Banking
Bank Employees and Social Banking
Bank employees and unions will have to recharge themselves to a new set of objectives that would enhance the business of banks on one side and help the society on the other
 
May Day is usually the day to recall the assertion of their rights. For a change, the All India Bank Employees Association (AIBEA) during this 70th year thought of taking the initiative of enjoining social responsibility. Gone are the hard days of militant agitations as means to achieve fair compensation, safety, security and comfort in work places. Workmen and officer representatives are today part of the governance and management of banks. Machines dictate the employees’ ways of working. Discretion has less relevance now than in the past. Technology dictates the employees’ ways of working and management processes. But are the customers, a happier lot? The response is discouraging.
 
Ever since the introduction of banking reforms following the recommendations of Narasimham Committee 1 and 2 and the alignment with the global regulatory architecture through BASEL I, 2 and 3, technology and capital adequacy have become the prime drivers of growth in banking sector.
 
Mobile banking and micro finance institutions (MFIs) moved into the space left by the RRBs, weakened cooperatives, and rural branches of commercial banks. Banking correspondents and customer service points, White ATMs surfaced.  Who should we blame for providing this space excepting the lack of commitment and motivation of staff to align with the objectives of the nationalisation of banks?
 
Several progressive regulatory measures from the RBI – asset reconstruction companies, payments and settlement solutions, safe mobile banking and revisiting the priority sector definitions have all happened during this period. 
 
Success of social banking is a function of trust and banking with a human face. Banks’ business is growing exponentially. Globally inclusive banking has become a great concern. Several economies – with developed nations being no exception – are devising ways to make possible access to banking easy, convenient and cheap. Digital architecture is reshaping the way of banking of the future.
 
Seamless integration with the mobile phones, emails, messages between the banks and customers benefits the banks more than the customers. Massive data is going to be captured through cloud technology. Cyber security is going to be an issue that would haunt the banks continuously. There is a huge opportunity for banks to innovate in this space. 
 
“Being able to take advantage of, or react to, the digital revolution requires banks to behave in ways that they are not quite accustomed to. It requires extremely clear and quick cross-functional collaboration.” Says McKinsey in its November 2014 Report.
 
The demographic profile of bank customers will also undergo sea change. Senior citizens are likely to constitute 20% of population by 2025, demanding far different services from the bank than the present. The youth, that constitute 40% of population, used to working on active social media like the Facebook, Twitter and the like, wanting speed and accuracy of transactions and women demanding different products to suit their multiple chores at family and work.  
 
HM Khan, Deputy Governor of RBI, while inaugurating a Dena Bank’s Self-Service Branch bank exhorted very rightly; “The focus has been on alternative channels and digitisation of banking and move (banking) from assisted to self-service mode… But the fact remains in the Indian context that despite us moving in the Jet-plane age, we have the bullock cart as well. We have different market segments and have to look at the hand behind the machine as well….” He called for handholding of older generation on-branch customers and the new entrants through ‘a blend of software with human touch’. 
 
Managements would be hence forward busy in formulating strategic initiatives to withstand the competition both from domestic and global financial institutions (the presence of global financial institutions on Indian landscape has been doubling up), coping with regulatory compliances, evolving new products and measures to mitigate product and process risks continuously. In other words, managements would focus on risk management and compliance. Risk management should be viewed as a window of opportunity for greater earnings and greater profits than as cost centre.
 
Most of the members of the staff, unlike in the past, are comfortably placed in the work environment. They have negotiated settlements on wages, salaries and perks; they do not have to slog for balancing their daybooks or ledgers. They are the face of the bank. This is precisely the reason for the employees to be socially sensitive. 
 
In the absence of any substantive relationship issues with the managements now, the unions should devote their time in house for service to the customer far more friendly than now. It is time to give back to the society. The employees have to relocate and recharge themselves to a new set of objectives that would enhance the business of the banks on one side and help better reach to the society on the other.
 
Social banking has to be responsible and responsive to small and marginal farmers, leaseholders, micro and small enterprises, small retail shop owners, economically weaker sections and women in bottom-of-pyramid  that require more than banking to succeed in the enterprise they pursue and they look to the banks to help them in that direction. Field visits help the employees to understand the farmer and entrepreneur. The documents tell only ownership story and not the story of his production and marketing. 
 
Mutual understanding builds trust and trust begets trust. Banking in India is built on the Scottish principle of ‘suspect and respect’ and not the reverse. The reversal has to be engineered only through a change in the mindset and cultural shift in understanding the requirements of the 25% of the country that are still poor. The bourgeoning middle class and the elitist can always be cultured into technology and internet banking.
 
Employees have more leisure than most of their predecessors of yesteryears and fewer responsibilities on the home front as well because of nuclear families. If a group of employees can volunteer to adopt a village, visit at least for two days in a month in a picnic mode, enhance the customers’ knowledge of bank and its deposit and loan products, prepare at least one bankable project once in a quarter, 15 lakh viable projects with loyal customer base would turn banking an experience worth the life. This in essence will be the responsible and responsive social banking.
 
(Dr Yerram Raju Behara is a former senior executive of SBI and an economist and risk management specialist. The views expressed in the article are his personal.)

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COMMENTS

SuchindranathAiyerS

2 years ago

Why would Bank employees be any different from the Nation's leadership? Aren't they on the lower rungs of India's Neta-Babu-Cop-Milard-Crony Kleptocracy? ( Computerization has only increased the insouciance and the officers do not even read the screen properly it seems. Recently my ECS mandate for BSNL was bounced for Rs 1,070/- by State Bank of India Jayanagar 2nd Block putting me to enormous inconvenience. I have fixed deposits in excess of 20 Lakhs there and an overdraft limit that I never draw on) This would never have happened during our non-computerized days without there being Hell to pay for the erring officer).

GANESHKUMAR AP

2 years ago

Challenge is to be relevant!

PATTABHI

2 years ago

Dr Yerram Raju. has rightly flagged the opportunities and challenges that face the Bank Employees as Ache Din is being ushered in by the present Govt. I hope the Employees and Unions would now start focussing on social change and on making a difference to the Society with greater purposive involvement.

Economy & Nation Exclusive
No income tax on LPG subsidy, says Finance Ministry
The Finance Act treats all subsidies, grants, cash incentives, duty drawbacks, waiver, concessions and reimbursements as taxable income. However, the Finance Ministrty has claried that there would be no income tax on LPG and other welfare subsidies for individuals
 
UPDATE: Updated to include clarification from Finance Ministry
 
First, the union government made it mandatory for every consumer to avail subsidy benefit for the liquefied petroleum gas (LPG) refill through bank accounts. However, to the shock of most taxpayers, who are receiving such subsidy, the amendment in the Finance Bill has termed this as income, and thus liable for taxation. Earlier, experts were divided whether such subsidy was taxable under the Income Tax (I-T) Act as there was no clear guidance from the authorities. Late in the evening (after this article was published), the government clarified that provision in Finance Bill 2015 won't affect the LPG subsidy and other welfare subsidies received by individuals.
 
The Finance Bill, 2015, as passed by Lok Sabha on 30th April has specified that subsidies no longer would be treated as capital gains, but as income (revenue receipt). The amendment in the definition of 'Income' under Section 2(24) in the Finance Bill, 2015, says, "A new sub-clause (xviii) is proposed to be inserted in Section 2(24) to provide that assistance in the form of a subsidy or grant or cash incentive or duty drawback or waiver or concession or reimbursement (by whatever name called) by the Central Government or a State Government or any authority or body or agency in cash or kind to the assesse [other than one considered under Explanation 10 to Section 43(1)] would be included in assessee's income."
 
This in other words any subsidy that is not reduced from the actual cost of the asset in view of provisions of Explanation 10 to Section 43(1) will be taxable as revenue receipts of the assessee.
 
This includes the subsidy for LPG refill as well. However, there are still some flaws in the taxability of subsidy for LPG. Some experts feel that the consumer pays in full towards buying the LPG refill at market price, for which she may already be paying income tax. Since the government is simply reimbursing the subsidy amount, it may lead to double taxation. 
 
For example, for a LPG refill the consumer pays about Rs650 as full market price from her pocket. Next the government reimburses around Rs200 (actual amount may differ), the difference between subsidised price and the full market price. The consumer may already be paying income tax on the total amount of Rs7,800 (Rs650x12 LPG refill per year). If she receives Rs2,400 as subsidy, then as per the Amendment in the Finance Bill, her tax liability would increase by this amount. 
 
So in the end, the consumer would end up paying income tax on Rs10,200 (Rs7,800 actual payment +Rs2,400 LPG subsidy). If the consumer is in the highest tax bracket, then she will have to pay Rs3,060 towards the income tax, instead of Rs2,160 she is already paying. An additional burden of Rs900 because of the LPG subsidy.
 
It is preposterous to treat LPG subsidy as income, as it is contrary to reason. It is only a refund of the excess amount paid by the consumer to the gas dealer, which the oil company refunds to the beneficiary to comply with the government order to sell the LPG cylinder at the stipulated price to the users. It is therefore, impetuous for Finance Minister Arun Jaitley and the Modi government to take a view that this amount is taxable at the hands of beneficiaries.
 
So what is the way forward? If the Narendra Modi government is serious about providing subsidy, then there is a need to make exemptions, especially for subsidies provided as social benefits, like LPG subsidy. If there is no exemption provided, then honest taxpayers and a very large number of them will have to pay more tax.
 
 UPDATE:
The Finance Ministry, in a clarification, has said that the provision in the Finance Bill will not affect LPG subsidy and other welfare subsidies received by individuals.

"The Income Computation and Disclosure Standards (ICDS) notified by the Central Board of Direct Taxes (CBDT) is applicable to persons having income chargeable under the head "Profits and gains of business or profession" or "Income from other sources" and following Mercantile System of Accounting. This is not applicable to individuals not having any income chargeable under the head "Profits and gains of business or profession" and receiving LPG subsidy or any other subsidy which is for the welfare of the individual. The Finance Bill, 2015 proposes to align the definition of Income with that provided in ICDS for this purpose. To restate the position, the provision in the Finance Bill, 2015, will not affect the LPG subsidy and other welfare subsidies received by individuals," the Finance Ministry said in a release.
 
 

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COMMENTS

Aditya Soni

1 year ago

Subsidies are financial help provided by government to their economically weak citizens. So How can government apply income tax on subsidies. On the other hand Mr. Modi introduces LPG subsidy surrender/give up scheme, this should be adopt by people who are financially strong.

give up subsidy here- http://www.getlpgsubsidy.in

R Varadarajan

2 years ago

Although the Oil price has fallen from US$106 to US$ 64, reduction of nearly 35% taking into exchange fluctuation, the reduction of Petrol and Diesel Prices are just about 11%. The difference of Rs.16/ & Rs12/ in the case of Petrol and Diesel would translate into a fortune if some one calculates the total difference on the total consumption of 25& 80 Million Ltrs respectively.Perhaps Moneylife could post the details of consumption and annual price difference not passed on to the consumers !!!

SuchindranathAiyerS

2 years ago

India's rulers are adept at stealing from Indians. Like the Constitution they say is mighty fine, it gives hundred rights and takes back ninety nine!

Bal krishna Gupta

2 years ago

The actual subsidy per cylinder is just Ra. 169.57. (I got one credited in my account today). So for those consuming 12 subsidised cylinders it amounts to Rs. 2034.38 per annum.
Out of 15 crore users, hardly 3 crore pay Income Tqax and almost 70% fall in 10% bracket. Their out go will therefore be hardly Rs.200 per annum.
It is not even certain whether this is taxable or not.
Even if it is taxable or not is it ok to make such a Hula Gulla about such a significant amount.
My family of four consumes just 6 cylinders a year. Those consuming 12 cylinders will have more than one earning members and can easily afford this Rs. 200-300 tax.

1. Due to direct transfer, the problem of ghost users and

2. Black marketing will reduce to a great extent.

3. Genuine users will get gas on time and

4. Waiting period would vanish.

5. Sale of gas to commercial users at higher prices would increase.

6. This will help gas companies to reduce their losses.

S K Gupta

2 years ago

Its a blatant preying on ignorant masses. Politician are happy making a free lavish living on public exchequer and bureaucrats have nothing to loose.

J Pinto

2 years ago

Government and bureaucracy are not known for their wisdom. Quite the contrary in fact.

Paras Savla

2 years ago

Press release issued by Finance Ministry states LPG and other welfare subsidy are not subject to income-tax http://pib.nic.in/newsite/PrintRelease.a...

Davidson D

2 years ago

According to me the burden would be on Rs. 2400 (200*12)@ 30.9% which works out to Rs.742 (Rs. 62 p.m.) additional tax burden. If the Govt. wants to tax subsidy,, then let them reduce entire value paid at the time of refill from total income so that consumers are in advantageous position.Every successive govt. seems to be worse than a pauper. This methodology of charging full price on refill and then crediting differential as subsidy in itself is a ridiculous way of handling subsidy. OMC have the no. of cylinders at subsidised rate, let them bill for 12 cylinders at subsidised rate and clear balance with full value. This would eliminate the round about method of crediting subsidies, tax implications can be eliminated, additional burden on banks of crediting subsidies to every account linked to Aadahar also gets eliminated. This would be a win win situation for consumers, banks, govt.

LALIT SHAH

2 years ago

All LPG cylinders holders pay attention
Is there actul subsidy on gas ?
All omc paying huge salery to its staff make everyone jillious. Also making heavy profit and paying aflatoon divided to government.
As far Gas subsidy is a great blunder run by this and previous government. And making public full.
Yday to news in navgujrat
1, Army has no fund to buy arms
2, We will do propaganda that our government has work in last 11 month says P.M.
And will spend any dam amount for TV PAPER AND INTERNET MIDEA
public knows that P.M. IS moving THIS TO THAT CONTRY ON WORLD TOUR. AND WEARING COSTLY CLOTHS SUITS BOOTS ETC.
PUBLIC WILL REPLY IN COMMING ELECTION.
SO ADVICE P.M. TO LET YOUR WORK SPEAK AND AAM PUBLIC KI DAL ROTI KI THALI PE BURI NAZAR NA DALE
MINISTERS AUR GOVERNMENT EXPANCE KO LAGAM DO

Ravindra Shetye

2 years ago

This is not the limit of their intelligence. They may come out with brighter ideas of Taxtortion for sure. Do they also tax the subsidy paid to the Oil Companies (with retrospective effect from 1956??
COMEDY CENTRAL realy. Kapil Sharma will blush at such comedies.

Men's rights activists demand reforms in family laws
Seeking reforms in family laws, a group of men's rights activists from across the country gathered at Jantar Mantar here and staged a sit-in on Tuesday.
 
The protesters later submitted a charter of demands to the Bhartiya Janata Party's national president Amit Shah.
 
"Our demand is basically against Section 498-A of the IPC (Indian Penal Code) and also against the move of the government to make the offence under it compoundable," rights activists Swarup Sarkar told IANS.
 
He said making the law compoundable will not serve any purpose.
 
Sarkar is the founder of the Delhi chapter of NGO Save Family Foundation, which organised the protest in association with Bangalore-based Child Rights Initiative for Shared Parenting (CRISP) that is fighting for shared parenting in case of divorce.
 
He said Section 498-A must be scrapped as it has been the most misused law in the country.
 
The Supreme Court in December last said false complaints under Section 498-A against innocent in-laws alleging cruelty and harassment were on the rise.
 
"For no fault, the in-laws, especially old parents of the husband, are taken to jail the moment a false complaint is filed against them by a woman under Section 498-A. By roping in in-laws without a reason and for settling a score with the husband, the false and exaggerated 498-A complaints are causing havoc to marriages," observed a bench of Chief Justice H.L. Dattu and Justice A.K. Sikri.
 
"While the Justice Malimath Committee (or Committee on Reforms of the Criminal Justice System) and the Committee on Petitions of Rajya Sabha have recommended that offence under Section 498-A be made bailable, the government seems to be working on making it compoundable," CRISP president Kumar V. Jahgirdar told IANS over phone from Bangalore.
 
Even now many men are getting arrested in matrimonial disputes on flimsy grounds.
 
"We are also demanding making of the Domestic Violence Act gender-neutral so that the harassed husbands could also file complaints against the abusive wives," he said.
 
The constitution, said Jahgirdar, guarantees equality in gender. "Surprisingly, no one believes that the men are also victims of domestic violence. Every year hundreds of married men are committing suicide due to family tensions."
 
He said the activists, after taking signatures against the biased law, submitted a memorandum to BJP president Shah in Delhi.
 
CRISP's activists, comprising families of the affected men, from its regional chapters in Chandigarh, Shimla, Delhi and Lucknow participated in the protest.
 
Social activist Santhoshkumar Potdar from Thelasangha village of Belgaum in Karnataka, who is fighting against misuse of law by women and reached the national capital by covering more than 2,500 km on foot from his hometown, demanded setting up a national commission for men and a separate ministry for the welfare of men.
 

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COMMENTS

Gaurav Satle

2 years ago

Laws ike IPC 498a, 376, Domestic Violence Act are gravely misused by women simply to extract more money out of husbands/boyfriends by the way of harrassment and blackmailing. Years of pending litigation, oppurtunists lawyers, rising corruption amongst govt officials and the mindset of the society that men are criminals by default and not see offences by women as crimes makes hell of lives of men. See that stats of suicides in men due to relationship disputes. Its on rise and increasing manifold every year.
Supreme Court of India and various committees have recognised these and have recommended the government to change or abolish such lopsided laws and make laws gender neutral. But its pleas have fell on deaf years as the government is more interested in votebank politics. Media rides on noises of women safety for business reasons. Innocent men have been alone in their struggle and remain isolated from the society. This is not a healthy symptom of a prospering nation.
Its time we bring in a positive change.

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