Citizens' Issues
Fadnavis sanctions BKC like business district for Thane
The new CBD, similar to Bandra-Kurla Complex in Mumbai, would be set up on a 72-acre land at Kalwa-Kharigaon near Thane
 
Close on the heels of the plush Bandra-Kurla Complex (BKC) in Mumbai, Devendra Fadnavis-led Maharashtra government has decided to set up a Central Business District (CBD) in Thane.
 
In an official release, Eknath Shinde, Guardian Minister of Thane, said that following persistent demands by elected representatives of Thane to undertake various development projects in the district on priority, Chief Minister Fadnavis was urged to sanction one more business district in the Mumbai Metropolitan Region (MMR).
 
At a joint meeting held in the Sahyadri Guest house on Friday under the leadership of Fadnavis, the decision to go in for the new business district for Thane district was taken, the release said.
 
Mumbai faces heavy population growth and basic amenities there are under extreme pressure it was stated. Similarly due to geographical conditions there is no more expansion possible in Mumbai. Hence the demand for one business district in Thane grew louder.
 
Shinde and MLAs Sanjay Kelkar and Jitendra Awhad reiterated the urgent need for a business district in the meeting which was supported by the CM, who made it clear that the state government would take positive steps towards the same.
 
The CBD is to be set up on a 72 acre land at Kalwa-Kharigaon and the place will be developed taking into confidence the local elected representatives, it was stated.
 
The setting up of this business district will decentralise the population and also help generate employment, Shinde said.
 

 

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Not just customers, bank staff are also fed up with unrealistic targets and mis-selling of insurance products
These revelations are part of a letter written by Harshavardhan Madabhushi, general secretary of Associate Banks' Officers' Association-SBH unit to the MD of SBI’s Associate Banks Department
 
While customers accuse bank staff of mis-selling and arm-twisting them to buy insurance policies, a revealing letter from a State Bank of India (SBI) Officers’ Association exposes the pressure tactics employed by banks on their own officers to earn meagre commissions. 
 
The letter also makes the interesting point that bank officers and staff face tremendous pressure to sell insurance, which involves huge manpower costs and time of the parent bank, for meagre commission earned from the insurance subsidiary, which is a separate entity. The letter further says that it would be far more fruitful to have bank officers and field agents putting in the same time and effort in recovering non-performing assets (NPAs) of banks. 
 
The contents of the letter provide clear proof of how Reserve Bank of India (RBI) continues to ignore consumers and non-governmental organisation (NGOs), which have protested against the mis-selling of insurance policies by banks without regard to customer harassment. The travails of bank officers forced to meet targets and the cost of selling insurance, which is transferred from the insurance subsidiary to the public sector entity and its staff, are also issues brought out in the letter.
 
All these revelations are part of a letter written by Harshavardhan Madabhushi, general secretary of the Associate Banks' Officers' Association (State Bank of Hyderabad Unit) to managing director (MD) of SBI Associate Banks Department. It was uploaded on the Facebook Page on the SBOP Officers' Mitra Mandal (Patiala) on 28 January 2015. In the letter, the Secretary lists issues that plague cross-selling portfolios in associate banks of SBI, and also makes few recommendations to address them. 
 
According to Mr Madabhushi, crossselling is the main source of income for most associate banks. Hence, the certified insurance facilitators (CIFs) are mandated to meet unrealistic targets in a limited time, putting them under extreme pressure. They end up selling policies in haste – they are unable to provide proper information or advice to their customers. The poor customers are left saddled with an insurance scheme that offers no real benefits. The CIFs are also given monetary incentives for cross-selling schemes. However, the performance pressure far supersedes any positive motivation that may result from these incentives. They often end up resorting to unethical practices such as arm-twisting the borrowers to purchase SBI Life Policies in order to get a loan sanctioned, or debiting insurance premiums to the borrowers' account without their knowledge. 
 
Moreover, associate banks receive no separate commission for after-sales service, because of which it is mostly neglected. On top of that, yearly renewals also take a backseat, when the original CIF, who sold the policy, is transferred to another location. Either there is no CIF appointed in time to take over from his predecessor, or the new appointee is too busy meeting his own targets to spare any time for the existing customers. There is no commission offered for renewals. Therefore, the CIFs have neither the time not the incentive to look into them. 
 
The Secretary, in his letter, insists that is important to ensure that no officer in the entire hierarchy is offered any commission from the sale of SBI Life products. He cites the example of Life Insurance Corp of India (LIC), where the field staff is offered incentives without keeping the administrative set-up in the loop. If any officer is offered a commission, he is sure to pressure his juniors and other field staff to meet targets that would end up benefiting him more than any customer. Moreover, when the field staff finds themselves in such impossible situations, they end up resorting to unethical practices, as mentioned above. 
 
Another observation in the letter is that since cross-selling accounts for most of the income for associate banks, a large fraction of their resources are concentrated towards it. Consequently, the core business of banking is neglected. 
 
Furthermore, the bank staff are specifically trained and recruited to discharge only banking services. Moreover, these people sell us insurance policies after they pass an examination to become CIFs. They have neither the training nor the technical knowledge to even understand the business of insurance and all its nitty-gritties, let alone explain that to customers. It is not surprising, then, that mis-selling of insurance is so rampant in our country. How can somebody who is himself largely ignorant of the nuances of insurance be expected to provide sound advice to all customers? 
 
The Secretary offers a few suggestions in order to address these issues. Firstly, it is important to set realistic targets for all branches and ease the unnecessary pressure on the field staff. They will be able to focus better on each of their customers, and have the time for providing after-sales service. Secondly, apart from just insurance products, banks can focus cross selling of other products such as credit cards in order to increase their non-interest income. Lastly, it would be useful to set up a separate vertical in all associate banks that focus on cross selling. It would ensure that the regular officers are able to focus solely on banking services, while ‘specialised’ officers can work on facilitating cross selling other products. 
 
Another significant point to be noted here is that the commissions earned from cross-selling are meagre when compared to the number of man hours spent on it. It would perhaps be more fruitful to channelise these efforts in the recovery of NPAs, rather than exhausting all resources in something that provides neither a proportionate income nor any consumer satisfaction.
 
Here is the letter sent by the Associate Banks' Officers' Association…
 

 

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COMMENTS

Dayananda Kamath k

2 years ago

It is strange that IRDA is silent on my complaint about how banks are selling even compromising credit decisions. violating their own regulations regarding eligibility of a person to sell insurance. where there are no licensed/approved insurance advisers also are given insurance targets by banks.

R S Murthy

2 years ago

When bankers were asked to open accounts under JANDHAN yojana, none commented.

Selling of insurance products all reactions are coming.

Both AP and Telengana CMS wanted to implement rural debt waiver and pressurised all bankers to provide details, the pressure was not felt.
Any subject matterbecomes an issue according to our perception.

Nifty, Sensex headed lower – Friday closing report

Nifty has some support around 8,750   

 

We had mentioned in Thursday’s closing report that the gain on the Indian indices may be capped and NSE’s 50-share CNX Nifty closing below 8,860 may weaken it. The benchmark opened high and hit its high at the same level. This is the new lifetime high for Nifty. Except for a range bound session between 11.45am to 2pm the index fell gradually.
 
The S&P BSE Sensex opened at 29,802 while Nifty opened at 8,997. Sensex hit a high at 29,844. Sensex moved lower to hit a low of 29,070 while Nifty hit a low at 8,775. Sensex closed at 29,183 (down 499 points or 1.68%) while Nifty closed at 8,809 (down 143 points or 1.60%). NSE recorded a higher volume of 129.91 crore shares. India VIX rose 3.81% to close at 20.1725.
 
The weak result from Bank of Baroda and ICICI Bank’s December quarter earnings showed that asset quality continued to remain under pressure. This further affected the market sentiment.
 
Minister of State for Finance Jayant Sinha Friday said the Indian economy has the potential to become a $4-5 trillion economy in the next 10-12 years and it is the great time to invest in India.
 
A UN report says India's FDI increased by 26% in 2014 to nearly $35 billion with maximum growth in the services sector.
 
Coming back to the Indian stock markets, Hindustan Construction Co (19.18%) was the top gainer in ‘A’ group on the BSE. The company posted an improved December 2014 quarter result, after market hours on Thursday.
 
Bank of Baroda (11.08%) was the top loser in ‘A’ group on the BSE. Posting a huge fall in the bottom line of December 2014 quarter pulled the stock lower.
 
Tata Power (2.90%) was the top gainer in Sensex 30 pack. It has entered into a binding understanding with Nelco to acquire group firm Nelco's defence business of Unattended Ground Sensors (UGS) for about Rs8.3 crore.
 
All the bank stocks in the Sensex 30 stock were among the laggards. SBI (5.13%) and
ICICI Bank (4.95%) were the top two losers. Axis Bank (1.75%) and HDFC Bank (1.67%) were also among the losers.
 
US indices closed Thursday in the green.
 
The number of people who applied for US unemployment-insurance benefits plunged 43,000 to 265,000 in the week that ended January 24, hitting the lowest tally in 14 years, according to Labor Department data released yesterday.
 
Pending home sales cooled in December, which the National Association of Realtors attributed to fewer homes available for sale and a slight rise in prices. The pending home sales index fell 3.7% during December, though the year-on-year gain was 11.7%, the highest since June 2013.
 
US crude turned positive on Thursday afternoon after earlier falling below $44 a barrel for the first time since April 2009, while benchmark Brent sharply pared early gains after data showing additions to already record-high US oil inventories.
 
Except for Jakarta Composite (0.51%) and Nikkei 225 (0.39%) all the other Asian indices closed in the red. Shanghai Composite (1.59%) was the top loser.
 
China's fiscal revenue growth dipped to a 23-year low of 8.6 per cent last year due to a slump in the demand raising concerns of a prolonged slowdown.
 
Japan's industrial output rose a seasonally adjusted 1% in December from the previous month, government data showed today. The rise in December came after a 0.5% fall in November.
 
Taiwan's gross domestic product rose 3.17% from a year earlier in the final quarter of 2014, the lowest rate in five quarters, and 1.17% from the previous quarter, an initial official reading showed today, 30 January 2015. The economy expanded 3.63% in the third quarter of 2014.
 
European indices were trading lower. US Futures too were trading in the red.
 
German retail sales rose less than expected in December, but the annual figures suggest that consumption continued to act as a pillar to economic growth in the final quarter of last year. Retail sales in December rose 0.2% in calendar- and inflation-adjusted terms compared with November, the Federal Statistics Office said Friday.
 

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