Money & Banking
How Chidambaram can walk the talk on bank issues

If Chidambaram’s expectation comes from genuine concern for public sector units, then it should be demonstrated by not giving ‘informal’ directions to transfer surplus income or profit to government or declare dividends to meet budgeted ‘quota’ of receipts

Finance Minister P Chidambaram’s loud thinking at the 78th Foundation Day celebrations of Indian Overseas bank on the role expectations from the public sector banks is indicative of a welcome change in government of India (GOI)’s approach to management of public sector undertakings (PSUs) in general.

 

The following observations by the FM are comforting, as they signal a change in GOI’s approach to the management of public sector organizations including Life Insurance Corp of India (LIC) and banks and statutory bodies like Reserve Bank of India (RBI):

  1. The claims of staff and employees should be duly acknowledged, recognised and fair and just settlements arrived at.
  2. There is humungous need for capital. Banks have to find their own capital from retained earnings. Banks had pumped in Rs35,000 crore and Rs37,000 crore capital from retained earnings in 2011-12 and 2012-13, respectively.
  3. We cannot show laxity to wilful defaulters. The amount of non-performing assets (NPAs) in September 2013 has more than doubled since March 2011. It cannot be where loans will become non-performing, borrowers prosper and lenders suffer. Banks must identify wilful defaulters, take stern steps to recover loans from wilful defaulters.

FM should walk the talk by taking the following initiatives:

  1. Take back the responsibility of wage negotiations from Indian Bank’s Association (IBA),  which is going by the traditional method of first offering some paltry rise, then stepping up commensurate with the pressure mounting up and coming to a settlement at a ‘convenient’ time, without clinching anything on ‘employee responsibility’. Chidambaram should give clear indications about the expectations from management and employees of banks and express readiness to offer market-related wage structure.
  2. It is common knowledge that GOI has been milking profit-making public sector undertakings, including public sector banks and statutory bodies, dry by making unreasonable demands for cash transfer to government or diversion of resources to less profitable avenues. If FM’s expectation comes from genuine concern for the health of PSUs, this should be demonstrated by not giving ‘informal’ directions to transfer surplus income/ profit to GOI or declare dividends to meet budgeted ‘quota’ of receipts from government-owned organizations.
  3. GOI should provide legislative and other support to banks for recovering dues from wilful defaulters.

To read more articles by MG Warrier, please click here.
 

(MG Warrier is former general manager of Reserve Bank of India.)

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COMMENTS

Ramesh Jaradhara

3 years ago

NPAs become a big burden for PSU banks due to laxity of govt action and legislative proceedings.If govt is keen to recover bad loans from willful defaulters, the position of banks will definitely improve.

S K Nataraj

3 years ago

I fully agree with Mr. Warrier's views. The FM has only the responsibility to lay down broad policy guidelines and it is not for him to dictate to public sector banks to pay more to the country's exchequer by way of dividends. He can broadly state as a Finmin that they should follow prudent lending practices, and curb the NPAs and also exhort the PSbs to take sterner measures for NPA recovery, and boost lending to certain productive sectors. But it is solely left to the banks to follow what practices they feel are right and prudent with regard to interest, sectors that need to be financed, the quantum etc. banks have a huge responsibility to their stakeholders too, the finmin is clearly exceeding his brief in spelling that PSBs ought to rake in the moolah and dole out higher dividends to the government. Already his acquiescence in the matter of opening of more than 200 branches in his constituency Sivaganga has meant that most of these branches are not turning in any profits and are loss- making. Let him correct things in his constituency first, and make every bank branch in Sivaganga profitable. After that, he will do well to address the profitability concerns of the PS Banks.

vaidya

3 years ago

While granting & recovery of loans are the responsibility of the concerned officers/executives,paying minimum eligible bonus of 8% goes automatically,and it is upto the managementg to further increase or not,subject bank"s performance towards recovery of bad debts as well.Most of the dafaulters are not persons connected with MNC and have other investments in their or in their family names.Hence, the bank has to find out to keep in touch with the borrwers and ensure the banks gets its legitimat income on their borrwings as well,.

Banking Ombudsman: Customers continue to get the short shrift in FY13

The Banking Ombudsman rejected 49% of complaints while passing awards in just 1% or 312 cases. Does this also mean, bank employees are getting away easily and without any penalty?

The Banking Ombudsman (BO) handled 75,183 complaints during 2012-13, which include 4,642 complaints brought from previous year. Out of the total 75,183, it found 56% or 39,400 complaints maintainable. However, even in maintainable complaints, it rejected almost 49% or 19,205 complaints while passing awards in just 1% or 312 cases and resolved 50% or 19,833 through mutual settlement. This also highlights the need to have certain norms that can make bank staff accountable for the suffering of customers.

 

According to a Reserve Bank of India (RBI) report on BO scheme for FY13, complaints related with failure to meet commitments, non observance of fair practices code or BCSBI codes were a major ground of complaint. The BO received 18,130 complaints or 26% of the complaints received during the year.

 

"A large volume of complaints on this ground indicates lack of awareness about these Codes among bank staff as also the customers. Banks need to devote special attention to this aspect and provide ongoing training to their staff on the Codes," the report said.

 

 

This was followed by complaints related with cards. The BO received 17,867 or 25% of total complaints against cards, out of which 10,123 were related with ATM or debit cards. "Broadly, the reasons for these card-related complaints are; issue of unsolicited cards, sale of unsolicited insurance policies and recovery of premium, charging of annual fee in spite of being offered as 'free' card, authorisation of loans over phone, wrong billing, settlement offers conveyed telephonically, non-settlement of insurance claims after the demise of the card holder, excessive charges, wrong debits to account, non-dispensation/short dispensation of cash from ATM, skimming of cards," the report says.

 

Loans and advances, pension payments, deposit accounts, levy of charges without prior notice were other major source of complaints. In loans and advances, complaints were mainly related to non-sanction/ delay in sanction of educational loans, charging of excessive rate of interest, non-return of registration certificate in case of vehicle loans, non-issuance of no-due certificate, non-return of title deeds of properties pledged and wrong reporting to CIBIL.

 

Complaints related to pension, though remained static at 8% over last three years, were a major area of grievance during FY13 for the BO. These complaints were mainly regarding delayed payments, errors in calculations, difficulties in switching over to family pension.

 

Non-maintenance of minimum average quarterly balance (AQB) in savings and current accounts, renewal charges, processing fees and pre-payment penalties in loan accounts, cheque collection charges were some of the reasons for complaints pertaining to levy of charges without prior notice, the report said.

 

Earlier, while speaking at the Annual Conference of Banking Ombudsmen in January 2013, Dr KC Chakrabarty, deputy governor of RBI had said, "...though the fact that the offices of the Banking Ombudsman receive more than 70,000 complaints a year bears a testimony to the credibility of the Banking Ombudsman Scheme, it also reflects on the poor redress system of banks as it shows that the customers repose greater faith in the Banking Ombudsman."

 

He emphasised banks to make efforts to strengthen their grievance redressal mechanism by proactively reviewing their processes, improving efficiency and delivering promised services in a fair, non-discriminatory and transparent manner. He stressed that the banks needed to address issues of safety and security in electronic banking to increase customer confidence and also to bring in uniformity in the service charges levied.

 

Mode of complaints
 

Post, fax and courier continued to remain a popular mode of lodging complaints with OBOs with 72% of total complaints received through this mode. Electronic mode was preferred by 28% of the complainants. As compared to last year, there was a marginal increase of 1% in complaints received through electronic mode.
 

 

According to the report, New Delhi, Kanpur, Mumbai and Chennai were the four Offices of Banking Ombudsman (OBOs), which received more than 50,000 complaints against banks. These four OBOs accounted for almost 50% of the complaints received by all OBOs. OBOs at Ahmadabad, Chennai, Guwahati, Mumbai, New Delhi and Patna recorded increase in complaints received whereas Bangalore, Bhopal, Bhubaneswar, Chandigarh, Hyderabad, Jaipur, Kanpur, Kolkata and Thiruvananthapuram recorded a decline in receipt of complaints over the previous year. On an average, each OBO received 4702 complaints during the year.

 

The source of complaints remained heavily skewed towards customers from metro or urban areas. Complaints from urban and metro areas continued to account for about 72% of the total complaints received as compared to about 28% complaints received from rural and semi-urban areas during the year 2012-13.

 

"Some of the reasons that can be attributed to the greater share of complaints from urban and metro areas are, increased availability of banking services, financial literacy and expectation level of bank customers and greater awareness about the BOS among residents of such areas as compared to their counterparts in semi-urban and rural areas. With increasing penetration of banking services into rural hinterlands and ongoing drives aimed at universal financial inclusion and financial literacy, this mix is expected to undergo significant change in coming years. Marginal increase of 1% in complaints received from rural areas this year is indicative of this trend," the report says.

 

Complaints against SBI group highest
 

During 2012-13, the highest number of complaints (33%) were received against SBI group followed by other nationalised banks (31%), private Sector banks (22%) and foreign banks (7%).

 


Compared to previous year, there was a fall of 2% in complaints against SBI and its associates, whereas, complaints against private sector banks increased by 1%.

 

Maintainable complaints
 

The complaints which do not pertain to grounds of complaint specified in the BOS and those complaints where procedure for filing the complaint laid down in the BOS is not followed are classified as non-maintainable. All other complaints are classified as maintainable and dealt with as per the provisions of the BOS 2006.

 

Over last three years, percentage of maintainable complaints has increased gradually from 49% in 2010-11 to 56% (39,400) in 2012-13. Percentage of non-maintainable complaints has declined to 44% or 30304 in FY13 from 51% or 36,522 in 2010-11.

 

Of the total maintainable complaints, 50% (19,833) complaints were resolved by mutual settlement. Awards were passed in 1% (312) of the cases, whereas 49% (19,205) of the complaints were rejected/withdrawn.

 

During the year 2012-13, 44% of the complaints received were non-maintainable. However, over the last three years, this percentage has come down from 51% to 44%, the report said.

 

Appeals against the decision of BOs
 

Although customers are becoming more aware about the applicability of this scheme, the report says, there is still need to create awareness among banking customers and bank staff. Even the number of non-maintainable complaints filed before the Appellate Authority shows the lack of awareness or knowledge among customers.

 

During the year, the Appellate Authority (Deputy Governor in charge of Customer Service Department at RBI) received 360 appeals/ representations out of which, only 52 were maintainable as per the provisions of clause 14 of the BOS. The Appellate Authority closed 308 representations pertaining to complaints under the non-appealable clauses of the Scheme.

 

Open House event of Moneylife Foundation
 

The report without naming anyone mentions about the "Open House with Dr KC Chakrabarty") event. This Open House event was organised by Moneylife Foundation in Mumbai. It says, "The major issues discussed/ debated were competition not having intended consequences for consumers of banking services, de-regulation of interest rates/ service charges had resulted in exploitation/ cartelization, mis-selling of third party products by banks, misreporting by banks to CIBIL and the consequent harassment, RBI to decide on reasonableness of charges and not delegate to Indian Bank's Association (IBA)/ Board of banks, simplification of know your customer (KYC) norms, improving effectiveness of grievance redress mechanism and regulating the sale of gold coins by banks."

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COMMENTS

Shyam Kumar

2 years ago

Dear Sir,
I am having a serious concern with Indian Overseas Bank, Baguiati and Salt lake city Br., Kolkata regarding my inward remittance which was transferred from Amsterdam, Netherland on 22nd itself but the bank employees are not taking any initiatives to release my remittance and Everytime I go to them they are just harassing me by asking some irrelevant documents.
Please help me.
mail: [email protected]
08981199324

Shyam Kumar

2 years ago

Dear Sir,
I had a serious concern with Indian Overseas Bank, Baguiati and Salt lake city Br., Kolkata regarding my inward remittance which was transferred from Amsterdam, Netherland on 22nd itself but the bank employees are not taking any initiatives to release my remittance and Everytime I go to them they are just harassing me by asking some irrelevant documents.
Please help me.
mail: [email protected]
08981199324

Shyam Kumar

2 years ago

Dear Sir,
I had a serious concern with Indian Overseas Bank, Baguiati and Salt lake city Br., Kolkata regarding my inward remittance which was transferred from Amsterdam, Netherland on 22nd itself but the bank employees are not taking any initiatives to release my remittance and Everytime I go to them they are just harassing me by asking some irrelevant documents.
Please help me...
mail: [email protected]
08981199324

Raykumar

3 years ago

Thanks for the Article: i had complained in the year 2012 regarding unauthorised (without my written concent)issue of my bank statement to third party without my knowledge, only when i saw the statement in the table of a person in my previous office the matter ultimately went to RBI banking ombudsman but the issue was not resolved and RBI gave the decision in favour of the bank -- The bank is HDFC Bank and i know from which bank branch the statement had been printed, i also came to know that the statement can be printed without the knowledge of the customer.i did not make any further effort in getting the justice since the bank is adamant and insisting that they are correct inspite of me telling the name of the branch manager to the RBI and HDFC Bank who did not take this into account nor HDFC Bank taken any action on the employee in this regard. i resigned from the company since this incident.

Simple Indian

3 years ago

Nationalized Banks like SBI don't have any accountability of their staff who harass customers or make customers suffer for staff's inefficiency. Neither does SBI have any proper means of complaint tracking, as their Helpline does take customers' complaints but proactively closes it after forwarding the issue to the Branch concerned, even if the customer has complained against the very Branch.

Scam-tainted officers gunning for Dr Ashok Khemka?

In a letter to the Principal Auditor General of Haryana, Dr Ashok Khemka, under attack for his pathbreaking effort to introduce better quality of roofing in food storage godowns, has openly identified two tainted senior officers as gunning for him because of personal reasons

In response to Haryana government’s move to charge Dr Ashok Khemka with various irregularities in connection with his path breaking decision to introduce better quality roofing for warehouses, Dr Khemka has sent a strongly worded point-by-point rebuttal to Principal Accountant General (Audit) of Haryana, while alleging bias on the part of two tainted state government functionaries for cancelling a dubious land deal of Robert Vadra, Sonia Gandhi’s son-in-law, in October 2012.

 

The letter, written in the third week of January alleges that “the motive of the ruling political executive is to malign my reputation in the public eye for daring to annul the mutation of a land deal of Skylight Hospitality, a company of Mr Robert Vadra, on 15 October 2012.”

 

Dr Khemka alleges that “Mr SS Dhillon and Mr Roshan Lal are acting in a criminal and vindictive manner in collusion with the ruling political executive to frame me.”

 

SS Dhillon is Principal Secretary to Chief Minister while Roshan Lal is the Principal Secretary Agriculture. Both of them have a checkered record, compared to Dr Khemka’s unblemished record to exemplary public service.

 

Dr Khemka is an engineering graduate from IIT Delhi and PhD in Computer Science from the Tata Institute of Fundamental Research, who chose to join the Indian Administrative Service (IAS) in 1991 to serve the country.

 

He has had repeated run-ins with the four chief ministers of the Haryana government ever since he joined the IAS, for which has been transferred 44 times. But it is his cancellation of the Vadra land deal that has got the political establishment to hit at him beyond just transfers. He is now sought to be framed to change the roofing in food storage godowns from harmful asbestos sheets to better quality roofing sheets called galvalume, in the interests of the workers, when he was the managing director of Haryana State Warehousing Corporation (HSWC) in 2009. This was a pathbreaking decision because the Food Corporation of India (FCI) has subsequently made galvalume sheets mandatory.

 

In his letter to the AG (Haryana), Dr Khemka alleges that Roshan Lal is trying to retaliate against him because he had filed a complaint with the Central Bureau of Investigation (CBI) on 4 March, 2013 on discovery of a scam involving purchase of 99,996 quintals of wheat seeds at high rates without open and competitive tenders from a private middleman in November 2010. On 3 December 2013 Dr Khemka made a detailed representation to the Chairman of Parliamentary Standing Committee on Agriculture, reporting the modus operandi adopted in Haryana to misappropriate central subsidies of the Agriculture Ministry. An enquiry by the Parliamentary Standing Committee on Agriculture is reportedly underway.

 

Dr Khemka has also identified the current Principal Secretary to Chief Minister, as participating in the witch-hunt against him because he had exposed Dhillon’s role in “several land-licensing and land-release scams while he (Dhillon) was posted as Director General of Town & Country Planning and Urban Estates Departments.” Dhillon’s role in licensing and release of state land in favour of a private builder was severely indicted in a judgment of 20 December 2013 of the Punjab & Haryana High Court.

 

Our emails sent to SS Dhillon and Roshan Lal remained unanswered till writing this report.

 

While the AG, supposedly an independent and constitutional authority, has been drafted in to probe Dr Khemka’s decisions, no records are being made available him for inspection despite written requests. The state government is apparently asking for a parallel enquiry by the CBI based on the same set of allegations without waiting for the final audit report of AG.
 

According to Dr Khemka’s letter to AG, “this shows utter lack of faith on the part of functionaries in the State Government in the special audit being conducted by a Constitutional authority.”

 

In a report, the Hindustan Times has said that the Haryana government has decided to defer the reference for a CBI probe into the allotment of Rs18.04 crore work orders for installing galvalume roofing sheets on warehouses by Dr Khemka.

 

You may also want to read…

Dr Ashok Khemka: The ‘unsung’ hero

 

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COMMENTS

uttamkumar dubey

3 years ago

Who is Right? has this yudhbir khylia really worked against Khemka?
Pls clarify i will withdraw my support from AAP immediately .I support khemka and those associated with him in right context.

Bala

3 years ago

Honore de Balzac (1799-1850) a French novelist:
"Bureaucracy is a giant mechanism operated by pygmies;
bureaucracy was definitely organised, however, under a constitutional government, with a natural kindness for mediocrity, a predilection for categorical statements and reports, a government as fussy and meddlesome as a small shopkeeper's wife!"

Arupkumar Das

3 years ago

Sack the principal secretary and secretary Agriclture of Haryana for troubling an honest officer Dr. Khemka. CBI should investigate them for disproprsionate assets charge against them.

jaideep shirali

3 years ago

As a nation, we only talk about corruption, whether Dr Khemka or the AAP. But inspite of what we saw in Parliament and the Delhi assembly, we support the old, corrupt and useless parties, with stupid excuses like stability. Inspite of the numerous scams surrounding UPA, we have any number of 'experts' who still speak highly of it. In all the media glee against the AAP, neither the journalists nor the viewers have stopped to think that the fight is about corruption and how it is destroying the nation. Khemka and AAP are just part of the fight against corruption, we citizens need to help them. We need to think about why we should have Pay Commissions and pay hikes, when government offices to most citizens symbolize corruption and red tape, inspite of automation. I sincerely hope we do not, as usual, forget Khemka and call him an 'anarchist' sooner or later !

CHANDU CHARTIST

3 years ago

DR,KHEMKA MUST JOIN AAP AND FIGHT AGAIENST CORRUPTION

REPLY

Dayananda Kamath k

In Reply to CHANDU CHARTIST 3 years ago

if he joins aap his fight also will be like kejriwals. as soon as he got power he bribed his voters. and helped the same power companie by subsidy. and all these decisions taken to garner majority as he was not sure of winning the vote of confidense and continuing in govt. so he ranaway which he wanted on flimsy grounds. if people of india are sensible they should use jadoo on every aap member.

nagesh kini

In Reply to CHANDU CHARTIST 3 years ago

Oh No. AAP is the last place.
The aam janaata had high expectations from AK and his AAP that have been belied and betrayed. In their quest to 'do something big' for their parliamentary 'conquest' they threw unto the winds their avowed fight for corruption by resorting to cheap populist antics like lalbatti gaddis, waiver and concessions in power charges and free water. The Rail Bhavan Dharna and getting to RIL did them in.
In the short time where will they get 'good incorruptible' candidates pan-India? Not the 'kalipeeli wala' so-called Kumar Viswas on the judicial strictured Law Minister Somnath Bharati!
The fartherest Dr. Khemka keeps away from AAP. Capt. Gopinath and Mallika Sarabhai must be rueing joining hands with it.

Abhijit Gosavi

In Reply to nagesh kini 3 years ago

My friend, I'm not sure which generation you belong to, but I am old enough to remember all those opportunists who were supporting VP Singh's Lok Dal party. Don't be surprised if MallikaS performs a Kathak dance and Captain Gopinath hosts a shaandar party in the honour of the honourable ex-CM! They are not ruing their decision at all.

nagesh kini

In Reply to Abhijit Gosavi 3 years ago

Abhijit - perhaps i belong to the generation as you do!
Suggest everbody's reads "All the Janata Men" (1978 Vikas) written by veteran Janardan Thakur that goes back even before VP Singh. The author in his first coalition era saga has written a chapter each on the opportunists ranging from Jagjivan, Morarji, Atal Bihari, Advani et all. None of them were Kathak dancers but hard core netagan!

Shivangni Sharma

3 years ago

This shows the pitfalls of having too many regulators, unscrupulous politicians will "fix" even Lokpal, CBI, with their own cronies. It very important to encourage and stand by such honest people cause they and a few other similarly honest & fearless people carry the load of governance on their shoulders

ABHA CHAWLA MOHANTY

3 years ago

"AUDIT" AND DEPARTMENTS FOR VIGILANCE PROVE AS VANGUARDS FOR ADMINISTRATIVE DISCIPLINE???,..TRUTH IS DEFEATED TO EVIL TRIUMPHANT..TESTIMONIAL TO PERFORATED PERFUSED CORRUPT MENTALITY,..WE as nation ambassadors of tolerance......shame!

REPLY

nagesh kini

In Reply to ABHA CHAWLA MOHANTY 3 years ago

Putting CAG to 'audit' on Dr. Khemka is the greatest blunder. For all you know it will throw open a bigger can of worms!

t k mitra

3 years ago

Dr.Khemka is a lion in the jungle of cowards.Scam tainted people will find no other way than to hide in the bushes to-day or tomorrow.His concern for preventing wastage of food grains from govt.godowns and promoting use of galvalume which later on adopted by FCI is commendable.

Sunil

3 years ago

Dr. Khemka is a fine example of what people in high places ought to do. Congratulations to the Moneylife team in supporting Dr. Khemka . Look forward to be a part of any other initiate that you want to drive towards supporting a Honest and upright officer in doing his duty.

SuchindranathAiyerS

3 years ago

So, what's new? If you are not a partner in crime, you will be "fixed". I should know. Been there. Been fixed. Many times:

Harish Kohli

3 years ago

The corrupt politicians are too thick skinned for anything to affect them. Dr. Khemka and people like him must not be left alone to wage their battle for probity in governance. One can imagine their courage in doggedly pursuing, despite the consequences to their personal lives, the flicker at the end of the long, long, long tunnel. Full credit to Moneylife in pursuing Dr. Khemka's case. Having followed Sucheta Dalal's writings for quite some time, she is not the one to give up.

nagesh kini

3 years ago

The Office of the CAG needs to ascertain as to how one of its arms at Harayana, in abdicating its duties as an indepedent constitutional audit authority is succumbing to the ditaks of a partisan and vindictive state government that is out to settle personal scores. Now that the matters are subjudice and before a Parliamentary Committee the CAG needs to direct the AG Harayana to cease from any action on the pain of contempt of court and parliament.

P M Ravindran

3 years ago

I would easily say that Dr Khemeka is a rare breed that we all need to protect and nurture. To do the right thing one needs not only competence but also courage. Most of those in the IAS can be dumped as useless clerks, in fact worse than the LDCs and UDCs in govt offices.

REPLY

Abhijit Gosavi

In Reply to P M Ravindran 3 years ago

Indeed, people like him need support from everywhere! He's fighting a lonely battle for ethics; he's not trying to line his own pocket. Such a humble man too!

The video is out there on the internet for everyone to see. But you won't hear any calls on twitter from these so-called "leftists"; no changed DPs nor any profile images --- unlike those for the caravan magazine.

But if I whine about how I may lose my fat pay check, I can depend on dear wolf-boy to support me on papyrus :)

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