EDITORIAL
H N SINOR
We have traversed through more than a
decade of reforms which has provided a
much needed fillip to Indian Banking Sector.
Dr.Y V Reddy, Governor, Reserve Bank of
India was invited to address Pakistani
Bankers at Karachi. His erudite address on
Banking Sector Reforms in India was a
treatise for scholars and policy makers in
banking in Pakistan. We are happy to
reproduce his address in this issue for the
benefit of our readers.
The power of technology has fuelled a
change and made an impact on the
working of banking sector. It has also
metamorphosed the marketing, pricing,
designing and distribution of financial
products and services which ultimately
have resulted in improving in efficiency and
cost effectiveness. Mr.S C Gupta,
Chairman & Managing Director, Punjab
National Bank in his article “Internet
Banking – Changing Vistas of Delivery
Channel” under CEO’s perspective,
highlights the importance of internet
banking which will be the most popular
banking delivery channel in days to come.
This issue is also packed with Mr.Sivaram
Prasad’s article on “Is ATM cost
Effective?” measuring the costing of ATM
www.iba.org.in
operations, break-even, etc. Shri
Santosh Patnaik sketches the need for
M & As of Indian banks in his article
“Consolidate or Perish”. Dr.R K
Srivastava elucidates the rise of FII
inflows into India and its impact in his
article “FII inflows into India: A
Dilemma”. Shri P V Anantha Bhaskar
writes about how Performance
Management System can be used as
an effective tool by banks to increase
productivity.
The discerning readers would observe a
tonal change eluerging in this issue of
the Bulletin. The new editorial team is
committeed to make your reading
visually more interesting and content-
wise more satisfying. This endeavour
would manifest itself in forthcoming
issues. The readers suggestions and
views as to what changes they would
like to see in the Bulletin would be most
welcome.
Happy reading,
IBA BULLETIN
JULY 2005
1
 contributors
Consolidate or Perish
Santosh Patnaik
contents
LEADER SPEAKS
Shri Santosh Patnaik is Officer, United Bank of India,
Bhubaneshwar.
Banking Sector Reforms in India : 30
An Overview
Dr. Y.V. Reddy
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Internet Banking – Changing Vistas 44
of Delivery Channel
S.C. Gupta DeeÙe efjmeeJe keâe ØeyebOe
Mr. S.C. Gupta, Chairman & Managing Director of Pubjab [e@. vejsvõ heeue efmebn
National Bank, is M.Com., CAIIB and started his banking career
from State Bank of India in 1966. 12 [e@. efmebn, vepeeryeeyeeo kesâ meent pewve keâe@uesle kesâ JeeefCepÙe efJeYeeie ceW Jeefj‰
EXPERTS VIEWS ØeJekeälee kesâ ¤he ceW keâeÙe&jle nQ~ 48
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Is ATM Cost Effective?
P. Siva Rama Prasad
[e@. megjsMe kegâceej Ghe-ceneØeyebOekeâ (jepe.) 51

Mr. P. Siva Rama Prasad is presently working as Chief FEATURES

Manager (BPR Project), State Bank of India, Mumbai. He Editorial 1
has been working in State Bank of India since May 1980
and has handled various assignments. 15 Major Developments in Banking
and Finance during May, 2005 3
Performance Management System in
Banks Banking Scene – Indian 35
P. V. Anantha Bhaskar
Mr. Anantha Bhaskar is presently working as a Manager Banking Scene – Global 37
in Development Credit Bank Ltd., Hyderabad. He is an
MBA (Finance) from IGNOU, New Delhi. He is a Licentiate Book Reviews 39-42
in Insurance. 22
FII Inflows into India : A Dilemma IBA Seminar 53
Dr. R.K. Srivastava
Back Cover
Dr. Srivastava is Reader, Dept of Economics, HNB Garhwal
University, Tehrigarhwal Banking Statistics
27
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Major Developments
Major Policy Announcements
◗ Many amendments were
made in the Finance Bill, 2005
with respect to Banking Cash
Transaction Tax and Fringe
Benefit Tax. Some of them
include a) exemption of savings
account from cash withdrawal tax b)
raising the threshold limit of BCTT for
corporate accounts to Rs. 1 lacs c) raising
the threshold limit to non-savings
account to 25,000 for individuals and
Hindu undivided families. d) Hiking of the
IT exemption limit from Rs. 1.5 lacs to Rs.
1.85 lacs to senior citizens e) lowering the
base for valuation of all expenses, except
certain four items from 50% to 20% for
calculating FBT f ) exempting
advertisement from the FBT etc. ( ET 3/5)
◗ The RBI did not permit foreign brokerage
houses to speculate on Indian commodity
bourses, either through wholly-owned
subsidiaries or a joint venture with local
commodity brokers. All foreign cash for
speculating on domestic commodity
bourses will have to wait till a regulator
and policies are in place for the commodity
bourses. ( ET 4/5)
◗ The Cabinet made amendments to the
RBI Act, 1934 will provide flexibility to
the Central Bank to fix the cash reserve
ratio. Other measures were removal of
cap on 10 % voting right in private
banks, permission of issuance of
preference shares for banks, power to
the RBI to cancel the bank boards ,
removal of floor rates on SLR and power
to the RBI to conduct special audit on
co-operative banks. ( ET 5/5)
◗ Rajya Sabha passed the Credit
Information companies Bill, 2004. The
Bill seeks to provide legislative support
to the business of credit information
regarding credit worthiness of various
categories of customers. The legislation
seeks to overcome the absence of
adequate, comprehensive and reliable
in Banking & Finance during May, 2005
information on borrowers and
facilitates efficient distribution of credit
to all segments of the society. ( ET 11/5)
◗ The Government had decided to close
PPF window to Hindu Undivided Families
(HUF) or an association of persons or a
body of individuals. ( ET 17/5)
◗ The mid-term appraisal of the 10th five
year plan and the reset of the targets
were approved by the cabinet. Mid-
term appraisal recommended sale of
minority stake in PSUs, opening retail
trade to FDI, reduced the growth target
to 7%, amendment of the Essential
Commodities Act, operationalisation of
Special Purpose Vehicle to finance
infrastructure projects etc. ( ET 20/5)
◗ The Employees Provident
Fund Organisation
recommended an interest
payout of 9.5% for the year
2004-05, although returns
on investments only allow
the fund to declare a deficit-less
interest rate of 8.5%. ( ET 29/5)
Major Events
◗ The RBI proposed to raise Rs. 2500 crore
through the auction of 364-day and 91-
day Government of India treasury bills
under the market stabilization scheme.
(BL 8/5)
◗ The Government introduced in the Lok
Sabha the Special Economic Zones Bill,
2005 which aims to provide minimum
regulatory intervention for such zones.
It also provides for single window
mechanism for the establishment of
SEZs. The objective of the SEZs is to
make available goods and services free
of taxes and duties, bolstered by
integrated infrastructure for export
production and a package of incentives
to attract foreign and domestic
investments for promoting export-led
growth. (BL 10/5)
◗ Small Industries
Development Bank of
India is planning to set up
a credit rating agency for
the small and medium
enterprises sector, along with Dun
and Bradstreet, Credit Information
Bureau of India Ltd and other
commercial banks ( BL 27/5)
Banking Developments
◗ The RBI permits doorstep services by
banks with its prior approval. Banks
have to formulate their own scheme for
doorstep banking and obtain RBI
permission before starting the service.
(BL 1/5)
◗ The Central Government
has decided to revamp the
Co-operative Banks with
sum of Rs. 15,000 crore. Of
which 25% (3500 crore) will be
borne by the State Governments. The
State Governments will get soft loans
from the Centre for this purpose. The
entire exercise will be undertaken in a
phased manner spread over a period of
four years. However, the state
governments would have to sign a
memorandum of agreement with the
Centre to ensure implementation of
the programme. The RBI will supervise
the overall programme. ( FE 2/5)
◗ RBI published a roadmap for the
payment and settlement system in the
country. Apart from starting
technology intensive electronic
clearing system (ECS) and electronic
funds transfer (EFT ), the proposed
National Settlement System (NSS) take
steps to convert MICR clearing into
cheque-truncation-based clearing. The
NSS will be operational by
December 05. ( BS 4/5)
IBA BULLETIN 3
JULY 2005
 ◗ The RBI proposed to lower the bar for governance covenants c) Bank must fee-based income. These are some of
extending the corporate debt disclose valuation details, financials and the recommendations of the draft
restructuring (CDR) scheme to share price movements to RBI before report prepared by an internal working
corporate entities on whom banks and the merger proposals is put to vote by group on RRBs released by the RBI.
institutions have an outstanding shareholders, etc ( ET 13/5) (ET18/5)

exposure of Rs. 10 crore or more, as
against the current norm of Rs. 20 crore
and above. ( FE 7/5)
◗ The RBI will assess the impact of Basel
II capital adequacy on banks in the
current year (2005-06) itself. It will
conduct parallel accounting in about
10 banks to get first hand estimation of
the extent of impact the banking sector
will have to bear. (BS 9/5)
◗ The RBI laid down new norms for
Megers and Acquisitions. Important
clauses are as include a) Voluntary
merger between private banks must be
approved by 2/3rds of the board
members b) Voting directors must be
signatories to existing corporate
◗ State Bank of India (SBI) and Housing
Development Finance Corporation
have divested part of their
shareholding in Credit Information
Bureau (CIBIL) in favour of a clutch of
banks, which will , as shareholders,
share credit information with the
Bureau. The aim is to keep with RBI
norms which require the Bureau to
ensure that no shareholder owns more
than 10%. ( ET 17/5)
◗ The RBI suggested mergers and
acquisition of regional rural banks,
change in sponsorship by involving
private banks, appointment of
chairman from the sector, minimum
capital requirement and a host of new
avenues of business to augment their
◗ Banks are allowed to open foreign
currency accounts for project offices
and intermittent remittances by them.
(ET 18/5)
◗ The Reserve Bank has introduced
severe restrictions on interest
derivatives . The bank has advised to use
only rupee bench mark for interest rate
derivatives. It also put bank on MIFOR
as a benchmark for pricing domestic
interest rate derivative products within
the next six months. (ET 21/5)
◗ The RBI permitted MIFOR for inter-bank
dealings as against the earlier
guidelines. But each bank has to take
RBI’s approval on the kind of open
interest (or trading position) it can take
in MIFOR transactions. ( ET 30/5)

Banking Developments
(Rs Crore)
Variations
Outstanding Financial Yr
so far
As on 27/5/05 Actual %
Aggregate Deposits 1778358 58,411 3.4
Investments 750144 7081 1.0
Bank Credit 1144051 51960 4.8
Non-Food Credit 1098324 47354 4.5
Funds to Commercial 1190238 45957 3.9
Sector

Market Developments and New
Products
◗ The National Commodity and
Derivatives Exchange launched the agri
composite index NCDEXAGRI. ( BL 4/5)
◗ Allahabad Bank posted a net profit of
Rs. 541.8 crore for the year ended 31st
March, 2005 as against Rs. 463.4 crore
of the previous year. ( ET 10/5)
◗ Syndicate Bank has posted a net profit of
Rs. 403 crore as against a profit of Rs.434
crore in the previous year. (FE 10/5) Market Developments
BSE Sensex : 6216.77 - 6715.11 ( 8.02%)
◗ Bank of America will make a fresh
Bankex : 3540.49 - 3803.40 ( 7.43%)
infusion of $175 million (Rs.767 crore)
Re/$ : Rs. 43.60 - 43.77 (-0.39%)
into its Indian operations. The Call Money : 4.90% -5.05% as on 31/5/05
additional capital inflow by BankAm
Government Borrowing Programme
will help the bank meet RBI
requirements on single and group ◗ The Centre has requested states to
draw the market borrowing
borrower exposure limits. ( ET 11/5)
programme schedule for the financial
· The ICICI Bank had acquired a small year 2005-06 as per the
recommendations of the 12th Finance
bank in Russia namely Investitsionno-
Commission. ( FE 2/5) q
Kreditny Bank (IKB).( ET 20/5)
Prepared by Smt. Jayasree Menon

4 IBA BULLETIN
JULY 2005
Leader Speaks
Banking Sector
Reforms in India :
An Overview Dr. Y. V. Reddy

In the current
scenario, banks
are constantly
pushing the
frontiers of risk
managements. Governor Ishrat Husain and room for complacency."
Compulsions distinguished bankers,
arising out of Taking account of the nature of audience here and
increasing At the outset, let me express my following the example of Governor Husain, who
competition, as gratitude to Governor Husain for spoke eloquently on the banking sector reforms
well as agency inviting me to visit Karachi and in Pakistan in January this year, I have chosen to
problems meet with you. I consider it an present an overview of banking sector reforms in
between honour to be here amidst the India.
management, banking fraternity. I would like to congratulate
It is useful to very briefly recall the nature of the
owners and other Pakistan for its impressive economic performance.
Indian banking sector at the time of initiation of
stakeholders are Governor Husain, in his address at the Seminar on
financial sector reforms in India in the early 1990s.
inducing banks Management of Pakistan Economy in Lahore, a few
The Indian financial system in the pre-reform
to look at newer weeks ago, had this to say about recent economic
period (i.e., prior to Gulf crisis of 1991), essentially
avenues to performance of Pakistan and challenges ahead, in
catered to the needs of planned development in a
augment his characteristically candid fashion:
mixed-economy framework where the public
revenues, while
"Economic growth rate has reached a solid 6 per cent sector had a dominant role in economic activity.
trimming cost.
Consolidation, plus, inflation has been contained to 5 per cent which The strategy of planned economic development
competition and has only recently started rising, exchange rate has required huge development expenditure, which
risk management been stabilized, fiscal deficit has been drastically was met through Government’s dominance of
are no doubt reduced, domestic interest rates have declined ownership of banks, automatic monetization of
critical to the dramatically, international reserves have jumped fiscal deficit and subjecting the banking sector to
future of banking twelve times their 2000 level, debt ratios have fallen large pre-emptions - both in terms of the statutory
but I believe that significantly and investment is booming." holding of Government securities (statutory
governance and He further added that,
liquidity ratio, or SLR) and cash reserve ratio (CRR).
financial Besides, there was a complex structure of
inclusion would "Pakistan has achieved macroeconomic administered interest rates guided by the social
also emerge as stability, introduced structural reforms, concerns, resulting in cross-subsidization. These
the key issues for improved economic governance not only distorted the interest rate mechanism but
a country like and resumed the path for also adversely affected the viability and
India, at this stage high growth rates. But profitability of banks by the end of 1980s. There is
of socio- there is no perhaps an element of commonality of such a
economic ‘repressed’ regime in the financial sector of many
development
IBA BULLETIN 5
JULY 2005

emerging market economies. It follows that
the process of reform of financial sector in
most emerging economies also has
significant commonalities while being
specific to the circumstances of each country.
A narration of the broad contours of reform
in India would be helpful in appreciating
”
As part of the reforms programme, initially,
there was infusion of capital by the Sequencing of interest
Government in public sector banks, which rate deregulation has
was followed by expanding the capital base
with equity participation by the private been an important
investors. The share of the public sector component of the
banks in the aggregate assets of the
banking sector has come down from 90 per reform process which

”
both the commonalities and the differences
in our paths of reforms. cent in 1991 to around 75 per cent in 2004. has imparted greater
The share of wholly Government-owned
Contours of Banking Reforms in India public sector banks (i.e., where no
efficiency to resource
First, reform measures were initiated and diversification of ownership has taken place) allocation.
sequenced to create an enabling sharply declined from about 90 per cent to
environment for banks to overcome the 10 per cent of aggregate assets of all
scheduled commercial banks during the
external constraints - these were related to
same period. Diversification of ownership
administered structure of interest rates, high
has led to greater market accountability and
levels of pre-emption in the form of reserve
improved efficiency. Since the initiation of
requirements, and credit allocation to certain
reforms, infusion of funds by the
sectors. Sequencing of interest rate
Government into the public sector banks
deregulation has been an important
for the purpose of recapitalisation
component of the reform process which has
amounted, on a cumulative basis, to less
imparted greater efficiency to resource
than one per cent of India’s GDP, a figure
allocation. The process has been gradual and
much lower than that for many other
predictated upon the instituion of
countries. Even after accounting for the
prudential regulations for the banking
reduction in the Government's
system, market behaviour, financial opening
shareholding on account of losses
and above all the underlying
set off, the current market value
macroeconomic conditions. The interest of the share capital of the
rates in banking system have been largely Government in public
deregulated except for certain specific sector banks has
classes; these are : savings deposit accounts, increased manifold
Non-Resident Indian (NRI) deposits, small
and as such what
loans up to Rs. 2 lakh and export credit. The
was perceived to be
need for continuance of these prescriptions
a bail-out of public
as well as those relating to priority sector
sector banks by
lending have been flagged for wider debate Addressed by Dr. Y. V. Reddy,
Government
in the latest annual policy of the RBI. However, Governor, Reserve Bank of India at
seems to be
administered interest rates still prevail in
turning out to be the Institute of Bankers of Pakistan,
small savings schemes of the Government.
a profitable Karachi
Second, as regards the policy environment investment for the on May 18, 2005
of public ownership, it must be recognised Government.
that the lion’s share of financial
Third, one of the major
intermediation was accounted for by the
objectives of banking
public sector during the pre-reform period.

6 IBA BULLETIN
JULY 2005
sector reforms has been to enhance
efficiency and productivity through
competition. Guidelines have been laid
down for establishment of new banks in
the private sector and the foreign banks
have been allowed more liberal entry. Since
1993, twelve new private sector banks have
been set up. As already mentioned, an
element of private shareholding in public
sector banks has been injected by enabling
a reduction in the Government
shareholding in public sector banks to 51
per cent. As a major step towards enhancing
competition in the banking sector, foreign
direct investment in the private sector banks
is now allowed up to 74 per cent, subject to
conformity with the guidelines issued from
time to time.
Fourth, consolidation in the banking sector
has been another feature of the reform
process. This also encompassed the
Development Financial Institutions (DFIs),
which have been providers of long-term
finance while the distinction between short-
term and long-term finance provider has
increasingly become blurred over time. The
complexities involved in harmonising the
role and operations of the DFIs were
examined and the RBI enabled the reverse-
merger of a large DFI with its commercial
banking subsidiary which is a major initiative
towards universal banking. Recently, another
large term-lending institution has been
converted into a bank. While guidelines for
mergers between non-banking financial
companies and banks were issued some time
ago, guidelines for mergers between private
sector banks have been issued a few days
ago. The principles underlying these
guidelines would be applicable, as
appropriate, to the public sector banks also,
subject to the provisions of the relevant
legislation.
Fifth, impressive institutional and legal
reforms have been undertaken in relation
to the banking sector. In 1994, a Board for
Financial Supervision (BFS) was constituted
comprising select members of the RBI Board
with a variety of professional expertise to
exercise 'undivided attention to supervision'.
The BFS, which generally meets once a month,
provides direction on a continuing basis on
regulatory policies including governance
issues and supervisory practices. It also
provides direction on supervisory actions
in specific cases. The BFS also ensures an
integrated approach to supervision of
commercial banks, development finance
institutions, non-banking finance
companies, urban cooperatives banks and
primary dealers. A Board for Regulation and
Supervision of Payment and Settlement
Systems (BPSS) has also been recently
constituted to prescribe policies relating to
the regulation and supervision of all types
of payment and settlement systems, set
standards for existing and future systems,
authorise the payment and settlement
systems and determine criteria for
membership to these systems. The Credit
Information Companies (Regulation) Bill,
2004 has been passed by both the Houses
of the Parliament while the Government
Securities Bills, 2004 is under process. Certain
amendments are being considered by the
Parliament to enhance Reserve Bank’s
regulatory and supervisory powers. Major
amendments relate to requirement of prior
approval of RBI for acquisition of five per
cent or more of shares of a banking company
with a view to ensure ‘fit and proper’ status
of the significant shareholders, aligning the
voting rights with the economic holding and
empowering the RBI to supersede the Board
of a banking company.
Sixth, there have been a number of measures
for enhancing the transparency and
disclosures standards. Illustratively, with a
view to enhancing further transparency, all
cases of penalty imposed by the RBI on the
banks as also directions issued on specific
matters, including those arising out of
inspection, are to be placed in the public
domain.
Seventh, while the regulatory framework
and supervisory practices have almost
converged with the best practices elsewhere
in the world, two points are noteworthy. First,
the minimum capital to risk assets ratio
(CRAR) has been kept at nine per cent i.e.,
one percentage point above the
international norm; and second, the banks
are required to maintain a separate
Investment Fluctuation Reserve (IFR) out of
profits, towards interest rate risk, at five per
cent of their investment portfolio under the
categories ‘held for trading’ and ‘available
for sale’. This was prescribed at a time when
interest rates were falling and banks were
realizing large gains out of their treasury
activities. Simultaneously, the conservative
accounting norms did not allow banks to
recognize the unrealized gains. Such
unrealized gains coupled with the creation
of IFR helped in cushioning the valuation
losses required to be booked when interest
rates in the longer tenors have moved up in
the last one year or so.
Eighth, of late, the regulatory framework in
India, in addition to prescribing prudential
guidelines and encouraging market
discipline, is increasingly focusing on
ensuring good governance through "fit and
proper" owners, directors and senior
managers of the banks. Transfer of
shareholding of five per cent and above
requires acknowledgement from the RBI and
such significant shareholders are put
through a `fit and proper' test. Banks have
also been asked to ensure that the
nominated and elected directors are
screened by a nomination committee to
satisfy `fit and proper' criteria. Directors are
also required to sign a covenant indicating
their roles and responsibilities. The RBI has
recently issued detailed guidelines on
ownership and governance in private sector
banks emphasizing diversified ownership.
IBA BULLETIN 7
JULY 2005
The listed banks are also required to comply
with governance principles laid down by the
SEBI - the securities markets regulator.
Processes of Banking Reform
The processes adopted for bringing about
the reforms in India may be of some interest
to this audience. Recalling some features of
financial sector reforms in India would be in
order, before narrating the processes. First,
financial sector reform was undertaken early
in the reform-cycle in India. Second, the
financial sector was not driven by any crisis
and the reforms have not been an outcome
of multilateral aid. Third, the design and
detail of the reform were evolved by
domestic expertise, though international
experience is always kept in view. Fourth,
the Government preferred that public sector
banks manage the over-hang problems of
the past rather than cleanup the balance
sheets with support of the Government. Fifth,
it was felt that there is enough room for
growth and healthy competition for public
and private sector banks as well as foreign
and domestic banks. The twin governing
principles are non-disruptive progress and
consultative process.
In order to ensure timely and effective
implementation of the measures, RBI has
been adopting a consultative approach
before introducing policy measures. Suitable
mechanisms have been instituted to
deliberate upon various issues so that the
benefits of financial efficiency and stability
percolate to the common person and the
services of the Indian financial system can
be benchmarked against international best
standards in a transparent manner. Let me
give a brief account of these mechanisms.
First, on all important issues, working groups
are constituted or technical reports are
prepared, generally encompassing a review
of the international best practices, options
available and way forward. The group
membership may be internal or external to
8 IBA BULLETIN
JULY 2005
the RBI or mixed. Draft reports are often
placed in public domain and final reports
take account of inputs, in particular from
industry associations and self-regulatory
organizations. The reform-measures
emanate out of such a series of reports, the
pioneering ones being: Report of the
Committee on the Financial System (Chairman:
Shri M. Narasimham), in 1991; Report of the
High Level Committee on Balance of Payments
(Chairman: Dr. C. Rangarajan) in 1992; and the
Report of the Committee on Banking Sector
Reforms (Chairman: Shri M. Narasimham) in
1998.
Second, Resource Management Discussions
meetings are held by the RBI with select
commercial banks, prior to the policy
announcements. These meetings not only
focus on perception and outlook of the
bankers on the economy, liquidity
conditions, credit flow, development of
different markets and directions of interest
rates, but also on issues relating to
developmental aspects of banking
operations.
Third, we have formed a Technical Advisory
Committee on Money, Foreign Exchange
and Government Securities Markets (TAC). It
has emerged as a key consultative
mechanism amongst the regulators and
various market players including banks. The
Committee has been crystallizing the
synergies of experts across various fields of
the financial market and thereby acting as a
facilitator for the RBI in steering reforms in
money, government securities and foreign
exchange markets.
Fourth, in order to strengthen the
consultative process in the regulatory
domain and to place such a process on a
continuing basis, the RBI has constituted a
Standing Technical Advisory Committee on
Financial Regulation on the lines similar to
the TAC. The Committee consists of experts
drawn from academia, financial markets,
banks, non-bank financial institutions and
credit rating agencies. The Committee
examines the issues referred to it and advises
the RBI on desirable regulatory framework
on an on-going basis for banks, non-bank
financial institutions and other market
participants.
Fifth, for ensuring periodic formal interaction,
amongst the regulators, there is a High Level
Co-ordination Committee on Financial and
Capital Markets (HLCCFCM) with the
Governor, RBI as the Chairman, and the Heads
of the securities market and insurance
regulators, and the Secretary of the Finance
Ministry as the members. This Co-ordination
Committee has authorised constitution of
several standing committees to ensure co-
ordination in regulatory frameworks at an
operational level.
Sixth, more recently a Standing Advisory
Committee on Urban Co-operative Banks
(UCBs) has been activated to advise on
structural, regulatory and supervisory issues
relating to UCBs and to facilitate the process
of formulating future approaches for this
sector. Similar mechanisms are being worked
out for non-banking financial companies.
Seventh, the RBI has also instituted a
mechanism of placing draft versions of
important guidelines for comments of the
public at large before finalisation of the
guidelines. To further this consultative
process and with a specific goal of making
the regulatory guidelines more user-friendly,
a Users’ Consultative Panel has been
constituted comprising the representatives
of select banks and market participants. The
panel provides feedback on regulatory
instructions at the formulation stage to
avoid any subsequent ambiguities and
operational glitches.
Eighth, an extensive and transparent
communication system has been evolved.
The annual policy statements and their mid-
term reviews communicate the RBI’s stance
on monetary policy in the immediate future
of six months to one year. Over the years,
the reports of various working groups and
committees have emerged as another plank
of two-way communication from RBI. An
important feature of the RBI’s communication
policy is almost real-time dissemination of
information through its web-site. The
auction results under Liquidity Adjustment
Facility (LAF) of the day are posted on the
web-site by 12.30 p.m the same day, while
by 2.30 p.m. the ‘reference rates’ of select
foreign currencies are also placed on the
website. By the next day morning, the press
release on money market operations is
issued. Every Saturday, by 12 noon, the
weekly statistical supplement is placed on
the web-site providing a fairly detailed,
recent data-base on the RBI and the financial
sector. All the regulatory and administrative
circulars of different Departments of the RBI
are placed on the web-site within half an
hour of their finalization.
Ninth, an important feature of the reform of
the Indian financial system has been the
intent of the authorities to align the
regulatory framework with international
best practices keeping in view the
developmental needs of the country and
domestic factors. Towards this end, a Standing
Committee on International Financial
Standards and Codes was constituted in
1999. The Standing Committee had set up
ten Advisory Groups in key areas of the
financial sector whose reports are available
on the RBI website. The recommendations
contained in these reports have either been
implemented or are in the process of
implementation. I would like to draw your
attention to two reports in particular, which
have a direct bearing on the banking system,
viz., Advisory Group on Banking Supervision
and Advisory Group on Corporate
Governance. Subsequently, in 2004, we
conducted a review of the recommendations
of the Advisory Groups and reported the
progress and agenda ahead.
What has been the Impact?
These reform measures have had major
impact on the overall efficiency and stability
of the banking system in India. The present
capital adequacy of Indian banks is
comparable to those at international level.
There has been a marked improvement in
the asset quality with the percentage of gross
non-performing assets (NPAs) to gross
advances for the banking system reduced
from 14.4 per cent in 1998 to 7.2 per cent in
2004. The reform measures have also resulted
in an improvement in the profitability of
banks. The Return on Assets (RoA) of the banks
rose from 0.4 per cent in the year 1991-92 to
1.2 per cent in 2003-04. Considering that,
globally, the RoA has been in the range 0.9 to
1.5 per cent for 2004, Indian banks are well
placed. The banking sector reforms also
emphasized the need to review the
manpower resources and rationalize the
requirements by drawing a realistic plan so
as to reduce the operating cost and improve
the profitability. During the last five years, the
business per employee for public sector
banks more than doubled to around Rs.25
million in 2004.
Continuity, Change and Context
We lay considerable emphasis on appropriate
mix between the elements of continuity and
change in the process of reform, but the
dynamic elements in the mix are determined
by the context. While there is usually a
consensus on the broad direction, relative
emphasis on various elements of the process
of reform keeps changing, depending on the
evolving circumstances. Perhaps it will be
useful to illustrate this approach to
contextualising the mix of continuity and
change.
The mid-term review in November 2003,
reviewed the progress of implementation
of various developmental as well as
regulatory measures in the banking sector
but emphasised facilitating the ease of
transactions by the common person and
strengthening the credit delivery systems,
as a response to the pressing needs of the
society and economy. The annual policy
statement of May 2004 carried forward this
focus but flagged major areas requiring
urgent attention especially in the areas of
ownership, governance, conflicts of interest
and customer-protection. Some extracts of
the policy statement may be in order:
"First, it is necessary to articulate in a
comprehensive and transparent manner the
policy in regard to ownership and
governance of both public and private sector
banks keeping in view the special nature of
banks. This will also facilitate the ongoing
shift from external regulation to internal
systems of controls and risk assessments.
Second, from a systemic point of view, inter-
relationships between activities of financial
intermediaries and areas of conflict of
interests need to be considered. Third, in
order to protect the integrity of the financial
system by reducing the likelihood of their
becoming conduits for money laundering,
terrorist financing and other unlawful
activities and also to ensure audit trail,
greater accent needs to be laid on the
adoption of an effective consolidated Know
Your Customer (KYC) system, on both assets
and liabilities, in all financial intermediaries
regulated by RBI. At the same time, it is
essential that banks do not seek intrusive
details from their customers and do not
resort to sharing of information regarding
the customer except with the written
consent of the customer. Fourth, while the
stability and efficiency imparted to the large
commercial banking system is universally
recognised, there are some segments which
warrant restructuring."
The annual policy statement for the current
year reiterates the concern for common
person, while enunciating a medium term
framework, for development of money, forex
and government securities markets; for
enhancing credit flow to agriculture and
IBA BULLETIN 9
JULY 2005
small industry; for action points in
technology and payments systems; for
institutional reform in co-operative banking,
non-banking financial companies and
regional rural banks; and for ensuring
availability of quality services to all sections
of the population. The most distinguishing
feature of the policy statement relates to
the availability of banking services to the
common person, especially depositors.
The statement reiterates that depositors’
interests form the focal point of the
regulatory framework for banking in India
and elaborates the theme as follows:
"A licence to do banking business provides
the entity, the ability to accept deposits and
access to deposit insurance for small
depositors. Similarly, regulation and
supervision by RBI enables these entities to
access funds from a wider investor base and
the payment and settlement systems
provides efficient payments and funds
transfer services. All these services, which are
in the nature of public good, involve
significant costs and are being made
available only to ensure availability of
banking and payment services to the entire
population without discrimination".
The policy draws attention to the divergence
in treatment of depositors compared to
borrowers as:
" … while policies relating to credit
allocation, credit pricing and credit
restructuring should continue to receive
attention, it is inappropriate to ignore the
mandate relating to depositors’ interests.
Further, in our country, the socio-economic
profile for a typical depositor who seeks safe
avenues for his savings deserves special
attention relative to other stakeholders in
the banks".
Another significant area of concern has been
the possible exclusion of a large section of
population from the provision of services
and the Statement pleads for financial
10 IBA BULLETIN
JULY 2005
inclusion. It states: changing circumstances within the country, the
overwhelming compulsion to be in harmony
"There has been expansion, greater
with global developments must be respected
competition and diversification of
and that essentially relates to Basel II.
ownership of banks leading to both
enhanced efficiency and systemic resilience Basel II and India
in the banking sector. However, there are
RBI’s association with the Basel Committee
legitimate concerns in regard to the banking
on Banking Supervision dates back to 1997
practices that tend to exclude rather than
as India was among the 16 non-member
attract vast sections of population, in
countries that were consulted in the
particular pensioners, self-employed and
drafting of the Basel Core Principles. Reserve
those employed in unorganised sector. While
Bank of India became a member of the Core
commercial considerations are no doubt
Principles Liaison Group in 1998 and
important, the banks have been bestowed
subsequently became a member of the Core
with several privileges, especially of seeking
Principles Working Group on Capital. Within
public deposits on a highly leveraged basis,
the Working Group, RBI has been actively
and consequently they should be obliged
participating in the deliberations on the New
to provide banking services to all segments
Accord and had the privilege to lead a group
of the population, on equitable basis."
of six major non-G-10 supervisors which
Operationally, it has been made clear that presented a proposal on a simplified
RBI will implement policies to encourage approach for Basel II to the Committee.
banks which provide extensive services
Commercial banks in India will start
while disincentivising those which are not
implementing Basel II with effect from March
responsive to the banking needs of the
31, 2007. They will adopt Standardised
community, including the underprivileged.
Approach for credit risk and Basic Indicator
The quality of services rendered has also Approach for operational risk, initially. After
invited attention in the current policy. I quote adequate skills are developed, both at the
further, "Liberalisation and enhanced banks and also at supervisory levels, some
competition accord immense benefits, but banks may be allowed to migrate to the
experience has shown that consumers’ Internal Rating Based (IRB) Approach.
interests are not necessarily accorded full
Let me briefly review the steps taken for
protection and their grievances are not
implementation of Basel II and the emerging
properly attended to. Several representations
issues. The RBI had announced in its annual
are being received in regard to recent trends
policy statement in May 2004 that banks in
of levying unreasonably high service/user
India should examine in depth the options
charges and enhancement of user charges
available under Basel II and draw a road-
without proper and prior intimation. Taking
map by end-December 2004 for migration
account of all these considerations, it has
to Basel II and review the progress made at
been decided by RBI to set up an independent
quarterly intervals. The Reserve Bank
Banking Codes and Standards Board of India
organized a two-day seminar in July 2004
on the model of the mechanism in the UK in
mainly to sensitise the Chief Executive
order to ensure that comprehensive code of
Officers of banks to the opportunities and
conduct for fair treatment of customers are
challenges emerging from the Basel II norms.
evolved and adhered to".
Soon thereafter all banks were advised in
It is essential to recognise that, while these August 2004 to undertake a self-assessment
constitute contextual nuanced responses to of the various risk management systems in
place, with specific reference to the three
major risks covered under the Basel II and
initiate necessary remedial measures to
update the systems to match up to the
minimum standards prescribed under the
New Framework. Banks have also been
advised to formulate and operationalise the
Capital Adequacy Assessment Process (CAAP)
within the banks as required under Pillar II of
the New Framework.
It is appropriate to list some of the other
regulatory initiatives taken by the Reserve Bank
of India, relevant for Basel II. First, we have tried
to ensure that the banks have suitable risk
management framework oriented towards their
requirements dictated by the size and
complexity of business, risk philosophy, market
perceptions and the expected level of capital.
Second, Risk Based Supervision (RBS) in 23 banks
has been introduced on a pilot basis. Third, we
have been encouraging banks to formalize their
capital adequacy assessment process (CAAP) in
alignment with their business plan and
performance budgeting system. This, together
with the adoption of RBS would aid in factoring
the Pillar II requirements under Basel II. Fourth,
we have been expanding the area of disclosures
(Pillar III), so as to have greater transparency in
the financial position and risk profile of banks.
Finally, we have tried to build capacity for
ensuring the regulator’s ability for identifying
and permitting eligible banks to adopt IRB /
Advanced Measurement approaches.
As per normal practice, and with a view to
ensuring migration to Basel II in a non-
disruptive manner, a consultative and
participative approach has been adopted for
both designing and implementing Basel II. A
Steering Committee comprising senior
www.iba.org.in
officials from 14 banks (public, private and
foreign) has been constituted wherein
representation from the Indian Banks’
Association and the RBI has also been
ensured. The Steering Committee had formed
sub-groups to address specific issues. On the
basis of recommendations of the Steering
Committee, draft guidelines to the banks on
implementation of the New Capital Adequacy
Framework have been issued.
Implementation of Basel II will require more
capital for banks in India due to the fact
that operational risk is not captured under
Basel I, and the capital charge for market
risk was not prescribed until recently.
Though last year has not been a very good
year for banks, they are exploring all
avenues for meeting the capital
requirements under Basel II. The cushion
available in the system, which has a CRAR
of over 12 per cent now, is, however,
comforting.
India has four rating agencies of which three
are owned partly/wholly by international
rating agencies. Compared to developing
countries, the extent of rating penetration
has been increasing every year and a large
number of capital issues of companies has
been rated. However, since rating is of issues
and not of issuers, it is likely to result, in effect,
in application of only Basel I standards for
credit risks in respect of non-retail exposures.
While Basel II provides some scope to extend
the rating of issues to issuers, this would only
be an approximation and it would be
necessary for the system to move to rating
of issuers. Encouraging rating of issuers
would be essential in this regard. In this
context, current non-availability of Thank you.
acceptable and qualitative historical data
relevant to ratings, along with the related
costs involved in building up and maintaining
the requisite database, does influence the
pace of migration to the advanced approaches
available under Basel II.
Above all, capacity building, both in banks
and the regulatory bodies is a serious
challenge, especially with regard to adoption
of the advanced approaches. We in India have
initiated supervisory capacity-building
measures to identify the gaps and to assess
as well as quantify the extent of additional
capital which may be required to be
maintained by such banks. The magnitude
of this task, which is scheduled to be
completed by December, 2006, appears
daunting since we have as many as 90
scheduled commercial banks in India.
Concluding Observations
In the current scenario, banks are constantly
pushing the frontiers of risk management.
Compulsions arising out of increasing
competition, as well as agency problems
between management, owners and other
stakeholders are inducing banks to look at
newer avenues to augment revenues, while
trimming costs. Consolidation, competition
and risk management are no doubt critical
to the future of banking but I believe that
governance and financial inclusion would
also emerge as the key issues for a country
like India, at this stage of socio-economic
development.
Once again, let me thank Governor Husain
for his kind invitation and the audience for
their patient hearing.
q
IBA BULLETIN 11
JULY 2005
CEO’s Perspective
Internet Banking –
Changing Vistas of
Delivery Channel S.C. Gupta

With
consolidation of
Banks and
Technology
upgradation of the Internet banking involves use of ICICI Bank, HDFC bank etc. were pioneers in
Internet as a medium of introducing Internet Banking in India. They had the
banking platform, advantage of technology platform and did not have
communication for accessing and
Internet Banking is utilizing host of banking and legacy systems. However with the technology
bound to grow financial services. The customer’s transformation of Public Sector Banks in the recent
demand for personalized service years, many banks have started offering the Internet
leaps and bounds Banking facility to their customers.
and the concept of “Anywhere &
and will emerge as anytime banking” has made “Internet banking” as The number of banks offering Internet banking in
the most popular one of the primary delivery channel available to India, has increased exponentially during the last 3
Banking delivery present day customers. years. Advancements in technology used by banks,
especially centralised Core Banking Solution, and the
channel, within As a business tool, Internet banking is rapidly
growth of Internet usage is propelling the growth
transforming the banking and financial world and
the next few years. of Internet Banking. This is supplemented by the
has made banks more efficient and fast in providing
With greater wide range of services possible through Internet
personalized services to the end users i.e. the customer.
Banking, anywhere - anytime at the click of the mouse,
emphasis been Internet Banking has not only transformed the “ways”
at Customer’s convenience.
laid on e- of banking but also all the aspects of the finance
and commerce. Internet banking has predominantly Internet Banking - New Vistas
governance, become a mode of e-banking in which the Internet Besides providing the routine Banking services,
Internet Banking offering itself as a new delivery mechanism for the Internet Banking has enhanced capabilities like
Channel will be a banks in reaching the customer. With the advent of providing Online Utility Bill Presentment and
Internet Banking, there is a perceptible shift in the Payment Systems, Online Share Trading, Demat and
key-facilitator with
customer preferences for Delivery Channel. Broking Services, Online Purchases and Auctions,
about 40-50% of According to a study in USA by the Pew Internet Funds Management and Payment Gateways.
the total banking & American Life Project, about 44 percent of
Customer Expectations
the U.S Internet Surfers - i.e. 53 million
and financial
people use online banking. While Brick and Mortar Banking is expected to
transactions to be continue its presence and dominance, there is a
Internet Banking in India
done through perceptible shift in customer preference for alternate
New Generation Private
Internet. delivery channels like Internet Banking and ATMs.
Sector Banks
namely Customers prefer 24 X 7 X 365 banking services at
their convenience and a place of their choice, and it

12 IBA BULLETIN
JULY 2005

should be easier for them to transact their
business. They would also prefer a single
interface which helps them in completing a
range of services. They would also prefer
confidentiality and privacy of their
transactions and accounts.
Advantages of Internet Banking for a
customer include convenience, round the
clock accessibility, instantaneous
transactions, single window view of all
accounts with drill down features, etc.
Internet Banking is a customer delight which
fulfils most of these aspirations.
Marketing Strategy of Banks
New products are evolved by the Banks, to
attract the customers towards these
alternate Delivery channels. There are also
special campaigns which give a focused
marketing thrust to increase the customer
base and usage of Internet Banking.
Incentives and Reward points are also offered
as part of these strategies.
For indian banks, there is a wide market
potential amongst Non-Resident Indians
and internet banking can be used as a
product to attract and tap this market. The
customer can be benefited by the various
funds transfer features of internet banking,
thereby facilitating instant remittances to
the beneficiaries, without the hassle of
procuring drafts, sending it by post / courier,
and follow up for its safe transit.
This will also facilitate customer growth and
potential opportunities to market their
products and services to new customer
segment.
Challenges Faced in India
➢ A majority of customers are not
computer savvy
➢ Availability of Internet Bandwidth and
connectivity is not uniform.
”
➢ Non availability of safe computing
facilities across the country While people under 40
➢ Banks are not networked and many of years of age prefer
the banks still have legacy systems,
where providing Internet Banking
online banking, older
Solutions is not cost effective and generations tend to be
efficient.
more hesitant towards
”
➢ Customer confidence in internet
banking needs to be built. online banking, as
➢ The initial cost of implementation many remain stuck in
being high, benefits can be visible only
when we have a critical customer base
old habits
and volume of transactions. Cost of
transaction will reduce only when
customer shifts to alternate delivery
channels from the branch banking. The
cost savings in the branch banking
front will be by redeployment of
resources.
➢ Ensuring Security including privacy and
confidentiality of customer information
is a challenge.
While people under 40 years of age prefer
online banking, older generations tend to
be more hesitant towards online banking,
as many remain stuck in old habits.
While the assessment of
transaction cost vary and is Mr. S.C. Gupta, Chairman & Managing Director of Pubjab
dependant on various National Bank, is M.Com., CAIIB and started his banking career
factors, various study from State Bank of India in 1966. After brief stints at State Bank
of India and Syndicate Bank, he joined Oriental Bank of
indicate that the cost of
Commerce in 1972 where he made significant contributions.
transactions through He was promoted as General Manager in 1994 and headed
internet is about 1/ important portfolios like credit, international banking, credit
10th the cost of the cards, priority credit and recoveries. He was Executive Director
transaction of Indian Overseas Bank (IOB) from December 1999 to May
2001 and its CMD from May 2001 to April 2005. Under his
through the leadership, IOB had registered record growth in business and
branch. profits.
However, this can He is a Director in United India Insurance Co. Ltd. and is Chairman
be realized, only of the IBA’s Committee on Credit management and headed the
IBA Committee on Vision - Banking 2010. Besides, he is Member
when there are
of IBA’s Managing Committee, Indian Institute of Banking and
sufficient volumes Finance, Institute for Banking Personnel Section and IBA Working
in the transactions Group on consolidation in Indian Banking System.
through the internet.
IBA BULLETIN 13
JULY 2005
Advantages for Banks
Some of the advantages for popularizing
this delivery channel include reduction in
transaction cost in the long run, an effective
medium to market their products and
services, faster product deployment,
customer consolidation, cost savings,
increase in productivity and introduction of
new products targeting for specific customer
segments.
Banks have discovered the benefits of online
customers and have become more
aggressive towards not only attracting
customers but retaining the existing
customers by offering incentives for online
services, and catchy advertisements. Various
studies indicate that online banking
customers are more profitable than offline
customers - they make fewer customer
service calls and are less likely to switch
banks.
Banks have gone a step further by using
internet banking as a medium for offering
internet related products.
Security Concerns
Security fears have served as deterrents to
online banking growth. Of particular concern
are threats of pharming and phishing.
Phishing is an internet fraud, through which
innocent persons are enticed to divulge their
personal information like User Identity and
Passwords, which are later on used by
scammers in unauthorised ways.
The most common method of phishing is
sending emails claiming to be from your
bank or other financial institution which are
dealing, that already has your personal
information, and you will be asked to
confirm the details by clicking a particular
link (url) provided in this fake email. This url
will take you to a fake website which will be
similar to the genuine website, and the
information provided by the customer in
14 IBA BULLETIN
JULY 2005
the forms provided in the fake website, will
be gathered and used for committing fraud
in their accounts / credit cards or withdraw
funds unauthorisedly from these accounts.
Pharming is another internet fraud, whereby
as many users as possible are redirected
before they reach the the legitimate online
banking websites they intend to visit and
are lead to malicious ones. The bogus sites,
to which victims are redirected without their
knowledge or consent, will likely look the
same as a genuine site. But when users enter
their login name and password, the
information is captured by criminals.
As per the latest survey, phishing and
pharming are one of the top five internet
security threats. With Online Banking
catching up with the customers, the
possibility of such threats increase.
The Anti-Phishing Working Group reports
that the number of new phishing messages
rose by an average 38 percent per month in
the last six months of 2004.
Safeguards to prevent security breaches
The Web servers can be provided with
Digital Certificates and are SSL enabled,
whereby the Customer is provided with the
authenticity of visiting our genuine website.
Customers need to be forced to change the
passwords at periodic intervals
automatically by the Internet banking
application so that the possibility of misuse
is reduced..
Some Banks have provided virtual keyboard
feature for Internet Banking Login, whereby
the customer uses mouse clicks instead of
typing using the keyborad. This minimises
the risk due to keyboard grabbing.
The possibility of providing two factor
authentication mechanisms ( some thing
what they know and what they possess, like
smart cards, I Keys, Tokens etc.) are being
contemplated, by some banks which will be
subject to feasibility of smooth integration
with the application.
Awareness needs to be created among the
users as to the risks involved and measures
to mitigate the risk.
Firewalls, Intrusion Detection Systems, Access
Control and other security mechanisms have
to be strengthened for Internet Banking.
Hosting the servers in own premises in a
controlled environment, is preferable.
Periodic audits including penetration testing,
by qualified external auditors and
vulnerablity analysis need to be undertaken,
periodically.
The Internet Banking Guidelines provided
by the Reserve Bank of India, provides for
exhaustive security measures to be
implemented by the banks offering Internet
Banking Services. There are also other
initiatives like Cert-in specifically for Financial
Sector, which will go a long way in
combating the internet threats. There is a
need to create awareness among the
customers about the risks and the measures
that have been taken to combat the threats.
Conclusion
With consolidation of Banks and Technology
upgradation of the banking platform,
Internet Banking is bound to grow leaps
and bounds and will emerge as the most
popular Banking delivery channel, within the
next few years. With greater emphasis been
laid on e-governance, Internet Banking
Channel will be a key-facilitator with about
40-50% of the total banking and financial
transactions to be done through Internet.
The vast customer base of banks in India and
the growth in technology implementation
in the coming years will see India emerging
as the country having the largest number of
users of Internet Banking in the world. q
 Experts Views
Is ATM Cost
Effective? P. Siva Rama Prasad

The term Cost benefit analysis is ➢ Which costs and benefits are included for
Today, the overall
used frequently in business analysis
economic planning and decision support ➢ Which financial metrics are important for
activities. However, the term itself decision makers and planners
conditions remain
has no precise definition beyond Technology and Its Implications
challenging. The the implication that both positive
Bill Gates is said to have remarked in 1994 that banks
and negative impacts are going
need of the hour is were “DINOSAURS”
to be summarized and compared. The term also has
no universally agreed spelling. It is written as cost a. Since then it is more and more believed that advances
to focus on the
benefit, cost/benefit, or cost-benefit, for instance. in technology will lead to the demise of banks, atleast
BASICS OF in the form, as we know them today. The threat is real.
Because the term "cost benefit analysis" does not
But then there are opportunities created by
BUSINESS. We refer to any specific approach or methodology, the
technologies too. And these opportunities can be
business person who is asked to produce one should
need to focus on capitalised by banks, financial services companies as
take care to find out what is expected or needed. The
also by retail organisations. All over the world, bank’s
managing cost term covers several varieties of business case analysis,
traditional business of taking advances and lending
such as:
efficiencies and on out the proceeds is in terminal decline. This is being
➢ Return on investment (ROI analysis) referred to as disintermediation. In America, banks
increasing profits. ➢ Financial justification and thrifts, building societies now have 28% of the
➢ Cost of ownership analysis financial services market. This is half of what they
As FORTUNE
had 20 years ago.
All of these approaches to cost benefit analysis
MAGAZINE rightly attempt to predict the financial impacts and other b. All the rich countries, even Japan is starting to
business consequences of an action. All these deregulate savings products. Similar forces are
pointed out, we
approaches have the same structural and at work on banks’ assets. The spread of
have learnt from information technology and the dramatic
procedural requirements for building a
advances in financial theory have made it
the dot com bust strong, successful business case. They cheaper for big companies to raise money in
differ primarily in terms of: the capital markets than from banks. Investors
that: “If it does not on the other hand, are finding new places to
➢ How they define "cost"
invest their cash. For example, mutual funds are
make cents, it does and "benefit" in spreading all over the world. All these changes,
practical coupled with lower interest rates, have resulted
not make sense” terms in reduced margins. Regional Banks in America

IBA BULLETIN 15
JULY 2005

today have margins of LESS THAN 3%
points compared to over 5.5% points in
1970s.
If economies do not grow very fast and
banks’ share of financial intermediation is
shrinking, i.e., their lending is not growing,
banks are confronted with the problem of
how to make money. CUTTING COST IS ONE
WAY OF IMPROVING RETURNS. This can be
achieved through
”
and
➢ Decreasing the expenses on the other.
CUTTING COST IS ONE
One of the crucial factors in maintaining WAY OF IMPROVING
profitability of a bank is its ability to control
cost of operations. The cost to income ratio
RETURNS. This can be
should be kept at minimum possible levels achieved through
reducing overheads on an on-going basis
but without adversely affecting the quality ➢ Merger of Banks
of services. Closing down of loss making rural
branches, reducing staff costs through and/or

”
➢ adaptation of technology and improving their
➢
Merger of Banks and/or
Use of Information Technology (IT) productivity etc., goes a long way in cutting
➢ Use of Information
The merger of Chase Manhattan, Chemical
overheads in this inflationary environment. Technology (IT)
Optimum use of modern Telecommunication
Bank, Manufacturer Hanover have resulted
Networks like SWIFT, e-mail, Video
in saving of $ 2.5 billion a year. The number
Conferencing, centralised bulk purchase of
of banks in America has fallen from 14,500
stationery etc. helps in the cost cutting efforts
in the mid 1980s to just under 8000 now.
of banks.
This is clearly to achieve cutting of costs.
Automated Teller Machine – a Cost Control
"Reduction of Cost is Profit" Device to the Commercial Banks
The Banks have a cost element in every risk COSTING has become an area of crucial
it undertakes. These can be broadly classified significance as never before in today's fast
as Controllable costs and Non-Controllable changing banking scenario. The key
Costs. Controllable costs can further be developments, which have resulted into
subdivided into visible, invisible and
providing a place of eminence for this
futuristic costs. Non-controllable costs
discipline, are as under:
comprise of salary / wage bills and taxes etc.
The importance of OPERATING COST in the 1) RBI's licensing policy has resulted
present banking environment can be in encroachment by private
gauged from the following statement in the (new generation)/foreign
Monetary and Credit Policy for the year 2000- banks in old bastions of
01 announced by the RBI. Public Sector Banks
(PSBs). This has Mr. P. Siva Rama Prasad is presently working as
“Another factor affecting the interest rate
resulted into
structure in India is the high level of non- Chief Manager (BPR Project), State Bank of India,
significantly
interest operating expenses of public sector
bringing down Mumbai. He has been working in State Bank of
banks. These work out to 2.5 to 3.5 per cent
market share
of total assets. The high transaction costs India since May 1980 and has handled various
percentage of
which generally reflect high costs, combined
PSBs. assignments.
with relatively high levels of Non-Performing
2)
Assets (NPAs), further constrain the He is B.Com., M.Com., MBA and having
Deregulation
manoeuvrability in respect of lending rates.”
of interest
Professional Qualifications in ICWAI, CS, Diploma
The operating cost as ratio of total assets is rates and
otherwise referred to as the intermediation cost. s e r v i c e in Management Accountancy, PGDPR, CAIIB and
charges for
Profit and thereby profitability, the ability to various other Diploma Courses in Banking,
remittances.
generate profit, can be increased by two ways Insurance, Mutual Funds and Computers.
This has
viz.
necessitated
➢ Increasing the income on the one hand efficient operating

16 IBA BULLETIN
JULY 2005
 system in banks to work under thinner
margins in a buyer's market.
3) Impact of globalisation witnessed in
the form of new products/re-
engineering in processes as a result of
progressive integration of Indian
Economy with World Economy.
4) Electronic Banking is gradually spreading
in PSBs, since the hi-tech superiority of
Private (new generation)/Foreign banks,
has rendered PSBs services obsolete. The
mammoth manpower of PSBs has
become their drawbacks symbolised as
a significant cost centre.
5) Strategic alliances through mergers, of
late, to strengthen product delivery
system has further sharpened
competition in banking sector.
The Indian Commercial Banks makes
its transition towards technology
oriented banking, alternate delivery
channels will assume importance for
better Customer Service with value
addition and effective reduction in
Cost of Transaction.
A large number of ATMs have already been
installed by the Commercial Banks
throughout the country. The utility of ATM
is already gaining popularity day-by-day
among the customers of the bank and the
benefit of such huge number of ATMs spread
over the country is being utilised by the
customers of the Commercial Banks. The
ATMs are emerging as the most useful tool
to ensure “Any-Time Banking” and “Any-
where Banking” or Any-Time Money.
While the benefits of ATM are immense, the
cost of ATM, though has come down, is still
prohibitive. An ATM costs anywhere between
Rs.8 - 10 lakhs. If a bank has to install 100
ATMs it should spend atleast Rs.8 - 10 crs.
Added to this, is the maintenance cost. Today,
any electronic device attracts an annual
maintenance cost of 8 to 12 % of capital
cost. Besides this, banks have to incur
expenditure on the rent for retail outlet, its
ambience and on security personnel etc.
While many Public Sector Banks have gone
on a big way in opening ATMs, there is a
need for sufficient examination of their
economic viability. Already there is
experience that the hits per ATM are less
than 200 resulting in no big gain for either
the bank or customer. The average usage of
ATMs in Europe was 3300 withdrawals per
machine per month in 1999. Sweden has
reported exceptional high in hits with an
average of 10156 withdrawals per ATM per
month. India with more population density
should show a higher average hit per day
and this emerges as a critical factor in the
overall ATM strategy towards making the
whole business idea profitable.
With the increasing pressures on spreads,
banks have no alternative but to resort to
cost cutting exercise in whatever way feasible.
While there is limited scope for reducing staff
costs for reasons best known to all, other
target areas where banks can certainly
ensure trimming of costs are stationery /
printing, rent, telephones, electricity and
other overheads etc. Faced with relentless
pressure to reduce costs, it would also be
necessary to have a re-look at all the
overheads including those which pertain to
maintenance of support services which may
not be part of core business activities of the
organisation. Such analysis of costs involved
in support services may prompt to resorting
to “ATM”. ATM is considered as one of the
acceptable strategies for cost control.
The rationale for banks introducing ATMs in
the 1970s, telephone banking in the 1980s and
now the internet banking was to deliver their
products more cheaply than traditional branch
networks, which are loaded with expensive staff.
"Lloyds TSB claim that only two people
control the banks' 4500 ATMs"
Private Sector Banks going ahead with
aggressive ATM plans particularly off-site
(away from branch), for wider reach with
LOWER COST. They are also targeting ATM
deployment in top corporate offices or staff
colonies – not only for the salary accounts
but also for a piece of the Corporate Pie and
also to get the following benefits.
a) Reduces overheads.
b) Minimises use of costly consumables
like cheque – leaves etc.
c) Can lead to increased profitability by
reducing costs per transaction–
imperative in an intensely competitive
environment.
d) With increase in number of ATM cards
and usage, transaction cost will decline
substantially.
e) Can advertise Bank’s products on
screen – cross selling loans, insurance,
credit cards, etc.
f) Revenue earning stream–through sale
of tickets, bill payments, income tax
collections etc.
At present some banks are offering only Cash
withdrawals. Banks should immediately
provide other facilities such as Cash deposits,
Issue of Cheque books, Drafts, Stop Payment
Instruction of cheques, and transfer of funds
from one branch to another branch of the
same bank and other facilities already
available in ATMs. Such a step will help in
optimum utilization of the ATM thereby
reducing Cost per transaction. The present &
future technology comparison of ATMs are:
Today’s ATM The Future ATM
Multi-Lingual Personalization
Web Enabled Campaign Management
Bill Payment Biometrics
Mobile Recharge Biometrics
Ticketing (Railways) Ticketing (Airlines)
Third Party
Advertisement Wireless
Fund Transfer Shared Network Model
National Financial Switch of Reserve Bank of
India
The Institute for Development and Research
in Banking Technology (IDRBT), established
by the Reserve Bank of India in 1996, is an
institute catering to the banking sector
requirements in areas of education and
training, security, technology, research and
development and consultancy.
IDRBT runs the communication backbone
of Indian Banking Sector, the INFINET (Indian
Financial NETwork).
Automated Teller Machines of all public and
private sector banks in the country will be
brought under the National Financial Switch
IBA BULLETIN 17
JULY 2005
(NFS) umbrella of the Reserve Bank of India
by July, 2005.
The project, aimed at inter-connecting the
ATMs of all banks, is being implemented by
the IDRBT.
Euronet Worldwide Inc. through its Indian
arm, Euronet Services India Pvt Ltd. is
implementing the ATM connectivity project
for IDRBT. The project will enable customers
to deposit or withdraw cash from an ATM of
any other Bank. Launched officially on
August 27,2004, three banks – Corporation
Bank, Bank of Baroda and ICICI Bank – have
already joined NFS. Seven other banks are
also likely to get hooked on to the NFS by
January, 2005.
According to the IDRBT, the NFS has
assumed importance given the plans of the
banks to share ATM resources. The project is
expected to optimise costs for banks. This
project has economic advantages and offers
wider reach while helping in preventing
infrastructure duplication. Besides, when in
place, this common solution opens up a
range of electronic possibilities for banks,
corporates and consumers.

Comparative Cost Statement of Automated Teller Machine And Teller

Automated Teller Machine

Sl. No. Type of Cost Total Cost Cost per Month

01 FIXED COST:
ATM Cost
(Sales Tax differs from State to State)
Average Life – 10 Years 6,70,000
Method of Depreciation (Straight Line Method @ 10% p.a.
Depreciation per month=(Rs.67,000/12 Months) 67,000 5,583
02 Cost of Construction of ATM Room (Civil Works & Electrical Installation) -
Average Life - 10 Years 2,50,000
Depreciation @ 10% p.a. – Straight Line Method
Depreciation per month=(Rs.25,000/12 Months) 25,000 2,083
03 Cost of Air-Conditioned, UPS, Fixtures & Furniture,
Telephone and its installation Cost 3,00,000
Depreciation @ 10% p.a. – Straight Line Method
Depreciation per month=(Rs.30,000/12 Months) 30,000 2,500
04 Rent payable per month for ATM Room (if it hired outside the branch
premises i.e., off-site (The rent depends upon the Location, City etc.,
i.e., Rs.2,500 p.m. to Rs.8,000 p.m.) – Average Rs.5,000/- p.m. 5,000
05 Annual Maintenance Cost @ 8% per annum on
Original Cost of ATM (Rs.6,70,000 x 8%) 53,600 4,467
Per month Annual Maintenance = (Rs.53,600 / 12 Months)
Insurance premium per annum:
1. Standard and Fire Policy – Rs.95/- per lakh.
It covers:
Fire and Standard. All types of fire, natural calamities,
malicious damages, riots and strike, terrorism, earth quake,
landslide, subsidence & aircraft damages.
2. Burglary and housing breaking – Rs.1,050 per lakh – 5%
service charges extra. For Bankers 5% discount facility available.
It covers burglary, theft and house breaking of ATM risks.
(Rs.95 + Rs.1,050) x Rs.6.7 lakhs
Per month insurance charges (Rs.7,700 / 12 months) 7,672 639

18 IBA BULLETIN
JULY 2005
Sl. No. Type of Cost Total Cost Cost per Month
07 Cost of Dish and its peripherals & installation cost 2,10,000
Average Life – 10 years
Depreciation -10% p.a. – Straight line method
Depreciation per month (Rs.21,000 / 12 months) 21,000 1,750
08 Outsource of Watch & ward for 24 hours & cleaning and
maintenance of ATM Room – per month 10,000
09 Supervising Staff average time spend for ATM cash
replenishment etc. – 2 hours per day
Average salary and allowance per supervising official is
Rs.300 x 2 hours x 30 days 18,000
10 Interest on Investment (i.e., ATM Project Cost Rs.15,00,000/-
@ 5% interest on diminishing balance method) 75,000 6,250

TOTAL FIXED COST PER MONTH 56,272

Comparative Cost Statement of Automated Teller Machine and Teller
Automated Teller Machine :
Sl. No. Type of Cost Total Cost Cost per Month
VARIABLE COST :
01 Electricity charges per month 2,500
02 VCR Tape and Other equipment charges p.m. 600
03 Paper rolls (Both for transaction slips + Cash Journal)
on an average per month. 2,750
04 Printer Ribbon Cost 2,500
TOTAL VARIABLE COST - PER MONTH 8,350
TOTAL FIXED COST - PER MONTH 56,272
TOTAL COST PER MONTH 64,622
No. of Hits per month on an average = 200 per day x 20 days
(Average-after deducting the shut-down period of ATM,
Net working problems / failures, Maintenance of ATM,
Out-of Cash in ATM-in particular i.e., after continuous
holidays, Replenishment period of Cash in ATM,
Technical Problems etc.) = 4,000 Hits per month
Per Hit Transaction Cost (Rs.64,577 / 4000) 16.16

Note :
A. ATM Card / PIN Mailers processing charges, VSAT/SWITCH/Net Working Communication charges are not taken for arriving the per
transaction cost.
B. No. of Hits per day taken as 200 and average number of days taken per month as 20 days(after taking into account Peak & Non-peak
levels as well as shutdown etc., - Total Number of Hits per month on an average 4,000).
C. ATM/Card/PIN Mailers Processing (including Postage) per account holder Rs.65-00 (This is one time cost).

IBA BULLETIN 19
JULY 2005
 Comparative Cost Statement of Automated Teller Machine and Teller

TELLER :

Sl. No. Type of Cost Total Cost Cost per Month

VARIABLE COST :
01 Average Monthly Salary (including perks, medical benefits, LFC,
welfare costs, cost of different leaves such as P.L. C.L. Sick Leave etc.,
Terminal benefits like Gratuity, Pension etc. – for a Senior employee) 36,000
02 Officers required for supervising the various activities of Teller such as
Cash Withdrawal/ Deposit from Currency Chest, Various type of
transactions Checking etc.
(2 hours a day for 2 officers @ Rs.600 /- per day for 2 officers x 30 days) 18,000
03 Cost of Teller counter, furniture, electricity, Stationery (Receipts &
Payment Vouchers, Day books, Balancing Books, Interest application
& Internal House-keeping Maintenance etc.,) per month 6,000
TOTAL COST PER MONTH - PER TELLER 60,000
04 Average number of instruments per day handled by teller
(peak and non-peak level = 100) for 20 days = 2,000 vouchers per month Rs.30

Conclusion
The success of cost of reduction through
the ATM depends on many factors:
➢ Right location of the ATMs
➢ Optimum population of ATMs at each
centre
➢ Provision of maximum facilities at the
ATMs
➢ Customer education
➢ Making the customer habitual of using
ATMs
Involvement, preparedness and willingness
of staff at all levels to make the program a
success.
The above analysis is not to discourage the
installation of ATM but to drive home the point
that the staff and the customer should be
educated to popularise the use of ATMs. Any
new idea is greeted with resistance world over
and ATM is no different in this regard. It is
reported that even in USA, the ATMs in the
initial stages were an unwelcome curiosity.
There is thus a dire need to increase the usage
of ATM by proper education of staff and
customer.
20 IBA BULLETIN
JULY 2005
The average cost of installing an ATM is
Rs.12,00,000/- and a recurring cost of
Rs.12,000/- per month. For an ATM to be
viable, it is estimated that a minimum of 300
to 400 transactions should take place at the
ATM per day because ATMs are expensive.
The cost of a teller transaction presently
ranges between Rs.30-60, while a transaction
on an ATM that does about 200 transactions
per day costs Rs.15-20. The cost of an ATM
transaction could fall to even Rs.15 if the
number of transactions were higher.
To ward off the problem of poor hits and to
make the investment viable, banks enter into
shared network agreement. Under this, an
agreed fee should be paid for the transactions
of the customers performed in other bank's
ATM. For example, a cash withdrawal of one
bank done in another bank's ATM attracts a
fee of Rs.50/- to be paid to the ATM owning
bank. Similarly, the fee for balance enquiry is
Rs.10/-. In this way, banks recover the capital
cost of ATMs. The small banks that cannot
afford huge capital investment can work out
this kind of agreement. This would be
mutually beneficial both for small and big
banks. While big banks can benefit from their
strength of resources, small banks need not
commit their capital to upgrade their
technology.
All business have common interests and
competitive interests. On the operational side,
banks co-operate wherever transaction costs
can be reduced by such co-operation. The
concept of open-architecture, which requires
co-operation between competing
organisations. Where the cost involved in
setting up a new entity is high or where there is
inadequate business or multiple entities, banks
have co-operated, such as the establishment
of ARCIL. Apart from areas of co-operation such
as the above, banks are naturally competitors
in the same business and tend to compete
hard for business and profits.
Today, the overall economic conditions
remain challenging. The need of the hour is
to focus on the BASICS OF BUSINESS. We
need to focus on managing cost efficiencies
and on increasing profits. As FORTUNE
MAGAZINE rightly pointed out, we have
learnt from the dot com bust that: “If it does
not make cents, it does not make sense”
 Particulars Required for Arriving the
"Cost - Benefit Analysis" of an automated Teller Machine

1. Name of the Company (Vendors of ATM) : & No. of slips generated

2. Functionalities of ATM : 1) per bundle + Cash Journal
2) transaction paper per bundle cost
3) & No. of Journals generated
4) per bundle and suppliers its
3. ATM Price : Actual Price Rs. supplier service) :
Sales Tax Rs. 19. No. of personnel required to service
(if any) the ATM like Officer, Systems Officer
Customs etc., hours spend per day on ATM
Duty etc., Rs. and their Salaries &
(if any) Allowances per hour :
4. Depreciation (per annum) : % percentage : 20. Average Hits per day : No.
Amount of Amount
Depreciation: Rs. 21. Cash replenishment periodicity :
(p.a.) 22. Capacity of Cash Bins, its
Expected Life of denomination and Total Amount :
ATM : ----- 23. Average Number of Hits :
(Years) a) Peak Level :
Method of b) Off - Peak Level :
Depreciation : 24. Problems
5. Annual Maintenance cost , Name of a) Banker's Point of View :
the Company & AMC -Terms and i) Technical :
Conditions of the Contract : ii) Generals :
6. Average Monthly Recurring Costs other b) Customer's Point of View :
than the Annual Maintenance Cost : i) Technical :
7. Insurance Premium, Total Risk Amount, ii) General :
Risks covered & Name of the 25. Net working failures per month :
Insurance Co., : 26. ATM shutdowns per month and
8. Construction Cost of ATM Room : Shutdown cost :
(Civil Works) 27. SWITCH / VASAT Services
9. Rent payable per month for Cost per month (if any) :
ATM Premises : 28. Dish Antenna Installation Cost,
(Off-site ATMs) & Peripherals Cost,
10. Electricity & AC Installation Cost : % depreciation & and its life etc., :
11. Electricity Installations Cost, 29. ATM card / PIN mailers processing
Life, % of Depreciation and charges per customer :
Depreciation Amount : 30. Duplicate ATM card processing
12. Electricity Charges per month charges per customer:
(for AC, ATM 31. Computer consumables like
and Electricity Installation etc.,) : printer Ribbon cost etc., :
13. AC Machinery Cost , Life of 32. Watch & ward Salaries & Allowances
A/C Machinery, (No. of watchmen required) :
Depreciation % and Depreciation 33. Maintenance Cost of
Amount and Method of Depreciation : ATM room per month :
14. VCR Tape Cost : 35. UPS Cost (Exclusively for ATM) :
15. VCR Tape - (Replacement period) : 36. Annual Maintenance Cost (for UPS) :
16. Camera Cost 38. Capital Expenditure cost
(if not included in ATM system) (i.e., Discounted value) :
its life & % of depreciation : 39. Any other costs (Please specify) :
17. Communication Charges 1)
(Networking charges like 2)
SWITCH / VSAT etc) : 3)
18. Paper Roll cost per bundle 4)
(to generate transaction slips etc., 5)

IBA BULLETIN 21
JULY 2005
 Performance
Management System
In Banks P.V. Anantha Bhaskar

“Performance
appraisal is a
personal
Meaning and Definition In the system of appraisal by the management, there
decision of is no opportunity for individual employee to report
erformance appraisal is an age old
his performance to the boss in the hierarchy, because
Management process and a part of performance
the individual employee will be rated by the
management system. It is prevalent
immediate superior and appraises his performance.
that affects the in any organisation and assumes
Unless this superior is impressed, the individual may
importance in personal decisions
status of an of management regarding the
not be rated properly. This method will give scope
for nepotism and may demotivate the employee.
status of an employee. It is a basic tool for increasing
employee in the morale and productivity of employees, ultimately
Demotivation ultimately will reduce the morale and
therefore his productivity, affecting the efficiency of
the organisational productivity. Performance
connection the organisation.
appraisal is also called “Performance review”,
with their performance rating, performance evaluation, employee In the “Self appraisal system of performance
appraisal or evaluation and merit rating. management” in public sector banks (PSBs) and old
retention in the Performance appraisal system is implemented in all private sector banks, each individual employee has
organisations including government departments. to submit a self appraisal to the immediate superior
organisation in the prescribed format. This is reviewed by the boss
It assumes importance in private sector, particularly
and sent to the higher ups with recommendations
termination, with reference to private sector banks.
for increments, promotions, rewards and incentives.
This process of rating employees is present in all
promotion, Self appraisal system is very transparent, provided
Banks both public sector and private sector. The
an opportunity for individual employees to reveal
appraisal may be of two types.
mobility or their performance in writing without any
➢ Appraisal by the management and rating apprehensions. Reviewer, who is the immediate
transfer, salary of performance of individual employees up to superior has to initiate impartial decisions to rate
the cadre of officers i.e., all the award staff the person by inviting for a discussion and decide
revision or covered under this method. the ranking before recommending to the

decrease or ➢ Self appraisal system for employees management of the bank.

above the cadre of award staff i.e.,
Deputing an employee for a specific training
imparting for officers, Sr. Executives
programme of his interest due to current job
and top level
requirement make both employer and employee
training”. executives.
take initiative in self learning and self development.
This helps banks in increasing their productivity.

22 IBA BULLETIN
JULY 2005
 ”
Self appraisal method is more transparent, ➢ Promotions, transfer decisions,
compared to the method of appraisal by changing the work assignments. Another approach is
the management itself. Appraisal by ➢ Evaluating the contribution of each known as
management shall not provide an individual employee to achieve the
opportunity to share the views of ranking/ efficiency, organisational growth and
Developmental
rating. On the other hand appraisal of the productivity. Approach, that views
employees up to award staff level prevalent ➢ Rewards, incentives, fast track
the employees as
in old private sector banks and PSBs, by the promotions, increments and other
management will give scope to dissect the related decisions. individuals. In this
correct personality of an individual, identify ➢ To decide about the training and approach the
his intrinsic strengths and weaknesses, and development needs of employees
his performance to play the role assigned. It based on performance. performance is viewed
is a qualitative tool and an art of rating the ➢ For human resource planning. for future by way of

merits of an individual.
With the advent of the new private sector banks
in India an account of globalisation and
liberalisation, the entire scenario of the appraisal
systems has taken a metamorphosis change.
The banks operations are driven by high
technology, changing the role play of each
employee in all the banks. Therefore, there is an
imperative need for revolutionary changes in
the performance management systems.
Approach to Performance Appraisals
The traditional approach prevalent in the
performance appraisal system, which is also
known as organisational or overall
approach, is concerned with the overall
rating of the organisation. It takes the past
performance as a comparative factor to
appraise the merits.
Another approach is known as Developmental
Approach, that views the employees as
individuals. In this approach
performance is viewed for future by way of
setting goals for each employee.
Purpose of Performance Appraisal
Performance appraisal system is used for
evaluating the merits for the factors
mentioned below:
”
➢ To decide about salary revision.
setting goals for each
Developmental Approach
employee.
In the developmental approach to
performance appraisal as mentioned in the
aforesaid paragraphs, it is concerned with
the use of performance appraisal as a factor
contributing to employee motivation,
development and human resource planning.
This approach provides the employees to
indicate the direction and level of the
employees addition. It also shows the
interest of the organisation in
development of employees. This in
turn, helps in retaining the
calibre and arrest the trend Mr. Anantha Bhaskar is presently working as a
of loosing the talents to Manager in Development Credit Bank Ltd.,
competitors. In this Hyderabad. He is a seasoned Banker with twenty
process an effective six years of experience in multifarious disciplines
communication of banking, having worked in both public and
channel is required private sector banks. He is a Fellow member of the
between the Institute of Company Secretaries of India, besides
the employees and a certified Associate of Indian Institute of Banking
management. It and Finance, Mumbai. He holds a Diploma in
provides an Financial Services awarded by IIB & F. He is law
opportunity to graduate. He has specialization in Development
employees to prove Banking and Rural Banking.
themselves by good
Mr. Bhaskar is an MBA (Finance) from IGNOU, New
performance.
Delhi. He is a Licentiate in Insurance.

IBA BULLETIN 23
JULY 2005
The Process of Performance Appraisal
In the process of performance appraisal a
relationship is established between the
evaluator, who is the superior or manager
and evaluatee who is employee regarding
the work expected, goals to be accomplished
and how the work performed is evaluated. In
order to establish this relationship,
continuous feed back of the information
about the work expectations, modified goals
or objectives should be communicated to the
employee on a regular basis. This process will
enable the management to properly evaluate
the performance and the progress made by
the evaluatee in the work assigned. The
superior performer will be rightly rewarded,
recognised and commended for the work
done.
The employee has to submit the appraisal
form to the management in time, so that the
discussion between the reportee and the
manager will enable the completion of
appraisal process and construction of a
development plan.
The above process is already existing in
many of the Banks, particularly PSBs in India.
This process has taken a revolutionary
change in new private sector banks and
implemented with several modifications.
Performance Appraisal is more of an art than
science. It is qualitative process, conducted by
a senior and experienced decision makers, with
the use of available techniques. The appraisal
will be highly analytic and decides the merit
rating of employees on the basis of
performance.
Performance appraisal will enable the
management in identifying the strengths
and weakness of employees, intrinsic skills,
the role efficacy of the job etc. Evaluation of
performance is a formidable task of
managers. Because a bad appraisal may
24 IBA BULLETIN
JULY 2005
badly affect the employee morale and
demonstrates, ultimately affecting the
productivity and so the organisation. The
character and credibility of an individual is
associated with his / her willingness to excel
in performance and to achieve the targeted
goals.
In a banking organisation, being a service
oriented industry the appraisee should have
the following traits to show
performance.
➢ An Attitude for achievement.
➢ Personal responsibility for achievement
or accomplish the goals assigned.
➢ Confidence in the ability to succeed.
➢ Proactive to feedback and to
demonstrate skills at higher levels.
➢ Orientation for future career.
➢ Preference to achievement of goals
rather than monetary rewards.
The Manager, who evaluates the
performance, should also take into account
all the above aspects in the appraisal process.
Performance appraisal necessitates
continues watch and review at all stages by
the management and monitor the
employees. Integrity, frankness, creativity,
commitment, patience, leadership qualities,
risk taking attitude of the Bank employees
will enable them to excel in performance.
In the new private sector Banks like ICICI, HDFC,
Kotak Mahindra Bank, IDBI Bank, UTI Bank,
revolutionary methods of performance
management have been introduced to
evaluate the individual employees.
In these Banks unlike the old private sector
banks and PSBs, the hierarchy of workforce
is different. The lowest category among the
staff is called Junior Executive / Officer /
Junior Officer etc. Therefore, these banks
have introduced self appraisal system for
all the employees.
People’s Review Process
The system of performance appraisal in most
of these Banks is known as “Peoples Review
Process”. This process is linked to
performance review.
The important aspects of this system of
performance management system are:
➢ Setting the goals and objectives for the
his review period, which are to be achieved
by the individual employee.
➢ Evaluating or appraising the
performance against the targets set for
each personnel.
➢ All rewards either monetary or non
monetary are linked to the performance
of the employee.
The peoples review process method of self
appraisal will give an opportunity to each
employee to interact with his/her immediate
superior at any point of time to express
views for the betterment of the organisation.
In this process superior performers will be
paid linked to the performance. Pay is fixed
accordingly. The employees are motivated
to take active part in achieving the goals to
gain better rewards. Higher rewards will
boost the employee morale and
productivity, ultimately enhancing the
organisational effectiveness.
Goal Setting
It is the first and foremost step in this new
performance management system. This
system covers the award staff in banks other
than sub-staff. The performance of sub-staff
will continue to be evaluated by the
management. This goal setting is done by
the employee himself in the prescribed
format, which contains the personal details
of the employee, key accountabilities of the
job entrusted, for the reporting period, the
goals set for the year and the target date by
which the set goals are to be achieved.
Normally the goal setting exercise is for the
financial year. The goals are set taking into
account the objectives and targets to be
achieved.
This goal setting exercise will be done by
the employee after discussion with the
immediate superior and agreed mutually by
both of them. From time to time the
evaluator or manager has to regularly
monitor the progress of the goals set with
the evaluatee or reviewee. An informal
discussion takes place with the reviewee
regarding the goal setting exercise by the
superiors.
Review Period
Normally, in every bank, the review period is
the financial year, say from April – March.
Goals set for the financial year would be
reviewed at the end of the year as a part of
the “Performance appraisal” exercise. The
employees covered under self appraisal
system have an opportunity to ventilate or
reveal their performance / achievements
without any reservations or inhibition. They
can also reveal the areas, where improvement
is required.
This gives the transparency to both employee
as well as reviewer. The appraiser will review
the self assessment after a discussion with
the appraisee and evaluates the
performance, award a rating after
discussions with HRD and Personnel. While
rating the performance, evaluator will share
the views of the evaluatee and record the
employees consent or dissent by obtaining
the signature as a token of having
acknowledged.
Based on this rating, management will
complete the process of rewarding,
recognition and remedial actions to be
initiated. At the same time the banks are
identifying the need for training and career
development of the employees.
The management of the bank will provide
the guidelines for each employee for
completion of the goal setting exercise.
The goal setting exercises will contain the
personal details, key account abilities, goals
and objectives set for the year.
For example: The key account abilities of a
Branch Manager in the Bank are listed as below:
➢ Ensure sound and profitable growth
through the achievement of product-
wise sales targets and to ensure quality
in service delivery.
➢ Accountable for the compliance with
all statutory/regulatory requirements.
➢ Over all supervision and business
achievements of the branch.
Likewise the key accountabilities are set for
each job depending upon the functional
designations.
Meaning of Goal
It is a statement in writing mentioning the
tasks to be performed by each employee.
The end result is measurable or quantifiable.
A goal is given in writing fixing a definite
responsibility. If it is orally conveyed, the
instruction cannot be powerful and becomes
only an idea. It will not have the force to
motivate. It lacks the power and defects the
purpose for which the goal is meant. A goal
entrusted in writing will always remind the
reviewee as well as the superior as to what
exactly is to be done during the reporting
period. Reading the goals set, again and
again regularly encourage the person for
achievement of the same.
Goals to be effective should be specific,
measurable, attainable, acceptable, realistic
in nature and tangible. These should be a
specific target date before which it is to be
achieved.
Goals should be clear and specific,
mentioned in short. The success or failure in
achieving the goal should be measurable.
Therefore, the goals should be quantified
to enable easy measurability.
In order to analyse the strengths, weakness,
opportunities and threats by an individual
himself realistic goals are to be established.
This requires knowledge management.
A targeted time frame is important for
achievement of goals by the individual
employee. The goals should be ideal that
includes short term as well as long term
goals, to be achieved in a targeted time
frame. Goals are to be clearly defined with a
specific action plan, target date for
achievement. The employee in manageable
lots for easy achievement can divide the task.
The goals set should be agreed by the
employee and his superior after having
formal discussions duly mentioning the
agreed date with signatures and should be
strictly adhered to so that the optimum
benefit is achieved out of the process
without any lacunae.
Competencies and Attributes
The appraisee in his self appraisal form
should mention his/her achievement in the
job as per role plans on the following
aspects:
➢ Professional expertise demonstrated in
his functions and knowledge in the
Banking to resolve issues relating to the
Business.
IBA BULLETIN 25
JULY 2005
➢ Relationships maintained for acquiring
business initiatives taken for result
orientation.
➢ Decision making abilities displayed in
his role play.
➢ Display of sound professional
behaviour and integrity in dealing with
people at all places. Team work for
successful business.
➢ Plan strategically setting clear and
attainable goals of the Bank and
monitoring the progress.
➢ The level of analytical ability and
communication skills.
➢ Building rapport with others and
develop a network for relationships for
achieving the goals.
Private sector banks give preference to
performance over seniority. Therefore
performance appraisal system is an
indispensable tool for ranking the employee
for better productivity and organisational
growth.
After completion of the goal setting exercise
and submission of self-appraisals, the next
step is ranking the employees at the end of
the year by taking the achievement of goals
in the reporting period.
Performance rating is done by the
management depending upon the
recommendations of the managers and unit
heads.
Forced Ranking/Tiering Percentages
In the new private sector banks, the forced
ranking system of Tiering percentages
method is adopted for ranking the
employees against the performance. The
ratings are given as under:
26 IBA BULLETIN
JULY 2005
1. Exceptional/Excellent - 10% of staff
2. Effective or Good - 25% of staff
3. Standard performance - 55% of staff
4. Needs improvement - 10% of staff
For rating purpose individual business units
are taken into consideration. For example
operations, credit department, foreign
exchange, risk management department,
corporate banking, personal business banking
etc.
Banks should initiate innovative measures,
encouraging their employees to broad base
their knowledge and upgrade their skills by
way of granting finance and for purchase
of books etc. or banking rated subjects. This
improves employee productivity.
The forced ranking percentage is distributed
by regions or zonal offices. Under this forced
ranking, if there are four employees working
in a branch and even if all the four people
have performed excellently the forced
ranking system is adopted. In this process
one will get exceptional ranking, one
effective, one standard and the fourth one
gets “Needs improvement”. This will de-
motivate the excellent performer, who gets
a lower ranking resulting in impairing his
efficiency. His/her morale is affected
ultimately his abilities and productivity.
Likewise, in various branches/unit offices of
the bank, several excellent performances will
be affected by poor ranking. This system of
forced ranking will have a serious effect and
the efficiency of the organisation and will
impair the productivity of the employees
and also the Bank. This type of distribution
of ranks is not a justified method. It affects
the morale of each employee and affects
the efficiency and de-motivates for further
performance.
Suggestions
➢ The Banks should adopt such type of
performance appraisal systems where
the employees are encouraged to
achieve the targeted goals.
➢ The forced ranking systems and the
tiering percentages should be
considered as a whole for the total work
force of the bank and not for individual
branches/units.
➢ The real performers should be ranked
suitably and rewarded correctly.
➢ The employees with least ranking i.e.,
needs improvement should be properly
trained and attention is paid to motivate
for better performance in future.
➢ An opportunity to be provided for
reconsidering the decision in ranking
depending upon the merits of the case.
➢ It is the duty of HRD in banks to bring out
revolutionary changes in appraising
system for better ranking of employees
to maintain efficiency of the organisation.
➢ Favouritism and nepotism should be
avoided in ranking and identify the
talents for proper utilisation of available
talents.
Conclusion
A performance review method adopted by
banks should aim at increasing the morale,
efficiency and productivity of each employee.
The ultimate result of the performance
review should cater to increase productivity
of the organisation. The performance review
process assumes greater importance in
banks.
Banks in order to sustain good performance
by increased productivity, HR managers
should plan to quickly implement modern
techniques in performance appraisal. Banks
should not allow the talent let go to
competitions. q
 FII Inflows into India :
A Dilemma
Dr. R.K. Srivastava

FII inflows into

India have
increased
dramtically in
Foreign Institutional Investor (FII) investment can take Trends and Reasons
recent years. place in a variety of ways like in shares and bonds;
India’s growth story is something that FIIs cannot
long-term forex loans; and short-term forex loans.
These inflows ignore. In fact, the global consulting firm Goldman
The beneficial effects of FIIs are somewhat indirect
Sachs put out a BRIC report that paints a rosy picture
have been and not as visible as in the case of FDI. FII inflows too
about where these four nations (Brazil, Russia, India
associated with help capital formation either by participating in
and China) are likely to be by the year 2050. The
public offerings or by releasing the existing pool of
the boom of BSE report clearly sends signals to global investors that
risk capital through the secondary markets. There is
they can bet on India. Factors such as a youthful
Sensex, a general fear that FIIs can reverse at any time. In the
nation with half of its population out of one billion
case of Indian stock markets, currently it is hugly
appreciation of falling in the prime age group of 25, the changing
influenced by FIIs. The market capitalisation of FIIs’
income distribution profile with a broader segment
Indian rupee, holdings was Rs. 214000 crore as on December 31,
of middle class enjoying greater access to money to
2004. This is equal to 30% of the total free float market
increase in spend or splurge are the key points of this report.
capitalisation. Such a large FII presence can lead to
Therefore, in recent years a large scale of FII inflows
inflationary huge volatility whenever FIIs buy or sell or shuffle
in Indian stock and debt markets. For instance, India
pressures, etc. their holdings. In fact, FIIs have been associated with
gets second highest FII inflows in emerging Asian
the current boom of BSE sensex; appreciation of
These are key markets. It is just behind Korea. In 2004 (till December
Indian rupee; increase in inflationary pressures, etc.
10), overseas investors have pumped about $10.5
concerns of RBI. RBI is in its own dilemma. In case it restricts to FII
billion into Korea, while India had received $7.8 billion
inflows, there will be wrong signal to the world’s
However, there during the same period. Since then FII inflows
investment community that India’s policy regime is
continuously in the market and it reached to $ 8.5
are some options weak and short-sighted. In either case if RBI does
billion in Indian equities in 2004. In 2005 FIIs are investing
not intervene forex market, the above cited
available in the more money in Indian equities than in South Korea
problems may become more complicated.
and Taiwan. According to the data sourced from Stock
hands of Therefore, the obvious objective of the
Exchanges in South Korea and Taiwan, since the
Government and article is to find out pros and cons of
beginning of calendar year till February 28, 2005 FIIs
RBI’s main concerns relating to FII
RBI to tackle this have injected $192 million into Indian stocks.
inflows and to trace out what
situation are the policy options left The Morgan Stanley Capital International (MSCI)
before RBI. Emerging Markets index rose 2.5% year-to-date (YTD).
prudently. In comparison, the MSCI India index remained flat. The

IBA BULLETIN 27
JULY 2005

MSCI South Korea index rose 7% while MSCI
Taiwan fell 1.9%. At the same time, India’s
weightage in the benchmark emerging
market indices managed by agencies like MSCI
and London’s FTSE, is a fraction of South Korea
and Taiwan put together. While South Korea
and Taiwan together account for around 35%
of the emerging market indices, India accounts
for only 6%. As a result, South Korea and Taiwan
have remained the biggest recipients of FII
”
Moreover, it is calculated in the calender year
2005 that about $10 billion FII money will
RBI Governor, Y. V.
pour into India. This dollar deluge could
Reddy has repeatedly
impact the capital market and further voiced his concern
strengthen rupee against dollar. about the
Second, FII inflows cannot be used for long- unprecedented high
term infrastructure projects. Cummulating forex inflows
forex reserves have their own costs that the particularly through
RBI needs to bear. In fact, forex reserves the FII route, posing a

”
money till 2004. It is only in 2004 that India
would remain idle with the RBI yielding challenge to forex and
probably 0.5% interest on US Government
managed to receive the second highest inflow monetary
bonds. If RBI does not support to buy dollar,
when it attracted over $8.5 billion by way of FII
rupee will appreciate further.
management.
inflows. That is why the stock markets are
dominated by FIIs. They brought in $7 billion in Third, the continuous large scale FII inflows
2003, $8.5 billion in 2004 and it is estimated that would perhaps increase the money supply
FII inflows will be around $10 billion in 2005. In and inflate the price structure of the
recent years, FIIs have shown their interest in economy. Consequently, India’s exports may
the Indian debt market too. From a net figure face thereat of uncompetitiveness. However,
of minus $2.2 million in October 2004, it has these fears seem unfounded as India’s
moved up to $81.9 million till December 17, 2004. exports grew by 33% in January’ 05.
Clearly, the reason is that the returns from debt
Options
instruments in India are better than the US.
Current large scale FII inflows into Indian
Major Concerns
stock and debt markets are largely driven
RBI Governor, Y. V. Reddy has repeatedly by appreciation of rupee against
voiced his concern about the unprecedented dollar in forex market. There are
high forex inflows particularly through the some options available in the
FII route, posing a challenge to forex and hands of Government and
monetary management. The key concerns RBI to tackle this
of RBI are : situation purdently.
First, Indian stock marekts have seen a These are :
record-breaking rally that was largely fuelled First, the RBI can put
by FII inflows. Therefore, BSE sensex has
a cap on FII inflows.
crossed 6700 levels. Current stock market
The implications Dr. Srivastava is Reader,
boom though some corrections will provide
can be far reaching. Dept of Economics,
benefits primarily to foreign investors
It would be wrong
because of their holdings. For instance, FII HNB Garhwal University,
signal to the
presently hold more than 50% of the free Tehrigarhwal
world’s investment
float of the top 100 companies. Current
community that
foreign holding in several companies is even
India’s policy regime
higher-71% in Moser Bear, 66% in Satyam,
is weak and unstable.
63% in HDFC and 70% in ICICI Bank.

28 IBA BULLETIN
JULY 2005
Second, FDI policies can be tailored more
attractive, stable and transprent to beat FII
inflows. The major hurdles to attract FDI are
: weak infrastructure facilities, rigid labour
norms; high fiscal deficit etc.
Third, Government of India is contemplating
the idea to follow the Chinese model to use
forex reserves. The Government is expected
to create a Special Purpose Vehicle (SPV) for
making forex reserves available for
"financially viable" infrastructure projects. It
would be right action in right direction. In
any way, the returns from infrastructure
projects would be better than the returns
from US or Euro deposits where our reserves
are currently parked.
Fourth, to put an end to excessive influence
of FIIs in stock markets, the Government’s
latest moves have opened the doors for
long-term domestic money to flow into the
equity markets. These moves (for example,
allowed pension funds to invest 5% of their
corpus directly in equities, etc.) can lead to
an investment of as much as Rs. 95000 crores
in domestic equities over a period of time.
Fifth, the Government has enhanced the limit
of Equity Linked Saving Scheme (ELSS) in
which investments upto Rs. 1 lac from
Rs. 10,000 in a financial year qualify for a tax
relief under Section 80c of Income Tax Act..
This will increase the influence of Indian
investors in the domestic capital market.
If these options are put into action, the
dominance of FIIs in Indian stock and debt
markets can be efficiently minimised. q

Contribution of Articles
Our Editorial Committee has decided to bring out articles on different topics of interest to bankers. Some
of the areas receiving focused attention of bankers in the recent past are:

• IT strategy vis-a-vis Business strategy : Issues in alignment

• Bank Scale Economies, Size and Efficiency - The Indian Experience
• Operational Restructing - Principles and practices
• Customer Relationship Management
• Social Banking : An Assessment

• Branding of Bank Services : An innovative Marketing technique.

Accordingly, the IBA Bulletin will carry articles on current topics on different aspects both in English and
Hindi languages.

Your contribution on any topic should be around 2500 words. The write-up should be crisp and concise but
certainly not at the cost of clarity. The manuscript should be sent on a floppy (MS Word) along with a hard
copy or e-mailed to ganesan@iba.org.in; tushar@iba.org.in; lira@iba.org.in. Please also submit a
statement declaring that the material has not been published elsewhere nor has been given to any other
publisher for publication. A passport size photograph of the author together with a small write-up about
the author may be sent alongwith the article. The Association pays honorarium to authors whose articles
are published.

IBA BULLETIN 29
JULY 2005
 Consolidate or
Perish Santosh Patnaik

Globally, the banking industry is organizations went from over 50 per cent in 1980 to
undergoing significant metamor- nearly 75 per cent in 1997. The reasons for these
phosis,with ‘bigger the better’- being mergers were a new statutory environment that
the revealed preference of the allowed interstate ownership and branching; banks
prime players. Disintermediation, seeking scale economies; geographical
Consolidation coupled with cut-throat diversifications; and increased competitive pressures.
competition have literally forced
Europe too, experienced similar M & As experiences
alone will give banks worldwide to look for new pastures to boost
between 1980 and 1995, when the number of
their earnings. Consolidation in fact,has been the
banks the muscle, banking establishments fell, particularly in Denmark
defining characteristic of the banking world during
(-57 per cent) and France (-43 per cent).The merger of
size and scale to the last decade. The year 1998 witnessed more
Switzerland’s two top banks – Union Bank of
volumes of mergers and acquisition (M & A) in the
act like world Switzerland and Swiss Bank Corporation on Dec, 08,
commercial banking industry worldwide than any
1997 created the world’s largest asset manager with
other industry. More than a fourth of total mergers
class banks. We a fund portfolio worth almost a trillion dollar, with
and acquisition deals were involving banks –
assets of Swiss Fanks1320 billion ($ 912.8 billion) and
have to think totalling $102 billion (The Economist, March 13, 1999).
a market capitalization of $ 59 billion at Dec 03, 1997
M & As however, are not a recent phenomenen; four
global and act prices and made it world’s 4th largest after HSBC,
periods of high merger activity, known as ‘merger
Bank of Tokyo-Mitsubishi and Lloyds TSB Group.In
local and seek waves’ occurred in the United States (1897-1904, 1916-
Japan,three banks - the Industrial Bank of Japan (IBJ),
29, 1965-69, and 1984-89) before the current one that
Dai-Ichi Kangya Bank (DKB) and Fuji Bank announced
new markets, began in the early 1990s. This latter wave attained
their intentions to merge in 1999. Some of the reasons
exceptional levels in terms of sheer value and
new classes of advanced by Japanese banks for their merger were:
volume of transactions, and has been
the need to invest more in information technology
borowers instrumental in the decline of the number of
than one bank can afford;foreign competition; drive
banking organizations in the U. S. - between
for economies of scale in retail banking; and the need
- Shri P. Chidambaram 1980 and 1997 they dwindled from
Minister of Finance to increase capital strength in the face of bad debt
12,333 to 7122. Simultaneously, the
crises.
proportion of banking assets
accounted for by the 100 A G-10 report on consolidation in financial services
largest banking which surveyed 45 experts in the area of banking
from these 10 countries revealed that exploitation

30 IBA BULLETIN
JULY 2005

of scale economies emerges as the single
most important motive for within industry
mergers, while enhancement of revenue
through provision of one-stop shopping for
customers emerges as the single most
important motive for mergers across
industry segments (Group of
Report,2001). While an important motivation
for mergers has been the ability to
rationalize branches to cut down costs, the
”
commercial banks at the end of 1951, the Mergers provide
number came down to 292 at the end of 1961, routes for cross border
to 100 at the end of 1966 and to 85 by the
end of 1969. Over the past 45 years, 34 banks
expansion;here the
and non-banking finance companies have motivation is
been merged. Till now, most mergers that have
increasing revenues.
Ten taken place in the banking industry have
been under coercion, e.g. Nedungadi Bank Banks find it easier to
with Punjab National Bank, Global Trust Bank acquire an existing
with Oriental Bank of Commerce,Benaras
bank with a wide

”
potential for such cost saving depends on State Bank with Bank of Baroda, Sikkim Bank
the structure of a country’s banking industry. with Union Bank of India, and ANZ Grindlays branch network than
Spain, for example, has more than five times as with Standard Chartered Bank. The notable
many branches per citizen as America; Germany’s exceptions, of course are HDFC Bank’s take-
to build their own
ratio is twice that of America’s (The Economist, over of Times Bank and the merger of SCICI, network from scratch.
March 13,1999). Thus,historical factors behind Anagram Finance, ITC Classic, Bank of Madura
branch expansion influence the possible and ICICI with ICICI Bank.
savings through branch rationalisation.
The Narasimham Committee on financial
Mergers provide routes for cross border sector reforms (Report II) had stressed the
expansion;here the motivation is increasing need to reduce the number of public sector
revenues. Banks find it easier to acquire an banks and to create a few large banks with
existing bank with a wide branch network large-scale operations and international
than to build their own network from presence. This was triggered off by Finance
scratch. Mergers are also used as an exit Minister P.Chidambaram’s speech at the IBA’s
route for troubled banks. The Trust annual general meeting in Mumbai in
Fund,established in 1995 at the height of August 2004, wherein he
the banking sector crisis in emphasized: “Consolidation
Argentina,assisted in the mergers of more alone will give banks the
than a dozen troubled banks with healthy muscle,size and scale to act
banks.In sum, the growing tendency towards like world-class
mergers in banks worldwide has been banks.We have to
primarily driven by: intensifying think global and act
competition, need to reduce costs, enhance local and seek new
size,technology upgradation, desire to markets, new
expand business into new areas, improve classes of
Shri Santosh Patnaik is Officer,
shareholder’s value, and diversify large bank borrowers”. While
United Bank of India, Bhubaneshwar.
loan portfolios to lessen the likelihood of replying to a
failure and harness core competencies. question on the
consolidation of
Indian scenario
Government owned
History reveals that mergers of banks in India banks in the Lok
took place in the 1960s under the direction Sabha on 4th
of the apex bank. From 566 reporting December, 2004, he

IBA BULLETIN 31
JULY 2005
remarked “Larger size entails better
management of risk. Small and weak banks
pose systemic risks with their low capital
adequacy ratio and high non-performing
assets”. Again, speaking at a banking seminar,
Chidambaram remarked “International
trends suggest that consolidation has
reduced the chances of credit risk.Tata
Motors looks and behaves like a global
company,Ranbaxy looks and behaves like a
global drug company. If Infosys, Wipro and
TCS look and behave like global companies,
Indian banks need to do the same.”
Close on heels of the Finance Minister
pitching for consolidation in the banking
sector, the RBI too, feels that M & As are
imminent. In view of favourable signals from
the Ministry of Finance and managements
of various banking institutions, a number
of leading public sector banks and new-age
private sector banks are understood to be
in the process of scouting for ‘suitable
acquisitions’, based on geographical
advantages and other business and cultural
synergies. M & A has, in fact, replaced NPA as
their buzzword. Among the private sector
banks, some of the names that have been
doing the rounds as ‘potential acquisitions’
are. Lord Krishna Bank, Lakshmi Vilas Bank,
Karur Vysya Bank, Karnataka Bank and
United Western Bank. The virtual merger of
SBI and its seven associates in the form of
technology and treasury integration has
alredy begun; legal merger requiring some
more time. Bank of Baroda is looking for
acquisition in principle, “We are looking for
acquisitions in areas where we don’t have a
very strong presence. We are very strong in
western India,but don’t have much reach in
the south, east and north. These are the areas
to which we would like to expand”, said its
Ex-CMD P. S. Shenoy. Punjab National Bank,
which took over the private sector Nedngadi
32 IBA BULLETIN
JULY 2005
Bank, is in the process of acquiring Industrial
Finance Corporation of India(IFCI). Allahabad
Bank is looking for an acquisition down
south where its coverage is limited. “Our aim
is to gain both operational and geographical
synergy, while we finalise the consolidation
process”, says its CMD O.N. Singh. Vijaya Bank,
a southern player is looking towards the
north. Indian Bank, after its resurrection, is
quite optimistic: “If you want to grow, you
need capital …We will takeover some bank
and are looking out two or three targets at
the moment”, says its CMD M. B. N. Rao.
Oriental Bank of Commerce, which is still
digesting its wedlock with Global Trust Bank,
is likely to revive its merger plans soon.
Union Bank of India and Bank of India may
be the first to tie their nuptial knots.
Advocates of M & As are of the view that
with large cost bases and unwieldly product
and regional distinctions in the Indian
banking sector, global logic for mergers and
acquisitions also hold good in India. This,
they argue, would take care of the negative
factors such as, slow settlement of bad debts,
low profitability, poor capital adequacy
ratios and increased competition. Nimble
newcomers, armed with tight business focus
and strong consumer brands are harnessing
the power of technology to take advantage
of deregulation and liberalisation, thereby
increasing pressure on profit margins of
established banks. Analysts feel that size
matters a lot when it comes to compete for
a piece of the pie in the domestic as well as
global market. Size, brings along with it
economies of scale by bringing down the
transaction cost, build up financial strength,
capture larger portion of the growing retail
business, help expand overseas business
and secure better regional presence. The
Basel II accord which is slated to come into
effect from the end of 2006 aims to give
banks the means to weather external shocks
especially by setting minimum capital
requirement to absorb the potential impact
from a big default. The mounting pressures
on capital structure to meet these prudential
capital adequacy norms necessitates the
need for consolidation in the banking sector
which would provide Indian banks the ‘size
advantage’ that most foreign banks do
have.Recent events of collapse of banks like
Global Trust Bank, South Indian Co-operative
Bank and Maratha Mandir Co-operative
Bank pose greater need for consolidation
and ensure safer business transactions for
bank’s customers. This would also ensure
higher transparency,higher business
efficiency and higher corporate governance
standards.
Proponent of M & A argue that India is a
hugely over-banked, but under serviced
country. There are close to 100 scheduled
commercial banks, 4 non-scheduled
commercial banks, and 196 regional rural
banks. The State Bank and its 7 associates
have about 14,000 branches; 19 nationalised
banks 34,000 branches; the RRBs 14,700
branches; and foreign banks around 225
branches. If one includes the branch
network of old and new private banks,
collectively the spread could be over 68,000
branches across the country. Besides, there
are a few thousand co-operative bank
branches. Thus on an average, one bank
branch caters to 15,000 people. Amidst this
plethora, State Bank of India is the sole
entity among the top 100 banks in the
world,that too ranking a lowly 82! Even small
economies in Asia like Thailand and Taiwan
have more big banks. It is only on parameters
like the number of employees and branches
that SBI figures near the top. SBI is catering
to a population size which is three times
than that serviced by Bank of America (BOA);
SBI is reaching 90 to 100 million customers
while BOA has around 30 million customers.
But looking at the assets of these two banks,
BOA has more than a trillion dollar of assets
as against SBI’s size of $ 93.75 billion (@Rs.43.5
/ $). This, undoubtedly gives BOA a muscle
to cut costs and amplify earnings.
People Issues
To gain full merger benefits, two overlapping
organizations are compressed into one,
trimming duplicated operations which
entails redundancies at all levels. The M & A-
driven consolidation is raising important
public policy concerns,notably with respect
to employment. As witnessed recently, the
United Forum of Bank Unions have
expressed strong reservation for
consolidation within public sector banks.
One of the major issues which need to be
handled is in regard to the treatment of the
employees of the transferor bank
consequent upon the merger or acquisition.
The regulator should draw guidelines
regarding the continuance and other service
conditions applicable to the employees of
the transferor bank consequent upon
merger. Re-training of staff is another
challenge for the emerged entity. “People
issues are important,” says former deputy
governor S.S.Tarapore, “Not much debate has
taken place on what is to be done with the
branches or staffing.” He adds that mergers
in India have so far been bailouts; one ailing
bank is rescued, but it is a leg shackle for the
other.
Change as usual, is always a source of
uncertainity, tension and potential conflict.
The creation of formal,internal
communication mechanisms as early as
possible in the process is necessary to limit
the anxiety that will otherwise be fuelled by
rumour, the grapevine, or even outside news
reports. It is essential to prepare and
communicate to staff a programme of
integration so as to combat the feelings of
fear, apathy, demotivation and the classical
“victor” and “vanquished” syndromes.While M
& As are driven by financial considerations,
their success vitally depends on the
motivation of retained staff to contribute to
the achievement of merger activity. Poor
morale due to increased job insecurity of
retained staff is by far the worst human
resource problem in today’s business climate.
The survivors who are already subject to
“survivor’s syndrome”find they have to work
harder to cover staffing shortfalls,with the
consequence that increased workloads feed
the stress related to job
insecurity,undermining the very efficiency
goals that motivated the merger or
acquisition. Job insecurity may make
employees feel pressured into agreeing to
put extra effort into their jobs to demonstrate
organizational loyalty; but such working
conditions are neither sustainable nor
conducive to the achievement of corporate
objectives. M & A value extraction is impossible
without the enthusiastic cooperation of
employees.
Consumer Issues
While supporters of M & As argue that this
would facilitate synergy between the
merged organisations, generate efficiency,
increase competitiveness and provide
services at lower prices, those opposing
financial sector M & As strongly contest their
consumer gains and maintain that they only
result in employment losses and
diminishing access to services. Studies have
indeed revealed that larger financial
institutions tend to charge more and higher
fees than their smaller counterparts and
note an inverse relationship between the
sizes of financial institutions and their loan
portfolios to small businesses. Assertions
that size guarntees economies of scale
essential to compete in global markets have
similarly been disputed on the ground that
size is irrelevant to international
competitiveness.
Cultural issues
Full integration requires the best aspects of
both legacy organisations to be
incorporated into a single new company
culture focused on achieving future business
growth. The key issues that lead to failure of
bank mergers are lack of planning and failure
to manage cultural differences. It is not
necessary that two banks have the same
culture. Cultural and symbolic elements in
M & As are typically framed in terms of the
distinction between the emerging firms, thus
leading to an “us versus them” dualism. Early
emphasis on cultural assessments and
communication plans are particularly
important. According to a KPMG report, M &
A deals were 26 per cent more likely than
average to be successful if they paid
satisfactory attention to cultural issues. If not
handled properly, this can lead to an
accumulation of critical errors and
misunderstandings and ruin what, on paper
might look like a highly promising deal.
Technological Issues
Most of the banks, especially public sector
banks,have implemented technology in bits
and pieces; as such, they are at different
stages of technological implementation.
Besides, they have different core banking
solutions provided by different vendors i.e.,
I-Flex,Infosys, TCS, Wipro, etc which,may pose
challenge to the merging entities to
integrate their technology and working
platforms. Similarly, the range of software
for treasury operations is quite wide e.g.
Kondor, +Kastle,
iDEAL, ITMS etc, while the vendors are Reuters,
Unisys, Oracle, TCS, Credence, ICICI info,
Bloomberg, Synergy login and a few others.
IBA BULLETIN 33
JULY 2005
Here too, software synergy becomes an issue
during mergers. If two banks with two
different technology platforms plan a merger,
hundreds of crores of rupees will go down
the drain.
Role of Regulators
Mergers should be based on the need to
attain a meaningful balance sheet size and
market share in the face of heightened
competition and driven by synergies and
locational and business-specific
complementaries. Bank consolidation/
merger process should be primarily market
driven and such proposals should come
voluntarily from the banks themselves.
Government and supervisory authorities
should only provide a conducive
environment for consolidation and
convergence through appropriate fiscal and
monetary policies supported by a sound
regulatory and supervisory framework; at the
same time ensuring that a few large
institutions do not create an oligopolistic
structure in the market.In particular,
regulators have to consider the anti-trust
aspects of merger activity.In this context the
experience of US Federal Reserve can be
useful since the US has seen more mergers
in the past two decades than any other
country. The objectives of the public policy
followed by the US Federal Reserve Bank in
cases of mergers are :
1. Ensure a safe and sound banking system;
2. Preserve benefits of competition for
consumers of financial services;
3. Meet convenience and needs of local
communities;
4. Allow the firm to evolve with the needs
of the market.
To ensure a smooth passage to the new zone,
the Government needs to amend the
Banking Regulation Act.IBA, the bankers’apex
body, which set up a committee under the
chairmanship of Mr. V. Leeladhar to look into
the intricacies of mergers and acquisitions in
the banking sector, has suggested
corporatisation to bring all banks under the
Companies Act, 1956, thereby ensuring a
common legal framework and resolving the
anamolies and lacunae in the Income Tax Act.
This would also help the government extend
tax sops to public sector banks.
Today’s highly competitive banking
world,inebriated with Darwin’s “Survival of the
Fittest” mantra has no reverence for the age-
old aphorism “Live,and Let Live”; and Indian
banks have no option,but to move slowly,
but surely from the present regime of ‘large
number of small banks’ to a ‘small number of
large banks’. The new era, certainly is going to
be one of consolidation around identifying
core competencies. "Consolidation" says
Dr. A.K. Khandelwal, CMD, Bank of Baroda,
could be in two phases. Phase I could be
between two banks, followed by the merger
of one or two additional banks to form larger
entities. This phase could also see area-
specific consolidation, followed by across-
the-country consolidation. What will mark
out the new era of consolidation from the
earlier experiences is that the future players
will be willing players.
The writing on the wall is very clear; whether
we back up or not, circumstances will force
us to consolidate or perish. q

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34 IBA BULLETIN
JULY 2005
 Banking Scene - Indian
Revised ECB Guidelines
Recently, the government revised the norms
for external commercial borrowings (ECBs).
The last revision of these norms were done in
January, 2004. ECBs could now be accessed
under two routes, the automatic and approval
route. ECB for investment in the real sector,
that is industrial sector, is under the automatic
route. All cases that fall outside the purview
of the automatic route, will be decided by an
empowered committee of the Reserve Bank
of India. Following are the amendments made
by the government with regard to the ECB
guidelines.
• Non-banking finance companies will be
permitted to go in for ECBs through the
approval route to meet fund
requirements from multilateral financial
institutions, reputed regional financial
institutions, official export agencies and
international banks towards import of
infrastructure equipment for leasing to
infrastructure projects with minimum
average maturity of five years.
• Housing Finance Companies with strong
financials satisfying criteria to be notified
by the RBI , will be permitted to issue
foreign currency convertible bonds under
the approval route.
• Financial institutions dealing exclusively
with infrastructure or export finance such
as IDFC, IL&FS,Power Finance Corporation,
Power Trading Corporation, IRCON, and
EXIM Bank of India will be permitted to
go for ECBs through the approval route.
• Banks and financial institutions that had
participated in the textile or steel sector
restructuring package as approved by the
government are permitted to the extent
of their investment in the package and
the assessment by RBI based on
prudential norms. Any ECB availed for this
purpose so far is deducted from their
entitlement.
• All ECBs would be subject to specific
maximum spreads over the six month
LIBOR, for the respective currency. The
interest spread ceiling would include rate
of interest, other fees and expenses in
foreign currency except commitment fee,
pre-payment fee and fees payable in
Indian rupees. Moreover, the payment of
withholding tax in Indian rupees is
excluded for calculating the all-in-cost.
• Issuance of guarantee, standby letter of
credit, letter of undertaking or letter of
comfort by bank, financial institutions and
NBFCs relating to ECBs is not permitted.
However, application for providing
guarantee/ standby letter of credit or
letter of comfort by banks, financial
institutions relating to ECBs in the case of
SME will be considered on merit subject
to prudential norms.
• The prepayment of ECBs will be revised
upwards to US $ 200 million from US $ 100
million, subject to minimum average
maturity of five years.
Special Economic Zones Bill – 2005
In May, 2005 the Special Economic Zones Bill
2005 was passed in the Lok Sabha.The SEZ Bill
is expected to encourage exports and foreign
direct investment in the country. The Bill
provides a single window clearance and
approval mechanism for the establishment of
SEZs, as well as production units inside the
zones. The Bill contains income tax
concessions for both SEZ units and SEZ
developers, who continue to get 100 per cent
income tax exemption for 10 years in a block
period of 15 years. Other features of the Bill
include the following:
• Establishment of SEZ and setting up of
units therein;
• Establishment of free trade and
warehousing zones to create world class
trade-related infrastructure to facilitate
import and export of goods, aimed at
making India a global trading hub;
• Requirements for setting up offshore
banking units and units in International
Financial Service Centre in SEZs, including
fiscal regime governing the operation of
such units.
• Establishment of an authority for each
SEZ set up by the Central government to
impart greater administrative autonomy.
• Designation of special courts and a
single enforcement agency to ensure
speedy trial and investigation of notified
offences committed in SEZs.
Simplification of Procedure for Settlement
of claims in respect of deceased depositors
With a view to facilitate expeditious and
hassle-free settlement of claims on the death
of a depositor, the RBI had issued the
following guidelines to the banks. Important
features are as follows:
1. Treatment of Accounts with nominee/
survivor clause
In the case of deposit accounts where the
depositor had utilized the nomination
facility and made a valid nomination or
where the account was opened with the
survivorship clause (“either or survivor”, or
“anyone or survivor”,or “former or survivor”
or “latter or survivor”), the payment of the
balance in the deposit account to the
survivor(s)/nominee of a deceased
deposit account holder represents a valid
discharge of the bank’s liability provided:
a) the bank has exercised due care and
caution in establishing the identity of the
survivor(s)/ nominee and the fact of death
of the account holder, through
appropriate documentary evidence; b)
there is no order from the competent
court restraining the bank from making
the payment from the account of the
deceased; and c) it has been made clear
to the survivor(s) / nominee that he would
be receiving the payment from the bank
as a trustee of the legal heirs of the
deceased depositor, i.e., such payment to
him shall not affect the right or claim
which any person may have against the
survivor(s) / nominee to whom the
payment is made. In the event of making
payment to the survivor(s) / nominee of
the deceased depositor, the banks are
advised to desist from insisting on
production of succession certificate, letter
of administration or probate, etc., or
obtain any bond of indemnity or surety
from the survivor(s)/nominee, irrespective
of the amount standing to the credit of
the deceased account holder.
IBA BULLETIN 35
JULY 2005
2. Accounts without the survivor/nominee
clause
In case where the deceased depositor had
not made any nomination for the
accounts other than those styled as “either
or survivor” (such as single or jointly
operated accounts), banks have to adopt
a simplified procedure for repayment to
legal heir(s) of the depositor keeping in
view the imperative need to avoid
inconvenience and undue hardship to the
common person. In this context, banks are
permitted to take decision keeping in view
their risk management systems, fix a
minimum threshold limit, for the balance
in the account of the deceased depositors,
up to which claims in respect of the
deceased depositors could be settled
without insisting on production of any
documentation other than a letter of
indemnity.
3) Premature Termination of term deposit
accounts
In the case of term deposits, banks have to
incorporate a clause in the account opening
form itself to the effect that in the event of
the death of the depositor, premature
termination of term deposits would be
allowed. The conditions subject to which
such premature withdrawal would be
permitted may also be specified in the
VIII Bipartite Settlement
Joint Note on Wage Revision
available at Rs.300/-
Publications Department, Indian Banks’ Association, Stadium House,
6th floor, Block 3, V N Road, Mumbai 400 020.
36 IBA BULLETIN
JULY 2005
account opening form. Such premature Banks have to settle the claims in respect
withdrawal would not attract any penal of deceased depositors and release
charge. payments to survivor(s) / nominee(s)
within a period not exceeding 15 days
4) Treatment of flows in the name of the
from the date of receipt of the claim
deceased depositor
subject to the production of proof of
In order to avoid hardship to the death of the depositor and suitable
survivor(s) / nominee of a deposit identification of the claim(s), to the bank’s
account, banks have to obtain appropriate satisfaction. Banks have to report to the
agreement/ authorization from the Customer Service Committee of the
survivor(s)/ nominee with regard to the Board, at appropriate intervals, on an
treatment of pipeline flows in the name ongoing basis, the details of the number
of the deceased account holder. of claims received pertaining to deceased
depositors / locker-hirers / depositors of
5) Access to the safe deposit lockers / safe
safe custody article accounts and those
custody articles
pending beyond the stipulated period,
For dealing with the requests from the sighting the reasons for the delay.
nominee(s) of the deceased locker-hirer/
Over and above these guidelines, the banks
depositors of the safe-custody articles
have to provide wide publicity and guidance
(where such a nomination had been
to deposit account holders on the benefits of
made) or by the survivor(s) of the
the nomination facility and the survivorship
deceased (where the locker / safe custody
clause. Further banks have to undertake a
article was accessible under the
comprehensive review of their extant
survivorship clause), for access to the
procedures and also take into account the
contents of the locker/safe custody article
Model Operational Procedure (MOP) for
on the death of a locker hirer / depositor
settlement of claims of the deceased
of the article, the banks have to adopt
constituents under different circumstances to
generally the foregoing approach, mutatis
be formulated by the Indian Banks’
mutandis, as indicated for the deposit
Association. q
accounts.
6 Time limit for settlement of claims
Compiled from various sources
by Jayasree Menon
CD on
for
Workmen Staff
and
for Officers
Contact :
Phone : 022-22894500/22894530

The FT Global 500 is an annual snapshot of
the world’s largest companies. In this
companies are ranked by market
capitalization. The companies with a free float
of at least 15 per cent were included in
calculating this index. The S&P 500 index of
leading US companies began in 1957. After
40 years, only 74 of the original 500 companies
remained on the list. Similarly, in Britain FTSE
100 index of leading British companies
started in 1984. After 20 years, only 23 of the
original companies remained. General
Electric of the US retained its top position in
2005 also in the FT Global 500 index. Exxon
Mobil of the US dealing in Oil and gas is in
the second place followed by Microsoft.
Citigroup is in the fourth position. There are
four Indian companies namely Oil and Natural
Gas, Reliance Industries, National Thermal
Power and Infosys Technologies in the FT
Global 500 index. Those companies which
have moved with times were able to perform
well. Analysts are of the opinion that the
compromise between shareholders’ interests
and those of employees and the wider
community has made a come back in recent
years in the form of “corporate social
responsibility. (CSR).” Champions of the CSR
opine that Companies that failed to take
account of wider social issues suffered
financial damage. Many companies have
gone along with the move towards corporate
social responsibility. Some investor groups
have encouraged them by stating that
companies should behave decently towards
their staff and the wider community because
their reputations could be damaged if they
ignore it, which ultimately lead to more
damage to shareholders. Many companies are
now sending work offshore to the benefit of
shareholders and to the greater discomfort
FT Global 500 –
Some facts
of European employees, and US who are
losing their jobs. Competition between
companies will always result in their seeking
some advantage. Sometimes that will be a
new technology but it will often be a
reduction in costs. Those who fail to grasp this
will be lost.
Basel II impact study threatens to delay the
accord start date in the US
The result of recently completed quantitative
impact study (QIS4) of Basel II may delay its
implementation in the United States. The four
US federal banking agencies (OCC,Federal
Reserve, FDIC and OTS) have called for a delay
in publishing an important notice of
proposed rulemaking (NPR) from the summer
to the autumn this year, to allow for further
study. The agencies have stated that QIS4
implied reductions in minimum regulatory
capital far larger than expected from previous
studies. Changes in effective minimum
required capital for individual banks ranged
from a decrease of 47% to an increase of 50%.
And no US bank would qualify under the
advanced approaches to Basel II. While the US
agencies testified that the original timetable
was possible, they also indicated that they
wanted a better understanding of the QIS4,
identify variations in the stages of bank
implementation efforts ( particularly related
to data availability), and/or suggest the need
for adjustments to the Basel II framework. In
short, the US banks require more time to
assess the impact of Basel II under the new
study. If the 20 US banks expected to
participate in Basel II do not get approval, the
possibility of a delay in the Basel II could not
be overruled.
Islamic Investment Bank’s share offering
net 100 million pounds
Banking Scene -
Global
The rise of Islamic banking has taken another
step forward with the recent successful 100
million pound share offering by European
Islamic Investment Bank (EIIB). The issue was
oversubscribed by 50 million pounds. EIIB was
incorporated in the UK in January with the
intention of becoming the first independent
Islamic investment bank in Europe, established
and managed on a wholly Sharia-compliant
basis. The founding shareholders include Gulf-
based individuals and institutions, including a
number of Islamic banks, as well as UK
individuals and companies. EIIB is planning to
submit by the end of May, 2005 an application
for authorization to the UK’s Financial Services
Authority (FSA) to conduct Islamic investment
and wholesale banking, with a focus on the
UK,Europe, the Middle East and Asia. The
proposed range of products and services
include the following Sharia-compliant
investment banking activities: Islamic treasury,
capital markets, asset management, trade
finance, correspondent banking and private
banking. The successful EIIB issue reflects the
growing demand for Islamic finance, an area
which has only been lightly tapped by
conventional banks and non-banking
institutions in Europe.
Micro Credit and Cambodia
After a dacade of civil war and a UN – brokered
peace accord in 1991, Cambodia has gradually
regained a degree of political stability. A small
private sector has grown from the ashes of
communist rule alongside a massive
international aid effort to raise living
standards for its 13.4 million people. As a
result, a foreign investment has flowed into a
few key sectors especially tourism and
garment manufacturing. One of the fastest
growing industries in microcredit lending,
IBA BULLETIN 37
JULY 2005
which provides loans to Cambodia’s poor and
has stimulated many successful small
businesses. Initially, many of the micro credit
institutions received foreign aid, but now they
are able to stand on their own as commercial
lenders. The combined outstanding loans by
licensed micro credit lenders grew from
roughly $15 million in 1997 to $ 64 million in
2003, according to the International Finance
Corporation (IFC). Cambodia’s largest such
lender is ACLEDA Bank, which began in 1993
as a non-governmental organization and is
now licensed as a full-fledged bank with
about 100 branches. With an average loan size
of $650, its portfolio stood at $75.4 million as
of March 2005, up from only $ 27 million at
end of 2002. ACLEDA has another distinction
as the only Cambodian lender with an
international credit rating from Moody’s
Investor Services. In 2004, the bank posted a
$2.5 million profit on $84 million in assets. One
of the reasons for the poor development of the
financial services in Cambodia was the lack of
properly structured legal systems which
prevents banks to lend without fear. The ratio
of bank deposits to GDP is less than 20% and
the total number of depositors is only 1,20,000.
The minimum capital requirement for banks
was raised in 2001 to $13 million which forced
many banks to close their operations. In the
micro credit sector, the lack of local-currency
deposits in the system is a long-term hurdle
for expansion. Most commercial banks in
Cambodia focus on servicing the country’s
closely interlocked political and business elite.
Only a handful of foreign banks are operating
in the country. May Bank and Public Bank of
Malaysia and Siam Commercial Bank of
Thailand have their operations in Cambodia.
But big players in the global scene are yet to
explore Cambodia.
For Subscription kindly contact the Editorial Department, IBA
Tel. : 022-2217 40 40 • Fax : 022-2218 42 22
38 IBA BULLETIN
JULY 2005
Spending on Customer Relationship behaviour to get the best accounting
Management (CRM) treatment. One of the complaints raised
against the new accounting standards is that
Customer Relationship Management (CRM) is
the new standards have led to insufficient
more than a technology. It is a very specific
consistency and comparability. Now values
strategy that seeks to identify customers
must be found for things that often have no
individually and then craft sales and service
market values such as employee stock
strategies that are uniquely appropriate for each
options or most loans, so that estimates
customer. CRM also seeks to interact with the
matter more than before. Moreover,
customer in a consistent manner, regardless of
companies have more flexibility in deciding
the channel of communication. Tower Group
how to apply IFRs. This flexibility is inevitable
estimates that, on a global basis, IT spending on
because IFR is principles-based rather than
the customer knowledge side of CRM in retail
highly detailed and prescriptive American
financial services institutions will be $5.9 billion
accounting standards. For all its flaws and
in 2005. Of that total, just under 50% ($2.6 billion)
merits, this new standard would be accepted
will be spent in the North American market and
by 90 countries all over the world. American
a further $1.6 billion in the EU. It is estimated
and international standard –setters have
that $ 7 million would be spend on CRM
made steady progress over many years to
technology by the year 2008.
close the gap between America’s rules and the
Accounting Standards rest.
From January 1 st , Europe’s 7000 listed Thailand raises interest rates
companies adopted international financial
Bank of Thailand, the Central Bank of Thailand
reporting standards (IFRs), replacing 25
increased the benchmark interest rates to 2.5
different local accounting regimes with one
per cent sighting maintaining economic
set of rules. The early reporters under the new
stability as the main goal of the government.
rules will be bigger companies. Smaller
The tightening of the interest was started
companies will follow the bigger companies
from August. But after three further rate
at a later stage. Most inconvenienced by this
increases of 25 basis points each, the central
new set of accounting standards are banks,
bank took a pause from its gradual tightening
insurers and other heavy users of financial
policy in April. But again it resorted to hiking
instruments such as derivatives, insurance
the interest rate in June. The aim of this policy
contracts and the like whose value changes
is to wipe out the negative real interest rate
very frequently and will affect the profit
in Thailand, which is being experienced by the
position of the concerned enterprises. Further,
country for quite some time. Further, the bank
the companies have very little time to adapt
also aims to maintain stability in the economy
to new rules and accounting standards owing
in the long run. q
to a tussle between standard setters and
European financial industry regulators, the
affected companies and politicians. As with Compiled from various sources
any rule, companies are likely to adapt their By Jayasree Menon
IBA Bulletin

Book Review
Not very long ago, Michael Faraday, 1 the
inventor of electricity had showed proof of his
discovery to his Prime Minister. When his
Prime Minister asked him what use it was –
‘Who knows Sir’, Faraday replied, ‘one day you
might be able to tax it’ 2 . Any one can
understand the embarrassment of a genius
who could not elicit an encouraging word
from those around him who can hardly
foresee the future beyond a few years. At
present, no one can think of life without
electricity (taking, of course, massive, nation-
wide power cuts. With more power-cuts, the
value of electricity is realised more). The world
is replete with hundreds of such examples of
how a potentially wonderful idea of an
inventor (like train, flight, car, medicine,
ambulance etc. to name just a few) is
discouraged by the contemporaries only to
be acclaimed many decades/centuries later
by millions and utilised by billions worldwide
to alleviate human sufferings and misery.
Consider these fantastic comments (read
criticisms) : Artificial flight (aeroplane) is
impossible. Transmission of television
pictures through air is not possible due to fog
(yes, you read it right, fog). Of all the gaffes,
this one takes the cake: “Telephone has no
(read my lips: NO) commercial application”.
“A man who lives on his past income is a wise
man. He who lives on his current income is a
careless man. The man who lives off his future
income is a brainless man”, said a finance
expert. However, a government living off its
future income, others money and borrowed
time is considered to be a great government.
How may of us still remember the college
dissertation we completed, leave alone
preserving a copy of it? Many, over the years
might have forgotten the topic of their
dissertation. Not Raravikar. He took it out and
presented an ‘improved’ version to the public.
A person thinking logically is a nice contrast
to the majority, they say. Raravikar thinks
logically and thinks differently too. What is
Book
Author
Price
Total Pages
Published by :
more? He flashes out reams after reams of
evidence in his defence. The common belief
is that the fiscal deficit and rising price level
has a casual nexus between them. Raravikar
swims against the tide (born fighter?). He says
a definite, emphatic ‘no’ to the common idea
and argues convincingly as well.
This book is divided into 5 crisp Chapters. The
Chapter 1 deals with the Background. Chapter
2 discusses the Fiscal Crisis in Indian Economy
while Chapter 3 talks about the Budget
Deficits: Concepts and Trends. Chapter 4
elaborates on Budgets and Inflationary Trends
in Prices. Naturally, when the book is on ‘Fiscal
Deficit and Inflation in India’ can the
discussion on ‘A Nexus Analysis’ be far behind?
So, exactly the same is the last and final
Chapter 5. He gives a number of suggestions
in the last chapter (for which not many in India
have the time and patience). A brief
bibliography and appropriate index
completes the book. The book is slim, crisp
and pocket-novel-sized (well, almost).
The foreword is from none other than
Prof. Bhalchandra L. Mungekar, the famous
Vice-Chancellor of the famous University of
Mumbai and the foreword should be read
fully to be enjoyed. Any educated person can
read English, but only an intelligent man can
read ‘between-the-lines’. A reader of the
foreword can write another book on the
implicit wisdom of the foreword itself.
Only a few legendary organisations like
Reserve Bank of India gives so much freedom
and encourage creativity. That is why such
institutions remain distinguished. Any
organisation, which stifles creativity, faces a
natural death, not because of the external
adversaries but because of internal enemies
who are self-centred and egoistic to the core.
This is the “disease” 3 which ails Indian
corporates. They choke the oxygen supplies
and the oxygen suppliers to any organisation.
The author of the book under review, working
: Fiscal Deficit and Inflation in India
:
:
:
Ashutosh Raravikar
Rs. 385/-
252
Macmillan India Ltd., New Delhi.
in RBI seized the opportunity and had
authored a good book. One wishes that other
scholars too, take out, dust and publish their
dissertation and their wonderful ideas for
common good than keeping the knowledge
to themselves. Let the ‘knowledge-seekers’ of
the world unite. Let there be light and debate.
The book is recommended for all persons who
are concerned about the well being of India, the
policy makers, economists and students,
especially for those who want to walk away from
the beaten path and contribute to the mankind
in whatever way possible. For organisations,
societies and families to march ahead towards
prosperity and strength, the GOLDEN RULE of
Ted Turner of CNN can be followed: “Either lead
or follow or get out of the way”. Like the water
finding a roundabout route to cross a blockade
on its way. If lifeless water can find a solution to
an obstruction, the men who have the sixth
sense can surely find one. q
Reviewed by:
Shri. K. M. Thirunavukkarasu,
Assistant General Manager,
Reserve Bank of India, Mumbai.
End Notes :
1
Critics’ Gaffes, Ronald Duncan,
Macdonald & Co., London and Sydney,
1983. An excellent collection of severe
criticisms (by detractors or due to pure,
green jealousy or for other reasons) on
many famous authors, playwrights,
composers, painters, scientists including
Beethoven and Shakespeare. Price :
Sterling Pound 5.95, but really worth
billions and billions of dollars.
2
Italics are mine.
3
The disease, which stays in one’s own
body, feeds from the same body and
destroys the very body it had benefited
from. A Tamil saying. (Verbatim in Tamil
language : ‘Koodave irunthu kollum
viyadi’).
IBA BULLETIN 39
JULY 2005
Book Review
Book : Book on Bond and Money Markets
Author : IIB &F
Publishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.
Price : Rs. 120/-
Pages : 167
A read of the book ‘Bond and Money markets’
depicts, the author Ms. Shefali’s
understanding and control over the subject.
Even though, it is a complex subject, Ms.
Shefali dealt with it, in a manner which is easy
to read and assimilate.
With financial reforms and deregulation of
markets, rapid changes have taken place in
financial Institutions, more so, in Banking. A
new array of financial services encircling all
aspects of financial needs of the customers
have come into the picture. Dis-
intermediation has taken place and medium/
big borrowers are approaching the Debt and
Money Markets directly. In this backdrop,
understanding the Bond and Money Markets
has become a necessity for financial students,
as well as experts.
The features of Debt Securities, kinds of Bonds
besides related terms like yield, nominal yield,
current yield, STRIPS etc., are well explained
in the chapter Indian Debt Markets. This is
followed by a commentary on Central
Government Securities which is quite
interesting and throws light on various
aspects like the need to borrow through
securities by Central Government, the role of
securities in financial markets etc. The
changes occurred in Debt and Money
markets during pre and post reform period,
the relation of fiscal deficit with issuance of
securities by Government, various types of
securities like G. Secs, State Government
Securities and Agency Bonds and their
features are well explained. The role of Primary
Dealers is also clarified in a lucid manner. The
annexure given on ‘Liquidity Adjustment
Facility’ is very useful for the readers.
Treasury Bills and different methods of
auctions to sell the Treasury Bills by Reserve
40 IBA BULLETIN
JULY 2005
Bank of India are well described, followed by
lucid explanation of State Government
Securities and RBI initiatives as debt manager
to the State Governments. The fiscal and
monetary management and the role of
Reserve Bank of India are clearly stated.
Call money markets, its features, functions and
recent changes that led to ‘Repo Market’ and
steps initiated by RBI to regulate Bank’s
operations in money markets are aptly
covered.
The Annexure 1 & 2 given to Corporate Bonds
listing Rating Symbols, SEBI guidelines for
issue of Debt Instruments are particularly
useful to financial students.
As a corollary to Corporate Bonds, the advent
of Commercial Paper and Certificate of
Deposit and their features, regulations, issue
mechanism etc., are thoroughly stated. The
distinction i.e., Commercial Paper are issued
by Corporates and Certificate of Deposit are
issued by Banks and Financial Institutions is
described in an unambiguous manner to the
benefit of financial students. Clarity of
expression is the hall mark of this book.
Ready forward contracts or Repos have been
dealt with in a step by step method, right from
Repo concept to calculation of interest, issue
of Repos, RBI guidelines etc. collaterised
borrowing and lending obligation, a newly
developed product to cater to the needs of
non-bank entities has been explained.
The coverage of the topics, Bond Market
Indices and Benchmarks, Secondary Markets
and Trading in Government Securities is
comprehensive and various aspects like NDS,
CCIL, WDM, GILT etc., have been clearly
explained.
The regulatory and procedural aspects
relating to Public Debt Act 1944, SEBI and
FIMMDA are thorougly described. Annexure
1 given to Chapter on Regulatory and
Procedural Aspects is very informative and
highly useful.
The Chapters on Bond Valuation, The Yield
Curve, Duration, throw light on important
aspects related to valuation of bonds,
different types of yields, interpretation of yield
curve, theories of term structure of interest
rates, characteristics of duration, types of
duration. It is indeed a complex stuff
explained in a cogent manner.
The last chapter contains valuable
information relating to Fixed Income
Derivatives. Interst Rate Swaps, Forward Rate
Agreements, benchmarks for interest rate
swap market etc., are covered in an extensive
manner.
Bond and Money Markets is a complicated
and complex subject. However, the manner
in which the author has presented the subject
matter in an easy to read and understand style
is commendable.
The author needs acclamation for the effort
to throw light on a subject that is taking its
roots in Indian Financial markets.
I strongly recommend this book to a) financial
students b) officials of Banks and Financial
Institutions who are involved in Bond and
Money Market Operations.
Priced at an affordable Rs. 120/- the content
outweigh the rate of the book. q
Reviewed by : V.S.R. Murthy
General Manager
Union Bank of India, Mumbai.
Book Review
Book : Book on Mutual Fund Industry – Products & Services
Author : IIB & F
Publishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.
Price : Rs. 145/-
Indian Institute of Banking & Finance (IIBF) has
been in the forefront of imparting quality
education of provide developing India with
knowledge rich, capable & efficient
professional in banking & finance. IIBF has
come a long way from being an Institute of
Bankers to the present level of encompassing
all banking & finance activities with a view to
provide technically sound financial
professional through perpetual education,
training and evaluation.
M/s. Taxman Publications Private Limited are
reputed publishers of books on Tax &
Corporate Laws and professional books on
finance & legal matters.
It is but natural that when two giants in their
respective fields join together, the students
& professionals alike are endowed with a
wonderful book, i.e. Mutual Fund Industry –
Products & Services.
The book is a comprehensive commentary on
‘A to Z’ of Mutual Funds, progressively
structured in 8 chapters.
Chapter-I illustrate the concept of Mutual
Fund, advantages of investing in Mutual Fund
besides explaining the benefits of a
diversified portfolio offers. The ‘Lessons from
Evans and Archer’ given as appendix 1 is
very useful piece of study.
Chapter- II contain the origin of Mutual Fund
and it’s spread to USA & UK. The evolution of
Mutual Fund in India and the formation of
AMFI is well explained. The mergers &
acquisitions that took place in Mutual Fund
Industry, have been elucidated in an
interesting manner. The steps initiated by
AMFI as self-regulatory authority (SRO) and
SEBI as regulatory authority, to rationalize the
functioning of Mutual Fund Companies are
well covered to the benefit of the readers.
Chapter – III is chiefly relevant to Indian
conditions, as it contain SEBI regulations &
structure given by SEBI to Mutual Funds. The
‘Three Tier’ structure of a Mutual Fund is well
portrayed in the chapter. Important points
like AMC, Trustee qualifications, duties,
rights & obligations are clarified.
In Chapter – IV Mutual Fund products are
highlighted as an alternate investment
opportunity and various Mutual Fund
products along with prescribed fee &
expenses that are billed to the investor are
given. The process of NAV calculation is
informative & knowledge enhancing. Add
on benefit of his chapter is income received
from Mutual Fund and its treatment for Tax
purpose.
Chapter – V explains the portfolio
management and various concepts involved,
i.e. Equity Fund Management & Index Fund
Management (Active Portfolio
Management & Passive Portfolio
Management). Investment styles and
hedging are deliberated in a lucid manner.
In Chapter – VI, various ways of measuring
return methods and the basis for such
methods explained. Not losing sight of ‘Risk
Factor’, different ways of arriving at risk are
analyzed. Different techniques to measure
the risk with realized return have been
elucidated to the benefit of readers. The
importance of Tracking & Monitoring the
performance of Mutual Fund has been
highlighted. The Appendix 1 (Indices for
Benchmarking Portfolios) & Appendix 2
(CRICIL Composite Performance Ranking
Methodology) will immensely benefit are
financial experts in honing their skills.
Chapter – VII covers the model portfolio
development keeping in mind the clients
investment goals & objectives.
In Chapter – VIII the regulation to protect the
interests of the Unit Holders has been
thoroughly described. SEBI regulations in this
regard are nicely explained. Trustee roles &
limitations, obligations are detailed and
role of AMFI are once again emphasized.
Annexure 1 to 11, given at the end of the book
are particularly useful in understanding
several aspects related to Mutual Funds and
the steps taken by Regulatory Authority to
protect Investor interests.
In its entirety, the book in a priceless,
knowledge rich, user-friendly guide to Mutual
Fund Products & Services. The content and the
high quality of the book mirror the efforts put
in by Ms. Rachana Baid & the experience is
instrumental in scripting this book.
The superior quality of the substance of the
book outweigh the price (Rs. 145/-). q
Reviewed by : V.S.R. Murthy
General Manager
Union Bank of India , Mumbai.
IBA BULLETIN 41
JULY 2005
Book Review
Book : Bank Financial Management
Author : IIB & F
Publishers : Taxmann Publications Pvt. Ltd., 59/32, New Rohtak Road, New Delhi 110 005.
Price : Rs. 225/-
Pages : 124

In recongition of the need of the bankers to
strengthen the balance sheet and improve
the stake holders value, the Institute of
Banking and Finance. Mumbai has introduced
Diploma qualification in Bank Financial
Management. The curriculum under the
diploma combines thereoretical inputs with
hands on experience in financial decision
making with the help of computer simulation
exercise known as Bank Mod TM which might
import knowledge and confidence necessary
for the bankers for achieving the objective
before them.
This book provides a comprehensive
coverage and valuable insidhts into bank
financial management. The subject matter is
spread over seven modules comprising of (a)
introduction to Bank Financial management,
prepared by Shri S.N. Sawaikar, SBI (b) Interest
Rate Risk Management, prepared by
E. Madhavan and R. Raghavan, RBI (c) Credit
Risk, prepared by A.K. Trivedi, IndusInd Bank,
(d) Liquidity Management in Banks, prepared
by A.K. Gulla, SBI (e) Derivatives, prepared by
R. Raghavan, RBI (f ) Profitability of Banks,
prepared by B.C. Acharya, SBI and (g) Bank
Capital and Stock Valuation prepared by B.C.
Acharya, SBI. All authors are bank
professionals, having fundamental
understanding of various financial aspects of
business of banking and finance. However,
subjects are effectively presented with a
useful blend of theory and operations.
This book can be a stand alone study book
for bank and finance professionals. However,
it is a very useful text book for students
pursuing the Diploma programme in Bank
Financial Management. q
Reviewed by : Dr. T.K. Chakraborty
Advisor, History Cell,
RBI, Mumbai.

INDIAN BANKING
YEAR BOOK - 2004
Indian Banking Year Book is one of our annual publications, which present an update on policy and
regulatory framework with relevant database covering multifaceted aspects of banking and financial
services industry.
The Year Book is divided into three Parts. Part I contains nine chapters viz., (1) Indian Banking – An Overview, (2)
Regulation and Supervision of Banks in India, (3) Financial Institutions, (4) Co-operative Banking in India – A
Brief Review, (5) Indian Capital Market, (6) Non-Banking Financial Companies (NBFCs), (7) Insurance Sector, (8)
Legal Reforms pertaining to Banking Sector and (9) Summaries of important Committees/Working Groups set
up by Government of India/Reserve Bank of India. Part II contains relevant statistical information pertaining to
Indian Banking and Part III contains profiles of IBA Members.
Year Book is prepared with the intention to provide latest information on banking and finance to various classes
of readers.
This publication is priced at Rs.100/- (inclusive of postage charges). For copies, kindly contact the Publications
Department, Indian Banks’ Association, Stadium House, 6th Floor, Block 3, Veer Nariman Road, Mumbai 400 020
Tel. : 022-22894530 Fax : 022-2283 5638.

42 IBA BULLETIN
JULY 2005
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DevÙe efveÙeb$eCe HeÇeJeOeeve ueiee mekeâles nQ~
(Ke)JÙeeHeeefjkeâ neefve
nesiee efkeâ Jen hetCe& peeie¤keâlee yejleles ngS
keâeues Oeve kesâ yeQkeâ ceW nesves mes Jen Oeve lees mejkeâejer keâeÙe& keâjsiee leLee keâneR Yeer keâYeer Yeer Deveweflekeâ
SpeWemf eÙeeW Éeje peyle keâj ner efueÙee peeSiee meeLe ner
Fme Pecesues mes Gyejves kesâ efueS pees kegâÚ keâjvee HeÌ[lee
uesveosve keâe helee ueieles ner Fmekesâ efJe<eÙe ceW
nw Je DeeefLe&keâ o=e<f š mes keâeHeâer KeÛeeauee leLee ceeveefmekeâ
”
ÙeeleveeoeÙekeâ nw~ Ssmes keâeÙeeX mes heBâmee yeQkeâ peneB Skeâ
Deesj Fve PebPešeW mes cegekf eäle Heeves kesâ efueS petPelee nw lees
me#ece ØeeefOekeâejer keâes metÛevee osiee~
otmejer Deesj Jen DeHeves Jele&ceeve ieÇenkeâeW keâer vepe]jeW ceW
efiej peelee nw leLee YeeJeer ieÇenkeâeW kesâ Deeves keâer
mebYeeJevee keâce nes peeleer nw~ Fme HeÇkeâej yeQkeâ keâes
JÙeeHeeefjkeâ neefve menveer HeÌ[leer nw~
(ie) HeÇefle<"e ceW efiejeJeš Je DebOekeâejceÙe YeefJe<Ùe
efpeme yeQkeâ ceW keâeues Oeve keâe JÙeeHeej neslee nes,
Ùeefo Ùen leLÙe HeÇkeâeMe ceW Dee peeS lees Gme yeQkeâ
keâer HeÇefle<"e lelkeâeue efiej peeleer nw~ Jen meceepe
ceW DeHeveer mecceevepevekeâ efmLeefle lelkeâeue Kees
yew"lee nw~ Gmekesâ Jele&ceeve Deewj Hegjeves ieÇenkeâ Yeer
Gme yeQkeâ mes yeQeEkeâie keâjvee Hemebo veneR keâjWies Je
Oeerjs-Oeerjs keâce nesles Ûeues peeSbies~
efveÙeb$ekeâ HeÇeefOekeâejer pewmes efJeòe
ceb$eeueÙe, YeejleerÙe efjpe]Je& yeQkeâ
keâer vepe]jeW ceW Yeer Ssmes yeQkeâ efMe#ee : Sce.S. efnboer (mJeCe&heokeâ Øeehle), heer.SÛe.[er., (legueveelcekeâ
DeHevee mecceeve Kees osles Yee<ee ef J e%eeve), Sce.S. (Deb « es p eer ) , Sue.Sue.yeer . ,
meer.S.DeeF&.DeeF&.yeer., [er.yeer.Sce. (DeeF&.DeeF&.yeer.), ef[hueescee
nQ ~ meeLe ner ,
(DevegJeeo), meeefnlÙejlve, DeeF&.peer.[er., (keâuee ef[hueescee),
efveOee&efjle HeæefleÙeeW
Got& ceW ØeJeerCelee ef[hueescee, Sce.yeer.S. (yeQefkebâie SJeb efJeòe),
Je HeÇef›eâÙeeDeeW keâe
meefnle 32 DevÙe ØeefMe#eCe ØeceeCe he$e/ef[hueescee Øeehle~
Heeueve ve keâjves mebØeefle : S.meer.Sme. (SmeesefMeSš Dee@heâ kebâheveer mew›esâš^erpe
keâe oes<eer nesves Hej Dee@heâ Fbef[Ùee) hee"Ÿe›eâce ceW DeOÙeÙevejle~
oC[ kesâ Yeeieer
uesKeve : 20 hegmlekeWâ efueKeer 16 ØekeâeefMele, 26 hegmlekeWâ mebÙegkeäle ¤he
nesles nQ~
mes Devetefole 1000 (Skeâ n]peej) uesKe efJeefYevve heef$ekeâeDeeW
cegbyeF& efmLele Skeâ ceW ØekeâeefMele, 10 mes DeefOekeâ heef$ekeâeDeeW kesâ Deveskeâ DebkeâeW keâe
yeQkeâ lees jeleeW-jele mecheeove~
Fmeer keâejCe
hegjmkeâej : 3 Deblejje°^erÙe, 18 je°^erÙe Je 12 jepÙemlejerÙe hegjmkeâej
DeHevee DeefmlelJe ner
Øeehle (kegâue 33 hegjmkeâej)~
Kees yew " e, Deepe
pevelee Gme yeQkeâ keâes Yeguee
yew"er nw~ Dele: HeÇelf e<"e Kelce
DeeFyeerS yeguesefšve 45
pegueeF& 2005
 nesles ner yeQkeâ Yeer Kelce nes peelee nw~ meeLe ner,
Ssmes yeQkeâ ceW keâeÙe&jle DeefOekeâeefjÙeeW, keâce&ÛeeefjÙeeW
Je efveosMekeâeW keâer HeÇefle<"e Yeer efiej peeleer nw~
(Ie)meceieÇ HeÇYeeJe
Gkeäle HeÇYeeJeeW kesâ HeÌ[ves mes efkeâmeer Yeer yeQkeâ keâe
yeves jnvee Ùee Ûeuevee keâef"ve nes peelee nw leLee
Fmekeâe meceieÇ HeÇYeeJe Ùen neslee nw efkeâ yeQkeâ yebo
nesves kesâ keâieej Hej Dee peelee nw~ Ùeefo yeQkeâ yeÌ[e
nes lees yebo nesves keâer veewyele lees veneR DeeSieer
Hejvleg keâF& Je<eeX lekeâ Gmes Fmeer keâuebkeâ kesâ meeLe
jnvee nesiee pees efkeâmeer Yeer mebie"ve kesâ efueS
DeÛÚe veneR nw~
keäÙee nw keâeues Oeve keâe JewOeerkeâjCe?
GHeefjJeefCe&le HewjeieÇeHeâeW mes keâeues Oeve keâe HeefjÛeÙe lees
efceue ieÙee nesiee~ Ùen Yeer mHe<š nes ieÙee efkeâ keâeuee
Oeve jKevee meceepe Je keâevetve keâer vepe]j ceW ieuele nw Je
Ùen DeHejeOe Yeer nw~ Dele: Fme keâeues Oeve keâes meHesâo
keâjves kesâ efueS DeLee&led Fme DeJewOe Oeve keâes JewOe keâjves
kesâ efueS pees HeÇÙeeme efkeâS peeles nQ leLee pees HeÇef›eâÙeeSB
DeHeveeF& peeleer nQ GvnW ceveer ueeBeE[^ie Ùee keâeues Oeve keâe
JewOeerkeâjCe keâne peelee nw~
Jemlegle:, Ùen Meyo Decesefjkeâer mebkeâuHevee mes yevee nw~
DeHejeOe mes HeÇeHle Hewmee 'ieboe' neslee nw Dele: Fmekeâer
OegueeF& (ueeBeE[^ie) keâjkesâ Fmes meHesâo (mJeÛÚ) yeveevee
ner ceveer ueeBeE[^ie nw~
ceveer ueeBeE[^ie Deewj yeQkeâ
Jemlegle:, Deepe kesâ peceeves ceW Hewmes keâes megjef#ele jKeves
keâe meyemes efJeMJemeveerÙe Deewj Hekeäkeâe lejerkeâe yeQkeâ ner nQ,
Hejvleg yeQkeâ JewOe Oeve keâes ner mJeerkeâej keâjles nQ, DeJewOe
Oeve keâes veneR ! yeQkeâ Hetje HeefjÛeÙe ueskeâj ner ieÇenkeâ keâe
Keelee Keesueles nQ, yesveeceer Ùee Heâpeea veece mes yeQkeâ Keelee
veneR Keesue mekeâles nQ~ Hejvleg, kegâÚ DeeHejeefOekeâ leòJe
ieuele lejerkesâ mes meYeer meyetle Deewj HeÇceeCe Deeefo pegšekeâj
yeQkeâ keâer meYeer DeewHeÛeeefjkeâleeSB Hetjer keâjkesâ DeHeveer
HenÛeeve keâes ÚgHeekeâj Keelee Keesue ueW lees Jes yeQkeâ kesâ
ieÇenkeâ yeve mekeâles nQ~
Deye HeÇMve Ùen G"lee nw efkeâ yeQkeâ Ùen kewâmes Helee keâjW efkeâ
pees JÙeefkeäle Gvekesâ Heeme Hewmee pecee keâjJee jne nw Jen
Gmekeâe JewOe Oeve nw Ùee keâeuee Oeve? ÙeneR mes yeQkeâeW kesâ
efueS Ûegveewleer DeejbYe nesleer nw~ Fme keâeues Oeve kesâ JewOeerkeâjCe
ceW yeQkeâeW keâes ceeOÙece yeveeÙee peelee nw Je keâeuee Oeve Yeer
46 DeeFyeerS yeguesefšve
pegueeF& 2005
DeJewOe lejerkeâeW mes JewOe keâjkesâ yeQkeâeW ceW pecee efkeâÙee peelee
nw~
kewâmes nesleer nw ceveer ueeBeE[^ie ?
ceveer ueeBeE[^ie keâjves kesâ ueeKeeW lejerkesâ nQ, uesefkeâve meyemes
Deemeeve Deewj mejue lejerkeâe Ùen neslee nw efkeâ DeHejeOeer
keâeues Oeve keâes JewOe keâjves kesâ efueS keâesF& Úesše-ceesše
keâejesyeej Keesue ueslee nw pewmes keâej HeeefkeËâie, jsmlejeB,
yeej, [ebme yeej, pÙeesefle<e keâeÙee&ueÙe Ùee Deeßece Ùee
Oeeefce&keâ mLeue Deeefo~ Jemlegle:, Ùes meye efoKeeJes kesâ
efueS nesles nQ~ Fvemes Yeues ner kegâÚ Yeer DeeÙe HeÇeHle ve nes
Hejvleg efjkeâe@[& ceW DeeÙe oMee&F& peeleer nw Je Oeerjs-Oeerjs
keâeues Oeve keâes JewOe keâjles ngS yeQkeâeW ceW pecee keâjeÙee
peelee nw~ meceepe keâes Ùee yeQkeâeW keâes Ùen Helee veneR ueie
Heelee efkeâ meÛecegÛe ceW Ùen JÙeeHeej keâe Hewmee nw Ùee
DeeHejeefOekeâ ieefleefJeefOeÙeeW mes HeÇeHle keâeuee Oeve~
otmeje, lejerkeâe yeÌ[s mlej Hej neslee nw~ FmeceW DeHejeOeer
vekeâueer keâbHeveer Keesue uesles nQ~ keâcHeveer keâe keâejesyeej
ueeKeeW keâjeÌs[eW ceW neslee nw Je ÙeneR mes keâF& HeÇkeâej mes
DeeBkeâÌ[eW keâer yeepeeriejer mes keâeues Oeve keâes meHesâo yevee
keâj yeQkeâeW ceW pecee efkeâÙee peelee nw~ keâF& yeej lees yeÌ[er-
yeÌ[er keâbHeefveÙeeB Keesueves kesâ efueS pees $e+Ce efueS peeles nQ
Jen meye efoKeeJee neslee nw~ Jemlegle: Ùen $e+Ce kewâmes
keâeues Oeve keâes meHesâo keâjlee nw Ùen Deueie keâneveer nw~
keâeues Oeve keâes meHesâo yeveeves kesâ Deepekeâue keâF& veÙes
Heâecet&ues Yeer Ûeue HeÌ[s nQ~ Ùen Heâecet&ueW MesÙej yeepeej kesâ
ceeOÙece mes Ûeueles nQ~ pewmes Hegjeveer iegceveece keâcHeveer kesâ
MesÙej yengle memles ceW Kejero keâj Kego Gmes efjeEieie Deeefo
lejerkeâeW mes Ketye ye{eÙee peelee nw Deewj efHeâj yesÛe efoÙee
peelee nw~ Jemlegle: Kejeroves Jeeuee Je yesÛeves Jeeuee
Deueie-Deueie veeceeW mes Ùen keâjlee nw Hejvleg Debeflece
ueeYe Gmes efceuelee nw ÙeÅeefHe FmeceW kegâÚ Deewj IegceeJe
efHeâjeJe keâjkesâ keâeues Oeve keâes JewOe efkeâÙee peelee nw~
keâeues Oeve keâes meHesâo yeveeves keâe Deepe keâue Skeâ Deewj
jemlee Kegue DeeÙee nw~ Jen nw Devlejje<š^erÙe yeepe]ej ceW
yengcetuÙe Oeeleg keâe DeLeJee eEpeme (keâceese[f šer) keâe JÙeeHeej~
Ùen kegâÚ-kegâÚ MesÙej ceekexâš keâer lepe& Hej ner neslee nw~
efJeosMeer cegõe efJeefveceÙe ceeOÙece mes Yeer keâeues Oeve keâes
meHesâo keâjves kesâ keâeÙe& ceW Yeer mebYeeJeveeSB leueeMeer pee
jner nQ~ keâevetveer oeJe HeWÛe Je keâevetve keâer KeeefceÙeeW keâe
ueeYe G"ekeâj Yeer Skeâ je<š^ mes otmejs je<š^ ceW Hewmee Yespe
keâj Gmes JewOe keâjeves keâer HeÇef›eâÙee ceW Yeer keâF& DeHejeOeer
efmeænmle nesles nQ~ keâeues Oeve keâes JewOe yeveeves keâer
HeÇef›eâÙee Ùee Heæefle pees Yeer nes GmeceW HeÇlÙe#e Ùee Hejes#e
¤He ceW yeQkeâ Deeles ner nQ~
DeLee&led lejerkeâoe pees Yeer nes keâeues Oeve kesâ JewOeerkeâjCe ceW
yeQkeâeW keâe GHeÙeesie efkeâÙee peelee nw~ Ùen keâYeer-keâYeer
yeQkeâ mšeHeâ keâer efceueerYeiele mes neslee nw Hejvleg, DeefOekeâebMe
ceeceueeW ceW Ùen Devepeeves ceW neslee nw~ Deepe Yeer yeQkeâ
F&ceeveoejer Deewj vÙeeÙeHetCe& {bie kesâ keâece keâjves Jeeueer
mebmLee kesâ ¤He ceW DeHeveer HeÇefle<"e keâes yeveeS ngS nQ~
yeQkeâ Fme Ûegveewleer keâe meecevee kewâmes keâjW?
yeQkeâeW keâes Fme Ûegveewleer keâe meecevee keâjves kesâ efueS LeeÌs[er
mepeielee yejleveer nesieer, LeeÌs[er peeie¤keâlee mes nceW Ssmes
pebpeeue mes yeÛe mekeâles nQ~ keâneB Deewj kewâmes mepeielee
yejleW Fmekesâ efueS kegâÚ GHeeÙe veerÛes megPeeS pee jns nQ :
1. DeHeves ieÇenkeâ keâes peeveW : Keelee Keesueves mes
HetJe& Keeles Keesueves Jeeues keâer Hetjer Úeveyeerve keâjW~
keâF& yeej yeQkeâ pecee mebieÇnCe DeefYeÙeeve Je veS
Keeles Keesueves keâe DeefYeÙeeve Ûeueeles nQ, Gme
meceÙe Deefle Glmeen ceW DeHeefjefÛele Ùee Devepeeves
JÙeefkeäle kesâ HeÇefle efveÙeceeW ceW efMeefLeuelee ve yejleW~
2. Keelee Keesueves kesâ yeeo KeeleeOeejkeâ kesâ Heles Hej
[ekeâ Éeje Heesmš keâe[& Ùee He$e YespeW~ Ùeefo ieÇenkeâ
He$e ueskeâj Deelee nw lees "erkeâ nw Ùeefo He$e ueewš
DeeS Ùee ieÇenkeâ MeeKee mes mecHekeâ& ve keâjW lees
Úeveyeerve keâjW~
3. Keeles kesâ HeefjÛeeueveeW Hej ve]pej jKeW~ Keeles ceW
yeÌ[er jeefMeÙeeW keâe Deevee Ùee kewâMe Éeje ner HeÇeÙe:
pecee nesvee Ùee mebosnemHeo jeefMe mebÛeeueve nesves
Hej Keelesoej kesâ yeejs ceW DeHeÇlÙe#e ¤He mes peevekeâejer
HeÇeHle keâjW~
4. YeejleerÙe efjpe]Je& yeQkeâ Ùee efkeâmeer GefÛele efveÙeb$eCe
HeÇeefOekeâejer mes efkeâmeer JÙeefkeäle Ùee keâbHeveer DeLeJee
mebie"ve kesâ efveef<eæ keâeÙe& Ùee DeelebkeâJeeoer mebie"ve
ceW nesves keâer metÛevee efceueves Hej lelkeâeue Keeles Hej
efveÙeb$eCe HeÇeefOekeâeefjÙeeW kesâ efveoxMe kesâ Devegmeej
keâej&JeeF& keâjW~
5. HeÇefleyebefOele mebie"veeW kesâ Keeles ves KeesueW~ HeÇefleyebefOele
mebie"veeW keâer metÛeer meowJe DeÅeleve jKeW~
6. me#ece HeÇeefOekeâejer kesâ efveoxMeeW keâe efJeefOeJeled DevegHeeueve
keâjW~
7. Ùeefo $e+Ce Keelee nes Ùee JÙeeHeeefjkeâ Keelee nes lees
Ùen osKeW efkeâ Gme JÙeeHeej ceW ueies DevÙe JÙeeHeeefjÙeeW
kesâ meceeve Keeles ceW mebÛeeueve nes jne nw Ùee veneR~
 ceevee efkeâ JÙeeHeejer keâHeÌ[s kesâ JÙeeHeej ceW ueiee nw~
keâHeÌ[s kesâ DevÙe JÙeeHeejer Ieešs ceW Ûeue jns nQ~
Gvekeâe uesveosve keâce nes, Hejvleg Fmeer JÙeJemeeÙe
ceW ueies efkeâmeer Keeles ceW efvejblej yeÌ[er jeefMeÙeeB
pecee nes jner nQ lees Keeles Hej efveiejeveer jKeW~
8. Ùeefo KeeleeOeejkeâ ves DeHevee Heâesve vecyej Ùee Helee
ieuele efoÙee nes Ùee Helee Ùee Heâesve efkeâmeer kesâ
ceeHeâ&led efoÙee nes lees Ùen mebosnemHeo neslee nw~
Dele: Ssmes Keeles Hej vepe]j jKeW~
9. efJeosMeer veeieefjkeâeW keâe Keelee Keesueves ceW DelÙeefOekeâ
meeJeOeeveer yejleW~ HeemeHeesš& Demeueer ceeBies pesjekeäme
veneR, DevÙe efJeefOekeâ DeewHeÛeeefjkeâleeSB ÂÌ{leeHetJe&keâ
efveYeeSB~ cegõe JewOeerkeâjCe keâe Ùen DelÙeefOekeâ
mebJesoveMeerue #es$e nw~
10. efJeosMeer efJeefveceÙe DeblejCe Hej keâÌ[er ve]pej jKeW~
efJeMes<e ¤He mes yeÌ[er jeefMeÙeeW kesâ ceeceues ceW mepeie
jnW~ efJeMes<e ¤He mes yeoveece je<š^eW mes DeevesJeeues
DeblejCeeW Hej meeJeOeeveer yejleW~
11. keâeuHeefvekeâ efJeosMeer keâbHeefveÙeeB mebmLeeSB : keâeues Oeve
kesâ JewOeerkeâjCe ceW keâeuHeefvekeâ efJeosMeer keâcHeefveÙeeW
mebmLeeDeeW keâer Yetecf ekeâe meJee&eOf ekeâ nesleer nw~ Ssmeer
keâbHeefveÙeeB efmeHeâ& keâeiepeeW Hej nesleer nQ JeemleefJekeâ ¤He
ceW veneR~ Dele: Ssmeer keâbHeveer Ùee mebmLeeDeeW Éeje
mebÛeeefuele KeeleeW keâer meceer#ee keâer peeveer ÛeeefnS~
12. vekeâoer uesveosve ceW ncesMee GÛÛelece meercee mes LeeÌ[s e
keâce ceW uesveosve keâjvesJeeues KeeleeW Hej vepe]j jKeW~
Ùen lees kesâJeue GoenjCe nQ~ Ssmes keâF& eEyeog nes mekeâles nQ
efpeve Hej OÙeeve efoS peeves keâer DeeJeMÙekeâlee nw~
keâeuee Oeve JewOeerkeâjCe Je YeejleerÙe keâevetve
keâeues Oeve kesâ JewOeerkeâjCe keâer yeÌ{leer mecemÙee mes efveyešves
kesâ efueS efJeMJe kesâ Deveskeâ osMeeW ves keâevetve yeveeS nQ~
Yeejle ceW Yeer ceveer ueeBeE[^ie keâer efJekeâš efmLeefle keâes
osKeles ngS meved 2002 ceW `keâeuee Oeve JewOeerkeâjCe
DeefOeefveÙece' DeefOeefveÙeefcele efkeâÙee ieÙee DeLee&led DeefOeefveÙece
DeeFyeerS yeguesefšve kesâ efueS uesKe Yespeles meceÙe uesKe kesâ meeLe ke=âheÙee Dehevee mebef#ehle yeeÙees[eše Yeer efYepeJeeSb leeefkeâ uesKe ØekeâeefMele nesves keâer efmLeefle
ceW Gmekeâe GheÙeesie efkeâÙee pee mekesâ~
yeveeÙee ieÙee~ Ùen DeefOeefveÙece ÙeÅeefHe Úesše nw Je FmeceW
kegâue 75 OeejeSB nQ~ mebe#f eHle nesves Hej Yeer Ùen DeefOeefveÙece
keâeHeâer no lekeâ keâeues Oeve keâer jeskeâLeece kesâ efueS
keâejiej efmeæ ngDee nw, Hejvleg keâef"veeF& Fme yeele keâer nw
efkeâ keâeues Oeve keâes yeenj ueeves ceW meceepe keâer Deesj mes
Devegketâue menÙeesie ve efceue Heeves kesâ keâejCe Ùen keâevetve
DeYeer DeHeveer HengBÛe keâes efJemle=le veneR keâj HeeÙee nw~
Fme DeefOeefveÙece ceW keâeues Oeve keâer jeskeâLeece kesâ efueS
DeHejeOe keâer HeefjYee<eeSB, Je Ssmes DeHejeOe nsleg mepee,
kegâkeâea HeÇeJeOeeve, vÙeeÙe HeÇef›eâÙee, mecceve, peyleer DeHeerueerÙe
HeÇeJeOeeve, efJeMes<e vÙeeÙeeueÙe, Fme DeefOeefveÙece kesâ efueS
me#ece HeÇeefOekeâejer, Je efJeefJeOe HeÇeJeOeeveeW kesâ ceeOÙece mes
keâeHeâer JÙeeefHle oer ieF& nw~ meb#esHe ceW keânW lees keân mekeâles
nQ efkeâ YeejleerÙe mebmeo Éeje DeefOeefveÙeefcele Ùen keâevetve,
keâeuesOeve keâer jeskeâLeece kesâ efueS keâeHeâer HeÇYeeJekeâejer nw,
yeMelex Fmekeâe keâeÙee&vJeÙeve keâjves ceW HeÙee&Hle efve<"e nes~
yeQkeâ leLee efJeòeerÙe mebmLeeDeeW nsleg HeÇeJeOeeve
`keâeuee Oeve JewOeerkeâjCe efveJeejCe DeefOeefveÙece, 2002'
ceW keâeues Oeve kesâ JewOeerkeâjCe kesâ mebyebOe ceW mHe<š efveoxMe
efoS nQ,~ Fme DeefOeefveÙece keâe DeOÙeeÙe 4 - yeQefkebâie,
efJeòeerÙe Je efJeòe keâer ceOÙemLelee keâjves Jeeues mebmLeeveeW kesâ
oeefÙelJeeW kesâ yeejs ceW efJemleej mes yeleelee nw~ meb#eshe ceW,
nce Fve ØecegKe efyebogDeeW hej ØekeâeMe [eue jns nQ :
Oeeje 12 : keâeues Oeve kesâ JewOeerveerkeâjCe keâer jeskeâLeece
kesâ efueS meYeer yeQkeâeW, efJeòeerÙe mebmLeeDeeW Ùee efJeòeerÙe
ceOÙemLe kesâ ¤he ceW keâece keâj jns mebie"veeW kesâ efueS Ùen
DeefveJeeÙe& keâj efoÙee nw efkeâ Jes Deheves meYeer uesveosveeW keâe
GefÛele efjkeâe[& jKeW efpemeceW uesve osveeW kesâ cetuÙe Je
Gvekeâer Øeke=âefle leLee Ùen efJeJejCe Yeer nes efkeâ Jen Skeâ
uesveosve nw Ùee Skeâ ceen kesâ Deboj uesveosveeW keâer hetjer
ëe=ÇbKeuee nw~ Fmekeâe efJeJejCe jKevee nesiee leLee keâesF&
efJemebieefle heeS peeves hej mebyebefOele DeefOekeâejer keâes Fmekeâer
metÛevee osveer nesieer~ Deheves meYeer «eenkeâeW keâer henÛeeve
keâe efjkeâe@[& jKevee nesiee Je meYeer uesveosveeW kesâ efjkeâe@[&
keâce mes keâce 10 Je<e& lekeâ megjef#ele jKes peeves ÛeeefnS~
uesKekeâeW mes DevegjesOe...
Oeeje 13 : FmeceW keâeues Oeve keâer jeskeâLeece ceW ueies
efveosMekeâ Deheveer FÛÚe mes Ùee keâneR mes efMekeâeÙele efceueves
hej mebyebefOele Keeles kesâ efJeJejCe ceebie mekeâles nQ leLee
efveosMekeâ kesâ DeeosMeeW keâe heeueve ve keâjves hej Ùee oes<eer
heeS peeves hej pegcee&vee Yeer ueiee mekeâles nQ~ Ssmeer Ûetkeâ
kesâ efueS pegcee&ves keâer jeefMe 10 npeej mes ueskeâj 1
ueeKe ®heÙes lekeâ nes mekeâleer nQ~
Oeeje 14 : kegâÚ ceeceueeW ceW yeQkeâeW Je efJeòeerÙe mebmLeeDeeW
keâes oerJeeveer Øeef›eâÙee mes Útš oer ieF& nQ~
Oeeje 15 : keWâõ mejkeâej, YeejleerÙe efjpeJe& yeQkeâ kesâ
hejeceMe& mes Fme DeefOeefveÙece kesâ ØeeJeOeeveeW keâes ueeiet
keâjves kesâ efueS Oeeje 12 keâer Ghe Oeeje (1) ceW yeleeF&
ieF& metÛevee keâes ceBieeves kesâ efueS Øeef›eâÙee Je heæefle
efveOee&efjle keâj mekeâleer nw~
Fme Øekeâej kesâ ØeeJeOeeveeW mes Ùen yeQkeâeW kesâ efueS yeeOÙekeâejer
nes peelee nw efkeâ Jes keâeues Oeve kesâ JewOeerkeâjCe keâer
jeskeâLeece Je Fmekesâ efveJeejCe ceW menÙeesie oW~
efve<keâ<e&
keâeuee Oeve meceepe, je°^ Je JÙeefkeäle, meYeer kesâ efueS
neefvekeâejkeâ nw~ Dele: Ùen ØelÙeskeâ veeieefjkeâ keâe oeefÙelJe
nw efkeâ Jen Fme meeceeefpekeâ yegjeF& keâes otj keâjves ceW
Ùeesieoeve os, Ùen mener ceeÙeveeW ceW je°^ mesJee nesieer~
yeQefkebâie leLee efJeòeerÙe leb$e je°^ keâer jkeäle JeeefnefveÙeeB nQ~
Ùeefo Demeeceeefpekeâ leòJeeW kesâ ieuele keâeÙeeX mes FmeceW
DeJejesOe Dee peeS lees Ùen je°^ kesâ DeLe&leb$e kesâ efueS
Ieelekeâ nesiee~ Dele: ØelÙeskeâ yeQkeâkeâceea keâes mJeÙeb Ùen
mebkeâuhe uesvee nesiee efkeâ Jen hetCe& peeie¤keâlee yejleles
ngS keâeÙe& keâjsiee leLee keâneR Yeer keâYeer Yeer Deveweflekeâ
uesveosve keâe helee ueieles ner Fmekesâ efJe<eÙe ceW me#ece
ØeeefOekeâejer keâes metÛevee osiee~ mener DeLeeX ceW nce leye ner
osMe kesâ mepeie veeieefjkeâ ceeves peeSBies~ q
DeeFyeerS yeguesefšve 47
pegueeF& 2005
 uesKe
DeeÙe efjmeeJe keâe ØeyebOe
Ùeefo efveÙeb$ekeâ GheÙegkeäle
otjoefMe&lee keâes DeheveeÙes
lees DeeÙe efjmeeJe keâes
keâeheâer no lekeâ jeskeâe pee
mekeâlee nw~ efheÚues kegâÚ
Je<eeX ceW, YeejleerÙe yeQkeâeW ceW
Yeer DeeÙe efjmeeJe keâer
IešveeÙeW osKeves Deewj
megveves keâes efceueer nQ~ kegâÚ
yeQkeâeW ceW nesves Jeeues DeeÙe
efjmeeJe kesâ neomeeW ves Fme
efJe<eÙe keâes meeceefÙekeâ Deewj
cegKej yevee efoÙee nw Dele:
DeeÙe efjmeeJe kesâ Fme
keâesÌ{ keâes efJejece efoÙee
peevee Deepe keâer cenleer
DeeJeMÙekeâlee nw~
48 DeeFyeerS yeguesefšve
pegueeF& 2005
Deepe efkeâmeer Yeer JÙeeJemeeefÙekeâ mebmLee
keâe cegKÙe GodosMÙe Deheves ueeYeeW ceW
Gòejesòej Je=efæ keâjvee neslee nw~ JÙeÙeeW
kesâ Thej pees DeeefOekeäÙe DeLeJee yeÛele
nesleer nw, Gmes ner nce DeeÙe keâer ßesCeer
ceW jKeles nQ~ Dele: ØeeefhleÙeeW SJeb JÙeÙeeW
kesâ Deblej keâes DeefOekeâlece keâjves keâe ØeÙeeme njmecYeJe GÛÛe
mlej lekeâ yeQkeâeW keâes keâjvee ÛeeefnS~ DeeÙe yeÌ{eves kesâ efueS yeQkeâeW
keâes Deheves ueeYe ceW Je=efæ DeeJeMÙekeâ nw~ yeQkeâeW kesâ DeeÙe meÇesleeW
ceW yÙeepe, yešdše, efJeefveceÙe Deewj keâceerMeve Deeefo Meeefceue nesles
nQ~ Iešleer yÙeepe oj kesâ Ûeueles yeQkeâeW Éeje keâce ueeiele keâer
peceeDeeW keâes mJeerkeâej keâj, MeeKee mlej hej yÙeepe keâer Deefleefjkeäle
Je Deuhe Jemetueer leLee mesJee, keâceerMeve, yešdše, oueeueer mebyebOeer
ØeYeejeW keâer hetCe& Jemetueer keâj Deheveer DeeÙe ceW Je=efæ keâjveer
nesieer~ je°^erÙeke=âle yeQkeâeW ceW Deepe Yeer Ùes ojW efvepeer #es$e kesâ yeQkeâeW
SJeb efJeosMeer yeQkeâeW keâer leguevee ceW keâce nQ leLee veJeervelece metÛevee
ØeewÅeesefiekeâer kesâ Ûeueles peesefKece keâer mecYeeJeveeÙeW Yeer yeÌ{er nQ~
yeQkeâeW keâes Deheveer DeeÙe keâes efmLej yeveeÙes jKeves kesâ efueS DeeÙe
efjmeeJe kesâ ØeyebOeve hej DeefOekeâ peesj osves keâer DeeJeMÙekeâlee nQ~
DeeÙe efjmeeJe DeefOekeâeefjÙeeW, keâce&ÛeeefjÙeeW leLee heÙe&Jes#ekeâeW keâer
ueehejJeener, Goemeervelee DeLeJee Deheves oeefÙelJe hetCe& ¤he mes
Jenve ve keâjves kesâ keâejCe leLee DeeOegefvekeâ metÛevee ØeewÅeesefiekeâer
ceW hetCe& ¤he mes ØeefMeef#ele ve nesves kesâ keâejCe neslee nw pees
yeQkeâesW kesâ efueS efyeukegâue Yeer efnlekeâj veneR neslee~
DeeÙe efjmeJe keâe DeLe&
yeQkeâ Éeje efJeefYevve KeeleeW ceW
heef j Ûeeueve meb y eb O eer
[e@. vejsvõ heeue efmebn
Jeefj‰ ØeJekeälee, JeeefCepÙe efJeYeeie,
meent pewve keâeuespe, vepeeryeeyeeo (Gòej ØeosMe)
MeleeX kesâ Debleie&le yÙeepe, keâceerMeve, efJeefveceÙe ØeYeej, oueeueer,
Jemetueer, DeeÙe SJeb DevÙeevÙe efJeefJeOe ceoeW mes Dehesef#ele DeeÙe
keâer Gieener keâer peeleer nw~ Ùen DeeÙe kegâue ueeYe DeLeJee kegâue
DeeÙe keâe Skeâ ceòJehetCe& efnmmee yeveleer pee jner nw~ peye
efJeefYevve keâejCeeW mes Ùes Dehesef#ele DeeÙe yeQkeâeW Éeje Jemetue veneR
nes heeleer nes lees DeeÙe efjmeeJe keâer efmLeefle yeve peeleer nw Dele:
DeeÙe efjmeeJe Ssmeer OevejeefMe nw efpemekeâer Jemetueer Dehesef#ele Leer,
efkeâvleg yeQkeâ keâes Øeehle veneR nes heeÙeer~ FveceW $e+CeeW Je Deef«eceeW
hej Øeehle yÙeepe, efyeueeW hej yešdše, Yegieleeve Jemetueer kesâ KeÛe&,
[^eheäš keâer Deouee-yeoueer, jkeâce nmleeblejCe, efveJesMeeW mes Øeeefhle
leLee DeeÙe kesâ DevÙe meeOeveeW keâes Meeefceue keâjles nQ~
DeeÙe efjmeeJe kesâ keâejCe
hej mejkeâej leLee YeejleerÙe efjpeJe& yeQkeâ Éeje yeQkeâeW keâes Gvekesâ
keâes<eeW, DeeÙe kesâ meeOeveeW, vekeâoer pecee SJeb $e+Ce, Glheeokeâlee,
mesJeeDeeW Deewj ueeYeØeolee kesâ mebyebOe ceW meceÙe-meceÙe efoMee
efveoxMe peejer efkeâS peeles jnles nQ~ efkeâvleg, Fve meyekesâ yeeJepeto,
yeQkeâ MeeKeeDeeW ceW Fve efveoxMeeW keâe keâce&ÛeeefjÙeeW Éeje hetje
heeueve megefveefMÛele venerR efkeâÙee peelee Deewj DeeÙe kesâ efjmeeJe keâer
efmLeefle yeve peeleer nw~ Ùeefo hetjs yeQefkebâie GÅeesie keâes osKee peeÙes
lees ØeefleJe<e& keâjesÌ[eW ®heÙee DeeÙe efjmeeJe kesâ ¤he ceW efvekeâue
peelee nw~ DeeÙe efjmeeJe ceW kegâÚ yeQkeâkeâceea peeveyetPekeâj Yeer
Meeefceue heeÙes peeles nQ~ Ùeefo efveÙeb$ekeâ GheÙegkeäle otjoefMe&lee keâes
DeheveeÙes lees DeeÙe efjmeeJe keâes keâeheâer no lekeâ jeskeâe pee mekeâlee
nw~ efheÚues kegâÚ Je<eeX ceW, YeejleerÙe yeQkeâeW ceW Yeer DeeÙe efjmeeJe
keâer IešveeÙeW osKeves Deewj megveves keâes efceueer nQ~ kegâÚ yeQkeâeW ceW
nesves Jeeues DeeÙe efjmeeJe kesâ neomeeW ves Fme efJe<eÙe keâes meeceefÙekeâ
Deewj cegKej yevee efoÙee nw Dele: DeeÙe efjmeeJe kesâ Fme keâesÌ{ keâes
efJejece efoÙee peevee Deepe keâer cenleer DeeJeMÙekeâlee nw~ DeeÙe
efjmeeJe kesâ ØecegKe keâejCe efvecveefueefKele nes mekeâles nQ :
l yeQkeâeW Éeje mesJee SJeb efvejer#eCe ØeYeej keâes mener
l yeQkeâeW ceW YeejleerÙe efjpeJe& yeQkeâ DeLeJee mejkeâej
cee$ee ceW Jemetue ve keâj heevee~
l yeQkeâeW Éeje yÙeepe, yešdše, keâceerMeve SJeb efJeefveceÙe
l
ØeYeej keâes hegjeveer DeLeJee keâce ojeW hej Jemetue
keâjvee~
l peceejeefMeÙeeW hej osÙe yÙeepe keâe DeefOekeâ oj hej
l
Yegieleeve keâjvee~
l efvejer#ekeâeW SJeb GÌ[veomleeW Éeje yeleeÙeer ieÙeer
yeQkeâeW Éeje efveOee&efjle JÙeÙe, GheÙegkeäle meceÙe
Devlejeue hej KeeleeW ceW yÙeepe ve ueieevee leLee
l
yÙeepe keâer ieCevee Ûe›eâJe=efæ ¤he ceW ve keâjvee~
l yeQkeâeW Éeje yÙeepe keâer ieCevee keâjles meceÙe mener
ieg C eveheâue leLee Ùees i e keâe ve keâjvee~
l
heefjCeecemJe¤he peceeDeeW hej DeefOekeâ yÙeepe keâe
Yegieleeve keâjvee leLee $e+CeeW hej yÙeepe keâer keâce
Jemetueer keâjvee~
l
l
yeQkeâkeâefce&ÙeeW Éeje DeeOegefvekeâ metÛevee ØeewÅeesefiekeâer
kesâ Ûeueles keâchÙetšj mes efkeâS ieS keâeÙe& keâer peebÛe
ceW efMeefLeuelee yejlevee~
l
l
yeQkeâeW Éeje efJeefYevve lÙeewnejeW SJeb DeJemejeW hej
oer ieF& Útš leLee mesJee ØeYeejeW ceW [ekeâ JÙeÙe
Deeefo keâer Jemetueer ve keâjvee~
l
l
yeQkeâeW Éeje efJeefYevve $e+Ce KeeleeW hej oC[ mJe¤he
yÙeepe leLee pecee KeeleeW ceW vÙetvelece Mes<e mes keâce
OevejeefMe nesves hej ueieeÙes ieÙes ØeYeejeW keâer ØeYeeJeer
Jemetueer ve nesvee~
l
l
yeQkeâeW Éeje pecee KeeleeW hej Deefleefjkeäle yÙeepe keâer
DeoeÙeieer keâjvee leLee $e+Ce KeeleeW hej yÙeepe keâer
hetCe& Jemetueer ve nes heevee keäÙeeWefkeâ pecee SJeb $e+Ce
KeeleeW hej yÙeepe keâer ojeW ceW meceÙe-meceÙe hej
heefjJele&ve neslee jnlee nw leLee yeQkeâ MeeKeeDeeW ceW
yeQkeâkeâceea Yeer Deebleefjkeâ DeLeJee yee¢e ¤he mes
mLeeveebleefjle nesles jnles nQ~
l yeQkeâeW Éeje yÙeepe DeLeJee DevÙe ØeYeejeW keâes Jemetueves
ceW DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW Éeje DeveeJeMÙekeâ
l
¤he mes JÙeÙe keâj efoS peeles nQ~
l yeQkeâ MeeKeeDeeW ceW DeYeer lekeâ ceeveJe Éeje ner
DeefOekeâebMe keâeÙe& mebhevve efkeâÙes peeles nQ Dele: KeeleeW
keâe Ùeesie, iegCeveheâue SJeb heefjkeâueve keâe ieuele
nesvee mJeeYeeefJekeâ Lee~ efkeâvleg, Deepe metÛevee ØeewÅeeseif ekeâer
kesâ Ûeueles yeQkeâeW ceW DeefOekeâebMe keâeÙe& ceMeerveeW Éeje
nesves ueiee nw peyeefkeâ ceeveJe mebmeeOeve keâer DeveosKeer
veneR keâer pee mekeâleer Deewj metÛevee ØeewÅeeseif ekeâer ceW
DeeÙe efjmeeJe kesâ Kelejs yeves jnles nQ~
Éeje peejer ceeie&oMeea efmeæevleeW keâe DeefOekeâeefjÙeeW,
keâce&ÛeeefjÙeeW leLee heÙe&Jes#ekeâeW Éeje iebYeerjlee mes
”
heeueve veneR efkeâÙee peelee Dele: DeeÙe efjmeeJe keâer
mebYeeJevee yeveer jnleer nw~
Ùeefo KeeleeW ceW uesve-osve keâes me#ece DeefOekeâejer
yeQkeâeW Éeje $e+Ce SJeb yÙeepe Jemetueer ceW osjer kesâ
keâejCe Deefleefjkeäle JÙeÙe Yeer Jenve keâjvee neslee nw
efpememes kegâue DeeÙe ceW keâceer nes peeleer nQ~
Éeje ØeceeefCele veneR efkeâÙee ieÙee nw lees Gmekeâer
yeQkeâeW ceW Debkesâ#ekeâeW, Deebleefjkeâ uesKee hejer#ekeâeW,
ueehejJeener, Goemeervelee SJeb keâle&JÙeefJecegKelee
efJeefYevve efJemebieefleÙeeW keâes lelkeâeue otj ve keâjvee~
kesâ keâejCe Ùeefo DeeÙe efjmeeJe ngDee nw lees Gmes
”
yeQkeâeW ceW mebÛeeuekeâeW SJeb ØeyebOekeâeW keâer ÙeLeeLe&lee
SJeb heefjMegælee kesâ melÙeeheve ceW iebYeerjlee keâe ve
heeÙee peevee~ Yeer GòejoeÙeer "njeÙee peeÙes~
yeQkeâeW ceW DeefOekeâebMe MeeKee ØeyebOekeâeW SJeb keâce&ÛeeefjÙeeW
Éeje DeeÙe efjmeeJe keâes ceveceeves {bie mes Øemlegle
keâjvee~
yeQkeâ DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW kesâ DeefOekeâejeW
ceW keâceer kesâ Ûeueles mJeleb$e efveCe&Ùe keâe DeYeeJe
jnlee nw efpememes ueeieleeW ceW Je=efæ nes peeleer nw~
yeQkeâeW ceW keâce&ÛeeefjÙeeW SJeb DeefOekeâeefjÙeeW kesâ meecetefnkeâ
ØeÙeemeeW ceW keâceer kesâ Ûeueles DeeÙe efjmeeJe ceW Je=efæ
nes peeleer nw~
yeQkeâeW Éeje cenòJehetCe& #es$eeW keâes ØeeLeefcekeâlee veneR oer
peeleer efpememes keâheš, ogjeÛejCe, OeesKeeOeÌ[er Deeefo
keâer IešveeDeeW ceW yeÌ{eslejer nesves mes DeeÙe efjmeeJe
nes peelee nw~
Ùeefo yeQkeâeW Éeje meceÙeeveg¤he
Deheveer efJeheCeve jCeveerefle ceW
heefjJele&ve veneR efkeâÙee peelee
Deewj hetJee&vegYeJeeW mes ßeer efmebn pewve keâe@uespe kesâ JeeefCepÙe efJeYeeie ceW ØeJekeä lee nQ~
meerKe veneR ueer peeleer
Deehe Sce.S. DeLe&MeeŒe, Sce.keâe@ce. leLee heerSÛe.[er. nQ~ efJeòeerÙe
lees DeeÙe efjmeeJe keâer
IešveeDeeW keâer ØeyebOeve Deewj yeQefkebâie ceW Deehekeâer efJeMes<e%elee nQ~ Deehekesâ ceeie&oMe&ve
hegvejeJe=efòe nesleer ceW Dee" Úe$eeW ves heerSÛe.[er. keâer nw leLee Fleves ner Úe$e
jnsieer~
heerSÛe.[er. keâj jns nQ~ Deeheves 18 heefjÙeespevee keâeÙe& hetje efkeâÙee
Ùeefo yeQkeâkeâefce&ÙeeW
Éeje Deheves heo kesâ nw~ Ùeespevee, kegâ®#es$e, ØeyebOe, ØeefleÙeesefielee ohe&Ce, heÙee&JejCe
Deveg¤he efpeccesoejer Ûeslevee leLee yeQefkebâie efÛebleve-DevegefÛebleve pewmeer heef$ekeâeDeeW ceW Deehekesâ
keâe hetCe& Denmeeme
veneR efkeâÙee peelee Deewj 35 mes Yeer DeefOekeâ uesKe ØekeâeefMele ngS nQ~
keâeÙe& kes â Øeef l e
ueehejJeener yejleer peeleer
nw lees Jen DeeÙe efjmeeJe keâe
keâejCe yeve peeleer nw~
DeeFyeerS yeguesefšve 49
pegueeF& 2005
DeeÙe efjmeeJe kesâ ØeyebOeve keâe #es$e
heefjÛeeueve heejoefMe&lee:
yeQkeâeW Éeje mejkeâej, YeejleerÙe efjpeJe& yeQkeâ SJeb Deheves
cegKÙe keâeÙee&ueÙeeW Éeje efveie&le efveosMeeW keâe heeueve megevf eefMÛele
efkeâÙee peevee ÛeeefnS~ yeQkeâ Deheves «eenkeâeW Éeje Keesues
ieÙes efJeefYevve KeeleeW keâes heefjÛeeefuele keâj, pecee jeefMeÙeeW
hej yÙeepe keâe Yegieleeve leLee $e+Ce KeeleeW hej yÙeepe keâer
Jemetueer keâjlee nw~ meeLe ner, DeefleosÙe Deef«eceeW hej
oC[mJe¤he yÙeepe Yeer Jemetuelee nw~ yeQkeâ, «eenkeâeW keâes
efJeefYevve mesJeeÙeW Øeoeve keâjles nw efpevekesâ efueS efJeefYevve
ojeW ceW ØeYeejeW keâer Jemetueer keâer peeleer nw~ Dele: yeQkeâ keâes
ÛeeefnS efkeâ Jen Deheves Fve heefjÛeeueveiele keâeÙe& ceW
heejoefMe&lee yeveeÙes jKes efpememes DeeÙe efjmeeJe ceW keâeheâer
no lekeâ keâceer keâer pee mekeâleer nw keäÙeeWefkeâ peye yeQkeâ kesâ
keâeÙeex ceW heejoefMe&lee nesieer lees «eenkeâ mJeÙeb Yeer Fme
yeele keâes peebÛe mekeWâies efkeâ Gvekesâ KeeleeW kesâ heefjÛeeueve
ceW keâesF& ieÌ[yeÌ[er lees veneR nw~ yeQkeâ Éeje $e+Ce SJeb
meeJeefOe pecee KeeleeW keâe GefÛele meceÙe hej veJeerveerkeâjCe
SJeb efMeveeKle keâer peeveer ÛeeefnS~ efyevee efMeveeKle leLee
DeefleosÙe KeeleeW hej oC[mJe¤he yÙeepe ueieekeâj Jemetueer
keâer peeveer ÛeeefnS~
ceeveJe mebmeeOeve SJeb GòejoeefÙelJe
Deepe yeQkeâeW keâe DeefOekeâebMe keâeÙe& Fueskeäš^e@efvekeâ yeQefkebâie
kesâ Debleie&le nes jne nw efkebâleg Gmekeâes megÛee® ¤he mes
Ûeueeves keâe keâeÙe& Deepe Yeer ceeveJe Éeje efkeâÙee peelee nw
Dele: keâeÙe& keâe efJeYeepeve keâeÙe& keâer efJeefMe°lee, ÙeesiÙelee
SJeb keâce&Ûeejer keâer ®efÛe kesâ Deveg¤he keâj, Gmekeâer
efpeccesoejer Yeer hetCe&®he mes Gme hej [eueveer ÛeeefnS~
yeQkeâkeâefce&ÙeeW keâes keâeÙe& keâer efpeccesoejer meeQheles meceÙe Jen
Yeer mhe° efkeâÙee peevee ÛeeefnS efkeâ ueehejJeener kesâ keâejCe
yeQkeâ keâer DeeÙe ceW keâesF& efjmeeJe neslee nw lees Gmekeâer
peJeeyeosner Gmeer keâer nesieer~ Fmekesâ efueS yeQkeâ kesâ efJeefYevve
keâeÙeeX kesâ Øeefle peJeeyeosner DeLeJee GòejoeefÙelJeeW keâe
efveOee&jCe keâj Gmes Skeâ hegefmlekeâe kesâ ¤he ceW ÚheJeekeâj
ØelÙeskeâ keâce&Ûeejer keâes efoÙee peevee ÛeeefnS~ yeQkeâ DeefOekeâeefjÙeeW
keâes ÛeeefnS efkeâ peye Yeer efkeâmeer keâesF& ieueleer keâe helee
Ûeues Gmekeâe legjble GheÛeej efkeâÙee peevee ÛeeefnS~ yeQkeâ
ceW keâefce&ÙeeW Éeje efkeâÙes ieÙes keâeÙeeX keâe uesKee-peesKee Yeer
Skeâ efvefMÛele meceÙe lekeâ jKee peevee ÛeeefnS leeefkeâ Yetle
ceW keâer ieF& ueehejJeeefnÙeeW leLee DeeÙe efjmeeJe kesâ Øeefle
Gvekeâer efpeccesoejer keâes efveOee&efjle efkeâÙee pee mekesâ~
50 DeeFyeerS yeguesefšve
pegueeF& 2005
DeeJeMÙekeâ metÛevee ØeyebOe
yeQkeâeW ceW DeeÙe efjmeeJe keâes jeskeâves kesâ efueS DeÅeleve
DeeJeMÙekeâ metÛeveeDeeW keâe ØeyebOeve DeefJeuebye efkeâÙee peevee
ÛeeefnS~ Ùeefo yeQkeâ mšeheâ meleke&â nes lees meYeer cenòJehetCe&
metÛeveeDeeW keâes efjkeâe@[& keâjves keâer DevegMeeefmele keâeÙe&
JÙeJemLee keâer pee mekeâleer nw efpememes keâesF& Ûetkeâ Ùee
ieueleer nesves Je Gmekesâ peejer jnves keâer mebYeeJeveeSb veieCÙe
nes peeleer nQ Deewj efveCe&Ùeve keâeheâer no lekeâ mener Je leer›e
nesles nQ~ Ùeefo keâesF& cenlJehetCe& metÛevee, efpemeceW yÙeepe
ojeW DeLeJee mebMeesefOele mesJee ØeYeej keâer ojeW keâe GuuesKe
nes, cegKÙe keâeÙee&ueÙe, mejkeâej leLee YeejleerÙe efjpeJe&
yeQkeâ mes Deeves ceW osjer nesleer nw lees Fme heefjJele&ve mes yeQkeâ
MeeKeeDeeW keâes pees DeeÙe nesveer ÛeeefnS Leer Jen yegjer lejn
mes ØeYeefJele nes mekeâleer nw~ mebYeJele: yeQkeâ MeeKeeÙeW
mLeeÙeer KeeleeOeejkeâeW keâes efJeMJeeme ceW ueskeâj Ssmes mesJee
ØeYeejeW DeLeJee yÙeepe keâer Jemetueer keâj mekeâleer nw efkeâvleg
Fme Øeef›eâÙee mes DeeÙe efjmeeJe ceW kegâÚ meercee lekeâ {erue
jnvee mJeeYeeefJekeâ nw~ Deepe mebÛeej JÙeJemLee Fleveer
lespe nes ieÙeer nw efkeâ DeÅeleve metÛeveeDeeW keâes Ûevo meceÙe
ceW ner Øesef<ele efkeâÙee pee mekeâlee nw efkeâvleg Fmekesâ meeLe-
meeLe Fmekesâ Kelejs Yeer Glhevve ngS nQ Dele: Fve meYeer
kesâ Øeefle yeQkeâ MeeKee kesâ keâce&ÛeeefjÙeeW DeefOekeâeefjÙeeW keâes
mepeie jnvee nesiee~
keâeÙe&efve<heeove ceW efJemebieefleÙeeb
yeQkeâ Éeje Deheveer MeeKeeDeeW ceW pees Yeer efoMeeefveoxMe
Yespes peeSb Jes efyeukegâue megmhe° SJeb efJemebieefleÙeeW mes
jefnle nesves ÛeeefnS keäÙeeWefkeâ efJeefYevve MeeKeeDeeW ceW Ùeefo
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efvekeâeue efueÙee peelee nw lees GmeceW DeeÙe efjmeeJe keâer
mebYeeJevee Gleveer ner DeefOekeâ nesleer Ûeueer peeÙesieer DevÙeLee
yeQkeâ keâe JÙeJemeeÙe ØeYeeefJele nes peeÙesiee~ yeQkeâ ceW Debkesâ#ekeâ,
uesKee efvejer#ekeâ Ùee hejer#ekeâeW Éeje Ùeefo keâefLele efJemebieefleÙeeW
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keâes ÛeeefnS efkeâ Jes legjble Ssmeer efJemebieefleÙeeW keâes megOeejkeâj
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Deheves Deevleefjkeâ efveÙeb$eCe ceW Dehesef#ele megOeej keâj
YeefJe<Ùe ces nesves Jeeues Ssmes efjmeeJe hej keâeyet hee mekeâles
nQ~
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yeQkeâeW ceW Øeefle efleceener/Úceener yÙeepe keâe heefjkeâueve
efkeâÙee peelee nw Deewj KeeleeW ceW [sefyeš DeLeJee ›esâef[š
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mesJeeDeeW kesâ yeoues mesJee ØeYeej Yeer yeQkeâ Éeje Jemetues
peeles nQ efkeâvleg Gve hej mebyebefOele keâce&Ûeejer SJeb peebÛekeâlee&
Éeje nmlee#ej veneR nesles~ Deepekeâue keâchÙetšj ceW Yeer
yÙeepe SJeb mesJee ØeYeejeW keâe efveOee&jCe keâjves kesâ Ghejeble
pees Yeer efJeJejCe ØekeâeefMele efkeâÙes peeles nQ Gve hej
mebyebefOele keâceea SJeb DeefOekeâejer kesâ efJeefOeJele nmlee#ej
efkeâÙes peeves ÛeeefnS keäÙeeWefkeâ YeefJe<Ùe ceW Ùeefo efkeâmeer $egefš
keâe helee Ûeuelee nw lees Gmekesâ efueS Gmeer mebyebefOele
JÙeefkeäle keâes GòejoeÙeer "nje keâj Gmekesâ efJe®æ
DevegMeemeveelcekeâ keâeÙe&Jeener keâer pee mekesâ~ Ùeefo KeeleeW
ceW uesve-osve keâes me#ece DeefOekeâejer Éeje ØeceeefCele veneR
efkeâÙee ieÙee nw lees Gmekeâer ueehejJeener, Goemeervelee SJeb
keâle&JÙeefJecegKelee kesâ keâejCe Ùeefo DeeÙe efjmeeJe ngDee nw
lees Gmes Yeer GòejoeÙeer "njeÙee peeÙes~ Ùeefo yeQkeâ kesâ
DeefOekeâeefjÙeeW SJeb keâce&ÛeeefjÙeeW kesâ ceve ceW Ùen yeele yew"e
oer peeÙes efkeâ Jes Deheves keâeÙe& keâes iebYeerjlee mes ueW Deewj
ØelÙeskeâ uesve-osve keâer Megælee keâer peebÛe keâj ner nmlee#ej
keâjW lees DeeÙe efjmeeJe hej keâeheâer no lekeâ keâeyet heeÙee
pee mekeâlee nw~
MeeKee mlej hej meleke&âlee
DeeÙe efjmeeJe keâes jeskeâves nsleg MeeKee mlej hej meleke&âlee
yejleveer yengle DeeJeMÙekeâ nw~ meleke&âlee mes efkeâmeer Yeer
Øekeâej keâer DeefveÙeefcelelee keâes Meg¤ ceW ner jeskeâe pee
mekeâlee nw Deewj ØeyebOekeâ meceÙe jnles jCeveerefle yeveekeâj
mecYeeefJele Kelejs mes yeQkeâ keâes yeÛee mekeâlee nw~ Deepe
veJeerve metÛevee ØeewÅeesefiekeâer kesâ Ûeueles keâchÙetšjeW Éeje Yeer
DeeÙe efjmeeJe nes jne nw pewmes DeveefOeke=âle ¤he mes
efJeòeerÙe uesve-osve keâjvee, oes<ehetCe& keâchÙetšj Øees«eece
yeveevee, jeskeâ[ Mes<eeW keâer efveefMÛele DeJeefOe kesâ yeeo
efjheesefšËie, OeesKeeOeÌ[er mes $e+Ce meercee Je=efæ, DeveefOeke=âle
¤he mes yÙeepe ojeW ceW heefjJele&ve keâjvee leLee meceeMeesOeve
JÙeJenejeW ceW ieÌ[ye[er keâjvee, yÙeepe ieCevee nsleg ieuele
lejerkeâe Deheveevee, efJeosMeer efJeefveceÙe uesve-osveeW ceW heefjJeefle&le
efJeefveceÙe oj ueeiet ve keâjvee Deeefo~ Dele: yeQkeâeW keâes
ÛeeefnS efkeâ Jes Deheves mšeheâ meomÙeeW keâes ØeefMe#eCe
Øeoeve keâjW Deewj DeeÙe efjmeeJe mes mebyebefOele mebYeeefJele
#es$eeW keâer peevekeâejer Øeoeve keâjW~ yeQkeâeW Éeje Deheves
keâce&ÛeeefjÙeeW keâes ØeefMe#eCe ceW Ùen DeJeMÙe yeleeÙee peeÙes
efkeâ Jes peevekeâejer kesâ DeYeeJe ceW keâeF& Yeer keâeÙe& ve keâjW
Deewj ve ner keâjves keâer menceefle Øeoeve keâjW~ yeQkeâ kesâ Øeefle
Deheveer efpeccesoeefjÙeeW keâes hetCe& ¤he mes efveYeeSb leLee
DeeÙe efjmeeJe kesâ yeejs ceW peevekeâejer jKeles ngS meowJe
meleke&â jnW Deewj yeQkeâ keâer keâeÙe&ØeCeeueer, efveÙeceeW SJeb
Mes<e he=‰ meb. 52 hej

hegmlekeâ - meceer#ee
pewmee efkeâ veece mes ner mhe° nw, efJeveÙe yebmeue Éeje
efueefKele `Jemlegefve‰ yeQefkebâie efJeefOe SJeb JÙeJenej' kesâ
efJeefYevve henuegDeeW keâer Jemlegefve‰ peevekeâejer oer ieF&
nw~ otmejs MeyoeW ceW, FmeceW yeQefkebâie mebyebOeer peevekeâejer
osves kesâ efueS ØeMveesòej Mewueer keâes DeheveeÙee ieÙee nw~
hegmlekeâ 17 DeOÙeeÙeÙeeW ceW efJeYekeäle nQ, efpeveceW yeQekf ebâie
kesâ efJeefYevve he#eeW keâes mecesše ieÙee nw~ henuee DeOÙeeÙe
YeejleerÙe efJeòeerÙe ØeCeeueer hej nw, efpemeceW yeQkeâeW kesâ
GodYeJe, je°^eÙr ekeâjCe, efJeueÙe SJeb DeefYe«enCe, YeejleerÙe
efJeòeerÙe ØeCeeueer kesâ {eBÛes Deewj Gmekesâ Debleie&le DeevesJeeues
efJeefYVve Øekeâej kesâ yeQkeâeW SJeb efJeòeerÙe mebmLeeveeW, Gvekeâer
mLeehevee, keâeÙe& SJeb keâeÙe&ØeCeeueer Deeefo mes mebyebeOf ele
ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~ otmeje DeOÙeeÙe
YeejleerÙe efjpeJe& yeQkeâ keâer mLeehevee, Gmekesâ heÙe&Jes#eCe,
efJekeâeme SJeb hegveefJe&òe mes mebyebeOf ele keâeÙeeX, he$e cegõe SJeb
keâjWmeer Ûesmš, meeKe efveÙeb$eCe kesâ DeueeJee efjpeJe& yeQkeâ
kesâ Jeeef<e&keâ veerelf e efJeJejCe mes mebyebeOf ele peevekeâejer oslee
nw~ leermeje DeOÙeeÙe yeQkeâ-«eenkeâ mebyebOe hej keWâefõle nw,
efpemeceW efJeefYevve pecee SJeb Deef«ece KeeleeW kesâ mJe¤he,
Gve KeeleeW keâes Keesueves SJeb Gvekesâ mebÛeeueve mes mebyebeOf ele
ØeMveesòej efoS ieS nQ~
ÛeewLee DeOÙeeÙe peneB yeQkeâ kesâ keâle&JÙeeW SJeb DeefOekeâejeW
mes mebyebefOele nw, JeneR heeBÛeJeW DeOÙeeÙe ceW hej›eâecÙe
efueKele, GheYeeskeälee mebj#eCe, yeQefkebâie efJeefveÙeceve
DeefOeefveÙece meefnle keâF& cenòJehetCe& JeeefCeefpÙekeâ
DeefOeefveÙeceeW leLee Gvekesâ ØeeJeOeeveeW keâe meceeJesMe
efkeâÙee ieÙee nw~ yeQkeâ Skeâ Deesj peneB pevelee mes
peceejeefMeÙeeB mJeerkeâej keâjlee nw, JeneR pe¤jleceboeW
keâes GvnW $e+Ce kesâ ¤he ceW os oslee nw~ uesefkeâve, Ùes
$e+Ce [tye ve peeSB DeLee&led Devepe&keâ Deeefmle ve yeve
peeSB, Fmekesâ efueS yeQkeâ keâes $e+Ce osves mes hetJe&
$e+Ceoelee keâer efJeòeerÙe efmLeefle keâe efJeMues<eCe keâjvee
meceeref#ele hegmlekeâ
uesKekeâ
ØekeâeMekeâ
veiej
cetuÙe
neslee nw~ hegmlekeâ keâe Ú"e DeOÙeeÙe $e+Ce osves kesâ
meeceevÙe efmeæebleeW, yeQkeâeW Éeje oer pee jner efJeefYevve
$e+Ce-megeJf eOeeDeeW, $e+Ce mebmJeerke=âle keâjles meceÙe DeeefmleÙeeW
hej me=efpele efkeâS peeves Jeeues efJeefYevve ØeYeejeW, yebOekeâ
Deeefo mes ner mebyebefOele nw~ FmeceW $e+Ce-ØeuesKeeW kesâ
ØeuesKeerkeâjCe hej Yeer efJeÛeej efkeâÙee ieÙee nw~
osMe kesâ meblegefuele DeeefLe&keâ efJekeâeme kesâ efueS yeQkeâeW
keâes Deheves kegâue Deef«eceeW ceW mes 40 ØeefleMele Deef«ece
ØeeLeefcekeâlee Øeehle #es$e keâes osves nesles nQ~ meeleJeW
DeOÙeeÙe ceW ØeeLeefcekeâlee Øeehele #es$e Deewj Gmekesâ
Debleie&le DeevesJeeues ke=âef<e, ueIeg GÅeesie pewmes #es$eeW keâes
efoS peeves Jeeues $e+CeeW keâer meercee, yÙeepe-oj Deeefo
mes mebyebefOele ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~
Dee"JeeB DeOÙeeÙe yeQkeâeW Éeje oer peevesJeeueer yeQkeâ-
ieejbšer Deewj meeKe he$e mes leeuuegkeâ jKelee nw~
peceejeefMeÙeeB mJeerkeâej keâjves Deewj $e+Ce osves kesâ
DeueeJee yeQkeâ kegâÚ Deveg<ebieer mesJeeDeeW Éeje Yeer DeeÙe
keâe Depe&ve keâjles nQ~ ›esâef[š keâe[&, Oeve-efJeØes<eCe,
Fueskeäš^e@efvekeâ efveefOe DeblejCe, mesheâ ef[hee@efpeš uee@keâj,
ceÛeXš yeQefkebâie, efkeâjeÙee ›eâÙe SJeb hešdše Deeefo
mesJeeDeeW mes mebyebefOele cenòJehetCe& ØeMve Deewj Gvekesâ
Gòej veewJeW DeOÙeeÙe ceW efoS ieS nQ~ hegmlekeâ keâe
omeJeeB DeOÙeeÙe mejkeâejer JÙeJemeeÙe mes mebyebefOele nw,
efpemeceW mejkeâejer uesveosve SJeb heWMeve leLee ueeskeâ
YeefJe<Ùe efveefOe Keeles Deeefo mes mebyebefOele peevekeâejer oer
ieF& nw~ iejeryeer-Gvcetueve Deewj yesjespeieejeW keâes jespeieej
Øeoeve keâjves nsleg Yeejle mejkeâej Éeje ØeeÙeesefpele
mJeCe& peÙebleer «eece mJejespeieej, ØeOeeveceb$eer jespeieej
Deeefo efJeefYevve ÙeespeveeDeeW Deewj Gvekeâer efJeMes<eleeDeeW
keâe efJeJejCe iÙeejnJeW DeOÙeeÙe ceW efoÙee ieÙee nw~
yeQkeâeW Deewj efJeòeerÙe mebmLeeDeeW keâer efJeòeerÙe efmLeefle
Gvekesâ legueve-he$e ueeYe SJeb neefve Keeles pewmes efJeJejCeeW
: Jemlegefve‰ yeQefkebâie efJeefOe SJeb JÙeJenej
: efJeveÙe yebmeue
: Ghekeâej ØekeâeMeve, 2/11S, mJeosMeer yeercee
(Meen efmevescee kesâ meeceves),
Deeieje-282002
: 145 ®heS
mes mhe° nesleer nw~ yeejnJeW DeOÙeeÙe ceW efJeòeerÙe
legueve-he$e, ueeYe SJeb neefve Keelee, vekeâoer ØeJeen
efJeJejCe pewmes cenòJehetCe& efJeòeerÙe efJeJejCeeW Deewj Gvekesâ
Debleie&le DeevesJeeueer ceoeW, GvekeâeW GheÙeesefielee Deeefo
hej ØeMveesòej efoS ieS nQ~
DeefveÙeefceleleeDeeW keâes jeskeâvee Deewj efve<heeove yeÌ{eves
kesâ efueS GheÙegkeäle GheeÙe megPeevee efvejer#eCe keâe leLee
JÙeJemeeÙe keâer efJeòeerÙe efmLeefle keâe ØeceeCe osvee uesKee
hejer#ee keâe cetue GodosMÙe neslee nw~ lesjnJeeB DeOÙeeÙe
efvejer#eCe SJeb uesKeehejer#ee mes ner mebyebefOele nw, efpemeceW
meebefJeefOekeâ uesKeehejer#ee, mebieeceer uesKeehejer#ee, yee¢e
uesKeehejer#ee Deeefo mes mebyebefOele cenòJehetCe& peevekeâejer
oer ieF& nw~ meeLe ner FveceW OeesKeeOeÌ[er keâer jeskeâLeece
kesâ efueS efkeâS peeves Jeeues GheeÙe Yeer Meeefceue efkeâS
ieS nQ~
`cegõe yeepeej SJeb cÙetÛegDeue hebâ[' veecekeâ ÛeewonJeW
DeOÙeeÙe ceW cegõe keâer heefjYee<ee, Gmekesâ keâeÙe&, YeejleerÙe
cegõe yeepeej, cegõe yeepeej kesâ efueKele, JeeefCeefpÙekeâ
he$e, Gvekeâer keâeueeJeefOe, GvnW peejer keâjves Jeeueer
kebâheveer keâer vÙetvelece keâeÙe&Meerue hetpB eer, pecee ØeceeCehe$e,
cÙetÛegDeue hebâ[, Gvekesâ keâeÙe& Deeefo efJe<eÙeeW hej
efJeÛeej efkeâÙee ieÙee nQ~ hetBpeer yeepeej SJeb [sefjJesefšJe
š^sef[bie mes mebyebefOele hebõnJeW DeOÙeeÙe ceW YeejleerÙe hetBpeer
yeepeej, MesÙej, $e+Ce-he$e SJeb yeeb[, MesÙej yeeFyewkeâ,
YeejleerÙe ØeefleYetefle SJeb efJeefveceÙe yees[& Ùeeveer mesyeer,
mše@keâ SkeämeÛeWpe, ef[hee@epf ešjer ØeCeeueer SJeb [sejf Jesešf Je
š^sef[bie mebyebOeer peevekeâejer oer ieF& nw~
hegmlekeâ keâe meesuenJeeB DeOÙeeÙe Deblejje°^erÙe yeQefkebâie
kesâ yeejs ceW nw, efpemeceW efJeefYevve osMeeW keâer cegõeSB,
efJeosMeer efJeefveceÙe, DeefveJeeCer YeejleerÙe, DeefveJeemeer
Keeles, efveÙee&le efJeòe SJeb hesâ[eF& mes mebyebeOf ele cenòJehetCe&
ØeMve SJeb Gvekesâ Gòej efoS ieS nQ~ hegmlekeâ kesâ
DeeFyeerS yeguesefšve 51
pegueeF& 2005
Debeflece Ùeeveer me$enJeW DeOÙeeÙe ceW jepeYee<ee efnboer,
De«eCeer yeQkeâ Ùeespevee, Devepe&keâ DeeefmleÙeeB, $e+Ce
Jemetueer vÙeeÙeeefOekeâjCe, Deeefmle hegveefve&cee&Ce kebâheveer,
yeQefkebâie ueeskeâheeue Ùeespevee 2002, mJeÙeb meneÙelee
mecetn, peeseKf ece ØeyebOekeâ, efJeMJe yeQkeâ JÙeeheej mebie"ve,
yeQefkebâie hej ieef"le efJeefYevve meefceefleÙeeW SJeb keâeÙe&oueeW
keâes mecesše ieÙee nw~
pewmee efkeâ yeleeÙee pee Ûegkeâe nw, hegmlekeâ ceW yeQefkebâie
mebyebOeer peevekeâejer osves kesâ efueS uesKekeâ ves ØeMveesòej-
Mewueer DeheveeF& nw~ yeQefkebâie kesâ ØeeÙe: meYeer he#eeW kesâ
mebyebOe ceW uesKekeâ ves mebYeeefJele ØeMveeW keâer keâuhevee keâer
nw Deewj Gvekesâ leerve-leerve, Ûeej-Ûeej Jewkeâefuhekeâ Gòej
efoS nQ, efpeveceW mes keâesF& Skeâ mener nw~ mener GòejeW
hej hee"keâ keâes efveMeeve ueieevee nw Deewj yeeo ceW
hegmlekeâ kesâ Deble ceW oer ieF& Gòejceeuee mes efceueekeâj
hegef° keâjveer nw efkeâ Gmekesâ Éeje Ûegves ieS Gòej mener
nw Ùee veneR~ Gòej mener nesves hej hee"keâ keâes hejer#ee
ceW meheâue nesves keâe Deevebo efceuelee nw Deewj ieuele
nesves hej lelkeâeue mener Gòej keâe helee ueie peeves mes
Deheves keâes heâewjve megOeejves keâe meblees<e neefmeue neslee
nw~ Ùen ØeMveesòej Mewueer peneB hee"keâ keâe %eeveJeOe&ve
keâjleer nw, JeneR yetPeves keâe mee Deevebo Yeer osleer nw
Deewj Fme Øekeâej, hee"keâ Kesue ceW yeQefkebâie pewmes
lekeâveerkeâer Deewj iebYeerj efJe<eÙe keâes Deelcemeeled keâj
ueslee nw~
he=‰ meb. 50 keâe Mes<eebMe
Øeef›eâÙeeDeeW kesâ ef›eâÙeevJeÙeve ceW meceÙe-meceÙe hej megOeej
keâjs Deewj efjmeeJe keâer mebYeeJeveeDeeW keâes meceehle keâjW~
ØeefMe#eCe kesâ oewjeve yeQkeâ keâce&ÛeeefjÙeeW kesâ ceve ceW mekeâejelcekeâ
efJeÛeejOeeje Yeer Glhevve keâjveer nesieer efpememes DeeÙe
efjmeeJe keâer IešveeDeeW keâer peebÛe ceW keâce&Ûeejer hetCe& menÙeesie
os mekesâ Deewj Fme yeele keâe Yeer Deemeeveer mes helee
ueieeÙee pee mekeWâ efkeâ DeeÙe efjmeeJe keâer Fve IešveeDeeW ceW
keâce&Ûeejer Éeje efkeâve heefjefmLeefleÙeeW ceW meeLe efoÙee ieÙee nw
leeefkeâ Ssmeer hegvejeJe=efòe hegve: ve nes mekesâ~ yeQkeâeW keâes
52 DeeFyeerS yeguesefšve
pegueeF& 2005
peeefnj nw efkeâ Jemlegefve‰lee Fme hegmlekeâ keâer efJeMes<elee
kesâ ¤he ceW meeceves Deeleer nw~ hej Ùener Jemlegefve‰lee
hegmlekeâ keâer keâcepeesjer Yeer nw~ Fmekesâ Ûeueles hee"keâ
efJe<eÙe keâe Glevee ner %eeve neefmeue keâj heelee nw,
efpelevee uesKekeâ Deheves Éeje meesÛes ieS ØeMveeW kesâ
GòejeW kesâ ceeOÙece mes Gmes osvee Ûeenlee nw~ uesefkeâve,
ØeMve Deewj Yeer nes mekeâles nQ Deewj Dekeâmej ØeMve veS
ØeMveeW keâes pevce osles nQ~ Gve ØeMveeW kesâ Gòej ve
heekeâj hee"keâ efvejeMe nesiee Deewj otmejer hegmlekeâ keâe
meneje uesves kesâ efueS yeeOÙe nesiee~ Fme ¤he ceW Ùen
nuekeâer-hegâuekeâer-meer kegbâpeer-pewmeer hegmlekeâ Øeleerle nesleer
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COMMUNICATION@IBA
SIGNING OF VIII BIPARTITE SETTLEMENT

Shri A. K. Purwar, Chairman, State Bank of India and Chairman, IBA signing the Settlement flanked by
Dr. Dalbir Singh to his right and Shri V.P. Shetty to his left.
The VIII Bipartite Settlement was signed on 2nd June, 2005. The settlement is uniquely historic for the reason that it is for
the first time in the history of bipartite negotiations at the industry-level that four Officers’ Associations and six Workmen
Unions signed the industry-level Joint Note/Bipartite Settlement on the same day, at the same venue in a joint function at
IBA Office, Mumbai. Shri A.K. Purwar, Chairman, IBA and Chairman, State Bank of India and Dr. Dalbir Singh, Chairman and
Managing Director, Central Bank of India (who was then Chairman, IBA, when the 8th Bipartite Negotiations commenced in
October 2002), Shri V.P. Shetty, and Chairman of the Negotiating Committee, IBA Chairman, IDBI Ltd., alongwith other
members of the Negotiating Committee were signatories to the Settlement fromt he management side.

June 2,
2005

ns IBA team
en Unio with Off
m with Workm icers’ As
IBA tea sociatio
ns

13.5.05
BREAKFAST SYMPOSIUM Mumbai
As a part of knowledge sharing exercise with members of the Association, IBA organized a breakfast symposium on 13.5.05 at IBA’s Office,
World Trade Centre, Mumbai - 5. The Speaker was Dr.Sumit Agarwal, Senior Vice President, Credit Risk Management Executive Small Business
Risk Solutions, Bank of America (Rockville, MD), Adjunct Professor of Finance, George Washington University, Washington DC.
Dr. Agarwal made a presentation to senior bankers in the areas of Basel II Accord and Capital Allocation, Risk Management of Small Business
Loans and Relationship Lending. Presentation was followed by interactive session.

53 IBA BULLETIN
JULY 2005
 RETAIL BANKING DIRECTIONS
MUMBAI
Keynote Address : Smt Shyamala Gopinath
Dy. Governor, RBI
On May 28, 2005, Banking Frontiers and Indian
Banks’ Association jointly organized a conference
titled “Retail Banking Directions: Challenges &
Opportunities”. The keynote was presented by
Shyamala Gopinath, Dy. Governor, RBI. She said that
retail banking has turned out to be the key profit
driver with retail portfolio constituting 21.5% of
total outstanding advances. Also the overall
impairment of the retail loan portfolio was much
lower than bank’s gross NPA. She mentioned that
retail loans constitute less than 7% of GDP in India,
compared to 55% in South Korea, 52% in Taiwan,
33% in Malaysia and 18% in Thailand. She then
deliberated on the two key aspects of retail
banking - cards and housing. She emphasized the
need for constant innovation in retail banking and
in bracing for another paradigm shift.
Panel Discussion (S.C. Basu, Dy. Chairman, IBA & CMD, B.O.M. third from left )
This was followed by a CEO panel discussion.
According to G.V. Nageswara Rao, CEO of IDBI Bank,
the way the customer interacts with the bank and
what he expects from the Bank has undergone a
revolutionary change. Today customers seek more
advice from their banks, such as what investment
products he should be looking at. Banks can step
up the quality of their analysis and advice. With
overseas markets being opened up by RBI, the day
is not far off when banks will be advising customers
whether they should be investing in Korean
equities or US junk bonds. According to R.N.
Ramanathan, Dy. MD SBI, in today’s fiercely
competitive scenario, every bank wants to grow
the balance sheet, and to grow the assets, banks
have to find the resources. Other challenges he
referred to are HR, technology, outsourcing, risk
management, compliance and re-engineering of
54 IBA BULLETIN
JULY 2005
Challenges and Opportunities
May 28, 2005
business processes. According to Deepak Patil,
banks have to constantly understand their
customers and respond accordingly. According to
Narendrakumar Baldota, co-op. banks are providing
all the facilities that public and private sector
banks are doing, including ATMs, demat, etc. S.C.
Basu, Chairman of Bank of Maharashtra, there are
three challenges — creation of market,
(particularly rural areas), packaging of product and
system of delivery of services. Satish Marathe, CEO,
United Western Bank, said that there is a need for
secondary sale of assets that are impared,
including cars, houses, etc., ARCIL deals only in high
value assets. Kumar Karpe of IBM said that banks
need to understand how they can create new
products and how they can go to market while
keeping a watch on costs so that project costs are
not overshot. He said that banks can optimize their
operations by centralizing process that are
common across different business activities.
In the session on top management MIS, Shantanu
said that it is all right for such data to sit on the
servers. But critical data should come to the
decision makers immediately over the phone or
the web. There should be alerts whenever
something crosses a threshold level. According to
Dr. Anand Dhingra from IBM, worldwide there are
certain best practices, and they have been codified
in certain business models. He then went on to
describe the business models. According to Pankaj
Patharphod, IT Head at ABN Amro Bank, earlier the
EDP department used to churn out a lot of
operational reports. But now a lot of MIS is
dovetailing towards business MIS. There is a
tremendous focus on overall customer
relationship and less on the number of systems
that the customer touches. Sandeep Mukherjee
from DCB said that banks need to analyze a lot of
external data such as malls coming up and then
determine whether they have the capability to
service that opportunity.
On the ATM front, one of the points of debate was
whether ATM should be seen as an instrument for
pushing the topline or the bottomline, ICICI Bank
representative O.P. Srivastava argued that queues
were building up at the ATMs and hence it was
preferably to migrate transactions other than cash
withdrawal from the ATM to other channels. He
said that ICICI Bank is putting up kiosks next to its
ATMs to handle non-cash transactions. HDFC Bank
representative Rahul Bhagat was of the opinion
that non-cash transactions take only a small
additional time and hence it was worthwhile for
banks to put up additional products on the ATM,
thereby making the ATM a full fledged channel.
In the cards session, Mr. Pasricha of RBI said that
cards are spreading and card spends are increasing.
He said that RBI wants cards business to grow in a
secure manner. Pralay Mondal of HDFC Bank,
economic indicators are rising which will lead to
more disposable income, which is good news for
retail banking. Today less than 1% of the payments
happens through cards and hence there is
immense scope. According to Pani, lifecycle of
ICICI Bank, cards are unique because they combine
transaction processing with consumer lending.
This industry has always delivered positive growth
for last 30 years in terms of consumer spend.
According to Utul Kapadia from IDBI, the
exponential growth indicates that there is a lot of
untapped potential ahead. He said that the cost of
the network, infrastructure and PoS terminal are
declining and the markets are maturing. According
to Shailandra Mittal from ReadyTestGo, the
challenge is how to capture spends on electricity,
water, groceries, etc.
Attentive Audience
 IT@BFSI CONCLAVE
Technology solutions for Business Transformation
June 7, 2005 MUMBAI
BFSI Conclave, country’s first IT Conference
consisted of four sessions covering topics on
Technology the key differentiator-
implementation challenges, IT as an enabler,
Reinventing with outsourcing and Security and
Risk Management - Business Continuity which Keynote Address : Smt K. J. Udeshi
included eminent speakers viz. Shri Ashok Kini, Dy. Governor, RBI
Managing Director, State Bank of India, Ms. H. A.
Daruwalla, Executive Director - Oriental Bank of
Commerce, Shri T. S. Vijayan, Managing Director -
Life Insurance Corporation of India and many
others from the financial sector.
Smt. K. J. Udeshi - Dy. Governor, RBI in her keynote
address at the BFSI Conclave, mentioned, that RBI
will come out with new guidelines on outsourcing Ashok Kini, MD, SBI speaks on ‘‘IT as an enabler"
to improve the regulatory supervision and risk
management of outsourcing which will cover per 18 villages. Banks can set up an information kiosk
aspects related to operational and prudential risks for every two or three villages. At the click of the
arising out of outsourcing of banking activities by mouse, the farmer will know his account balance
banks. and interest due to him and have a host of value-
“RBI has constituted an internal group on added services at his disposal,” she said.
outsourcing and based on its recommendations, “The kiosk can double up as a vending machine,
regulatory guidelines will soon be issued. The Welcome Address by H. N. Sinor
but the only constraint will be adequate power

Speakers at the Conference

(L – R) R. Jangoo Dalal; T.S. Vijayan; Ashok Kini; Ms. H. A. Daruwala; T. Srinivasan

guidelines apply to banks operating in India. The supply. Customers can use these kiosks. What better country’s GDP accounted for 45% of gross bank
move is not towards curbing BPO, but to put in way can there be to free farmers from the shackles loans, agriculture with 20% of the GDP, received
place checks and balances to lower incidence of of moneylenders and middlemen,” she said. about 11% of advances. She said banks need to deal
fraud. “A number of IT-related services were Emphasising on the potential in rural credit, Ms. with data transmission in a safe and secure way on
outsoureed (by banks). This is posing a challenge Udeshi said while industry with a 22% share in the a priority basis.
to operational risk management and data
integrity. Caution needs to be exercised as the new
Basel norms require banks to handle voluminous
data,” said Ms. Udeshi, “Outsourcing has its own
challenges, specially in drafting of legal contracts,”
she added. The new guidelines will address
regulatory concerns on operational risks and data
integrity. RBI is also concerned that outsourcing
could lead to transfer of banking risks, management
and regulatory compliance to third parties, over
whom RBI may not have any regulatory control.
Ms. Udeshi spoke about extending the reach of
banking to rural areas. She mooted the idea of banks
setting up information kiosks in villages. “There are
Cross section of Participants IBA BULLETIN 55
six lakh villages in the country and one bank branch
JULY 2005
 IT@BFSI CONCLAVE
9th June, 2005 Bangalore

V. Leeladhar, Dy. Governor, RBI Welcome Address by Ananthakrishna,

Chairman, Karnataka Bank Ltd.

“With the increasing use of automation in banking

and communication, networking can be used for
distributed processing which would also help to
reduce the costs besides improving efficiency,” said
Shri V Leeladhar, Dy. Govenor - RBI, in his keynote
address at the BFSI conclave. While major Indian cities
were enjoying the fruits of banking automation, he
said, there was a need to take it to the mid-sized
towns and even rural areas. “The manufacturing
M. Balachandran, CMD, Bank of India sector has revived through a process of re- K. N. Prithiviraj, CMD, OBC
engineering and this is something that Indian banks
could f ocus on notably in the area of job processes,” he added. While rising competition was a certainty, there was even a possibility of
competition coming from unexpected quarters like retailers providing easy finance scheme to purchase durables. Earlier, welcoming Mr.
Leeladhar, Chairman of Kamataka Bank, Mr. Ananthakrishna noted that the global BFSI segment was witnessing robust activity. “Globally
banks, financial services and insurance (BFSI) segment is witnessing annual investments to the tune of $6 billion,” he added. Mr. K. N.
Prithviraj, CMD of Oriental Bank of Commerce, said that integration had become relatively easier given the fact that both OBC and GTB had
the same technology platform – Finacle. Mr. Jangoo Dalal, senior VP at Cisco Systems — India and SAARC, said that with banks re-
configuring their delivery systems, platforms like internet and ATMs were becoming common place. Mr. T. Srinivasan, MD of Mercury, said
that while outsourcing was becoming common-place, there was a need to define the contours of this phenomenon.

56 IBA BULLETIN Seminar in progress

JULY 2005