National Consumer Bank, National Wholesale Bank, National
Infrastructure Bank, Payments Network Operator, Payments Bank, Wholesale
Consumer Bank, and Wholesale Investment Bank.
External and Internal factors cause volatility of Rupee.
Strong and stable economy stabilises currency value.
Financial contagion refers to a scenario in which small shocks, which initially affect
only a few financial institutions or a particular region of an economy, spread to the
rest of financial sectors and other countries whose economies were previously health
However, under todays financial system, with large volume of cash flow, such as
hedge fund and cross-regional operation of large banks, financial contagion usually
happens simultaneously both among domestic institutions and across countries
The development of sophisticated financial products, such as credit default swaps
and collateralized debt obligations, has complicated the financial regulation
The FSLRC was headed by Shri B N Srikrishna and the commission was asked to
comprehensively review and redraw the legislation governing Indias financial
The Draft Indian Financial Code proposed by the commission is a nonsectoral,principal based law consolidates separate laws governing different sectors
of the financial system.
The Draft code seeks to move away from the current sector wise regulation to a
system where the RBI regulates the banking and financial payments system and
unified Financial Agency subsumes existing regulators like SEBI, IRDA, PFRDA and
FMC to regulate the rest of the financial markets.
Financial stability can be defined as a condition in which the financial system is
capable of withstanding shocks, thereby reducing the likelihood of disruptions in the
Your Interview, Shrabana Kumar Nial

financial intermediation process which are severe enough to significantly impair the
allocation of savings to profitable investment opportunities.
Safeguarding of financial stability requires identifying the main sources of risk and
vulnerability such as inefficiencies in the allocation of financial resources and the
mis-pricing or mismanagement of financial risks.
Financial Stability and Development Council (FSDC) of India is envisages to
strengthen and institutionalise the mechanism of maintaining financial stability,
financial sector development, inter-regulatory coordination along with monitoring
macroprudential regulation of economy.
Fiscal deficit = [Total Expenditure-(Revenue receipts + Recoveries of Loans + Other
receipts)] Fiscal deficit is 4.6% of the GDP during 2013-14 (RE).
High level fiscal deficit adversely affects the exchange rates, interest rate and
Indias exports in 2013-14 managed to reach $312.35 billion but, fell short of the
$325 billion target.
The annual supplement to FTP lays emphasis on greater technological intensity and
higher value creation by exports of manufactured goods from India.
Abolition of the 3 per cent EPCG scheme and extension of the zero duty scheme for
a year to all sectors is expected to facilitate the much-needed investment
Both Central and State Governments issue G-Sec to fund their fiscal deficit and short
term cash mismatches.
These instruments are available for both short term and long term (even upto 30
Main variants of G-Sec are T-Bills, Cash Management Bills (CMBs), Dated
Securities,STRIPS and State Development Loans (SDLs).
Government Securities offer the maximum safety as they carry sovereign
commitment for payment of principal and interest.
Investment in some of the Govt. Securities such T-Bills, Dated Securities and
SDLsare eligible for the purpose of SLR for the SCBs.
Indian financial sector had undergone substantial transformation during the last 2
However, more reforms are needed in areas like corporate bond market,
infrastructure finance etc.
At end-December 2013, Indias external debt stock stood at US$ 426.0 billion,
recording an increase of 5.2% over the level of end-March 2013.
The narrowing of the CAD in 2013-14 followed a lower trade deficit due to higher
exports as well as moderation in imports.
Your Interview, Shrabana Kumar Nial

The decline in imports was primarily due to sharp moderation in gold imports since
July 2013.
IINSS-C are internationally known as inflation linked securities. The objective of
these securities is to provide investors much respite from high inflation.
IINSS-C is more like FD, less like a bond. It has an advantage over taxable and tax
free bonds for the conservative saver who does not like the volatility of the
investment amount, based on market interest rates.
These securities will be for a fixed term of 10 years where it will pay a fixed coupon
rate to the investor. On completion of the term the principal amount will be paid to
the investors along with accrued interest.
IINSS-C has an option of premature redemption with penalty. However these
securities cannot be transferred to any other individual during his/her living but has
nomination facility and it can also be kept as collateral for availing loans from
Banks, FIs, NBFC.
It is a market of short term instruments i.e. up to 1 Year.
These instruments help the business units, banks, other organizations and the
Government to borrow funds to meet their short term liquidity mismatch.
Call money, Treasury Bills, Commercial Papers, Certificates of deposit, Repo
market and CBLOs are important money market instruments.
Government of India moved from a defined benefit pension to a defined
contribution based pension system.
Pension Fund Regulatory and Development Authority (PFRDA) is the autonomous
body set up by the Government of India to develop and regulate the pension
market in India.
Employee as well as employers contribution to the account of employee is eligible
for tax exemption as per the Income Tax Act.
Nanotechnology, or nanotech, is the study and design of machines on the
molecular and atomic level. To be considered nanotechnology, these structures
must be anywhere from 1 to 100 nanometers in size. Nano is an International
System of Units (SI) which means 10 to the negative 9th power, or 0.000000001
As nanotech continues to develop, consumers will see it being used for several
different purposes. This technology may be used in energy production,
medicine,and electronics, as well as other commercial uses
Nanotechnology has the potential to revolutionize the agricultural and food industry
with new tools for the molecular treatment of diseases, rapid disease
detection,enhancing the ability of plants to absorb nutrients etc. which ultimately will
result in world food security.
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New Banking licenses are overdue as licenses were last issued back in 2001.It
was also announced in the Union budget for 2010-11.
RBI issued guidelines for new licenses on 22nd Feb 2013.
Promoters / promoter groups (of residents only) that have a successful track
record of at least 10 years in running their businesses shall be eligible.
New banks will be permitted only through a wholly-owned Non-Operative
Financial Holding Company (NOFHC).
The aggregate non-resident shareholding from FDI, NRIs and FIIs in the new
private sector banks shall not exceed 49% for the first 5 years.
On 2nd April 2014, after screening of 25 applications by a Committee headed by
Dr Bimal Jalan, in-principal approval was granted to Bandhan Financial
Services and IDFC to set up banks under the said guidelines.
The principal goal of organic production is to develop enterprises that are sustainable
and harmonious with the environment.
The organic standards generally prohibit products of genetic engineering and animal
cloning, synthetic pesticides, synthetic fertilizers, sewage sludge, synthetic
drugs,synthetic food processing aids and ingredients, and ionizing radiation.
The countries with the most organic agricultural land are Australia, Argentina, and the
United States.
Quantitative easing is an occasionally used monetary policy, which is adopted by the
government to increase money supply in the economy
Quantitative easing is aimed at maintaining price levels, some times with lack of
judgement it backfires.
100.RBI Financial Stability Report (FSR) December 2013
The RBIs Financial Stability Report (FSR), focuses on reviewing the nature, magnitude
and implications of risks that have bearing on the macroeconomic environment, financial
institutions, markets and infrastructure.
The strain on asset quality continues to be a major concern for banking sector in India.
Some factors affecting the asset quality adversely are economic slowdown global and
domestic, persistent policy logjams, delayed clearances of various projects,aggressive
expansion by orporates during the boom phase with resultant excess capacities,
deficiencies in credit appraisal, etc
Five sectors, namely, Infrastructure, Iron & Steel, Textiles, Aviation and Mining together
contribute 24 % of total advances of SCBs, and account for around 53 % of their total
stressed advances.
RBI constituted an Expert Committee to Revise and Strengthen the Monetary Policy
Framework under the chairmanship of Deputy Governor Dr. Urjit Patel.
Your Interview, Shrabana Kumar Nial

The main objective of the Committee is to recommend what needs to be done to

revise and strengthen the current monetary policy framework with a view to, inter alia,
making it transparent and predictable.
Sustainable development is development that meets the needs of the present without
compromising the ability of future generations to meet their own needs.
The United Nations Framework Convention on Climate Change (UNFCCC) defines
climate change as a change of climate which is attributed directly or indirectly to
human activity that alters the composition of the global atmosphere and which is in
addition to natural climate variability observed over comparable time periods.
A Systemically Important Financial Institution (SIFI) is a bank, insurance company,or
other financial institution whose failure might trigger a financial crisis.
Each countrys internal financial regulators make their own determination of what is a
Systemically Important Financial Institution for their country.
However, the Basel Committee has identified factors for assessing whether a financial
institution is systemically important i.e its size, its complexity, its interconnectedness,the
lack of readily available substitutes for the financial infrastructure it provides, and its
global (crossjurisdictional) activity.
In India many institutions like LIC, SBI, ICICI, HDFC & some more do pose a threat to
the financial system if allowed to expand beyond certain comfort levels.
The Companies Act 2013 has replaced the existing Companies Act 1956.
In the Act, new entities have been introduced such as One Person Company
(OPC),Small Company, Dormant Company etc.
Maximum number of directors in a company increased to 15. For a public Company
minimum Directors should be 3.
Introduction of stringent punishment for not distributing dividend within 30 days of its
First meeting of Board of Directors (BOD) of any new company to be held within 30 days
of its incorporation.
According to the Act, persons belonging to Priority category will be entitled to 5 kg food
grains per person per month at Rs 3/kg for wheat, Rs 2/kg for rice, Rs 1/kg for coarse
General category household covered under Antodaya Anna Yojna are entitled to at least
35 kg food grains per household per month.
The Act seeks to reform the existing TPDS through doorstep delivery of food grains,
leveraging Aadhaar, Transparency in records, cash transfer and food coupons schemes,
licensing of fair price shops etc.
Global growth is projected to strengthen from 3 % in 2013 to 3.6 % in 2014 and 3.9 %
in 2015.
Your Interview, Shrabana Kumar Nial

In advanced economies, growth is expected to increase to about 2 % in 201415.

Key drivers are a reduction in fiscal tightening, except in Japan, and still highly
accommodative monetary conditions.
In emerging market and developing economies, growth is projected to pick up
gradually from 4.7 % in 2013 to about 5 % in 2014 and 5 % in 2015.
ASBA means "Application Supported by Blocked Amount . ASBA is an application
containing an authorization to block the application money in the bank account, for
subscribing to an issue. If an investor is applying through ASBA, his application money
shall be debited from the bank account only if his/her application is selected for
allotment after the basis of allotment is finalized.
It involves management of a banks assets and liabilities.
It essentially focuses on managing risks caused by changes in liquidity, interest rates
and fluctuations in foreign currency rates.
Success of ALM depends on availability of information, existence of sound policies
and risk management system.
The BCSBI is an independent banking industry watchdog to ensure that consumers
get what they are promised by the banks. The BCSBI evolved the Code of Banks
Commitment to Customers first in July, 2006. The latest revision has been released in
January 2014 and is binding on all member banks.
The code is applicable to all banking services like deposit accounts, payment
services,electronic transactions, currency notes exchange facility, Loans, overdrafts
and guarantees, Third party insurance and investment products sold through bank
branches,Various card products, e.g., credit and debit cards.
There is an imperative need to go after profitable customers who have the capacity to
pay for the services and whose life time value to the bank is a relatively high.
Aligning our interests with the interests of the client is the most important aspect of HNI
service. Income should come more from advice led and performance led fees rather
than from interest on funds lent to them.
Basel III is part of the BCBSs continuous effort to enhance the banking regulatory
framework. It builds on the International Convergence of Capital Measurement and
Capital Standards document (Basel II). While Basel III was designed to address the
weaknesses of the past crisis, the Committees main intent was to prepare banks and
the banking sector for the next crisis.
Bitcoin is a unit of currency not issued by any govt. or Central Agency.
It is based on a concept called crypto-currency.
Your Interview, Shrabana Kumar Nial

New Bitcoins are created out of decentralized processing, called Mining, where miners
are processing transactions and securing the network and are collecting new Bitcoins in
Bitcoins have value because they have the characteristics of money i.e.
durability,portability, fungibility, scarcity, divisibility, and recognizability.
The numbers of new Bitcoins are created in a controlled manner and its issuance will
completely halt with a total of 21 million Bitcoins in existence.
Currently, Bitcoins are facing flak of regulators in various countries, which have
exaggerated due to the bankruptcy of MT Gox, largest Bitcoin exchange in Japan.
Referred to as Trade Credits and extended only for Import payment.
Maturity period maximum 3 years.
Arranged by domestic branches but extended from our foreign offices/banks abroad.
Based on LC Suppliers Credit.
Based on LOU/LOC Buyers Credit.
The concept of carbon credits came into existence as a result of increasing awareness
of the need for controlling emissions. The mechanism was formalized in the Kyoto
Protocol, an international agreement between more than 170 countries.
India has generated approximately 30 million carbon credits and approximately 140
million in run, the second highest transacted volumes in the world.
Indias carbon market is growing faster than even information technology, bio-technology
and BPO sectors.
Cheque Truncation System is an image based clearing system where the Physical
cheque is truncated (stops moving) at the presenting branch and the image thereof is
sent to the drawee branch through the clearing house for payment
CTS speeds up the process of inter-bank clearing resulting in better customer service
and reduces the scope of clearing related frauds or loss of instruments in transit
A GRID based approach to cover national roll out of CTS is envisaged to cover even
small branches which are not even member of any clearing operation now.
To ensure uniformity in respect of the size, paper quality and security features a
standardized Cheque format CTS 2010 is to be used by the Customers
With amendments in the Sections 6 and 1(4), coupled with the introduction of 81 A to the
Negotiable Instruments Act, 1881, truncation of cheques is now legalized.
In contrast to equity and government securities markets, the corporate bond market has
languished both in terms of market participation and structure.
With the intervention of the Patil Committee recommendations, the corporate bond
market is slowly evolving.
Several initiatives taken earlier to development corporate bond market.
Your Interview, Shrabana Kumar Nial

Concerned departments of the Government, RBI and SEBI to work in tandem to

furtherboost the corporate bond market.
Values can be defined as those things that are important to or valued by someone.
The CDR Mechanism is an organizational framework institutionalized for speedy
disposalof restructuring proposals of large borrowers availing finance from more than
one bank/FI and where total outstanding (fund-based and non-fund based) exposure is
Rs.10 crore or above.
CDR system in the country has a three-tier structure: CDR Standing Forum and its Core
CDR Empowered Group and CDR
Cell. Main Advantages of CDR are:
A resolution with the maximum value addition to stressed exposure.
Recompense for sacrifice.
The only multi-lender institutional forum for consensus-based resolution of credit stress.
A structured mechanism for resolving inter-creditor issues.
Protection of IRAC status of the account.
Control of process fully with banking system.
Country risk is a very important risk and all banks should put in place a comprehensive
country risk management policy in tune with RBI guidelines.
Banks should reckon both funded and non-funded exposures from their domestic as well
as foreign branches while identifying, measuring, monitoring and controlling country
Exposures should be computed on a net basis, i.e.,gross exposure minus collaterals,
guarantees, insurance, etc.
Provision on net funded country exposure has to be made when net funded exposure on
a country exceeds 1% of banks total assets.
Credit default swaps (CDS) are credit derivative contracts between two counterparties in
which the buyer gets protection from a specific default.
Though to some extent the CDS may look like an insurance policy, there are differences
between CDS and insurance.
Credit default swaps are the most widely traded credit derivative product.
CGTMSE scheme aimed to facilitate the flow of collateral free credit upto Rs.100 lakh for
Micro and Small Enterprises (MSEs).
Credit facility is any financial assistance by way of term loan and/or fund-based and nonfund based working capital (e.g., Bank Guarantee, Letter of credit, etc.) facilities
extended by the lending institution to the eligible borrower (except retail trade).
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Of the credit facilities extended by Member Lending Institutions (MLIs), in the case of
default by the borrower, guarantee cover available is to the extent of 50% of amount in
default subject to maximum of Rs.50 lacs
Credit risk is the foremost of all risks in terms of importance.
Major Credit risks include risk of exposure, risk of default by the borrower, risk of
deteriorationin the standing of the borrower.
Credit risk is managed through use of covenants, collateralisation, managing
concentration and capital allocation in relation to risk and risk-return optimization.
Credit risk models, stress testing, use of derivatives and securitisation help in managing
credit risk.
Exchange Traded Currency Futures were introduced in India in 2008.
Currency futures are standardised foreign exchange contracts traded on a recognized
stock exchange to buy or sell one currency against another on a specified future date, at
a price specified on the purchase or sale date.
The contract size is of 1,000 USD/1,000 GBP/1,000 EUR/JPY 1,00,000 and the tick
size(minimum price fluctuation) will be 0.25 paise.
The trading period will range from one month to 12 months and the contract will be
settled on the basis of RBIs reference rate on the last trading date.
Individual participants have a daily position limit of $5 million.
Currency option means having the right but not the obligation to buy or sell a specific
quantity of currency at an agreed rate.
Upfront premium has to be paid by the party buying the option.
Only banks can write options in India.
The underlying asset in a currency option is foreign exchange.
It is a hedging tool.
Currency swap is the exchange of one currency for the other.
It is used as a hedging mechanism to guard against adverse currency fluctuations.
It is used to convert a loan in one currency to another currency to reduce the cost of
borrowings It helps in efficient management of currency exposure and cash flows.
Customer Relationship Management (CRM) is the process by which relationships with
the customers are built and maintained profitably.
CRM has to be seen broadly and strategically as a holistic organizational approach to
managing customer relationship.
Building strong customer relationship primarily requires that companies view customers
as people first and consumers second

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Damodaran Committee was constituted by RBI to look into banking services rendered to
retail and small customers, including pensioners, and also to look into the system of
grievance redressal mechanism prevalent in banks.
The total number of recommendations made by the Committee was 232. With the
objective of implementing on its recommendations, Indian Banks Association (IBA)
circulated 107 recommendations which are found acceptable for implementation by
member banks with modifications in certain cases with approval from RBI.
Financial inclusion is about (a) the broadening of financial services to those people who
do not have access to financial services sector. It aims to give everyone the tools and
resources to better themselves, and in doing so, better the country.
With the objective of ensuring greater financial inclusion and increasing the outreach of
the banking sector, SCBs including RRBs and have been permitted to use the services
of intermediaries in providing financial and banking services through the use of Business
Correspondent Model.
Ultra Small Branches (USB) may be set up between the base branch and BC locations
so as to provide support to about 8-10 BC Units at a reasonable distance of 3-4
kilometres. Such USBs should have minimum infrastructure such as a CBS terminal
linked to a pass book printer and a safe for cash retention for operating large customer
transactions and would have to be managed full time by bank officers/ employees.
Financial literacy may be defined as a combination of financial awareness, knowledge,
skills, attitude and behaviours necessary to make sound financial decisions and
ultimately achieve individual financial wellbeing.
In India, FSDC (Financial Stability and Development Councils ) is mandated, to focus on
spread of financial inclusion and financial literacy . Under the aegis of (FSDC) a National
Strategy for Financial Education (NSFE) has been prepared which envisages creating
awareness and educating consumers on access to financial services.
Financial Planning is a must for individuals with moderate means and rising aspirations.
It is also a new business opportunity for the banks and helps in increasing switching
costs of the customer.
It is based on the principle of Protection, Accumulation and Transfer ( PAT) represented
by Five pillars namely 1. Insurance Planning 2. Retirement Planning (Protection) 3.Tax
Planning 4. Investment Planning (Accumulation) 5. Estate Planning (Transfer)
There are three distinct types of Non-Banking Financial Companies (NBFCs) depending
on their principal business namely, Asset Finance Company, Investment Company, and
Loan Company.

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The extent of finance to a NBFC will not exceed 3 times the NOF of the company in the
case of SB1 ,SB 2 rated companies and 2 times the NOF for others or 10% of the
Banks capital funds, whichever is lower.
Net owned funds would mean the aggregate of the paid-up equity capital and free
reserves (as per latest balance sheet ) after deducting there from accumulated balance
of loss, deferred revenue expenditure, and other intangible assets; and investments of
such company in shares of its subsidiaries, companies in the same group, all other
The daily turnover in the Indian Foreign Exchange markets is approximately US$ 50.00
billion, which includes Interbank (Bank to Bank) and merchant trades.
In recent times there has been tremendous interlocking and convergence in the global
financial markets which include the Capital Markets, Foreign Exchange Markets, Money
Markets, Commodities Markets and the Derivatives Markets.
Forfaiting, similar to factoring, involves discounting of export receivables of mediumterm and long-term.
Unlike factoring, in forfaiting, the forfaiting agency has no recourse to the seller in case
of payment default by the buyer. It helps in upfront realization of credit sale, perhaps, at
a discount.
Efficient diversification for investment portfolio.
Easy Liquidity through stock exchange.
Ease of Operations through demat account.
Cost effective - No making charges, wastages and premia, as incurred in Jewellery.
Secure - Each unit is backed by physical Gold held in secured vaults.
Assured Purity - All gold bullion held is 99.5% pure.
Smaller unit size - one unit is approximately equal to one gram of Gold.
No head ache of storage, theft, safety and maintenance
Green / Ethical Banking implies socially and environmentally conscious banking.
It includes: ethical investment, socially responsible investment, corporate social
Green Banks have the potential to create environmentally and socially conscious
business practices.
They can introduce pricing differentials for units that are following environmentally
sustainable business practices and charge more for units that arent doing so. Banks
have been surprisingly slow to examine the environmental performance of their clients.
They must consider performing a triple bottom line analysis (an analysis that takes into
account environmental, social, and financial performance) of their borrower customers.
Hedge fund is just a managed portfolio of investments.
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They are distinct from traditional investment funds like mutual funds, pension funds, etc.,
in that they are under less regulatory restrictions and are thus allowed to make a broader
variety of investments.
For Tail risk, we need to look at the normal distribution which is a popular distribution
function used in the area of statistics and finance.
Housing market in India, as evidenced by the growth in bank exposures to the
sector,witnessed a spurt took off mainly since the year 2001.
Rising business opportunities in new and emerging enterprises were fuelled by the
growth in the middle class population, favourable demographic structure, rising job
opportunities in the metropolitan centres, increasing income levels, low interest rates,
and emergence of a number of second tier cities as upcoming business centres.
Challenges, apart from risk management perspectives, include Customer Relations
Management, improved service quality and implementation of KYC norms.
(Also Known as Inter Bank Mobile Payment Service)
IMPS offer an instant, 24X7, interbank electronic fund transfer service through mobile
IMPS facilitate customers to use mobile instruments as a channel for accessing their
bank accounts and put through interbank fund transfers in a secured manner with
immediate confirmation features.
The Incoterms rules describe mainly the Tasks, Costs and Risks involved in the
delivery of goods from sellers to buyers.
The rules do not constitute primary contract of sale, but should be incorporated in the
sale contracts.
Swap is simply an exchange of one for the other.
Interest rate swap involves the exchange of interest rates between two parties.
A simple example would be moving over to floating rate of interest in the place of fixed
rate of interest (and vice versa) during the currency of the loan.
This is done to align debt exposure with prevailing market conditions.
IFRS financial statements are considered high-quality, alongside those presented under
The major difference between Indian Accounting Standards and IFRS is in fair value
Convergence of Indian accounting standards (IGAAP) with IFRS may improve investor
confidence across the world due to transparency and comparability.
The central feature of the Islamic finance system is the prohibition in the Quran of the
payment and receipt of interest (or riba).
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The Islamic Development Bank (IDB) was established in 1975 and gave momentum to
the Islamic banking movement.
Some of the most commonly used Islamic financing techniques are:
musharaka mudaraba
murabaha ijara
istisna salam
Liquidity is the ultimate reward or punishment for the sound management of the other
risks combined, states Carrel.
Issues with liquidity can arise from poor risk management policies in areas such as
funding, portfolio and collateral management, counterparty management, failed
settlements and other operational issues.
Social media efforts of the Banks targeted at several stakeholders i.e Existing
Customers, New Customers, Media, Regulatory Agencies, Community At-Large
By having a truly digital business banks can move away from reactive, transactionbased
customer relationships, towards a more intimate, proactive and personalized experience
across multiple channels, products and services.
Microfinance or Micro Credit is defined as provision of thrift, credit and other financial
services and products of very small amount to the poor in rural, semi-urban and urban
areas for enabling them to raise their income levels and improve living standards.
Since the latter half of 2010 Micro Finance Institutions (MFIs) have come under the
scanner of public and journalistic scrutiny, particularly in Andhra Pradesh, due to a variety
of reasons.
RBI constituted Shri Y. H. Malegam Committee, to study Issues and Concerns in the MFI
Sector in October 2010. The Committee has made a number of recommendations to
mitigate the problems of multiple-lending, over borrowing, ghost borrowers and coercive
methods of recovery.
Mobile Banking offers from basic Account Enquiry Services to Funds Transfer facilities,
Utility Bill Payment Services, placing orders for Cheque Books etc. via mobile phones.
With multiple access channels such as SMS, downloadable client application,mobile
Internet (WAP) mobile banking is encouraging mobile users more to explore the service.
The New Businesses Department was created to formulate strategies for new
businesses, incubate new business initiatives, pilot them and on their stabilization, hand
over the initiatives to the Business Group concerned.
Various new businesses include:
a. Private Equity
b. Payment Solutions
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c. Merchant Acquiring Business

d. Green Channel Counters (GCC) and Cash Deposit Machines (CDM)
e. Self Service Kiosks (SSK)
f. SBI Green Remit Card [GRC]
g. State Bank SME Insta Deposit Cards
h. State Bank Business Debit Cards
i. SBI eZ Pay Cards
j. State Bank Gift Cards
k. State Bank Virtual Cards
l. State Bank Saral Money
m. State Bank Achiever Cards
n. State Bank Imprest Cards
o. SBI ePay
p. TAB Banking
Non Deliverable Forward contracts are derivatives that oblige traders to exchange one
currency for another at a future date and at a price set in the agreement.
The actual delivery of the currency does not take place because Governments have not
given it a legal status.
They are called non deliverable forwards because the settlements occur in US Dollars.
The participants in the NDF market are domestic companies with overseas presence,
Overseas corporate entities, International hedge funds and banks
Operational risk in banks can arise before, during and after a transaction is processed.
Shift by some banks away from traditional banking towards a more trading-oriented
environment and the increasing concentration of processing risk may mean that banks
may be more vulnerable to sudden, extreme losses than before.
Electronic payment products are expected to provide speedier, cheaper and hassle free
payment experience to customers in comparison to traditional paper based payment
instruments. The evolution of electronic payment products in the country have
progressed through two main phases - (i) introductory phase and (ii) rationalization
An efficient and well-run payment system is sine-qua-non for the efficient functioning of
any economy.
Mobile phone based payments are one of the important evolutions in payment systems.
The primary objective of the Policy is to prevent the Bank from being used, intentionally
or unintentionally, by criminal elements for money laundering or terrorist financing
activities. Purposes proposed to be served by the Policy are:
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To prevent criminal elements from using the Bank for money laundering activities.
To enable the Bank to know/understand the customers and their financial dealings better
which, in turn, would help the Bank to manage risks prudently.
To put in place appropriate controls for detection and reporting of suspicious activities in
accordance with applicable laws/laid down procedures.
To comply with applicable laws and regulatory guidelines.
To ensure that the concerned staff are adequately trained in KYC/AML/CFT procedures
Rates of provisioning stipulated for NPAs are the regulatory minimum and during better
times, banks should try to make a buffer for absorbing losses during bad times.
Total amount of provision against NPAs including floating provision has been termed as
Provisioning Coverage and minimum provisioning coverage ratio has been stipulated at
70% by RBI.
Banks with substantial NPAs in recoverable class will have to make substantial extra
provision to meet the requirements of RBI.
Presently provisions are made based on the category, age and value of the assets
(unsecured/secured) which gives room for various interpretations. PCR of 70% will
provide a good cushion to guard against all these variations.
A home loan product which converts a home into an income channel over a period of
A suitable product for old people who have a house to live but no money to make their
The borrower can opt for a monthly, quarterly, annual or lump sum payments at any point,
as per his discretion.
The amount received through reverse mortgage is considered as loan and not income;
hence the same will not attract any tax liability.
Market intelligence (MI) is Market targeted intelligence that is developed on real-time
aspects taking place in the product or service marketplace.
Useful in better understanding of the attractiveness of the market.
Used by marketing and sales managers to hone their marketing efforts so as to respond
quickly to Customers expectations.
India needed a domestic affordable card for common man and a tool for financial
NPCI is mandated to introduce the card, RuPay, on the line of Chinas Union Pay.
ATM cum Debit card and RuPay Kisan Card already launched.
Next in the line is to address concerns envisaged by the stake holders and launch an
indigenous Credit Card with RuPay logo.
Your Interview, Shrabana Kumar Nial

Shadow banking comprises entities which conduct financial intermediation directly and
entities which provide finance to such entities.
In India, NBFCs play a crucial role in broadening access to financial services, and
enhancing competition and diversification of the financial sector.
In India, the shadow banks have been brought under progressively tighter regulations
and many of the activities which contributed to the global crisis are either not allowed, or
are allowed in a regulated environment with appropriate limits.
Supply chain management is aimed at managing complex and dynamic supply and
demand networks.
Managing a supply chain is supply chain management.
Supply chain management (SCM) is the management of a network of interconnected
businesses involved in the ultimate provision of product and service packages required
by end customers.
Under take-out finance, institution/bank financing the infrastructure projects has an
arrangement with any financial institution for transferring to the latter outstandings in
respect of such financing in its books on a pre-determined basis.
Banks have expertise to appraise a project but do not have long-term fund. Some
longterm financers like Insurance Companies and Pension Funds have long-term fund
but no expertise to appraise a project. Take Out Finance is a noble way of meeting the
requirements of these two parties.
Take-out financing through ECBs for refinancing of rupee loans availed of from domestic
banks has now been allowed.
Toxic asset is a popular term for certain financial assets whose value has fallen
significantly and for which there is no longer a functioning market, so that such assets
cannot be sold at a price satisfactory to the holder
In India too with the trend of rising NPAs in banks, toxic assets clouded the quality & size
of balance sheets prompting many banks to cleanse their balance sheets by selling off
such toxic assets to entities such as ARCIL.
The assets of the bank are subjected to expected, unexpected and stress loss. Banks
cover expected loss through hedging while stress loss rarely occurs.
VaR is the measure (amount) of unexpected loss by the bank.
Normally VaR is measured for a specific time duration at a given level of confidence.
VaR (99%, 1 Week)= Rs.1,00,000 implies that the unexpected loss will be a maximum of
Rs.1 lakh in a duration of 1 week; and the chance of it exceeding Rs.1 lakh can happen
only in 1% of the occasion (100-99).
Some methods of measurement: Correlation Aggregation, Historical Simulation and
Monte Carlo Simulation.
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Viral Marketing is present day avatar of conventional word of mouth or word of mouse
marketing that encourages consumers to convey feedback on company developed
products and services in audio, video or written mode to others online.
Viral Marketing involves creating an online message that is entertaining and interesting
enough to prompt consumers to pass it on to others, thereby spreading the message
across the Web like a virus, at no incremental cost to the advertiser / marketer.
White label ATMs are similar to other ATMs, these ATMs can be used by any domestic
debit card holder issued by banks to withdraw cash, make a balance inquiry, change the
personal identification number or ask for mini statements.
Cash Management of WLAs shall be entrusted to the sponsor bank, which may have
necessary arrangements in this regard with other banks for servicing cash requirements
at various places where the ATMs are located.
Developed by Drs. Robert Kaplan of Harvard Business School and David Norton of
Palladium Group.
It is a performance measurement and monitoring tool.
Through measurement monitors, it attempts to link the vision, mission and values of the
organisation for application by employees.
Four perspectives - namely business process, customer, financial and learning.
It helps to promote goal-oriented behaviour.
The Learning and Growth Perspective
The Business Process Perspective
The Customer Perspective
The Financial Perspective
Behavioural finance studies the effects of social, cognitive and emotional factors on the
economic decisions of individuals and institutions and the consequences for market
prices, returns and the resource allocation. The concept tries to explain the emotional
and often irrational economic behaviours of people.
It means observing Best Practices, function or processes of competitors or companies in
other industries, and comparing ones own performance to theirs.
It implies setting benchmarks for excellence and working towards it.
Normally the measurement is done along three components Products/Services,
Process/Procedure and People.
Being externally focused, Benchmarking leads to setting higher standards.
The set of written or unwritten rules of behaviour in a civilised society is known as
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The rules and customs governing behaviour in a professional setting are known as
business etiquette. In order to create a positive impression of self and the organisation,
one must learn and practise the rules of business etiquette.
Competency mapping is defined as process of identifying key attributes and skills for
each position and process within the company. In competency mapping the strength of a
worker is assessed both as an individual and also as part of an organisation. It generally
examines 2 areas, i.e., emotional intelligence (or EQ) and strength of the individual in
areas like team structure, leadership, problem solving and decision making.
It plays a vital role in selecting, recruiting and retaining the right people.
Competency mapping helps in creating an accurate job profile.
Corporate Social Responsibility initiatives are undertaken by which Companies integrate
social and environmental concerns in their business operations and give back benefits to
the community.
Corporations are beginning to understand the concept of social responsibility and are
taking to it in their own interest. CSR is a process by which a corporation is able to reach
out to its people and, in so doing, receives ideas and understands important issues
concerning the community.
SBI has always been actively involved in CSR through various initiatives carried out
under the Community Services Banking umbrella since 1973 Banks efforts have
received appreciation and recognition from various quarters. Recently, the Bank has
been awarded the Golden Peacock for CSR in 2012
Creativity and innovation are buzzwords in modern world, particularly, in business and
A famous economist brought out the difference between I and innovation by saying that
creativity is thinking up new things. Innovation is doing new things.
There are several models proposed by eminent personalities to describe the process of
Procedures to improve and nurture creativity within oneself also can be used by
organizations to encourage creativity.
Employee Engagement is defined as employees willingness and ability to achieve
organisational goals & objectives by putting in sustained discretionary effort .
Some of the identified drivers of engagement are alignment of work with overall vision &
mission, empowerment, teamwork & collaboration, communication, opportunities for
growth & progression, challenging & meaningful work, autonomy, sense of feeling valued
& involvement, recognition, innovation etc
Three general employee behaviours have been found to be displayed with greater
consistency: Say, Stay & Strive. Employees had greater Say in the organisation they
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had a greater desire to Stay on and Strive to outperform. On the other hand, disengaged
employees were found to be Spinning, Settling And Splitting.
Research shows concentrating on employee engagement can help organisations
withstand economic vicissitudes and possibly even thrive in challenging times
Going Green has become the necessity from an individual to a country and for the planet
as a whole. Initiatives for going Green on the personal level, state level and the universal
level are going up by the day, thanks to the increased awareness and dedicated actions.
While environmental concerns are being addressed by states all over, activities
connected to IT which are harming the planet and the people need to be focused upon.
IT community is becoming increasingly aware of the need for sustainable development
that meets the need of the present without compromising the ability of future
generations to meet their own needs.
The Internal Customer concept is a relatively less understood idea.
Those who work in organizations would readily realize how the employees in operational
departments are dependent on internal service provider departments for their
Delivery of customer service to the external customer depends on getting
necessarysupport from within the organization, by way of efficient internal services.
A learning organisation is one in which employees learn continually and also learn to
learn together.
A Learning Organisation has its constituent disciplines in personal mastery, mental
models, shared vision, team learning and systems thinking.
A Supportive learning environment, concrete learning processes and leadership that
reinforces learning, together build a learning organisation.
The VAK Model:
Three basic learning styles:
Visual (Seeing)
Auditory (Listening)
Kinesthetic (Experiencing)
The Experiential Learning Model:
Four learning approaches: Four Learning Styles:
Concrete Experience
Abstract Conceptualisation
Reflective Observation
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Active Experimentation
Mentoring is the process of giving special support to juniors with the purpose of building
capabilities in them.
A mentor is a senior experienced employee who is interested in the personal and
professional development of a junior.
Mentoring helps not only the person mentored, but also contributes to organizational
growth by creating motivated personnel.
Leadership:A process in which a person
tries to influence a set of individuals in the
pursuit of achieving individual, group and
organisational objectives.
Leadership Theories
Trait Perspective
Behaviour Perspective
Autocratic & Democratic
Contingency Perspective
Situational Leadership
Inspirational Perspective
Charismatic Leadership
Transformational Leadership Manager
vs. Leader
Leadership is one of the many roles a manager has to play. Contemporary Thoughts
A leader is someone you choose to follow to a place you wouldnt go by yourself.
Leadership is no longer a privilege, it is a responsibility.
It is not only what you say that is important, but its how you say it that can make the
Non-verbal messages are an essential component of communication.
An awareness of non-verbal behaviour will enable one to become a better sender and
receiver of messages.
Creating a climate that facilitates work and attention to detail demands good non-verbal
and verbal skills.
Organisational culture refers to the way we do things here .
It is the easiest thing to comprehend but most difficult to define.
It is unique and distinct for every organisation.

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The Johnson and Scholes cultural web model contains six inter-related elements
rituals and routines, stories, organisation structure, symbols, power structures and
control systems.
Performance management is a continuous and on-going round the year dialogue
between supervisors and employees.
The components of effective performance management systems are setting goals,
planning performance, monitoring and mid-term review, feedback and annual review or
Performance management is increasingly being considered as a tool for career
development and employee growth.
Your appearance determine peoples perception of you
Your sense of dress and your body language build your personality.
Identify the sources of stress in your life. Stress Management starts with identifying the
sources of stress in your life.
Dealing with Stressful Situations
Figure out what is really important in your life.
Drop unnecessary activities.
Protect your private time.
Accept help to balance your time.

ARCs act as debt aggregators. They perform like a bad bank making normal operations
of banks good.
ARCIL was established in August 2003 under

SARFAESI Act...ICICI bank is the

highest shareholder with 29.58%. SBI holds 19.95%

ARC acquires banks bad assets, reorganizes them and sell them to investors by
separating NPAs from the core banking system.
The loss on sale of asset can be offset against capital gains on another
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Banks with weak capital base and low provisioning avoid selling bad loans
Post Basel II, banks will have to exploit the benefits of ARC to meet stringent Basel
Most of the public sector banks own and possess large properties in prime locations.
This is an accounting concept and represents a reassessment of the value of
a capital Asset as at a particular date.
The reserve is considered a category of the equity of the entity.
The extent to which

revaluation reserves can be relied

on as a cushion for

unexpected losses would depend on level of certainty that can be placed on

estimates of the market value of the relevant assets. Loans sanctioned
03.ARBITRAGE :It means buying a specified item whether foreign
exchange,stocks,bonds, gold or silver bullions, bills of exchange etc. in one market and
simultaneously selling it or its equivalent in the same market or in other markets. By this,
the benefit of differential or spread prevailing at least temporarily because of the conditions
particular to each market, is available to the player/ banker.
04.BURNOUT:Burnout is a state in which a person experiences emotional and physical
exhaustion and it is caused by excessive and prolonged stress. Unhappiness caused by
burnout may eventually threaten a persons health, relationships and job. Burnout does not
happen overnight and since it is difficult to overcome it after its onset, it is advisable to
recognise the early signs of burnout and work on them. Since burnout is an outcome of
prolonged stress, methods effective in controlling stress are helpful in preventing burnout
also acted through correspondent relationships.
05.BANKING OMBUDSMAN SCHEME 2006:The Reserve Bank of India has reviewed the
Banking Ombudsman Scheme, 2002 and introduced the Banking Ombudsman Scheme
2006 w.e.f 1st Jan
bank customers.

006 to provide an expeditious grievance redressal mechanism to

The Scheme provides for redressal of grievances against deficiency in

banking or other services. Banking Ombudsman Scheme 2006 enlarges the extent and the
coverage of thescheme.It covers all Regional Rural Banks in addition to all commercial
Your Interview, Shrabana Kumar Nial

banks and Scheduled


Primary Cooperative






to redress complaint on ATM,Debit card and credit card operations of Banks.

Non- payment or inordinate delay in the payment or collection of cheques,refusal to open

deposit account without any valid reason,,non-adherance to prescribed working hours
etc can be ground of complaint. The complaint should be in writing and




electronic means. Complaint to Ombudsman can be preferred only after a written



the Bank and

the Bank has either rejected the




complainant has not received a reply within one month of complaint. The Ombudsman
after taking in to account the evidence placed before him pass the award by way of
compensation for the loss suffered by the complainant. An award shall not be binding on
the Bank against which it is passed unless the complainant furnishes it within a period of
15 days from the date of receipt of copy of the award. Any person aggrieved by the award
can prefer an appeal before the appellate authority within 45 days of the receipt of the
06..BUSINESS PROCESS RENGINEERING:Business Process Re-engineering (BPR) is the
fundamental rethinking and radical redesign of business processes to bring about dramatic
improvement in performance. BPR is not a change; it is a transformation that alters the basic
rhythm and character of the organization.
Objectives of BPR:
To increase Customer satisfaction and convenience through new processes and simplification
of existing processes. The Branch Managers and other functionaries of the branch will be
freed from routine and non-productive work to concentrate in sales and marketing. To
retain the premier position and undisputed leadership in India and to emerge as a world-class
financial institution.
Business Facilitator








intermediate entities

/individuals to provide support services for non financial services of the Bank. These
services are not intended to involve the conduct of banking business by Business Facilitators.
Business Correspondent

Your Interview, Shrabana Kumar Nial

The Business correspondent model envisages the use of identified institutional

agents/organizations and






Bank in


financial services, operating from different locations away from the bank branches. These
services involve the conduct of banking business by Business Correspondents.
Objectives To extend Micro Finance services for uplifting the poor.
To emerge as the leader in Financial Inclusionand be acknowledged as one.
To provide comprehensive financial services to the underprivileged encompassing
savings, credit, remittance, insurance and pension products in a cost effective manner, in
the untapped/unbanked areas.

improve process efficiencies and reduce

transaction costs

by providing linkages

between the existing network of bank branches on the one side and the innumerable
informal and formal agencies engaged with the poor, by adopting technology based
To substantially increase our rural business base and market share.
To market various financial products of the State Bank Group including insurance and
mutual funds across the nation.
To reach areas hitherto not tapped.
08..BANK BIDDING IN AUCTION: In the circumstances where sale of properties through
court auction is considered difficult due to lack of bidders or the bid amount is below the
expected price and where it is considered not desirable to assign the decree, bidding for
mortgaged properties by the Bank is a feasible option. Presently, branches are prohibited
from bidding in auctions even in special circumstances. Therefore, Bank has felt that, some
flexibility on a highly selective basis, needs to be introduced in this regard to prevent
influential borrowers from blocking sale of mortgaged properties. If the Bank is able to bid
for properties in a few selected cases, it will convey a strong message to the defaulting
borrowers at large. The properties thus bid by the Bank may be held

in Banks name


Your Interview, Shrabana Kumar Nial


periods and eventually disposed. Approval of bidding may be accorded by CCC for

properties upto Rs.1 crore and by COCC for properties above Rs. 1 crore
RBI-promoted BCSBI registered as an independent society
Banks to be members and pay an annual subscription fee towards self sustaining
Relationship managers will act as an interface between compliance report filed by the
bank and their field report
09. BANKING CASH TRANSACTION TAX: The Finance Act, 2005 has introduced a levy, viz.
The banking cash transaction tax (BCTT) on certain cash transactions in banks.
1. Tracking down large transactions for better tax compliance
2. Curbing generation of black money in the economy
The BCTT is applicable in respect of all taxable banking transactions entered into on or
after 1st June 2005
The rate of BCTT applicable is 0.1 % (10 basis points) of the value of the taxable banking
10. BALANCED SCORE CARD: Developed by Dr Robert Kaplan and David Norton of
Harvard Business School
It is a performance measurement and monitoring tool
Through measurement monitors, it attempts to link

the vision, mission and values of

the organisation for application by employees

Four perspectives namely business process, customer, financial and learning.
It helps to promote goal-oriented behaviour
It means observing Best Practices observed by competitors or companies in other
industries in some activity, performance to theirs function or processes and comparing
Your Interview, Shrabana Kumar Nial

ones own. effect, it implies setting benchmarks for excellence and working
towards it.
Normally the measurement is done along three components1. Products/Services,
2. Process/Procedure
3. People.
Being externally focused Benchmarking leads to setting higher standards.
12...BALANCE-SHEET LENDING: The traditional method of

bank finance is based on what

is called Balance- Sheet lending. In this, the bank looks at the financial status (as
reflected in the Balance Sheet) of the prospective borrower and decides to lend or
Otherwise. There are risks associated with this type of lending. This way, the bank usually Ends
up financing an open position of goods without adequate control over the goods.
The security advantage of biometric technology is that it can authenticate an individual
by Measuring his distinct physical characteristics or behavioral traits.
Physical characteristics measured by biometrics include: face, fingerprint, iris, hand
geometry and retina.
Some of the Biometrics techniques are Signature technology, Fingerprint technology,
hand geometry technology, Voice technology, and Iris technology.
14. BUDGET - An understanding
It is a statement of proposed expenditure and the means of financing it.
Contains 3 key documents:
1. The Annual Financial Statement;
2. Demand for Grants
3. The Finance Bill

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Budgetary Deficit

is the excess of total

expenditure over

total receipts. It is

Covered by borrowings from market and from RBI.


Deficit: Total

Expenditure (Total Receipts + market borrowings). In other

words, it is equivalent to borrowings from RBI.

Buy back is an arrangement by which shares issued to equity holders are bought back by
the company
Why done: To support market price; to acquire controlling interest;


deploy surplus

Funds for buy back should come from authorised sources

Effects: Buy back may affect companys liquidity; profits; EPS, Book Value and
gearing ratio of the Company.
India is a leading destination for outsourcing of Information Technology Enabled
Services (ITES) and other related Business Process Outsourcing (BPO) activities
BPO activities

encompass wide



areas comprising services relating to

manufacturing, banking, insurance, HR etc.

BPO activities have benefited India by generating substantial job opportunities
1. Graham MITRA
Graham Mitra, a clerical staff is stationed in branch and his role includes welcome
customers, guiding them to appropriate counters, help them in their transactions and with
forms and literature, as required, including alternate delivery channels like issuance of ATM
cards, their usage etc.
2. ATM Migration / ATM Dost
This initiative is aimed as migrating customers to ATM. At selected branches, customers are
identified who do cash transactions on SWO but who do not have ATM cards. Whenever
such customers go to SWO next time, the system alerts about the ATM cards being available.
Your Interview, Shrabana Kumar Nial

Such customers are given ATM cards and PINs and are explained how to use ATM
Besides, Channel Managers being appointed at ground level to manage ATMs.
3. Migration to Drop Boxes
Concept of drop boxes for cheque deposit was already in the Bank but migration to them
has not been generally successful. A new drop box has been designed for a concerted
effort to migrate customers successfully.
4. Retail Assets Central Processing Center (RACPC)
It covers five kinds of P segment loans viz. Housing, education and car rent plus Marketing
Loans. The loan application will be canvassed by the identified branches and forwarded
to the RACPC. KYC responsibility is that of the branch. The loan application was will be
processed and sanctioned at RACPC. Pre sanction visit and legal and valuation reports as
required will be the responsibility of RACPC. Post sanction follows up and recovery will be the
responsibility of the branch.
5. Small Enterprises Credit Cell (SECC)
The functions of SECC include processing and sanction of Small Enterprises
(Turnover upto Rs. 5 crore) proposals. The documentations are also to be arranged by
SECC, where after the proposal is handed over to concern branch for disbursement
and follow up.
6. Currency Administration Cell (CAC)
CACs role includes management of currencies at branches and in due course reporting to
RBI also for their currency chests management. Two officers and two cashiers and other
infrastructure like cash vans, mobile phones, computers, fax etc to be provided. Decision
regarding delivery or collection of currency notes for hand balance branches is taken by the
CAC and also

arranged according through Currency Chests attached to them for the

7. Relationship Manager (PB)

(PB)s includes identification of high net worth customer of the Branch (minimum 300

customers) in the following order of preference

a) Deposit of Rs. 5 lac and above
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b) Housing Term Loan of Rs. 10 lacs

c) Annual income of Rs. 2.40 lacs and maintaining balance of Rs. 2 to Rs. 5 lacs, Car Lone 5
lacs developing relationship with them and up sell and cross sell various products.
8. Micro Market Study
Metro and Urban cities are to be divided into number of micro markets to study in detail
about the performance of our bank branches and also that of other banks. The business
potential in the micro markets are studied for the benefit of Micro Markets Manager (AGM
of region) for proper business coverage. It is also aimed to examine adequacy of Banks net

in each

micro market alone


potential therein. This study will help in planning

number and types of branches / other units required in the city and also in budgeting and sale
9. Relationship Manager (ME)
The branch which has a substantial ME business (Medium Enterprises is a unit with a
sales turnover above Rs.5 crores and upto Rs.25 crores) will have a Relationship Team
headed by a Relationship Manager and a Customer Support Officer. The team will acquire,

proposal recommend








subsequent administration and monitoring. The team will also look after the existing ME
10. Home Loan Sales Term
For selling our Home Loans in major cities / district centers. The HLST will contact all
hot/warm leads and proposals which fulfill all the required norms. This will be forwarded to
the RACPC for sanction if in order.

Thereafter the sanction will be intimated to the

documentation, disbursal. The team is headed by an AGM and supported by 5 Officers and 20
Award staff members.
11. Multiproduct Sales Team for SE Business (MPST)
To enlarge the coverage of Small Enterprises Segment to include all units (C&I/SSI/SBF)
with a turnover upto Rs.5 Crores and credit requirement falling within AGMs p o w e r s .
The t e a m

is h e a d e d by a M a n a g e r and supported by 3 Officers 12 award staff

12. Public Provident Fund Scheme

Your Interview, Shrabana Kumar Nial

Branches having substantial PPF accounts are connected to GAD. Belapur through SBI
connect. Before EOD starts, the transactions are transmitted to GAD Belapur directly for
settlement with the Govt next day.
13. Central Pension Processing Centre
Pensions will

be centralized and pension will



centrally and will


communicated to branches with the list.

14. RACPC Pilot
In the pilot, stage, in addition to processing of housing, education, Car loans,
documentation, disbursement and follow up of advances will also take place at
RACPC.PDC maintenance will be done at RACPC. Branches will pay attention to
marketing of business.
15. Stressed Assets Resolution Centre (SARC)
It is being setup to provide focused attention to all cases where legal action is initiated.
Substandard, Doubtful & Losses assts of this category will migrate from braches to SARC. The
loan account operation will continue to be at the branches, though the administrative
control of the accounts is proposed to be taken over by SARC.
16. Trade Finance CPC
Trade Finance CPC will deal with centralized operations of the Letter of Credits (Inland /Forex),
Import bills, Bank Guarantees and FORWARD Contracts. In addition the TFC will also
perform back office operations such as reporting to FD cover

operation on Banks

Nostro account and reporting to RBI for exchange control purpose.

17. SME City Credit Centre
In SMECC, in addition to processing, sanction and document of small enterprises proposals,
disbursement, follow up & soft recovery will be part of SMECC.
18. Liability CPC
While opening deposit accounts, branches will have to key in minimum mandatory details
and give out non-personalized welcome kit (containing 10 cheque leaves, ATM Card, etc)
to the customer. Remaining details of the customer will be keyed in at LCPC. Pass book,
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personalized cheque book, ATM Card with name will be sent to the



courier by LCPC. Nomination, issue of cheque books, scanning of signatures, opening

of bulk accounts done by LCPC. There are 4 LCPCs at Delhi, Mumbai, Calcutta, and Chennai.
19. Clearing CPC
Clearing CPC will be a centralized center for handling both inward and outward
Only for referral cases, branches will be contacted through the system.
20. Document Archival Centre
Where documents and records will be stored in a centralized place and can be retrieved on
21. Branch re-designs
Branches are unable to aggressively play their sales and marketing role on account of
heavy transaction





In fact, operations and

administration account for about 40% of the time. Though BPR a large part of these
transaction processing and administrative tasks will be removed from branches which
will enable them to focus on sales and service. The Branch Redesign involves two types
of changes in a branch. The first is change in roles of various functionaries of the branch and
the second is change in internal layout to facilitate functioning of role holders of a redesigned
branch. The Branch Redesign aims at providing multiple benefits to both customers as well
as staff.
18. Benefits of Branch Redesign:
a) Benefits to the customers:
Help & guidance from Graham MITRA at th