August 2005- Volume XXVII-No 8- Rs.

30 A Monthly Journal published by the Indian Banks' Association

PERSPECTIVE
CEO’s

M. Balachandran
Strategic Models
for Re-Positioning of PSBs
PERSPECTIVE
CEO’s

Dr. K.C. Chakrabarty

Role of Banks in
Entrepreneurial Development
& Micro Finance

Featuring
• Channelising
▼

Retail Credit
▼

Y2K38 : Problem
and a Possible
Way out
▼

Banking Cash
Transaction Tax
▼

ytr:tof Jr"to; bqjGt

 Indian Banks’ Association

“To work proactively for the growth of

a healthy, professional and forward
looking, banking and financial
services industry, in a manner
consistent with public good.”

OFFICE BEARERS
CHAIRMAN
EDITORIAL BOARD
Shri A K Purwar CHIEF EXECUTIVE & EDITOR

DEPUTY CHAIRMEN Shri H.N. Sinor

Shri Niall S K Booker Editorial Committee
Shri V P Shetty Dr. Jayantilal Jain
Dr. T.K. Chakraborty
Shri S C Basu
Shri V.S.R. Murthy
H O N O R A RY S E C R E TA RY Shri T.R.S.Trivedi
Shri Ananthakrishna Editorial Team
Prabhuta Vyas
Vice President (Communications)
K. Ganesan - Manager
MEMBERS Lira Alphonso - Officer
Tushar A. Shah - Officer
Shri K Cherian Varghese Dharmraj Mishra - Officer
Shri S C Gupta
INDIAN BANKS’ ASSOCIATION
Shri M S Kapur
Head Office :
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Blocks 2 & 3, Stadium House,
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Editorial Office :
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Indian Banks' Association
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web : www.iba.org.in
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Shri Gunit Chadha
Edited & Published by :
Shri Sanjay Nayar Shri H.N. Sinor
Shri Bart Hellemans For Indian Banks’ Association, Blocks 2 & 3, Stadium
House, 6th Floor,81-83,Veer Nariman Road, Mumbai
Shri Rana Kapoor - 400 020 (India). The views expressed in this Bulletin
Shri S K Banerji are not necessarily the views of the Indian Banks’
Association or the bank institution to which the
Shri Deepak S Patil author belongs.
Shri Vere J Carneiro Designed, Processed & Printed by :
Repro India Limited
Shri Aditya Puri
Shri K V Kamath
 EDITORIAL

H N SINOR

Dear Readers,
Micro finance is now seen as a holistic concept of not only lending, but also providing
saving and other services to the unorganized sector. Bankers now consider micro
finance a viable business. Dr. K.C. Chakrabarty, Chairman and Managing Director,
Indian Bank in his article ‘‘Role of Banks in Entrepreneurial Development and Micro
Finance’’traces out the role of banks in India for the development of micro enterprises
as credit providers, as intermediaries in the supply chain and providers of group
insurance to mitigate market/interest risks.
The Financial Sector Reforms ushered in 1991 have changed the profile of Indian
Banking Industry, more particularly the Public Sector Banks. Liberalisation and
Globalisation have thrown greater challenges ahead for our banks. Mr. M.
Balachandran, Chairman and Managing Director, Bank of India in his article
‘‘Strategic Models for Re-positioning of PSBs’’ highlights on key issues such as
organizations’ structural re-design, use of technology, marketing strategy,
differentiated services, skill upgradation, tapping rural opportunities and
consolidation of banks for greater synergies.
This issue also carries host of other informative articles on issues of topical interest
besides regular features. We are overwhelmed by your appreciative response to
the changes introduced from last issue of the Bulletin.We assure you that we shall
continue our endeavours to make the content of the Bulletin more relevant and
readable and its format visually more pleasing. Feedback from you would facilitate
our achieving this objective.
Happy Reading,

H N Sinor
 contributors Counter – The Best Marketing Joint
S. Pradeep Naidu
Shri Pradeep Naidu is Manager, ING Vysya
Bank, Davangere.
41
contents
CEO’s PERSPECTIVE
Whether Amendement to CPC – A Boon or Myth
Strategic Model for Re-positioning of PSBs
K. Shivaramakrishnan
M. Balachandran
Shri Shivaramakrishnan is Manager &
Shri Balachandran is Chairman & Managing Faculty , Canara Bank, Regional Staff
Director, Bank of India. Training Centre, Hyderabad.
5 42
Legal Decision Affecting Bankers
Role of Banks in Entrepreneurial Ajit Singh Cheema
Development and Microfinance Contributed by Shri Ajit Singh Cheema, Senior Manager,
Dr. K. C. Chakrabarty Punjab & Sind Bank, Amritsar.
Dr. K. C. Chakrabarty is Chairman & 43
Managing Director, Indian Bank.
9 eEnoer - Keb[
EXPERTS VIEWS
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Channelising Retail Credit jepesvõ efmebn
T. M. Bhasin
ßeer efmebn FefC[Ùeve DeesJejmeer]pe yeQkeâ ceW cegKÙe DeefOekeâejer
Shri T. M. Bhasin is General Manager, nQ~ ßeer efmebn yeer.Sme.meer. (Dee@veme&), S«eerkeâuÛej SJeb
Oriental Bank of Commerce, New Delhi
Regional Office.
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13
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Y2K38: Problem and a Possible Way Out mejpeerle efmebn
Dr. Ashutosh Saxena
ßeer efmebn yeQkeâ Dee@heâ yeÌ[ewoe, meerkeâjer Kego& MeeKee,
Dr. Ashutosh Saxena is Faculty, Institute for
Development and Research in Banking
ieeef]peÙeeyeeo (G.Øe.) ceW keâeÙe&jle nQ~ 54
Technology, Hyderabad.
17 FEATURES
Banking Cash Transcation Tax - A New Editorial 1
step in Indian Budget
Major Developments in Banking
P. K. Barman and Finance during June, 2005 3
Shri P. K. Barman, is a Chartered Accountant, Performance Highlights of Public Sector
Jamshedpur. Banks 2004-05 26
21
Banking Scene – Indian 44
Balancing Quality and Quantity in SHGs in India
R. Devaprakash
Banking Scene – Global 46
Shri Devaprakash is an Agro Economist .

25 Book Reviews 48
Change, Competition, Leadership & Rethinking Future IBA Seminar 57
K. M. Gopinath
Shri Gopinath is General Manager (IIS), Back Cover
Indian Bank, Head office, Chennai.
40 Banking Statistics
Subscription Rates (for 3 years) with effect from 20th September, 2003
Bank Employees & Students* Rs. 600
2 IBA BULLETIN Institutions Rs. 1000
AUGUST 2005 Other Individuals Rs. 1000
Overseas Subscriptions (US$) 200
* A certificate from appropriate authority confirming the status should be enclosed.
 Major Developments in Banking & Finance during June, 2005
Major Policy Announcements
◗ The Government has
permitted housing finance
companies and non-
banking finance companies
to access the foreign debt
market through FCCBs and ECBs
subject to RBI approval.
( ET 4/6)
◗ The Government raised the External
Commercial Borrowings (ECBs) from $9
billion to $ 12 billion for 2005-06.
However the ceiling on cumulative
investment in government securities
by foreign institutional investors (FIIs)
has been left unchanged at $1.75
billion. ( ET 13/6)
◗ The Cabinet permitted a
comprehensive economic co-
operation agreement (CECA) between
India and Singapore. The pact is
designed to offer an integrated
package governing trade in goods and
services, an agreement on investment,
mutual recognition agreements in
services and co-operation agreements
in areas such as education, e-
commerce, the media and intellectual
property. ( BL 21/6)
◗ The Special purpose
vehicle (SPV ) to fund
infrastructure projects, to
be named as Indian
Infrastructure Finance
Company (IIFC) as a wholly owned
government company under the
Companies Act. It will have an initial
capital of Rs. 10 crore. ( FE 24/6)
◗ 3 Banks namely Allahabad Bank,UTI
Bank and UCO bank have got RBI
permission for opening representative
offices in China and are waiting for
approval from the monetary authority
in China. (BL 24/6)
Major Events
◗ The Government plans to borrow less
than estimated in the financial year
2006. The country’s fiscal deficit stood
at 4.1 per cent of GDP, against the
government’s 4.5 per cent. ( ET 3/6)
◗ The proposal to issue inflation-linked
bonds to help investors hedge against
the risk of inflation has been cancelled.
( ET 10/6)
◗ The Mid Term Appraisal of the Tenth
Five Year Plan showed that the
performance of the economy was well
below the target averaging 6.5% in the
last three years. (ET 28/6)
Banking Developments & Policies
◗ Current account withdrawals of over
Rs. 25,000 will attract Banking Cash
Transaction Tax. The tax will be
applicable on withdrawals from
current accounts on a single day from
scheduled banks. ( ET 1/6)
◗ In the meeting held by the Finance
Minister with the Chief Executives of
PSBs on 3rd June, 2005,the Finance
Minister had ruled out reduction in
government’s equity in public sector
banks below 51%.Further, the issue of
merger of regional rural banks would
be considered by August-end and the
process of consolidation among public
sector banks will be considered later.
Target for agricultural lending was
fixed at Rs.1,41,000 crore.
(ET 4/6)
◗ Reserve Bank has allowed banks to
lend money to Indian companies for
acquisition of equity in overseas joint
ventures, wholly owned subsidiaries, or
in other overseas companies, as
strategic investment. Bank board
would have to approve a policy for
such lending and incorporate it in their
loan policy. ( BL 8/6)
◗ The Centre has
constituted a seven-
member expert group to
review the functioning of
nidhi companies.. The
review will cover the role of nidhi
companies, their regulatory
framework and steps to safeguard
depositors. ( BL 8/6)
◗ The RBI has directed banks to simplify
the procedure to facilitate speedy and
easy settlement of claims following the
death of depositors. The RBI has also
requested Indian Banks’ Association to
formulate a model operational
procedure for the settlement of such
claims. The RBI notification also said
that banks have to settle the claims and
release the payments of the deceased
depositor’s account (s) within 15 days
of receiving the claim and on
production of proof of death of the
depositor and satisfactory
identification of the claimant.
(BL 10/6)
IBA BULLETIN 3
AUGUST 2005
 ◗ The RBI directed banks to closely track
the spends of international debit card
(IDC) holders and report to it if the
aggregate spend exceeds $ 1,00,000 in
a calendar year. ( BS 15/6)
◗ State Bank of India has set up new
strategic business unit (SBU) for
personal banking , small and medium
enterprises and agriculture. ( FE 18/6)
◗ Reserve Bank of India allows UCBs
even the non scheduled UCBs to
participate in the repos as long as they
have a constituent SGL account.
(ET 24/6)
◗ The RBI panel
suggested reforms in the
foreign exchange market
for liberalizing some capital
account transactions like foreign
currency derivatives. (ET 25/6)
◗ The RBI and the
Andhra Pradesh
government have signed
an MOU to strengthen
and work out ways and
means to revive the 40 urban co-
operative banks (UCBs) in the state.
RBI would be assessing the training
and computerization needs of urban
co-operative banks, upgrade skills of
employees and improve operational
efficiency through technological
upgradation. (ET 28/6)

Banking Developments
(Rs. in Crore)
Financial Year
so far
Outstanding Actual %
As on 24/6/05 (Variations)
Aggregate Deposits 17,89,864 89,665 5.3
Investments 7,40,078 925 0.1
Bank Credit 11,61,387 60,958 5.5
Non-Food Credit 11,16,583 57,275 5.4
Funds to Commercial
Sector 11,53,373 54,142 4.5

Market Developments & New Policies a-percentage point in housing loans. 2005 as against the net profit of Rs. 23
(ET 17/6) crores. ( ET 28/6)
◗ The Government will allow three
largest Singapore based banks free ◗ The Boards of Centurion Bank and Market Developments

access to the Indian market, with
operational freedom at par with other
domestic banks. Development Bank of
Singapore, United Overseas Bank and
OCBC Bank will have far more
operational freedom than other big
foreign banks operating in the country.
( ET 17/6)
◗ HDFC Bank and ICICI Bank have
increased their lending rates by half-
Bank of Punjab are planning to meet
on June 29th to discuss the merger
between these two banks.Valuation of
shares would be done by KPMG & NM
Raiji & Co ( ET 21/6)
◗ Federal Bank is planning an equity
issue of Rs.300-350 crore by
September, 05. ( ET 21/6)
◗ Lord Krishna Bank reported a net loss
of Rs. 24 crore during the financial year
BSE Sensex : 6729.90 -7193.85 (6.9%)
Re/$ : Rs.43.78- Rs. 43.51 (0.62%)
Call Money : 5.70% to 5.90% as on 30/6/05
Govt: Borrowing Programme
◗ The Central Government has
borrowed Rs. 37,000 crore from the
market till June 10 this fiscal. ( ET 17/6)
❑
Prepared by Smt. Jayasree Menon

www.iba.org.in
4 IBA BULLETIN
AUGUST 2005
CEO’s Perspective
Strategic Model for
Re-positioning of PSBs
M. Balachandran

If the PSBs have to Since nationalization in 1969 and areas of technology related banking, wealth
till the year 1991, when financial management and other ancillary products. This
position sector reforms were undertaken, competition is here to stay.
themselves as the public sector banks have
The further opening up of the Indian banking market
relevant players in virtually ruled the market place.
to foreign banks, for which RBI has released the road
the emerging They performed a well-defined
map will intensify competition from more efficient
role in a planned economy set up.
business They were primarily responsible
foreign banks particularly after 2009. India is today
opportunities, skill the world’s 10th largest economy and also the second
to channelise household savings towards directed
fastest growing large economy. As per BRICS report
upgrade in new priorities of state. Due to high statutory pre-emptions
we will be the 3rd largest economy in the world in
and profitable and relatively low availability of credit in the system,
about 30 years’ time. With positive demographics in
the mindset of bankers that developed was one of
areas of banking is credit allocation and not competition. The products
favour of the country, the attractiveness of Indian
a must. This will economy to the invasion by foreign financial sector
set on offer was limited and not present on the retail
giants is only inevitable. They will challenge the local
require multi- asset side at all. High quality customer service was
banks with their global reach, skills, wide range of
pronged approach not essential to survive in the market place.
products and international scales of capital. The
including campus Post 1991, the entry of new generation private sector Banking sector in India, particularly the PSBs, will thus
recruitment of banks has redefined competition on the banking soon face the full force of global winds of
landscape. These banks brought with them a new competition.
personnel skilled era with latest technology, autonomy in respect of
The introduction of prudential norms in early
in management, business areas, management teams, and incentive
nineties in line with international best practices
finance, etc. and structure and quickly created a strong niche for
further exposed the PSBs and suddenly brought into
also lateral themselves particularly among the rich and
focus several deficiencies particularly in the area of
preferred classes. They are rapidly capturing
recruitment at market share away from both PSBs and foreign
quality of asset portfolio. Gross NPA levels shot up to
middle and senior more than 20% in certain cases. Capital adequacy
banks alike, having garnered as much as 13%
norms made capital a pre-requisite for growth. With
levels of of the business share by March, 2004 from
partial disinvestment of equity to the public by the
professionals nothing in 1991. They are increasingly
Government, Investors have emerged as important
entering all the business areas
experienced in including Government business,
stakeholders, whose expectations and aspirations
relevant lines of have to be met by the banks if they want to be
SME, export finance,
assured of adequate investment support for fresh
business and agriculture apart from
equity.
gradual building their strength
Operational efficiency is another area that shows
up of skills within yawning gaps from international standards in the
the bank.
IBA BULLETIN 5
AUGUST 2005
working of our PSBs. This is so since
intermediation costs are very high,
accentuated by the small size of banking
transactions and portfolio in the Indian
banking.
The introduction of Basel II norms is set to
put even more pressure on the banks for
capital adequacy, risk management and
attaining international standards of
operational efficiency if they have to maintain
the faith of the shareholders and customers.
Basel II lays down benchmark ratios of
operational efficiency in terms of ROA (> 1%),
Gross NPA (< 3%), Net NPA (below 1%), net
interest margin (> 3.5%), CAR (> 12.5%), etc.
In the face of increasing competition and
more demanding customers requiring total
financial solutions, universalisation or
convergence in banking has assumed
increasing importance and urgency. Banks
are emerging as multi-capability one stop
financial superstores. This has implications
on business issues viz. retention of
discerning clients and operational issues
including HR capabilities for PSBs.
Last but not the least, technology has been
the major driver of all change and
determines the delivery and product
capabilities, as well as efficiency and risk
management of the banks. Technology has
transitioned beyond a transaction-
processing tool. It today sets the new
paradigms in product creation and delivery
capabilities, across geographic boundaries
and as per customer’s choice.
With all these changes in the market
environment, the need for PSBs to reposition
themselves hardly needs over-emphasis.
These banks many of which have a trail of
success of a century or more need to
restrategise to remain relevant even for the
next quarter century. The impending changes
on the horizon further emphasize the need
and urgency of this strategic re-positioning.
Objectives of re-positioning
The objectives, to my mind would
encompass the following:
a) To emerge as efficient and competitive
6 IBA BULLETIN
AUGUST 2005
entities in line with international
efficiency parameters, product
capabilities and size so that they
continue to remain not only relevant Banks also need to leap
but also command respect in the
increasingly globalizing world.
frog into next level of IT
b) To achieve and sustain high levels of
profitability through stable and initiatives viz. CRM,
diversified revenue streams so as to
give superior value to all stakeholders.
HRM, and Decision
”
c) To retain and increase the market share
via planned strategic organic or Support Systems.
inorganic growth.
d) To develop as universal banks.
e) To acquire the trust of the customer
based on their capability alone and to
reinforce it continuously by delivering
world-class banking services.
f) To shed the slow moving, bureaucratic
image and position themselves as tech
savvy, efficient organizations, which
care for the customer and provide
financial solutions in a professional
way. Only then they can become the
preferred choice of the best of the
customers, investors and staff talent.
Elements in the quest for re-
positioning
In the past few years Indian Shri Balachandran is presently Chairman & Managing Director
of Bank of India. He joined Bank of Baroda as a Specialist Direct
banks have taken
Recruit Officer in 1970 after completing his Masters degree in
important steps to Science and rose to the position of General Manager in Bank of
emerge strong. They Baroda. In February, 2004, he was appointed as the Executive
have attained Director of Bank of India and elevated as Chairman & Managing
substantial clean-up Director on 9th June, 2005.
of their balance
He has a rich knowledge of various aspects of Banking, covering
Priority Sector Finance, Commercial Credit and International
sheets and the NPA Banking. In addition to various linguistic territorial exposures,
ratios today are he has vast experience of managing different categories of
inching towards branches, as a Regional Head and Zonal Head besides in the
world class Corporate Office of the Bank. He is also credited with evolving
Policies and Guidelines for enhancing the flow of timely credit
standards. Most
to activities identified as national priority, particularly
banks have Agriculture, Rural Finance & SSI Lending and associated with
brought net NPA the Committees of NABARD and IBA. He also served as the Chief
below 3% and are Executive of Bank of Baroda’s USA operations at New York and
fast moving to 1% or gained valuable International Banking perspective.
below. Induction of Mr. Balachandran is an astute administrator and a professional
Banker with keen interest to make the Bank more competitive and
technology in the banks
preferred one, providing best financial solutions by technological
has seen a paradigm capabilities and management of Human Resources.
change with most banks now on the trail of
achieving networked and multi delivery
capabilities from the earlier stand-alone
computing. Various banks have also
diversified their revenue streams and today
offer multiplicity of products across the
financial sector. A round of VRS has brought
a scale-up in their producti-vity parameters.
Most PSBs have also partially invited public
shareholding, and the resultant market
discipline is ensuring better levels of
operational efficiency and corporate
governance. While all these have been
important ingredients in the Indian public
sector banks’ quest for attaining an
important place in the new order, the time
has come for the banks to undertake the
next level of transformation to emerge as
really world-class and contemporarily
relevant organizations. Some of the
elements for this strategic change would
cover the following :
Organisation Structure Re-design
Reflecting the realities and demands of the
protected and expansionary business model
post 1969, the basic structure of the public
sector banks has developed along
geographic lines. The needs of business were
well served by this structure all these years. In
the absence of IT, there was no real alternative
method to organize the banks with sufficient
ability to control the operations. Thus, a
structure was born that had zones and
regions controlling the numerous bank
branches. The premise was that
undifferentiated bank branches could each
serve every customer’s basic banking needs.
With the changes in the landscape and
advent of IT, it is appropriate to review the
current structure under three different
lenses. Does it allow the bank to address the
needs of its customers efficiently and
effectively (in particular providing
differentiated services to different classes
of customers)? Can it compete with its
competitors and respond quickly to market
demands in specified business areas? and
Does it take full advantage of the technology
that it has acquired to reduce cost, improve
revenues and serve the customer effectively?
The Indian customers have changed. They
are now more assertive and seek global class
services. Corporates require this to stay
competitive in an increasingly aggressive
market place. Retail customers are working
harder and have less time and so are not
willing to be charitable to service providers
who do not serve them well. The banks’
current geographic and branch centric
operating model is not suited to
differentially serve the needs of different
segments. For example large corporate
customers are looking at turnaround time
and quality of advice including in areas of
treasury and risk management. This is viewed
as a key parameter of service, which does
not get delivered from generalist branch
officials in undifferentiated branches.
Likewise, retail asset customers need to be
served at the point of sale through an
independent direct sales channel. Different
segments require different skills, focus and
dedicated resources. An organization
structure based on Strategic Business Units
(SBU) Model is required to serve these
different business segments by employees
with a clear focus on that segment with
accountability in improving penetration and
profitability.
The organization structure has to be agile
to respond to the customers’ needs. The
combination of IT and communication
technology permits taking of higher quality
decisions remotely. It also allows for
consolidation and centralization of back
office activity away from the branches to
cheaper locations with much greater scale
and allowing for substantial efficiency. This
can also free up the time at the branches for
the front end personnel to devote more on
customer facing activities and doing more
cross sell and change the face of the branches
as customer servicing and selling units.
Present geographic organization structure
with undifferentiated branches doing most
of the back office work and being the sole
delivery channel needs to undergo a quick
change to be able to compete effectively
for the share of wallet of the new age
customer. A suitable organization structure
is after all the sine-qua-non for delivering
the identified competitive and efficient
business model.
Intelligent use of Technology
As stated earlier, the Indian banks have
moved beyond branch level automation to
varying degrees of networking across
branches. The network capability has got
tremendous potential to augment service
delivery and efficient use of resources of
the banks. The important point however is
to use technology intelligently. Time has
come where the banks need to undertake
Business Process Re-engineering initiatives
to leverage the technological resources to
the full. These initiatives in the efficiency area
would centre around questions like - does
the activity need to be done the same way,
does it need to be done at every office or at
the front end and so on. Almost 50 to 60%
of branch operations are amenable to
shifting to BackOffice, and typically efficiency
gains of 30 to 40% are achievable by doing
centralization. Add to that the possibility of
moving the origination of the transaction
to the customer’s office. It is possible with
today’s secured technology channels
(including SFMS of RBI or web based
banking channels of the banks) to ask the
customers to transmit an application for LC
or other banking requirements
electronically to the bank. Bank can upload
this into its system and transfer/transmit to
the recipient bank terminals. The customer
would thus be able to control its transactions
and derive better satisfaction while the Bank
will be able to achieve cost reduction and
efficiency. Banks also need to leap frog into
next level of IT initiatives viz. CRM, HRM, and
Decision Support Systems.
Marketing Set-up
The Bank branches, which the PSBs have so
far almost solely used, as units for
dispensation of services are no longer
sufficient in the changed environment. While
IT enabled channels like ATMs, internet
banking, etc. provide one alternate channel,
increasing reliance will have to be placed
on developing direct sales force as an
IBA BULLETIN 7
AUGUST 2005
independent channel for business growth
and service delivery. As stated earlier, for
example retail assets have to be catered to
at the point of sale or at the customer’s
premises. Corporate business, which is
becoming very competitive on the interest
margin front, can be made profitable only
by garnering larger share of fee business.
This would accrue only through better
relationship management under the sales
channel. No longer would business
opportunities accrue to banks which stand
and wait for customers to walk in, at least
not of the preferred variety. The marketing
culture would also have to pervade to
become a mind set issue with the bank
personnel. Upsell and cross sell of products
has to become part of culture with the staff.
It has been recognized that the more
number of products the customer uses, the
profitability and customer retention is much
better.
Differentiated services
In the present day of shrinking spreads and
increasing costs and faced with more
demanding customers, it is imperative that
the banks reorganize themselves to be able
to provide differentiated services to
customers. While public sector banks would
need to continue to serve the mass
customers with basic banking services, they
increasingly need to provide higher value
added personalized services to the higher
end customers in line with their profitability
and value for the bank.
Capability Upgrade
In service industry like banks, it is the quality
of human resources, which determines the
capability of the bank to deliver superior
quality services and compete effectively. It is
a paradox that in Indian public sector banks,
which have been doing mostly traditional
banking of deposit and lending, the
availability of credit skills across the bank
particularly in the areas of large credits, project
finance, etc. is deficient. The skills in regard to
ancillary services of merchant banking, refined
risk management and treasury products for
the corporates, personal finance advice,
8 IBA BULLETIN
AUGUST 2005
wealth management solutions and capital
market related services for the personal
banking segment are in severe short supply.
At a stage when India is rapidly globalising
and Indian corporates are making large forays
abroad including the acquisition of overseas
companies, non-Indian banks manage most
of these deals. This is both a loss of good
business opportunity, loss of relationship
with the clients and set back to the status
and respect of Indian banks in global markets.
Skill upgrade in these new and profitable
areas of banking is a must, if the PSBs have
to position themselves as relevant players
in the emerging business opportunities. This
will require multi-pronged approach
including campus recruitment of personnel
skilled in management, finance, etc. and also
lateral recruitment at middle and senior
levels of professionals experienced in
relevant lines of business and gradual
building up of skills within the bank. The
present pay and incentive structure in public
sector banks is however deterrent to
developing this model. The recent autonomy
package given by the government does
open up possibility of unshackling the banks
in this regard. However much more needs
to be put in place, for the banks to be really
able to attract, retain and nurture talent.
Tapping Rural Opportunities
The rural landscape has changed. Increasing
use of technology in farming, usage of
genetically modified seeds aided by
scientific irrigation techniques has brought
about stability in agricultural production.
The agricultural sector is acquiring
commercial hue, adding to the prosperity of
the rural communities. Growing trend of
consumerism is being seen among the rural
populace. This is creating opportunities for
banks to market not only traditional
agricultural lending but also loans for
consumer products and a plethora of other
financial services. Public sector banks, which
have extensive network in rural areas and
also the experience, feel, understanding and
relationships in the rural segment are well-
positioned to tap this increasing business
opportunity. Two issues in rural lending, risk
management and high transaction cost
however, need to be tackled. Experience has
shown that agricultural loans are no more
susceptible to NPA generation than other
loans. Further, technology today provides
the facility for better risk management by
developing risk models for individual
segments. High transaction cost can be
tackled through use of partnerships with
NGOs, MFIs, Farmer Clubs, etc. Rural segment
is the next big growth story and PSBs with
their established niche need to get their act
together for making full use of the
opportunity.
Consolidation
It is an acknowledged fact that the Indian
banks are very small in size by international
reckoning. The biggest Bank of this country
is the only bank to rank among the top 100
global banks. The largest bank in China is
eight times bigger than the biggest Bank of
India. Mergers and acquisitions happening
in the west as also in our neighbourhood
are further increasing this gap.
Size of the bank is important as it gives
global reach, ability to develop and offer
comprehensive set of products, enjoy
economies of scale, derive optimum benefit
out of the huge investment in IT, roll out
next generation of IT initiatives, and ward
off predatory acquisition moves.
Consolidation in Indian banking is therefore
perhaps an idea, which needs to be pursued
with due seriousness by the banks,
regulators and the Government. However
consolidation of public sector banks should
not be a forced merger of strong and weak
banks but driven by synergies and resultant
benefits.
It is clear that public sector banks, which have
developed in a protected environment in
limited areas of banking services have to
take major initiatives for positioning
themselves in the global competition which
is knocking at their doors. Any procrasti-
nation in taking the required steps will
simply marginalize these banks with serious
loss of business, market share and customer
patronage. ❑
CEO’s Perspective
Role of Banks in Entrepreneurial
Development and Microfinance
Dr. K. C. Chakrabarty

Banks have a Introduction These micro enterprises, or “the world’s smallest

businesses,” represent an estimated 80 percent of
major role to play In most of the developing
total enterprises. According to the Economic Census
countries poverty is a major factor
in the haunting the socio-economic
of 1990, India had 24 million microenterprises,
constituting 97 percent of all enterprises, providing
development of development. This prompted
employment to at least 45 million people and
United Nations to include poverty
micro-enterprise and hunger eradication as one of
employing 63 percent of all non-agriculture workers.
and microfinance. Larger proportions of rural non-agriculture workers
the objectives in their Millennium
are employed in microenterprises (75 percent) than
Their first role is Development Goals. Poverty is
in the urban areas (52 percent).1 Yet, only about 5%
reflected in the society as a vicious circle which is
that of credit of the world’s entrepreneurs have access to financial
created due to people having limited access to credit,
services. Currently, the Microfinance Sector globally
provider, but apart leading to restriction in productivity, inhibited income,
is reaching approximately 4% of that potential
low savings and thus low capacity to invest. This is
from that they further fuelled by low risk taking capacity of the
market.
have to act as people. Microfinance serves as a means to empower Microfinance generally refers to the provision of
the poor, and provides a valuable tool to assist the small-scale savings, credit, insurance, and any other
change agents. As
economic development process. But it would be financial services to those who cannot access them
change agents meaningful only if the poor are empowered with from formal financial institutions. Due to issues of
they have to help crucial skills to run micro enterprises successfully. risk and cost associated with servicing the larger
numbers of small low capital input businesses, the
the people in In recent times, lot of thrust has been given to the
formal sector lending to micro enterprises is low.
micro enterprise sector after the realisation of its
acquiring the basic considerable contribution to economic growth and
The late 1970s and early 1980s saw the emergence of
“microenterprise lending” programs, with focus on
knowledge of vitality. Over 500 million poor people around the
credit for income generating activities and targeting
world are running profitable micro-enterprises. By
business. By promoting and developing micro enterprises the
very poor (often women) borrowers. The early focus
of most microenterprise lending programs was to
providing training entrepreneurial quality of people can also be
prove that the poor were creditworthy.
atleast basic developed. It has been understood that without
developing an enterprise at micro level, true In the mid-1990s the term micro-enterprise lending
nuances of development will only be a dream. began to be replaced by a new term “microfinance”
business can be Microenterprise and microfinance
that included not only credit, but also savings and
other financial services. The 1990s saw growing
instilled in them. In countries, which are undergoing the enthusiasm for promoting microfinance as a strategy
Training should process of economic development, self- for poverty alleviation. For providing more thrust to
employment through micro-credit the year 2005 has been recognised as
comprise of the “International Year of micro Credit”.
microenterprise is often the only
knowledge about means for people to
Through microfinance, by making loans available and
business, about provide for their
providing job training, the poor are given the
families.
the product, policy opportunity to engage in promising microenterprises.
Microfinance acts as the lever to push the process.
environment, etc.
IBA BULLETIN 9
AUGUST 2005
But the philosophy of microfinance
programmes go beyond mere access and
distribution of money. It helps in fostering
and developing an environment where
existing networks and interlinks are
strengthened. It is a necessary but not a
sufficient condition for microenterprise
promotion. Other inputs required are
identification of livelihood opportunities,
capacity building, establishing of market
linkages for inputs and outputs, activity
analysis and policy reforms.
Need for developing micro-enterprise and
micro-finance
The promotion of self-employment is a basic
component of economic development and
social policy in most countries. It is
recognised as one means of bringing a
person into the mainstream of society as a
productive and contributing individual. The
economics of microenterprise make it a
compelling anti-poverty strategy. With a loan
of Rs 5,000 in a poor country one can start a
small business, repay the loan in a year, while
still owning the productive assets. Over time,
one can earn enough to escape from
poverty.2
Microenterprise development refers to the
package of services, policies, programs, and
institutions intended to develop micro-
enterprises. Microenterprise development
contributes to widening the pool of
entrepreneurship available to society and it
broadens the base of the private sector. There
are many good reasons to support
microenterprises as they
➢ Provide sustainable employment and
income for many people by protecting
existing livelihood opportunities and
creating other potential jobs.
➢ Have strong economic linkages with
other sectors of the economy.
➢ Meet the needs of low-income people
for goods and services at the prices, in
the amount and in the locations that
are accessible to them.
➢ Increases the circulation of money.
➢ Cause minimal impact on the
environment due to low power
consumption. Many micro-enterprises
also directly improve the environment
because they are based on recycling
and locally available materials and
resources.
10 IBA BULLETIN
AUGUST 2005
➢ Have the potential to improve social
and political stability and cohesion in
communities by reducing income Microfinance generally
inequalities, encouraging self-reliance,
self-pride and increased local control,
thus building social capital.
refers to the provision
➢ Successful microentrepreneurs in of small-scale savings,
communities can serve as role models
credit, insurance, and
for young people.
Challenges being faced by microenterprise
any other financial
A large proportion of micro entrepreneurs
has cited credit as the primary constraint to services to those who
business growth. Another major challenge
facing this sector is the compulsion to cannot access them
become self reliant and self-supportive
given the phased dismantling of protective from formal financial
”
business. The enterprises suffer not only
from domestic and international institutions.
competition but also from the normal
business cycle.
The major problem is, for running any
enterprise business acumen is required
which normally all do not have. Training can
help in getting to know the nuances of
business but for being successful,
understanding of the whole scenario and
its integration is very much required, which
any training can only stimulate in one’s
mind. The other problem is of indiscriminate
growth of microenterprises, which leads to
increased supply of material in the
market. In market the twin forces of
demand and supply play an
active role. Excess supply
without increasing demand
Dr. Chakrabarty has assumed charge as Chairman & Managing
for labour intensive Director of Indian Bank, on 9th June, 2005. He started his career as a
products leads to Planning Officer with Bank of Baroda in 1978 and prior to joining
reduction in price Indian Bank, he was with Punjab National Bank as its Executive
ultimately leading to Director.
loss for the poor With a Ph.D in Statistical Techniques and Demographic Studies,
microentrepreneur. Dr. Chakrabarty brings with him rich and varied experience of
working in various capacities for more than 26 years at Bank of Baroda.
Role of banks in At Bank of Baroda, he was looking after lead bank responsibilities,
entrepreneurial Corporate Planning, MIS, Economic Research, Information
Technology at various times and headed the Integrated treasury
development and
functions. The Bank’s Corporate Risk Management function was
microfinance
vested with him and he was in charge of the UK Operations of Bank
India has of Baroda for more than four years from May, 2001 to July, 2004 with
supported social ‘approved person’ status from Financial Services Authorities in U.K.
(U.K. Regulator).
banking for a long
Dr. Chakrabarty’s varied expertise includes preparation of Corporate
time. Policy
Strategic Plans, establishing Asset-Liability Management system,
directions to rapidly
setting up Resource Management functions, Marketing of new
expand rural products, establishing Modern Enterprise-wise Risk Management
branches, mandate System, Electronic Payment Systems, diversifying into Insurance
credit allocations for business and e-banking at Bank of Baroda.
priority sectors (including
agriculture), deliver large
subsidy oriented credit programmes to serve
marginal communities and poor households
and regulated interest rates have been tried
for over 35 years. But this objective remained
a long cherished dream. With microfinance
intervention, however this situation is
changing. Now all the banks believe that poor
are also bankable, they can also save and thus
repay. Robinson (2002), notes that “The formal
sector has begun to realise that financing
the poor can be both economically and
socially profitable.”
Indian Bank was the pioneer in India in this
field, who in 1989 thought of the project of
financing Self Help Groups (SHGs) directly
alongwith IFAD. United Nations Office for
Project Service (UNOPS) in the year 1994 in
its report, appreciated involvement and role
of Indian Bank in the implementation of the
project. Based on those lines, what NABARD
had started off in 1992 as a modest pilot
testing of linking around 500 SHGs with
branches of half a dozen banks across India
with the help of a few NGOs, today involves
about 35,294 rural outlets of more than 560
banks, with an advance portfolio of more
than Rs. 39 bn in micro Finance lending to
SHGs. Financial services have reached the
doorsteps of over 83.5 million very poor
people through 1,079,091 SHGs hand-held
by over 3024 development partners.3 Indian
Bank continues to be the leader among the
commercial banks in credit linking highest
number of SHGs in the state of Tamil Nadu.
It has sustained its position through
aggressive strategies and continued
innovation. It has introduced microfinance
derivative products like Vidhya Sobha
Education Loan Scheme, Junior SHGs, Griha
Lakhshmi, (Housing Loan Scheme) etc. It has
also relaxed the norm for maximum lending
to 10 times of the savings which was earlier
4 times only.
Banks offer a variety of potential advantages
for financing of micro-enterprises and
microfinance, including a commercial
outlook and relatively sophisticated skills.
As profit-making institutions, they are
already dedicated to the goal of financial
sustainability. The greatest potential
advantage of banks is that they are going
concerns and are in a position to mobilize
deposits. Banks have been at the forefront
of some of the following innovations :
➢ Lending wholesale loan funds.
➢ Assessing and buying out micro-
finance debt (securitisation).
➢ Innovating specific retail products such
as the Kisan (Farmer) Credit Card,
Swarozgar credit card.
➢ Engaging microfinance institutions as
agents for disbursement and recovery
of loans.
➢ Equity investments.
Thus banks have a major role to play in the
development of micro-enterprise and
microfinance. Their first role is that of credit
provider, but apart from that they have to
act as change agents. As change agents they
have to help the people in acquiring the
basic knowledge of business. By providing
training atleast basic nuances of business
can be instilled in them. Training should
comprise of knowledge about business,
about the product, policy environment, etc.
Indian Bank alongwith Indian Overseas Bank
and NABARD has set up rural training centre
at Karaikudi which has microentrepreneurial
development as one of the objectives.
Bank has to act as an intermediary at all
stages in the supply chain. Its main activity
should be to strengthen the whole supply
chain so that there is win-win situation for
all. Microenterprises need strong forward as
well as backward linkages, which means
availability of produce, in right quantity, of
right quality, and at right time. Banks can
establish the large volume of business by
maintaining a database of all these
businesses and providing for the possibility
for outsourcing. The recent advancement of
leveraged leasing/sub-contracting
supported by banks can help the micro-
entrepreneurs get the required business and
also the inputs needed for it. All the banks
together or individually can think of forming
a venture capital fund especially for
promoting micro enterprises. From this fund,
starting of the enterprises as well as the
training required and other aspects related
to it can be financed like finance required
for market research.
Loans provided to micro-enterprises are
inherently very risky but this risk can be
reduced for the poor micro-entrepreneur by
giving credit assistance in the form of equity
assistance. Small start-up businesses
generally have weak or poor cash flow
situations for a period of time, often for more
than a year. The difficulties and pressures
which a new entrepreneur has to face is
always very formidable, and an obligatory
and totally structured loan repayment
schedule can often be a fatal factor. There is
no mechanism to insulate the entrepreneur
from the normal business failures. So the
banks role is to properly identify the
business according to the demand supply
situation and make the repayment schedule
accordingly. To mitigate the market risk and
interest risk, insurance of the business at
affordable premium could be thought of
on the lines of group insurance. Banks can
provide the enterprises group loans at lesser
interest rates without any intermediary in
between to keep the interest rates low. Banks’
can also think of re-engineering the
microcredit programs to target some non-
poor micro- or meso-entrepreneurs who
generate much needed wage employment
opportunities for the poor and the poorest.
There is no harm in supporting the poorest
first with wage employment before they
become self-employed.
Apart from all this bank has a major role to
play in policy formulation, programme and
project implementation, support and co-
ordination etc. Bank as a larger entity and
having presence at all the levels of supply
chain, can influence the policies and proceed
in such a way so that it is implementable
and also beneficial for the micro-
entrepreneur.
Challenges being faced by bank
Micro-enterprises are influenced more by any
change in the macro environment. They are
so vulnerable that normal business cycle can
also influence them. So care has to be taken
to identify more of growth oriented
micro enterprises than livelihood enterprises.
Livelihood enterprises are more prone to
such risks. Besides they just augment the
household income but cannot give
employment to others.
Those who have some business acumen
take up the growth oriented
microenterprises. But the challenge is to
identify such talents. For this, banks can take
help of the SHG members or village level
organisations. Another challenge is to build
banking products and develop micro
enterprises in such a way that the burden is
on the individual and not on the whole
group. Many a times banks give loans to
SHGs for starting up of microenterprise. This
loan is for the whole group and everybody
is responsible for the profit and loss,
including them who do not know anything
about business and or are not interested.
This increases the non-financial cost and
IBA BULLETIN 11
AUGUST 2005
leads to failure of the business. Instead of
this, the banks should insist on giving loans
to individuals with group guarantee. For
keeping the social security system of SHGs
intact banks can take some extra interest
rate (as decided by the SHG members) which
will be given to the SHG in the event of their
standing as guarantor for any individual of
the group.
For starting up of any business the first
requirement is market research.
Indiscriminate increase in the
microenterprises can lead to glut in the
market thus lowering the price of the
produce. So banks have to look into the
economical and financial viability of the
business before promoting it.
Conclusion
Micro enterprise sector contributes
considerably to economic growth. Limited
access to credit, low risk taking capacity of
the people, poor skill, lack of forward and
backward linkages, demand and supply
mismatch are some of the bottlenecks that
inhibit microenterprise promotion. The
bankers have a major role to play in the
development of microenterprise and
microfinance by combating these
bottlenecks. Microfinance is an emerging
solution to the problems of entrepreneurial
development. The core of microfinance
programmes go beyond mere providing of
credit to deeper issues of how money is
utilised and invested and also other issues
such as business opportunity identification,
rural talent search, business and production
training, establishment of market linkages
for inputs and outputs, policy reform, market
research, etc. Banks can partner with other
agencies that can facilitate above raised
issues. Banks, besides playing the major role,
as Credit Provider will have to act as a
change agent, facilitator for providing
necessary infrastructure and hedging
mechanism to mitigate market risks etc. They
will have to strengthen the supply chain by
building the capacity of all the people
involved in the supply chain to create a win-
win situation for all. Through the
development of microenterprises the
entrepreneurial qualities of people can also
be developed.
References
1. “Microenterprise Development : Not By
Credit Alone”, Asian Development Bank, 1997.
2. Seibel, Dr. Hans Dieter & Harishkumar R. Dave
(2002), “Commercial Aspects Of SHG
Banking In India”, Paper Presented At The
Seminar On SHG-Bank Linkage Programme
At New Delhi.
3. Albu, Mike (2004), “Leveraging Leases for
Small Businesses : a working analysis of
opportunities, with special reference to
situation in Kenya”.
z Jhunjhunwala, Bharat (2005), “Turning SHGs
into sustainable business enterprises”,
Business Line, Page 8, dated July 12, 2005.
z Vincent, Guy, “Sustainable
Microentrepreneurship: The Roles of
Microfinance, Entrepreneurship and
Sustainability in Reducing Poverty in
Developing Countries”.
z Robinson, Marguerite S., 2002, “The
Microfinance Revolution: Sustainable
Finance for the Poor”.
z NABARD, 2003-04, “Progress of SHG – Bank
Linkage in India. ❑

Dear Readers,
U have in hand the August 2005 issue of
revamped ‘avatar’ of IBA Bulletin. Please take a
few minutes from your ‘here and now’ concerns
to let us have your valuable feedback ......... Your
feedback .......... will be highly appreciated .............
It will help us serve U better ........ U r at liberty
to criticize us .......... correct us .......... and of
course even praise us. Needless to say that your
comments are the perfect source of
improvement in its content to make your Bulletin
more interesting and informative. ❑
12 IBA BULLETIN
AUGUST 2005
Experts Views
Channelising
Retail Credit
T.M. Bhasin

During the Introduction attract the corporate and large borrowers where the
past five years, major chunk of credit flows out ensuring constant
The banking industry earns its
revenue to the bank in the shape of interest, with
there has major portion of income from
lesser overheads. However, unfortunately even if a
been interest on advances and
single corporate/large borrowal account becomes
investments. The interest spread
adequate defaulter, there is a sudden jump in the NPAs, thereby
takes care of operational
liquidity in the overheads, technological
affecting the bottom line of the concerned bank.
banking Gradually therefore, the trend has shifted towards
upgradation and provisions
addressing the credit needs of medium and small
system and against NPAs, etc. However, the spread has
borrowers who are in need of finance, not only for
the banks continuously been shrinking over a period of time
their business requirements but also for their own
from around 8% in the early 90s to around 3% now
have, personal needs as that of their employees for vehicle,
in the Indian Banking Industry. Internationally, the
therefore, spread hovers between 1% and 1.5%. With
consumer, housing loans, etc. These retail credit
been devising avenues offer a diversified portfolio to the bank,
globalisation and emerging competition from the
thereby optimizing the risk and maximising the
various private and international players, it is very likely that
return.
schemes to the interest spread will go on shrinking in the times
to come. To augment the income from other sources, Trend towards retail credit
attract the
the banking industry has been looking for new
corporate and ancillary business activities such as CMS,
As per industry estimates, the overall Retail Credit
large disbursements have grown by 30% during the Financial
Bancassurance, Credit/Debit Card, etc. In view of the
Year 2005, as against a growth of 12.6% in the last fiscal.
borrowers fixed mindset of public sector bank employees, it is
The segments-wise break up of these disbursements,
where the taking longer than the required time to encash the
over a period of last three years is as under :
major chunk opportunities available in the ancillary business
and it remains a matter of fact that the “interest (Rupees in crores)
of credit flows income remains a single major source of Loan Category Financial Financial Financial
out ensuring revenue for the banking industry”. Year 2005 Year 2004 Year 2003
constant Home 60,000 47,000 42,000
During the past five years, there has
revenue to the been adequate liquidity in the Auto 29,000 20,000 19,200
bank in the banking system and the banks Commercial 24,000 19,000 13,800
shape of have, therefore, been Personal/Commercial 10,500 10,500 10,200
devising various Two-wheeler 6,500 3,500 3,600
interest, with
schemes to Total 1,30,000 1,00,000 88,800
lesser
overheads.
IBA BULLETIN 13
AUGUST 2005
Home loans account for a whopping 46% of
retail loans. There may be varied reasons e.g.
Rising Property Prices, Higher Income Levels,
single nodal point. As far as the staff aspect
is concerned, the policy, documentation,
processing and appraisal need to be codified
”
Low Interest Rates Regime, continuous in such a way that delays at the appraisal,
availability of Tax Benefits, etc. Nevertheless documentation and sanction level can be
home loans is one sector which gives the obviated. We need to be more
financing banker a security satisfaction, which
With the experience of the banking sector customer centric and
appreciates in due course and thus the
in disbursing retail loans, it is observed that
default in repayment can be recovered by
the marketing, submission of application, computer savvy for
invoking the provisions under Securitisation
appraisal, disbursement and post
& Reconstruction of Financial Assets and augmenting the Retail

”
disbursement follow-up has a set pattern
Enforcement of Security Interest Act, 2002.
of definite and defined set of activities. This Credit Portfolio.
As per Society of Indian Automobile set of defined activities can be translated
Manufacturers, domestic passenger car sales into finite action points in which the
grew by 17.8% to nearly 8.2 lakh units in technology can be deployed, thereby
financial year 2005 against 7 lakh units last helping the bank to reduce the operational
year. The used car sales market is also overheads. The disposal can also be made
estimated at 70 to 90% of new car sales and time bound so as to eliminate probability
the car buying appetite is also going up, in of complaints arising out of delays.
view of easy financing options available from
However, as a first step the concerned Bank
the organised and unorganised financial
must reformulate the entire gambit of retail
sector and also in view of higher disposable
credit schemes under a single umbrella of
income and increased family comfort criteria.
“Retail Schemes”. The existing schemes
In the last two years, auto and two wheeler should be further fine tuned with certain
loans showed higher growth than home changed procedures so that at least
and personal loans. Both in fact accounted one scheme out of the entire
for 70% of overall retail loan growth. Thus bouquet of Retail Schemes
the demand in Retail Segment Loans has meets the requirement and
been tremendous and keeping in view the taste of every customer. In Shri Bhasin is presently General
future potential, various banks have been the present day
launching a number of retail lending competitive scenario,
Manager, Oriental Bank of Commerce,
schemes for which plethora of necessary the customer centric
New Delhi Regional Office. His
guidelines are being issued. “However, it has schemes need to be
been observed that more often than not, developed which qualification is M.Sc. with an MBA
these circulars merely go as a routine means under
instructions and in view of the lack of housing loan (Finance), FMS, LLB and CAIIB. He has
marketing drive, substantial chunk of scheme, there
also done Diploma in Criminology and
business is not mobilised under otherwise could be a dozen
very competitive schemes”. It is felt expedient subsets/types of Forensic Science and Diploma in Office
that all these retail credit schemes should schemes with
be made customer friendly by simplification different tastes and Organisation and procedures.
of procedures and ready availability of entire flavours. These
information/documents required to be schemes may be
submitted by the prospective borrower at a developed for NRIs,

14 IBA BULLETIN
AUGUST 2005
professionals, builders, hospitals, schools,
societies and even for repair and
refurnishing purposes.
It is in this context that banks may consider
setting up a helpline for retail products. The
helpline can be set-up in three ways – (i)
Interactive/Integrated Voice Response
Helpline, (ii) Use of Web Technology & (iii)
Setting up of Retail Marts.
Interactive/Integrated Voice Response
System
This type of response system will need to
be outsourced leading to delegation of an
intensive business process to an outside
service provider who owns, administers and
manages according to the defined set of
matrics. This in turn means delegating back
end functions which are necessary to run a
business but do not form a part of the core
business. It will involve transfer of direct
managerial responsibility but not
accountability to a 3rd party service provider
who performs services previously delivered
by internal staff and management within
agreed service level agreements.
The distinct advantages of this service for
retail lending are as under :
1. In a highly competitive and IT driven
banking industry, the deployment of the
technology and its continuous
upgradation is extremely expensive and
complex activity.
2. The technology needs to be fine-tuned
at regular intervals by deploying latest
tools for which the skilled and
contemporary manpower is required. It
is a major constraint to retain technical
and skilled manpower especially in the
public sector banks.
3. The bank can focus on their core
activities including marketing and
recovery thereby leaving mundane
tasks to specialised vendors who can
handle such activities more efficiently
with lesser cost.
4. As the cost of retention of the employees
in the organisation is becoming a major
expense, the outsourcing would reduce
the operational overheads by ensuring
optimum utilisation of limited manpower.
5. The bank would be transparent to any
technological upgradation or in other
activities thereby reducing their
involvements in such activities.
The Interactive/IVRS can be set up in two ways
• Setting up of Call Centres
• Setting up of Direct Selling Agents
(DSAs)
Call Centres
A Call Centre is the room or rooms where
telemarketers sit at phone banks talking with
customers or prospective customers. There
are two kinds of call centres : (i) Inbound and
(ii) Outbound. An inbound call centre receives
calls as and when a customer calls a toll free
(1-800) number with a question about a retail
credit product. In an outbound call centre,
the telemarketers call the customers or the
prospective customers. Outbound call centres
often use an automatic dialer, a setup in which
a computer dials random phone numbers
from a given file and then transfers any
answered call to an available telemarketer.
Call centres have been aided by a range of
telecommunications and computer
technologies, including automatic call
distribution (ACD), interactive voice response
(IVR), computer telephony integration (CTI),
which allows the action of the computer to
be synchronised with what is happening on
the phone.
Direct Selling Agents (DSAs)
DSAs are appointed to market new business
as per terms and conditions of Retail Credit
Schemes. The DSAs also assess the financial
worthiness and facilitate collection,
compilation and collation of pre-appraisal
documents then the complete information
is processed as per the predefined norms of
the Bank and if the proposal merits sanction,
it is put forth before the Sanctioning
Authority. The entire documentation and
disbursement formalities are completed by
DSAs. The post disbursement follow-up,
timely recovery etc. is also ensured by such
DSAs. The Bank is involved in overall quality
improvement and policy formulation.
Use of Web Technology
At present, the Banks have created many
outlets including the brick and mortar
structure to offer above activities to the
customers. However, the current set up
necessitates large investments in setting up
such infrastructure and also requires
substantial expenses in terms of
maintenance of the infrastructural
overheads, staff etc. on an ongoing basis. As
most of the above activities have clear and
well-defined processes, the technology can
be used to a large extent thereby minimising
the operational overheads.
With a view to minimise these infrastructural
related overheads, the concept of Web
Banking has been picking up during the last
few years in the global markets. In the Web
based Banking concept, the ‘Brick and Mortar’
structure of the Banks gets converted into a
‘Click and Portal’ Banking. The branches are
not required to have a physical
infrastructure in the shape of a building and
instead the Web Based Bank model offers
the concept of the banking transactions
through the Internet or through the
privately hosted websites.
Each web bank sets up a highly secured,
versatile, efficient and customer friendly
IBA BULLETIN 15
AUGUST 2005
Website through which the customers can
either download or fill up the forms online for
various banking applications including for
opening of account or taking any other facility
such as funds transfer, mortgage etc. The
customer can interact and transact their
banking business at their homes/offices or at
any other convenient place by connecting the
Website of that Bank through the Internet.
A highly secured interactive website may
contain the details of such schemes which
interalia include the eligibility criteria,
prescribed documentation and other
formalities, EMI etc. The preliminary
information and the application form can be
downloaded or may be submitted online by
the prospective customers through the well-
articulated navigation screens which would
reduce the frequent visits to the branch by
such customers. It would also reduce the
reaction time in the decision making as the
back end staff can continuously monitor and
do the appraisal thereby conveying a prompt
decision to the customers.
With the well defined processes in place to take
a decision, large sets of such processes which
are required for appraisal of customers can also
be computerised and the decision can be
arrived at, with least human intervention.
For completion of the post disbursal
formalities, the customers may either visit a
branch or a back office which would be
limited in each city thereby ensuring the
central repository of such sensitive
documents.
Based on the agreement between the
customers and the Bank, the post disbursal
follow up can also be computerised by
For Subscription kindly contact the Communication Department, IBA
Tel. : 022-2217 40 40 • Fax : 022-2218 42 22 • tushar@iba.org.in
16 IBA BULLETIN
AUGUST 2005
generating the self-contained timely
reminders and even sending the triggers to
the mobile phones or through e-mail.
Continuous default can be contained and
wherever required the matter can be
personally followed up thereby avoiding the
need for fleet of persons involved in the post
disbursement follow up and recovery process.
Setting up of Retail Marts
As a step to give focussed growth to the
Retail Credit portfolio, the Bank may open
‘Retail Marts’ at prominent locations. These
Marts should be compact and self-contained
offices to deal with marketing, disbursal and
post disbursal process relating to the Retail
Credit Schemes. Such Retail Marts should be
manned by skilled, courteous and efficient
officials and should be supported with latest
technological tools such as Kiosks, E-mail
counters and comprehensive software to
provide quick decisions on the request of
the customers.
It is felt that with highly focussed and well-
equipped Retail Marts, substantial volumes
can be generated for the Retail Credit
Schemes. This would help improving the
bottom line of the Bank and would also give
enough publicity to the Bank.
Steps to increase the retail credit portfolio
within a Bank
● The existing policies and procedures of
the various retail credit schemes should
be made more customer savvy and the
processes should be fine-tuned to reduce
the paper work thereby improving the
reaction time to the customer.
● The identified team should be
IBA Bulletin
comprehensively trained on the
complete suite of the retail credit
products. Special seminars should be
held at all levels so that the message
and intent of the top management of
giving special thrust to retail credit
percolates down at the operating level.
● The helpline policy for retail credit may
be articulated to ensure that repetitive
and mundane activities involved in the
complete cycle of marketing and
managing such retail credits, may be
entertained through call centres. This
would provide round the clock
infrastructure and assistance to the
existing and prospective customers at
their convenience.
● The Corporate Intranet may include
updated circulars on various retail
credit schemes which can be accessed
by the concerned staff through the
click of a mouse. The Intranet may also
include list of Frequently Asked
Questions (FAQs) by the customers so
that experience of a customer of a
particular branch/region may be shared
by all concerned.
● The banks should set up a
comprehensive secured website which
should cater to the requirement of
application form and other relevant
details for various schemes. The
customers may fill the form online
thereby minimising the visits of the
customer to the branch.
In a nutshell, we need to be more customer
centric and computer savvy for augmenting
the Retail Credit Portfolio. ❑
 Y2K38: Problem and a
Possible Way Out
Dr. Ashutosh Saxena

The greatest The Problem Bonds and Polices etc. This problem of insufficient
storage for date variable can cause great errors in
danger with the It is quite possible that in the first
their Books of account and reflect in major disaster.
month of the year 2038 many
year 2038 computers will encounter a date-
Software for, mortgage calculation, vital statistics and
many other applications may need to frequently and
problem is its related bug resulting inaccurate.
reliably examine a century or two forward and
Just as Y2K problems arise from
invisibility. backward.
programmes not allocating enough digits to the year,
Software Y2K38 problems arise from programmes not The problem that results from computing dates into
companies will allocating enough bits to internal time. the year 2038 and beyond in 32-bit operating systems.
Unix and other C (and possibly some JAVA)
probably not The effect of this bug is hard to predict. Some experts
applications represent time as the number of seconds
are of opinion that this bug can cause serious
think of trying out from January 1, 1970. The 32-bit variable (time_t) that
problems on many platforms, especially Unix and
a Year 2038 stores this number overflows in the year 2038 and
Unix-like platforms, because these systems will “run
becomes December 13, 1901. However, even today,
scenario before out of time”. Starting at GMT 03:14:07,Tuesday, January
any date calculations forecasted beyond that time
19, 2038, one may expect to see lots of systems around
doomsday strikes. the world breaking satellites falling out of orbit,
will be erroneous. By the year 2038, the time_t
representation for the current time will be over 2 140
Of course, there massive power outages (like the 2003 North American
000 000 and that is the problem. A modern 32-bit
will be some blackout), hospital life support system failures, phone
computer stores a “signed integer” data type, such as
system interruptions, banking errors, etc. One second
warning ahead of time_t, in 32 bits. The first of these bits is used for the
after this critical second, many of these systems will
positive/negative sign of the integer, while the
time. Scheduling have wildly inaccurate date settings, producing all
remaining 31 bits are used to store the number itself.
kinds of unpredictable consequences. In short, many
software, billing of the awful predictions for the year 2000 are much
The highest number these 31 data bits can store
works out to exactly 2 ,147,483,647. A time_t value of
programmes, more likely to actually occur in the year 2038, consider
this exact number, 2,147,483,647, represents Tuesday,
personal reminder the year 2000 just a dry run. In case if we sit on this
January 19, 2038, at 7 seconds past 3:14 AM Greenwich
issue for another 30 years before addressing it,
calendars and Mean Time. So, at 3:14:07 AM GMT on that fateful day,
consider that reports of temporal echoes of the
every time_t used in a 32-bit C or C++ or JAVA program
other such pieces 2038 problem are already starting to appear in
will reach its upper limit. One second later, on
future date calculations for mortgages and vital
of code that set statistics.
19-January-2038 at 3:14:08 AM GMT, disaster strikes.
Table 1. gives more clarity on the exact time_t
dates in the near
Most of the Banks, Financial Institutions representations.
future will fail as and Insurance companies servers are
What causes it?
soon as one of running on Unix or Unix like OS, will
need to react now, as many Unix and Unix-like operating systems do not
their target dates product and services offered calculate time in the Gregorian calendar, they simply
exceeds 19-Jan- by them are for long count time in seconds since their arbitrary “birthday”,
2038, assuming a duration such as GMT 00:00:00, Thursday, January 1, 1970. The industry-
L o a n s , wide practice is to use a 32-bit variable for this number
time_t is used to (32-bit signed time_t). Imagine an odometer with 32
store them.
IBA BULLETIN 17
AUGUST 2005
wheels, each marked to count from 0 and 1
(for base-2 counting), with the end wheel
used to indicate a positive or negative
integer. The largest possible value for this
integer is 2**31-1 = 2,147,483,647 (over two
billion). 2,147,483,647 seconds after Unix’s
birthday corresponds to GMT 03:14:07,
Tuesday, January 19, 2038. One second later,
many Unix systems will revert to their birth
date (like an odometer rollover from 999999
to 000000). Because the end bit indicating
positive/negative integer may flip over,
systems may revert the date to 20:45:52,
Friday, December 13, 1901 (which
corresponds to GMT 00:00:00 Thursday,
January 1, 1970 minus 2**31 seconds).
Table 1. Exact time_t representations of Date
and Time in signed 32-bits datatype.
may not be possible to upgrade many of
these systems. Clock circuit hardware that
has adopted the Unix time convention may
also be affected if 32-bit registers are used.
While 32-bit CPUs may be obsolete in
The Y2K38 problem
desktop computers and servers by 2038, they
may still exist in microcontrollers and involves the basic
embedded circuits. Embedded functions
present a serious maintenance problem for system time-keeping
all rollover issues like the year 2038 problem,
since the package part number and other from which most other
markings usually give no indication of the
device’s internal function. For instance, the
Z80 processor was available till late 2000 as
time and date
an Embedded Function within
programmable devices. Such embedded
information is derived,
functions present a serious maintenance
problem for Y2K38 and similar rollover issues, while the Y2K problem,
since the package part number and other
mostly involves

”
Date & time time_t markings typically give no indication of the
re- internal function.
presentation
This problem is somewhat easier to fix than application programs.
1-Jan-1970, 12:00:00 AM GMT 0 the Y2K problem on mainframes, fortunately.
1-Jan-1970, 12:00:01 AM GMT 1 Well-written programmes can simply be
recompiled with a new version of the library
1-Jan-1970, 12:01:00 AM GMT 60
that uses, for example, 8-byte values for the
1-Jan-1970, 01:00:00 AM GMT 3 600 storage format. This is possible because the
2-Jan-1970, 12:00:00 AM GMT 86 400 library encapsulates the whole time activity
with its own time types and functions.
3-Jan-1970, 12:00:00 AM GMT 172 800
Some Unix vendors have already started to
1-Feb-1970, 12:00:00 AM GMT 2 678 400
use a 64-bit signed time_t in their operating
1-Mar-1970, 12:00:00 AM GMT 5 097 600 systems to count the number of seconds
1-Jan-1971, 12:00:00 AM GMT 31 536 000
since GMT 00:00:00, Thursday, January
1, 1970. Programmes or databases
1-Jan-1972, 12:00:00 AM GMT 63 072 000 with a fixed field width should
1-Jan-2003, 12:00:00 AM GMT 1 041 379 200 probably allocate at least 48
bits to storing time values.
1-Jan-2038, 12:00:00 AM GMT 2 145 916 800 64-bit Unix time would be
19-Jan-2038, 03:14:07 AM GMT 2 147 483 647 safe for the indefinite
future, as this variable
Which operating systems and platforms are would not overflow
affected by it? until 2**63 or 9,223, Dr. Saxena is Faculty, Institute for
So far, the few operating systems are not 372, 036, 854, 775, 808
found susceptible to the 2038 bug include (over nine
very new versions of Unix and Linux ported quintillion)
to 64-bit platforms, one may refer to the seconds after the Development and Research in
online list at the site in [1]. A large number of beginning of the
machines, platforms and applications could Unix epoch -
be affected by the 2038 problem. Most of corresponding to Banking Technology, Hyderabad.
these will, hopefully get decommissioned GMT 15:30:08,
before the critical date. However, it is possible Sunday, December
that some machines going into service now, 4, 292,277,026,596.
or legacy systems, which have never been This is a rather
upgraded due to, budget constrains, may artificial and arbitrary
still be operating in 2038. These may include date, considering that it
process control computers, space probe is several times the
computers, embedded systems in traffic light average lifespan of a sun
controllers, navigation systems, etc. and it like our solar system’s, the

18 IBA BULLETIN
AUGUST 2005
very same celestial body by which we
measure time. The sun is estimated at present
to be about four and a half billion years old,
and it may last another five billion years
before running out of hydrogen and turning
into a white dwarf star. Thus a
Perl
$ENV{‘TZ’} = “GMT”;
for ($clock = 2147483641; $clock <
2147483651; $clock++) print ctime($clock);
The output of this script on GNU/Linux (kernel 2.4.20-8) for both Perl and C:
Tue Jan 19 03:14:01 2038
Tue Jan 19 03:14:02 2038
Tue Jan 19 03:14:03 2038
Tue Jan 19 03:14:04 2038
Tue Jan 19 03:14:05 2038
Tue Jan 19 03:14:06 2038
Tue Jan 19 03:14:07 2038
Fri Dec 13 20:45:52 1901
Fri Dec 13 20:45:53 1901
Fri Dec 13 20:45:54 1901
These are incorrect outputs; check whether
the date and time outputs come correct after
the critical event second in your machine?
Further a checklist of suggestions
1. An organisation called The Open Group
(formerly X/Open), which maintains the
Unix specification and trademark, has a
number of programming
recommendations [2] that should be
followed by developers to deal with the
year 2038 and other problematic dates.
2. If you are working with Open Source code,
a free library at [3] may be a useful reference
for patching existing code for high-
accuracy long-term time calculation
3. Also, see an article [4] regarding Solutions
to the Year 2000 Problem. Though fixing
the Y2K bug may not directly help in
fixing the Y2K38 bug but many of the
suggestions from this article can be
applied to the 2038 problem too.
How about making time_t unsigned in
32-bit software?
One of the quick-fixes that has been
suggested for existing 32-bit software is to
re-define time_t as an unsigned integer
instead of a signed integer. It sounds like a
good idea at first. We already know that most
of the standard time_t handling functions
do not accept negative time_t values anyway,
straightforward approach is switching to can do to this problem. A quick check with
64-bit computing and solves the problem. the following Perl and C script may help
determine if your computers will have
What can one do about it?
problems (this requires Perl and/or C to be
If you are a programmer or a systems installed on your system):
integrator who needs to know what you
C
#include <stdio.h>
#include <time.h>
int main()
{ time_t i;
i=2147483641;for(;i<2147483651;i++)
printf(“%s”,ctime(&i));
}
Tue Jan 19 08:44:01 2038
Tue Jan 19 08:44:02 2038
Tue Jan 19 08:44:03 2038
Tue Jan 19 08:44:04 2038
Tue Jan 19 08:44:05 2038
Tue Jan 19 08:44:06 2038
Tue Jan 19 08:44:07 2038
Sat Dec 14 02:39:12 1901
Sat Dec 14 02:39:13 1901
Sat Dec 14 02:39:14 1901
so why not just make time_t into a data type differences not being computed properly.
that only represents positive numbers?
Not very obvious
An unsigned integer does not have to waste
The greatest danger with the Year 2038
one of its bits to store the plus/minus sign
Problem is its invisibility. The more-famous
for the number it represents. This doubles
Year 2000 is a big, it only takes a few seconds
the range of numbers it can store. Whereas
of thought, even for a computer-illiterate
a signed 32-bit integer can only go up to 2
147 483 647, an unsigned 32-bit integer can person, to imagine what might happen
go all the way up to 4 294 967 295. A time_t when 1999 turns into 2000. Also this Bug
of this magnitude could represent any date received large amount of media attention.
and time from 12:00:00 AM 1-Jan-1970 all But January 19, 2038 is not nearly as obvious.
the way out to 6:28:15 AM 7-Feb-2106, surely Software companies will probably not think
giving us more than enough years for of trying out a Year 2038 scenario before
software to dominate the planet. doomsday strikes. Of course, there will be
some warning ahead of time. Scheduling
Well, there is a problem. time_t is not just software, billing programmes, personal
used to store absolute dates and times. It is reminder calendars, and other such pieces
also used, in many applications, to store of code that set dates in the near future will
differences between two date/time values, i.e. fail as soon as one of their target dates
to answer the question of “how much time is exceeds 19-Jan-2038, assuming a time_t is
there between date A and date B?”. In these used to store them.
cases, we do need time_t to allow negative
values. It is entirely possible that date B comes Worse, the parts of their software they had
before date A. Blindly changing time_t to an to fix for Year 2000 Compliance will be
unsigned integer will, in these parts of a completely different from the parts of their
programme, make the code unusable. programs that will fail on 19-Jan-2038, so
fixing one problem will not fix the other.
Changing time_t to an unsigned integer Most programmes written in the C or other
would, in most programmes, be robbing One high level programming language are
to pay Other. You would be fixing one set of relatively immune to the Y2K problem, but
bugs (the Year 2038 Problem) only to suffer instead from the Year 2038 problem.
introduce a whole new set as the time This problem arises because most C
IBA BULLETIN 19
AUGUST 2005
programmes use a library of routines called
the standard time library (time.h). This library
establishes a standard 4-byte format for the
storage of time values and also provides a
number of functions for converting,
displaying and calculating time values.
Some Contrast Views
One school of thought feels that this
impending disaster will NOT strike too many
people and consider as non-problem. They
reason that, by the time 2038 rolls around,
most programmes will be running on 64-bit
or even 128-bit computers. In a 64-bit
programmes, a time_t could represent any
date and time in the future out to 292 000
000 000 A.D., which is about several times
the currently estimated age of the universe.
The problem with this kind of optimism is
the same root problem behind most of the
Year 2000 concerns that plagued the
software industry in previous years : Legacy
Code. Developing a new piece of software is
an expensive and time-consuming process.
It is much easier to take an existing
programmes that we know works, and code
one or two new features into it, than to throw
the earlier program out and write a new one
from scratch. This process of enhancing and
maintaining “legacy” source code can go on
for years, or even decades. The MS-DOS layer,
still at the heart of Microsoft’s Windows 98
and Windows ME was first written in 1981.
Much of the financial software hit by the
various Year 2000 bugs had also been used
and maintained since the 1970s, when the
year 2000 was still thought of as more of a
science fiction movie title than an actual
impending future. Surely, if this software had
been written in the 1990s its Year 2000
Compliance would have been crucial to its
authors, and it would have been designed
with the year 2000 in mind.
One may note that computer designers can
no longer afford to make a “clean break” with
the computer architectures of the past. No
one wants to buy a new kind of PC if it does
not run all their old PC’s programmes. So, just
as the new generation of Microsoft Windows
operating systems has to be able to run the
old 16-bit programmes written for Windows
3 or MS-DOS, similarly any new PC architecture
will have to be able to run existing 32-bit
programs in some kind of “backward
compatibility” mode. Even if every PC in the
year 2038 has a 64-bit CPU, there will be a lot
of older 32-bit programs running on them.
The other school of thought feels that the
Y2K38 threat is more likely to result in aircraft
falling from the sky, glitches in life-support
systems, and nuclear power plant meltdown
than the Y2K threat, which is more likely to
disrupt inventory control, credit card payments,
pension plans etc. The reason for this is that the
Y2K38 problem involves the basic system time-
keeping from which most other time and date
information is derived, while the Y2K problem,
mostly involves application programs.
Well whatever may be the thoughts we must
do our homework and keep ourselves
update properly in order to run our system
accurately in present for any future dates.
Acknowledgements
The author acknowledges Shri R. Gandhi, In-
charge Director, IDRBT for initiation and
motivation and the Computing and Internet
community working in this area.
References
1. http://www.deepsky.com/~merovech/
outputs.html
2. http://www.rdg.opengroup.org/
public/tech/base/year2000.html
3. http://cr.yp.to/libtai.html
4. http://www.deepsky.com/~merovech/
millennium.html ❑

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20 IBA BULLETIN
AUGUST 2005
 Banking Cash
Transcation Tax - A New step in
Indian Budget P.K. Barman

BCTT is leviable Introduction mode on any single day from an account (other than a
on a banking Our Hon’ble Finance Minister
savings bank account) maintained with any scheduled
transaction, being Shri P. Chidambaram has always
bank, exceeding –
withdrawal of Cash shown the new path of revenue (i) Rs. 25,000/- in case such withdrawal is from the
by whatever mode collection, keeping in mind to account maintained by any individual or Hindu
on any single day unearth black money and Undivided Family (HUF);
from an account
(other than a (ii) Rs. 1,00,000/- in case such withdrawal is from
bringing it to the main stream of economy through
savings bank the account maintained by a person other than
reformation. In this Union Budget 2005-06, the
account) any individual or HUF.
Hon’ble Finance Minister has introduced new
maintained with schemes to unearth black money and assets. He was However such banking transaction tax is leviable
any scheduled concerned about large cash transactions, especially from the account holder whose cash is withdrawn
bank, exceeding – withdrawal of cash which become part of black from any scheduled bank.
● Rs. 25,000/- in economy. The rate of such tax is 0.10% of the value of every
case such Therefore, two anti tax-evasion measures are such taxable banking transaction.
withdrawal is suggested in his budget speech. Firstly, Banking Cash The value of taxable banking transaction shall be
from the Transaction Tax and secondly, reporting to the the amount of cash withdrawn.
account Government, all deposits which are exempt from TDS
maintained by on interest by banks.
As for example Rs. 26,000/- is drawn in cash in a
any individual single day from current account of M/s. X Enterprise
or Hindu Meaning & Applicability (a proprietorship business of Mr. X) or Rs. 1,05,000/- is
Undivided The Banking Cash Transaction Tax (BCTT) means drawn in cash in a single day from Cash Credit
Family (HUF); Tax leviable on the taxable banking Account of M/s. XYZ. Co. Ltd., from any scheduled
transactions. bank, then Rs. 26/- or Rs.105/- shall be debited by the
● Rs. 1,00,000/-
scheduled bank respectively in the current account
in case such Taxable Banking Transaction (TBT) is
of M/s. X Enterprise or Cash Credit account of
withdrawal is described below :
M/s. XYZ Co. Ltd. as BCTT.
from the
A transaction, being
account A transaction, being receipt of cash from any
withdrawal of Cash
maintained by scheduled bank on any single day on encashment
by whatever
a person other of one or more term deposits, whether on maturity
than any or otherwise, from that bank exceeding –
individual or
IBA BULLETIN 21
HUF. AUGUST 2005
(i) Rs. 25,000/-, in case such term deposit scheduled bank to the credit of the Central

‘‘
or deposits are in the name of any Government by the 15th day of the month
individual or HUF; immediately following the said calendar BCTT is introduced in
(ii) Rs. 1,00,000/-, in case such term deposit
month. Any scheduled bank, who fails to collect the budget to prevent
BCTT, shall, not withstanding, such failure, be
or deposits are by any person other money laundering, tax
liable to pay the tax to the credit of the Central
than any individual or HUF.
Government within specified time. evasion and black
However such banking transactions tax is
As per provision of the Banking Cash
money generation.The
payable by the persons who receives the
cash on encashment of term deposit(s). The
Transaction Tax Rules, 2005 main object is ‘not to
rate of such tax is also 0.10% of the value of a) every branch of a scheduled bank shall tax but to track’. The
every taxable banking transaction. Here the keep and maintain in Form No.1 the intension is great but
value of taxable banking transaction shall particulars of taxable banking
application should not
be the amount of cash received on transactions entered into in that branch;
encashment of term deposit(s). However no
be compelled to bear

”
b) every scheduled bank which is required
banking cash transaction tax shall be payable
to collect and pay BCTT in respect of all
the cost by non-
if the amount of the term deposit(s) are
its branches, pay the amount of such targeted group.
credited to any account with the bank.
tax to the credit of the Central
As for example, Rs. X is the maturity value of Government by remitting it into any
a fixed deposit in a scheduled bank and the branch of the Reserve Bank of India or
depositor or the nominee is eligible to State Bank of India or any authorised
encash the FD. In such a case, Rs. Y= bank accompanied by a BCTT Challan.
(0.10/100.10 * Rs.X) shall be charged on the
Furnishing of monthly BCTT Statement to
depositor and Rs. (X-Y) should be paid in
the Income Tax Authority
cash by the scheduled bank
Every scheduled bank shall furnish a
Here ‘scheduled bank’ means (i) State Bank
statement of taxable banking
of India and it’s subsidiary banks, (ii) banks
transactions in respect of
constituted under the Banking Companies
which it is required to
(Acquisition and Transfer of Undertakings)
collect tax during a Shri Barman, M.Com., F.C.A. is
Act, 1970 or the Banking Companies
month, in Form No. 2 to
(Acquisition and Transfer of Undertakings) founder Partner of M/s. P. K. Barman
the income tax
Act, 1980, (iii) any other bank included in the
authority specified & Co. (Chartered Accountants),
Second Schedule of the Reserve Bank of India
in this behalf by the
Act, 1934. Jamshedpur. He is concurrent
Board on or before
However BCTT is applicable to whole of India the expiry of the
auditor of several Banks.
except Jammu & Kashmir with effect from m o n t h
01st June,2005. immediately
following the said
Collection, Deposit and Recovery
month on a
Every scheduled bank shall collect the BCTT computer media, in
from every person who enters into a TBT with accordance with the
that bank. The BCTT collected during any following :
calendar month shall be paid by every

22 IBA BULLETIN
AUGUST 2005
i) the computer media conforms to the
following specifications:-
a) CD ROM of 650 MB capacity or
higher capacity; or
b) 4mm 2GB/4GB (90M/120M) DAT
Cartridge; or
c) Digital Video Disc
ii) if the data relating to the schedules
is copied using data compression or
backup software utility, the
corresponding software utility or
procedure for its decompression or
restoration shall also be furnished;
iii) the statement shall be accompanied
by a certificate regarding clean and
virus free data.
Submission of Annual Return
Every scheduled bank (i.e., assessee) shall
submit annual return in Form No. 3 in
computer media, to the Assessing Officer or
any other authority or agency authorised
by the Central Board of Direct Taxes (CBDT)
within 31st July immediately following the
financial year. The particulars required to be
furnished in the Schedules A & B to Form
No. 3 shall be furnished on a computer
media, in accordance with the following :
i) the computer media conforms to the
following specifications :
a) CD ROM of 650 MB capacity or
higher capacity; or
b) 4mm 2GB/ 4GB (90M/ 120M) DAT
Cartridge; or
c) Digital Video Disc;
ii) if the data relating to the schedules is
copied using data compression or
backup software utility,
corresponding software utility or
procedure for its decompression or
restoration shall also be furnished;
iii) the statement shall be accompanied
by a certificate regarding clean and
virus free data.
Such Annual Return shall be signed and
verified
i) in case of a scheduled bank, being a
company, by the managing director or
a director thereof:
ii) in case of a scheduled bank, not being
a company by the principal officer
thereof.
Where any assessee fails to furnish the above
Return within the prescribed time, the
Assessing Officer may issue a notice to such
assessee to furnish return within 30 days
from the date of service of the notice.
Any assessee who fails to furnish the return
within the prescribed/allowed time or having
furnished a return but discovers any
omission or wrong statement therein, may
furnish a return or a revised return, as the
case may be, at any time before the
assessment is made.
Assessment and Rectification of Mistakes
The Assessing Officer is empowered to make
assessment and demand to produce
accounts or documents or evidence, as he
requires for the purpose of such assessment.
The Assessing Officer after considering such
accounts, documents or other evidences and
any other relevant material, shall, by an order
in writing assess the BCTT payable or
refundable. Such assessment shall be made
within expiry of 2 years from the end of the
relevant financial year. Every assessee, in case
any amount is refunded to it on assessment,
shall, within 30 days from the date of receipt
of such amount, refunds to the concerned
the
person from whom such amount was
collected.
The Assessing Officer may amend any order
passed by him to rectify any mistake
apparent from record, within 1 year, from
the end of the financial year in which the
order was passed. Any amendment which
has the effect of enhancing an assessment
or reducing refund or otherwise increasing
the liability of the assessee, shall be made
only after giving the assessee a reasonable
opportunity of being heard.
Levy of Interest and Penalty
Every assessee who fails to credit the BCTT
to the account of Central Government within
15th day of the month immediately
following said calendar month, shall pay
simple interest @ 1% of such tax for every
month or part of a month by which such
credit of the tax or any part thereof is
delayed.
An assessee who fails to collect the whole or
any part of the BCTT, shall be liabile to pay by
way of penalty, a sum equal to the amount of
BCTT that it fails to collect in addition to
paying the tax and interest on it.
Any assessee who having collected the BCTT,
fails to pay such tax to the Credit of the
Central Government by the 15th day of the
month immediately following the said
calendar month, shall be liable to pay by
way of penalty Rs.1,000/- for every day
during which the failure continues in
addition to paying the tax and interest on it.
However such penalty shall not exceed the
amount of BCTT that it fails to pay.
If an assessee fails to furnish annual return
in due time or within time allowed by
Assessing Officer through any notice, shall
be liable to pay, by way of penalty, Rs.100/-
for every day during which the failure
continues.
If the Assessing Officer in the course of
proceedings relating to BCTT satisfied that
any person has failed to comply with a notice,
IBA BULLETIN 23
AUGUST 2005
he may direct to such person to pay, by way
of penalty in addition to any BCTT and
interest, if any, payable by him, Rs.10,000/- for
each such failure.
No penalty shall be imposed under any of
the above situation, if the assessee proved
that there was reasonable cause for the
failure. No order imposing a penalty shall
be made unless the assessee has been given
a reasonable opportunity of being heard.
Where any tax, interest or penalty is payable
in consequence of any order, the Assessing
Officer shall serve upon the assessee a notice
of demand in Form No. 4 specifying the sum
payable.
Appeals
Any assessee aggrieved by any assessment
order, may appeal to the Commissioner of
Income Tax (Appeals) within 30 days from
the date of receipt of the order of the
Assessing Officer. Every appeal shall be made
in Form No. 5 describing the grounds of
appeal and the form of verification
appended thereto relating to an assessee.
Form No. 5 shall be signed and verified by
the person who is authorised to sign the
return of taxable banking transaction. Also
appeal filed to the C.I.T.(Appeals) by any
assessee shall be accompanied by a fee of
Rs. 1,000/-. Any assessee aggrieved by an
order passed by C.I.T. (Appeals) may appeal
to the Appellate Tribunal against such order.
Also the Commissioner of Income Tax may,
if he objects to any order passed by the
C.I.T.(Appeals), direct the Assessing Officer to
appeal to the Appellate Tribunal against
www.iba.org.in
24 IBA BULLETIN
AUGUST 2005
such order. Every such appeal to Appellate
Tribunal shall be filed within 60 days from
the date of receipt of the order by the
assessee, or by the C.I.T as the case may be.
Every such appeal shall be in Form No. 6
describing the grounds of appeal and the
form of verification appended thereto
relating to an assessee. Form No. 6 shall be
signed and verified by the person who is
authorised to sign the return of taxable
banking transaction. Also appeal filed to the
Appellate Tribunal by any assessee shall be
accompanied by a fee of Rs. 1,000/-.
Prosecution
If a person makes a statement in any
verification or delivers an account or
statement, which is false, which he either
knows or believes to be false or does not
believe to be true, he shall be punishable
with imprisonment for a term which extend
to 3 years and with fine. Notwithstanding
anything contained in the Code of Criminal
Procedure, 1973, the above offence shall be
deemed to be non-cognizable within the
meaning of that Code. A person shall not be
proceeded against for any offence under
BCTT except with the previous sanction of
the Chief Commissioner of Income Tax.
Deduction is respect of BCTT paid by the Tax
payer
Any amount paid as BCTT by a tax payer will
be allowed as a deduction under section
36(1)(xiii) while computing his business or
professional income w.e.f. assessment year
2006-07. It is subject to note that BCTT paid
by a person having no business or
professional income, cannot claim benefit
of this deduction.
Application of other Acts or Rule(s)
Where words and expressions, provisions
used but not defined but defined in the
Negotiable Instruments Act, 1881, the Reserve
Bank of India Act,1934, the Banking
Regulation Act, 1949, the Income Tax Act, 1961
or the rules and regulations made thereunder
shall have the meaning respectively assigned
to them in those Acts or the rules or the
regulations in relation to BCTT.
Conclusion
BCTT is introduced in the budget to prevent
money laundering, tax evasion and black
money generation. The main object is ‘not
to tax but to track’. The intension is great
but application should not be compelled
to bear the cost by non-targeted group.
This system may affect those who are
genuine tax payers and routing all
transactions through scheduled banks only
and specially have no income from
business. It is accepted fact that those who
evade tax do not carry out transaction
through scheduled banks. They neither
deposit, nor withdraw money from
scheduled banks.
On the other side, honest tax payers deposit
their entire receipts by way of sale proceeds of
business, rental and other incomes in the bank
and withdraw cash from bank for payment of
wages, salaries and other expenditures specially
by SSI or tiny units or small traders in rural and
semi urban areas of India. ❑
 Balancing Quality and
Quantity in SHGs in India
R. Devaprakash

Micro finance has come of ages in product since the last decade. However the spread
The leaps and India and especially in the last and success of the program needs to spill over
three to four years there has been uniformly across the country.
bounds in terms an exponential growth in micro
The leaps and bounds in terms of growth of SHGs
finance development. It is said
of growth of SHGs have brought in attendant risks of ensuring quality
that India brims with Self Help
in SHGs. There are also many not-so-serious players
Groups (SHGs) and over 91% of
who for the heck of getting the kick of SHG based
have brought in the Indian micro finance is
approach, have come to adapt SHG based approach
through the SHG based linkage
without being convinced of the seriousness of the
attendant risks of banking leaving the rest to the MFI based Grameen
SHG business. The fact that for many of the
type of lending or direct lending methodology.
Government programs, SHGs have become a format
ensuring quality Anecdotal evidence suggests that there are over 26.9
to deliver the services though have caused some
million clients covered by micro finance, of which
aberrations in quality and standards, but fairly good
in SHGs. There are over 24.25 million clients are covered by SHG based
number of Government programs like Mahalir
mainstream methodology. State-wise compilation of
Thittam of Tamil Nadu, Mission Shakti of Orissa, Velugu
also many not-so- SHG census put the total SHGs count at over 26
of Andhra Pradesh, Kudumbashree of Kerala to name
million and out of which over 17.5 million have been
a few, have been virtually anchoring the SHG
serious players credit linked (1618476 million SHGs as credit linked
movement in the concerned states setting new
has been reported as of March 2005). While 65% of
standards and ensuring best practices on SHGs which
who for the heck SHGs (roughly over 17 million SHGs) are densely
remains largely appreciated and complements to the
located in the four southern states, leaving the
larger efforts of the other stake holders in the sector.
of getting the kick remaining SHGs sparsely sprinkled across the rest of
The target-based approach both for formation of
the states in India. There have been deliberate
SHGs and credit linkage has been worrying factor
of SHG based interventions in the last two years by major players
which had its own negative implications on the
in the sector including NABARD to address to this
quality of SHGs. In the game of ensuring larger
approach, have inequity in distribution of SHGs. An estimate put the
outreach, the challenge remains for large
micro finance NGOs at over 10000 out of over a
Government programs promoted by key anchoring
come to adapt lakh of NGOs in India. There are over 800 MFIs,
agencies like Women and Child Development
over 4000 SHG federations and the total credit
Department and Panchayat and Rural Development.
SHG based outlay by all the micro finance entities is put at
Department (which happens to take a lions share in
around Rs. 10000 crores ( Rs. 6898 crores alone
terms of number of SHGs promoted) of the
through SHG based lending). Of all the rural
approach without Government to balance the quality of SHGs while
credit products in India, there is no other
broadcasting of SHGs over wider area.
product, which has invaded the rural
being convinced credit inventory of banks than SHG SHG Rating
linkage banking which has
of the seriousness emerged as the most Rating of SHGs assumes importance as it is not only
successful, viable, a pre-appraisal tool but as well a self monitoring
of the SHG sustainable and yardstick for the SHGs themselves for self evaluation
accepted which is a continuous process. Quality assessment of
business.
Contd. on Page 35...

IBA BULLETIN 25
AUGUST 2005
Highlight
Performance Highlights of
Public Sector Banks 2004-05
I
n this note we analyse the
performance of public sector banks
(except Punjab and Sind Bank) on
important parameters such as Total Assets,
Deposits, Investments, Advances, Non-
Performing Assets (Gross and Net), Interest
Income, Other Income, Total Income,
Interest Expenditure, Operating
Expenditure,Total Expenditure, Operating
Profit, Provisions and Contingencies and
Net Profit and important ratios like Credit-
Deposit Ratio, Investment-Deposit Ratio,
Spread to Total Assets, Operating expenses
to Total Expenses, Return on Assets, Capital
Adequacy Ratio, NPA ratio and productivity
ratios. Significant features of the operations
of banks on each of the above-mentioned
parameters are given below :
Total Assets – As on 31st March, 2005,total
assets of the public sector banks increased
to Rs. 17,58,207 crores from Rs. 14,71,428
crores of the previous financial year
recording a growth of 19.5 per cent during
2005 as against 14.4 per cent of the previous
year. Higher growth in total assets is due
largely to inclusion of total assets of IDBI
Ltd. in 2005. Excluding IDBI Ltd., the growth
in total assets was marginally lower at 14.0
per cent during 2004-05. 10 banks recorded
higher growth than the group average.
Oriental Bank of Commerce tops the list
with a growth of 31.9 per cent, closely
followed by the Allahabad Bank (30.1 per
cent) and State Bank of Indore (29.5 per
cent). Bank of Maharashtra recorded lowest
growth in assets with 2.1 per cent during
2004-05.
Deposits – Total deposits mobilised by the
Public Sector Banks increased from
Rs. 12,26,838 crores as on 31st March,
2004 to Rs. 14,21,672 crores as on 31st
March, 2005. Deposits showed a subdued
26 IBA BULLETIN
AUGUST 2005
growth during 2004-05. Total deposits
recorded a growth of 15.9 per cent during
2004-05, which is higher than 13.7 per cent
of the previous year. Excluding IDBI Ltd.,
the total growth was only 14.6 per cent
during 2004-05. 15 banks recorded higher
growth than the group average. Oriental
Bank of Commerce recorded the highest
growth in deposits with a growth of 34.1
per cent, closely followed by State Bank of
Indore with 32.5 per cent during 2004-05.
Indian Overseas Bank recorded the lowest
growth in deposits with 6.7 per cent
during 2004-05. SBI and Associates as a
group recorded a growth of 16.8 per cent
as compared to nationalised banks’ group
with a growth of 13.5 per cent during
2004-05.
Investments – Banks’ investments
showed a lower growth of 8.5 per cent
during 2004-05 as against the growth of
14.7 per cent during 2003-04. In absolute
terms, the total investments increased
from Rs. 6,25,678 crores as at March 31st,
2004 to Rs. 6,78,637 crores as on 31st
March, 2005. Excluding IDBI Ltd., the
growth in investment was only 4.5 per cent
during 2004-05. Seven Banks recorded a
higher growth than the group average.
Allahabad Bank recorded the highest
growth in Investments with 22.1 per cent,
closely followed by Punjab National Bank
with 20.3 per cent during 2004-05.
Nationalised Banks as a group showed a
growth of 4.0 per cent during 2004-05,
which is much lower than the previous
year’s growth of 17.3 per cent during 2003-
04. SBI group as a whole recorded a growth
of 5.2 per cent during 2004-05 as against
10.9 per cent recorded in the previous year.
Advances - The year 2004-05 witnessed
higher credit off take by the commercial
banks. This was reflected in the total
disbursement made by the PSBs during
2004-05. Total advances of the banks
jumped up from Rs. 6,32,740 crores as on
31st March, 2004 to Rs. 8,48,340 crores as
on 31st March, 2005 showing an
impressive growth of 34.1 per cent as
against the previous year’s growth of 15.2
per cent. Excluding the IDBI Bank Ltd., the
growth was 26.9 per cent during 2004-05.
Eight banks recorded higher growth than
the group average. United Bank of India
showed the maximum growth in advances
with 43.02 per cent closely followed by
State Bank of Indore with 41.1 per cent
and State Bank of Bikaner & Jaipur with
39.7 per cent during 2004-05. Nationalised
banks as a group recorded a growth of 25.7
per cent during 2004-05 as against the
previous year’s growth of 14.5 per cent. As
for SBI Group the growth was 29.1 per cent
during 2004-05 as against 16.6 per cent
recorded in the previous year.
Non-performing Assets (NPA) – During
2004-05, both gross and net non-
performing assets showed decline in
absolute terms and as percentage of
advances inspite of the reduction in the
total provisions towards non-performing
assets as compared to the previous year.
Persistent recovery set up coupled with
close monitoring of the assets could be
sighted as reasons for reduction in non-
performing assets. Gross NPA of the Public
Sector Banks decreased from Rs. 51,537
crores as on 31st March, 2004 to Rs. 47,596
crores as on 31st March, 2005 showing a
declined growth of (-) 7.6 per cent. Net
NPA declined from Rs. 18,860 crores as on
31st March, 2004 to Rs. 16,983 crores as
on 31st March, 2005 recording a declined
growth of (-) 10.0 per cent. Six banks
namely Bank of India, Bank of Maharashtra,
Oriental Bank of Commerce, Vijaya Bank,
State Bank of Indore and State Bank of
Patiala recorded higher growth in Gross
NPA during 2004-05 as compared to
previous year. In the case of Net NPA, nine
banks recorded higher growth in net NPA
than the previous year. SBI Group recorded
higher net NPA than the previous year.
Income – Total Income of the Public Sector
Banks recorded a growth of 3.8 per cent
during 2004-05 as compared to 7.2 per
cent of the previous year. Excluding IDBI
Ltd. the growth was only 1.4 per cent during
2004-05. Growth in income in PSBs was
due largely to higher contribution from
interest income than the fee based
income. Non-interest income, which was
showing a higher growth during the last
three years, has recorded a declined
growth during 2004-05.This could be due
to lower treasury earnings during 2004-
05. Interest income of the banks increased
from Rs. 1,09,572 crores during 2003-04
to Rs. 1,19,098 crores during 2004-05
recording a growth of 8.7 per cent as
against 2.10 per cent during 2003-04. On
the other hand, the other income of the
banks recorded a declined growth of (-)
15.5 per cent during 2004-05 as against
the previous year’s growth of 32.3 per cent.
Interestly, the share of fee income in the
total income declined to 16.6 per cent
during 2004-05 as against 20.4 per cent of
the previous year. Ten banks recorded
higher growth in income than the group
average. Allahabad Bank tops the list with
a growth of 11.9 per cent, closely followed
by State Bank of Mysore with 11.2 per cent
during 2004-05.
Expenditure – Total expenditure
(excluding provisions and contingencies)
of the banks increased from Rs. 98,127
crores during 2003-04 to Rs. 1,04,038
crores during 2004-05 showing a growth
of 6.0 per cent as against previous year’s
lower growth of (-) 0.6 per cent. Excluding
IDBI Ltd., the growth in total expenditure
was 3.0 per cent during 2004-05. Interest
expenditure recorded a higher growth of
3.5 per cent during 2004-05 as against the
previous year’s growth of (-) 5.9 per cent.
Operating expenditure, on the other hand,
recorded a lower growth of 11.1 per cent
during 2004-05 as compared to 11.9 per
cent during 2003-04. Nationalised Banks
and SBI Group recorded lower growth in
operational expenditure during 2004-05.
14 banks recorded higher growth in total
expenditure than the group average
during 2004-05. Allahabad Bank (-2.9 per
cent), Indian Bank (-13.9 per cent) and
State Bank of Saurashtra (- 6.5 per cent)
were the only three banks, which recorded
a decline in operating expenses than the
previous year.
Profit – The total operating profit of the
PSBs declined from Rs. 39,536 crores
during 2003-04 to Rs. 38,799 crores during
2004-05 recording a declined growth of
(-) 1.9 per cent during 2004-05 as against
33.1 per cent of the previous year.Though
the total provisions made by the banks
increased from Rs. 22,928 crores during
2003-04 to Rs. 23,241 crores during
2004-05, the growth was only marginal at
1.4 per cent during 2004-05 as against 31.6
per cent during 2003-04. Majority of the
banks have made lower provisions during
2004-05 as compared to previous year. Net
profit of the banks also declined from
Rs. 16,546 crores during 2003-04 to
Rs. 15,558 crores during 2004-05 recording
a declined growth of (-) 6.0 per cent as
against 33.6 per cent of the previous year.
Excluding IDBI Ltd., the decline is even
sharper at (-) 7.8 per cent during 2004-05.
None of the banks analysed in this note
showed net loss during 2004-05.Ten banks
recorded higher growth in net profit than
the previous year.
Capital Adequacy Ratio – All PSBs had
achieved the stipulated CRAR of 9 per cent
as on 31st March, 2005. United Bank of India
topped the list with a CRAR of 18.2 per
cent closely followed by Corporation Bank
with a CRAR of 16.2 per cent. 10 banks
recorded higher CRAR during 2004-05,
than the previous year.
Return on Assets – Net Profit as
percentage to total assets (Return on
assets) declined marginally from 1.1 per
cent during 2003-04 to 0.9 per cent during
2004-05. 14 banks have higher ROA than
the group average, of which 10 banks have
ROA of more than 1 per cent. Andhra Bank
topped the group with an ROA of 1.59 per
cent, followed by Oriental Bank of
Commerce with 1.41 per cent.
Credit-Deposit Ratio – Credit-Deposit
Ratio (C/D) Ratio of public sector banks
showed considerable improvement during
2004-05. This is largely due to higher
deployment of credit and lower resource
mobilization during 2004-05. C/D ratio of
the banks improved from 51.6 per cent
during 2003-04 to 59.7 per during 2004-
05. Excluding IDBI Ltd, the ratio was 57.1
per cent during 2004-05. IDBI Ltd. tops the
list with a C/D ratio of 300.7 per cent
followed by Bank of India with 71.1 per
cent and Corporation Bank with 68.1 per
cent.The lowest ratio of 44.9 per cent was
recorded by Central Bank of India.
Investment-Deposit Ratio – As noted
before, the investments of the banks were
lower during 2004-05 as compared to the
previous year. This is reflected in the
investment –Deposit (I/D) ratio also during
2004-05. The I/D ratio of the banks
declined from 51.0 per cent during
2003-04 to 47.7 per cent during 2004-05.
IDBI Ltd. with a ratio of 165.9 per cent tops
the group followed by UCO Bank and
United Bank of India with 56.8 per cent
and Indian Bank with 51.5 per cent during
2004-05. Bank of India recorded the lowest
ratio with 35.8 per cent during 2004-05.
Interest Spread – Interest spread or net
Interest Income as percentage of total
assets declined marginally from 3.0 per
cent during 2003-04 to 2.9 per cent during
the financial year 2004-05. In the case of
nationalized banks, interest spread
declined from 3.1 during 2003-04 to 3 per
cent during 2004-05. On the other hand,
for SBI group, the interest spread ratio
moved up from 2.8 per cent during
Contd to page 34...
IBA BULLETIN 27
AUGUST 2005
 Statement I : Public Sector Banks : Deposits/Investments/Advances
As on March 31 (Rs. crore)
Deposits Investments Advances
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 25463 31477 40762 12372 15555 18988 12544 15342 21150
2. Andhra Bank 21062 22941 27550 10518 10317 10646 11513 12885 17516
3. Bank of Baroda 66441 72967 81333 30179 38019 37074 35348 35601 43400
4. Bank of India 64098 71003 78821 24435 27163 28203 42633 45856 56013
5. Bank of Maharashtra 22176 26446 28844 11802 13943 14479 9508 11732 13061
6. Canara Bank 72095 86345 96908 30458 35793 38053 40472 47639 60421
7. Central Bank of India 51165 55909 60751 26045 31405 30834 23159 22804 27277
8. Corporation Bank 21725 23191 27233 10670 10685 10261 12029 13890 18546
9. Dena Bank 16491 18349 20096 8500 9736 9696 8436 9412 11308
10. Indian Bank 27016 30444 34808 14839 16696 17920 12275 14126 18380
11. Indian Overseas Bank 36699 41483 44241 18603 20172 19015 17447 20295 25205
12. Oriental Bank of Commerce 29809 35674 47850 14781 16794 18342 15677 19681 25299
13. Punjab & Sind Bank 13224 13642 N.A 6237 6777 N.A 5892 6030 N.A
14. Punjab National Bank 75813 87916 103166 34030 42125 50672 40228 47225 60412
15. Syndicate Bank 30661 42585 46294 13823 17917 20370 16305 20647 26729
16. UCO Bank 31343 39244 49470 14138 17611 19064 15923 20626 27656
17. Union Bank of India 44749 50559 61830 19371 22442 22792 25515 29426 40105
18. United Bank of India 21031 22758 25348 12639 13916 14403 7352 7963 11389
19. Vijaya Bank 17020 21015 25617 8862 10837 12068 7884 11045 14335
TOTAL OF 19 NATIONALISED
BANKS [I] 688081 793947 900923 322302 377904 392880 360140 412224 518202
II. State Bank of India (SBI) 296123 318619 367047 172348 185676 197097 137758 157934 202374
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 13234 15642 19038 7682 8430 8362 6773 8597 12009
2. State Bank of Hyderabad 20599 24258 28929 12519 15017 14559 9663 11814 15599
3. State Bank of Indore 9217 10419 13807 5137 5429 5898 5183 6406 9040
4. State Bank of Mysore 9013 11084 13585 4761 5487 5796 5261 6307 8781
5. State Bank of Patiala 17870 22473 26495 8122 11110 12312 10746 13086 15359
6. State Bank of Saurashtra 9054 10675 12613 4730 5846 6086 4649 5240 6714
7. State Bank of Travancore 15926 19721 24133 8039 10778 10592 9171 11132 14848
TOTAL OF 7 ASSOCIATES [III] 94913 114272 138600 50989 62097 63605 51445 62582 82350
TOTAL OF STATE BANK
GROUP [II+III] 391036 432891 505647 223337 247774 260702 189204 220516 284724
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 15102 25055 45414
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 1079117 1226838 1421672 545639 625678 678637 549344 632740 848340
Source: Balancesheets of Banks
N.A: Not Available

Deposits Investments Advances

(Rs. in crore) (Rs. in crore) (Rs. in crore)
1500000 800000 900000

700000 800000

1200000 700000
600000
600000
500000
900000
500000
400000
400000
600000
300000
300000
200000
200000
300000
100000 100000

0 0 0
2003 2004 2005 2003 2004 2005 2003 2004 2005
SBI Nationalised SBI Nationalised SBI Nationalised
SBI SBI SBI
Associates Bank Associates Bank Associates Bank

28 IBA BULLETIN
AUGUST 2005
 Statement II : Public Sector Banks : Total Assets, Gross and Net Non-Performing Assets
As on March 31 (Rs. crore)
Total Assets Gross NPA Net NPA
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 28051 34704 45144 1842 1418 1284 887 363 271
2. Andhra Bank 24678 27009 32728 581 615 441 206 120 49
3. Bank of Baroda 76425 85109 94664 4168 3980 3322 1700 1761 1206
4. Bank of India 76627 84860 94978 3804 3734 4491 2286 2062 1554
5. Bank of Maharashtra 24905 32213 32884 958 954 962 459 288 281
6. Canara Bank 82055 99539 110305 2475 3127 1432 1454 1378 1129
7. Central Bank of India 57105 63345 68595 3244 3092 2621 1563 1271 814
8. Corporation Bank 26272 29154 33923 657 722 647 198 250 207
9. Dena Bank 20162 22160 24028 1617 1484 1148 997 884 591
10. Indian Bank 35375 39154 43860 1630 1192 748 755 383 247
11. Indian Overseas Bank 41155 47322 50815 1896 1576 1388 912 578 319
12. Oriental Bank of Commerce 33999 41007 54069 1146 1211 2492 225 – 327
13. Punjab & Sind Bank 14491 15011 N.A 1247 1204 N.A 639 577 N.A
14. Punjab National Bank 86222 102332 126241 4980 4670 3741 1527 449 119
15. Syndicate Bank 34435 47223 52109 1420 1590 1433 700 532 426
16. UCO Bank 34914 43798 54589 1366 1479 1399 697 753 811
17. Union Bank of India 51060 58317 72413 2388 2347 2058 1253 845 1060
18. United Bank of India 24269 25843 29097 959 764 726 406 299 277
19. Vijaya Bank 19072 24071 29335 506 390 431 206 100 85
TOTAL OF 19 NATIONALISED
BANKS [I] 791272 922171 1049777 36883 35549 30764 17072 12893 9773
II. State Bank of India (SBI) 375877 407815 459882 13506 12667 12456 6183 5442 5349
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 18038 20256 23401 580 484 400 282 107 194
2. State Bank of Hyderabad 26132 30646 34922 740 691 553 315 77 95
3. State Bank of Indore 11364 13044 16898 295 266 303 138 – 91
4. State Bank of Mysore 11336 13758 16552 562 515 415 273 186 81
5. State Bank of Patiala 21289 26897 31502 531 503 653 161 – 189
6. State Bank of Saurashtra 11453 12837 15039 354 200 184 164 – 94
7. State Bank of Travancore 19033 24003 28874 635 662 652 280 154 269
TOTAL OF 7 ASSOCIATES [III] 118645 141442 167188 3698 3321 3160 1613 525 1013
TOTAL OF STATE BANK
GROUP [II+III] 494521 549257 627070 17204 15988 15616 7796 5967 6362
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 81360 1216 848
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 1285793 1471428 1758207 54087 51537 47596 24868 18860 16983

Total Assets Gross NPA Net NPA

(Rs. in crore) (Rs. in crore) (Rs. in crore)
2000000 60000 25000

50000
20000
1500000

40000
15000

1000000 30000

10000
20000
500000
5000
10000

0 0 0
2003 2004 2005 2003 2004 2005 2003 2004 2005
SBI Nationalised SBI Nationalised SBI Nationalised
SBI SBI SBI
Associates Bank Associates Bank Associates Bank

IBA BULLETIN 29
AUGUST 2005
 Statement III : Public Sector Banks : Income
As on March 31 (Rs. crores)
Interest Income Other Income Total Income
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 2570 2669 3186 524 750 640 3095 3418 3826
2. Andhra Bank 2195 2227 2273 604 678 753 2799 2905 3026
3. Bank of Baroda 6098 6147 6431 1262 1719 1305 7359 7866 7736
4. Bank of India 5928 5796 6031 1642 1792 1156 7571 7588 7187
5. Bank of Maharashtra 2082 2203 2368 360 465 385 2442 2669 2753
6. Canara Bank 6692 7007 7572 1478 2073 1544 8170 9080 9116
7. Central Bank of India 5073 5064 5205 554 964 920 5627 6028 6125
8. Corporation Bank 2188 2276 2250 532 517 565 2634 2793 2815
9. Dena Bank 1772 1735 1725 437 617 311 2209 2353 2036
10. Indian Bank 2532 2667 2871 525 747 569 3057 3414 3440
11. Indian Overseas Bank 3486 3754 3951 520 741 640 4006 4495 4591
12. Oriental Bank of Commerce 3304 3301 3572 531 722 505 3836 4022 4077
13. Punjab & Sind Bank 1284 1279 307 256 1591 1534
14. Punjab National Bank 7485 7780 8460 1250 1867 1676 8735 9647 10136
15. Syndicate Bank 2875 3085 3758 495 776 565 3370 3861 4323
16. UCO Bank 2793 3096 3547 609 625 516 3402 3722 4063
17. Union Bank of India 4306 4516 4970 825 831 766 5131 5348 5736
18. United Bank of India 2119 2073 2133 428 505 478 2548 2578 2611
19. Vijaya Bank 1671 1940 2094 346 526 354 2017 2466 2448
TOTAL OF 19 NATIONALISED
BANKS [I] 66454 68615 72397 13230 17172 13648 79598 85787 86045
II. State Bank of India (SBI) 31087 30460 32428 5740 7612 7119 36827 38073 39547
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 1438 1574 1741 340 492 483 1778 2065 2224
2. State Bank of Hyderabad 2067 2213 2325 462 707 421 2529 2920 2746
3. State Bank of Indore 986 1046 1110 302 361 178 1288 1407 1288
4. State Bank of Mysore 1037 1057 1168 294 340 386 1331 1397 1554
5. State Bank of Patiala 1759 1888 2133 350 630 355 2109 2519 2488
6. State Bank of Saurashtra 904 978 1132 215 306 114 1119 1284 1246
7. State Bank of Travancore 1584 1740 2008 300 470 408 1885 2210 2416
TOTAL OF 7 ASSOCIATES [III] 9777 10496 11617 2262 3306 2345 12039 13802 13962
TOTAL OF STATE BANK
GROUP [II+III] 40864 40956 44045 8003 10919 9464 48867 51875 53509
IV. OTHER PUBLIC SECTOR BANKS
IDBI Ltd. 2656 627 3283
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 107318 109572 119098 21232 28091 23739 128464 137663 142837

Interest Income Other Income Total Income

(Rs. in crore) (Rs. in crore) (Rs. in crore)
120000 30000 150000

100000 25000
120000

80000 20000
90000

60000 15000

60000
40000 10000

30000
20000 5000

0 0 0
2003 2004 2005 2003 2004 2005 2003 2004 2005
SBI Nationalised SBI Nationalised SBI Nationalised
SBI SBI SBI
Associates Bank Associates Bank Associates Bank

30 IBA BULLETIN
AUGUST 2005
 Statement IV : Public Sector Banks : Expenditure
As on March 31 (Rs. crores)
Interest Expenses Operating Expenses Total Expenditure*
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 1661 1583 1822 918 959 931 2579 2542 2753
2. Andhra Bank 1442 1317 1204 602 658 829 2044 1975 2033
3. Bank of Baroda 3994 3575 3452 1648 1805 1982 5643 5381 5434
4. Bank of India 3892 3594 3794 1649 1752 1932 5541 5346 5726
5. Bank of Maharashtra 1405 1432 1486 516 560 720 1922 1992 2206
6. Canara Bank 4425 4325 4421 1748 1897 2109 6172 6221 6530
7. Central Bank of India 3176 2942 2830 1527 1558 1686 4703 4499 4516
8. Corporation Bank 1310 1237 1120 471 574 637 1782 1811 1757
9. Dena Bank 1204 1143 1039 511 499 550 1715 1642 1589
10. Indian Bank 1712 1550 1567 755 1062 914 2467 2612 2481
11. Indian Overseas Bank 2264 2155 2096 947 1015 1158 3212 3170 3254
12. Oriental Bank of Commerce 2090 1845 2048 583 644 796 2673 2489 2844
13. Punjab & Sind Bank 898 785 N.A 413 600 N.A 1310 1385 N.A
14. Punjab National Bank 4361 4155 4453 2057 2371 2975 6418 6526 7428
15. Syndicate Bank 1665 1656 2064 1086 1151 1264 2751 2807 3328
16. UCO Bank 1911 1902 2140 867 871 1103 2778 2773 3243
17. Union Bank of India 2809 2780 2905 1018 1085 1257 3827 3865 4162
18. United Bank of India 1400 1292 1218 592 673 704 1992 1965 1922
19. Vijaya Bank 1027 1102 1110 557 498 549 1584 1600 1659
TOTAL OF 19 NATIONALISED
BANKS [I] 42646 40369 40769 18466 20231 22096 61112 60601 62865
II. State Bank of India (SBI) 21109 19274 18483 7942 9245 10074 29052 28519 28557
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 887 857 872 450 527 622 1337 1384 1494
2. State Bank of Hyderabad 1320 1372 1363 451 535 671 1771 1906 2034
3. State Bank of Indore 619 593 607 248 282 328 867 875 935
4. State Bank of Mysore 651 603 623 328 370 479 978 973 1102
5. State Bank of Patiala 975 1066 1157 395 449 479 1370 1515 1636
6. State Bank of Saurashtra 585 574 624 248 272 254 833 846 878
7. State Bank of Travancore 1062 1057 1112 368 452 503 1430 1509 1615
TOTAL OF 7 ASSOCIATES [III] 6097 6121 6358 2488 2886 3336 8586 9007 9694
TOTAL OF STATE BANK
GROUP [II+III] 27207 25395 24841 10431 12131 13410 37638 37526 38251
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 2468 454 2922
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 69853 65765 68078 28897 32363 35960 98749 98127 104038
* Excluding Provisions and Contingencies

Interest Expenses Operating Expenses Total Expenditure*

(Rs. in crore) (Rs. in crore) (Rs. in crore)
80000 40000 120000

70000 35000
100000
60000 30000
80000
50000 25000

40000 20000 60000

30000 15000
40000
20000 10000
20000
10000 5000

0 0 0
2003 2004 2005 2003 2004 2005 2003 2004 2005
SBI Nationalised SBI Nationalised SBI Nationalised
SBI SBI SBI
Associates Bank Associates Bank Associates Bank

IBA BULLETIN 31
AUGUST 2005
 Statement V : Public Sector Banks : Profit
As on March 31 (Rs. crores)
Operating Profit Provisions and Contingencies Net Profit
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 516 876 1073 350 413 530 166 463 542
2. Andhra Bank 755 930 993 352 467 473 403 464 520
3. Bank of Baroda 1717 2485 2302 944 1518 1625 773 967 677
4. Bank of India 2030 2242 1461 1179 1234 1120 851 1008 340
5. Bank of Maharashtra 521 676 547 299 372 369 222 305 178
6. Canara Bank 1997 2859 2586 978 1521 1476 1019 1338 1110
7. Central Bank of India 924 1529 1609 618 911 1252 306 618 357
8. Corporation Bank 853 907 1057 437 403 655 416 504 402
9. Dena Bank 494 711 447 380 480 386 114 231 61
10. Indian Bank 590 802 959 401 397 550 189 406 409
11. Indian Overseas Bank 794 1325 1337 378 812 685 416 513 652
12. Oriental Bank of Commerce 1163 1533 1233 706 847 472 457 686 761
13. Punjab & Sind Bank 281 150 N.A 276 141 N.A 4 9 N.A
14. Punjab National Bank 2317 3121 2708 1475 2012 1297 842 1109 1411
15. Syndicate Bank 619 1054 994 275 620 591 344 434 403
16. UCO Bank 624 948 819 417 513 473 207 435 346
17. Union Bank of India 1304 1483 1574 751 771 854 553 712 720
18. United Bank of India 556 613 689 251 298 389 305 315 300
19. Vijaya Bank 432 866 789 236 454 408 197 411 381
TOTAL OF 19 NATIONALISED
BANKS [I] 18486 25111 23180 10702 14184 13605 7784 10928 9570
II. State Bank of India (SBI) 7775 9553 10990 4670 5872 6685 3105 3681 4305
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 441 681 730 238 380 524 203 302 206
2. State Bank of Hyderabad 758 1014 713 457 633 462 301 381 251
3. State Bank of Indore 421 532 352 221 306 219 200 226 133
4. State Bank of Mysore 353 425 452 237 249 245 116 176 207
5. State Bank of Patiala 740 1004 852 418 573 565 322 430 287
6. State Bank of Saurashtra 287 438 368 196 275 327 93 177 41
7. State Bank of Travancore 455 701 802 284 456 555 171 245 247
TOTAL OF 7 ASSOCIATES [III] 3454 4796 4268 2047 2872 2897 1407 1937 1371
TOTAL OF STATE BANK
GROUP [II+III] 11229 14349 15258 6718 8745 9582 4512 5618 5676
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 361 54 307
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 29715 39536 38799 17420 22928 23241 12295 16546 15558

Operating Profit Provisions & Contingencies Net Profit

(Rs. in crore) (Rs. in crore) (Rs. in crore)
40000 25000 20000

35000
20000
30000 15000

25000
15000

20000 10000

10000
15000

10000 5000
5000
5000

0 0 0
2003 2004 2005 2003 2004 2005 2003 2004 2005
SBI Nationalised SBI Nationalised SBI Nationalised
SBI SBI SBI
Associates Bank Associates Bank Associates Bank

32 IBA BULLETIN
AUGUST 2005
 Statement VI : Public Sector Banks : Ratios
As on March 31 (in per cent)
Credit Deposit Ratio Investment Deposit Ratio Spread as % of Assets
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 49.26 48.74 51.89 48.59 49.42 46.58 3.24 3.13 3.02
2. Andhra Bank 54.66 56.17 63.58 49.94 44.97 38.64 3.05 3.37 3.27
3. Bank of Baroda 53.26 48.79 53.36 45.47 52.10 45.58 2.75 3.02 3.15
4. Bank of India 66.15 64.58 71.06 37.91 38.26 35.78 2.66 2.59 2.36
5. Bank of Maharashtra 42.88 44.36 45.28 53.22 52.72 50.20 2.71 2.40 2.68
6. Canara Bank 56.14 55.17 62.35 42.25 41.45 39.27 2.72 2.69 2.86
7. Central Bank of India 45.26 40.79 44.90 50.90 56.17 50.75 3.32 3.35 3.46
8. Corporation Bank 55.37 59.89 68.10 49.11 46.07 37.68 3.02 3.56 3.33
9. Dena Bank 51.15 51.29 56.27 51.54 53.06 48.25 2.82 2.67 2.86
10. Indian Bank 45.44 46.40 52.80 54.93 54.84 51.48 2.32 2.85 2.97
11. Indian Overseas Bank 47.54 48.92 56.97 50.69 48.63 42.98 2.97 3.38 3.65
12. Oriental Bank of Commerce 52.59 55.17 52.87 49.58 47.08 38.33 3.54 3.55 2.82
13. Punjab & Sind Bank 44.56 44.20 N.A 47.17 49.67 N.A 2.67 3.29 N.A
14. Punjab National Bank 53.06 53.72 58.56 44.89 47.92 49.12 3.62 3.54 3.17
15. Syndicate Bank 53.18 48.48 57.74 45.08 42.07 44.00 3.51 3.03 3.25
16. UCO Bank 50.80 52.56 44.93 45.11 44.88 56.82 2.53 2.73 2.58
17. Union Bank of India 57.02 58.20 64.86 43.29 44.39 36.86 2.93 2.98 2.85
18. United Bank of India 34.96 34.99 44.93 60.10 61.15 56.82 2.97 3.02 3.14
19. Vijaya Bank 46.37 52.56 55.96 52.07 51.57 47.11 3.37 3.48 3.35
TOTAL OF 19 NATIONALISED
BANKS [I] 52.32 51.92 57.52 46.82 47.60 43.61 2.99 3.06 3.01
II. State Bank of India (SBI) 46.52 49.57 55.14 58.20 58.28 53.70 2.65 2.74 3.03
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 51.18 54.96 63.08 58.05 53.89 43.92 3.06 3.54 3.71
2. State Bank of Hyderabad 46.91 48.70 53.92 60.77 61.91 50.33 2.86 2.75 2.75
3. State Bank of Indore 56.23 61.49 65.47 55.74 52.11 42.72 3.23 3.48 2.98
4. State Bank of Mysore 58.37 56.90 64.64 52.82 49.50 42.66 3.41 3.30 3.29
5. State Bank of Patiala 60.14 58.23 57.97 45.45 49.44 46.47 3.71 3.06 3.10
6. State Bank of Saurashtra 51.36 49.09 53.23 52.59 54.77 48.25 2.94 3.15 3.38
7. State Bank of Travancore 57.58 56.45 61.53 50.47 54.65 43.89 2.75 2.85 3.10
TOTAL OF 7 ASSOCIATES [III] 54.20 54.77 59.42 53.76 54.34 45.89 3.12 3.09 3.15
TOTAL OF STATE BANK
GROUP. [II+III] 48.39 50.94 56.31 57.12 57.24 51.56 2.77 2.83 3.06
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd 300.72 165.91 0.23
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 50.89 51.57 59.67 50.55 51.00 47.74 2.91 2.98 2.90

Statement VII : Public Sector Banks : Ratios

As on March 31 (In per cent)
Interest Income Opr. Exp. as % to Total Expenses Net Profit as % to Assets Capital Adequacy
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I. NATIONALISED BANKS
1. Allahabad Bank 35.61 37.73 33.82 0.59 1.34 1.20 11.15 12.52 12.53
2. Andhra Bank 29.44 33.34 40.78 1.63 1.72 1.59 13.62 13.71 12.11
3. Bank of Baroda 29.21 33.55 36.47 1.01 1.14 0.72 12.65 13.91 12.61
4. Bank of India 29.75 32.76 33.74 1.11 1.19 0.36 12.02 13.01 11.52
5. Bank of Maharashtra 26.86 28.13 32.64 0.89 0.95 0.54 12.05 11.88 12.68
6. Canara Bank 28.31 30.49 32.30 1.24 1.34 1.01 12.50 12.66 12.78
7. Central Bank of India 32.47 34.62 37.33 0.54 0.98 0.52 10.51 12.43 12.15
8. Corporation Bank 26.46 31.68 36.25 1.58 1.73 1.19 18.50 20.11 16.23
9. Dena Bank 29.80 30.39 34.61 0.57 1.04 0.25 6.02 9.48 11.91
10. Indian Bank 30.61 40.66 36.84 0.53 1.04 0.93 10.85 12.82 14.14
11. Indian Overseas Bank 29.49 32.02 35.59 1.01 1.08 1.28 11.30 12.49 14.21
12. Oriental Bank of Commerce 21.80 25.89 27.99 1.34 1.67 1.41 14.04 14.47 9.21
13. Punjab & Sind Bank 31.48 43.30 N.A 0.03 0.06 N.A 10.43 11.06 N.A
14. Punjab National Bank 32.05 36.33 40.05 0.98 1.08 1.12 12.02 13.10 14.78
15. Syndicate Bank 39.47 41.02 37.98 1.00 0.92 0.77 11.03 11.49 10.70
16. UCO Bank 31.22 31.42 34.01 0.59 0.99 0.63 10.04 11.88 11.26
17. Union Bank of India 26.61 28.06 30.20 1.08 1.22 0.99 12.41 12.32 12.09
18. United Bank of India 29.72 34.23 36.63 1.26 1.22 1.03 15.17 17.04 18.16
19. Vijaya Bank 35.16 31.11 33.09 1.03 1.71 1.30 12.66 14.11 12.92
TOTAL OF 19 NATIONALISED
BANKS [I] 30.22 33.38 35.15 0.98 1.18 0.91
II. State Bank of India (SBI) 46.52 49.57 35.28 0.83 0.90 0.94 13.50 13.53 12.45
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 33.68 54.96 41.63 1.13 1.49 0.88 13.18 12.93 12.60
2. State Bank of Hyderabad 25.49 28.04 32.99 1.15 1.24 0.72 14.91 14.29 11.74
3. State Bank of Indore 28.61 32.23 35.08 1.76 1.73 0.79 13.09 12.39 11.61
4. State Bank of Mysore 33.50 38.03 43.47 1.02 1.28 1.25 11.62 11.53 12.08
5. State Bank of Patiala 28.84 29.63 29.28 1.51 1.60 0.91 13.57 13.56 14.21
6. State Bank of Saurashtra 29.76 32.10 28.93 0.81 1.38 0.27 13.68 14.53 11.45
7. State Bank of Travancore 25.74 29.98 31.15 0.90 1.02 0.86 11.30 11.36 11.05
TOTAL OF 7 ASSOCIATES [III] 28.98 32.04 34.41 1.19 1.37 0.82
TOTAL OF STATE BANK GROUP [II+III] 27.71 32.33 35.06 0.91 1.02 0.91
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 15.54 0.78 15.51
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV] 29.26 32.98 34.56 0.96 1.12 0.88

IBA BULLETIN 33
AUGUST 2005
 Statement VIII : Public Sector Banks : Ratios
As on March 31 (In Crores) (In lacs)
Interest Income Net NPA as % to Net Advances Business Per Employee Profit per Employee
Sr. No BANKS 2003 2004 2005 2003 2004 2005 2003 2004 2005
I NATIONALISED BANKS
1 Allahabad Bank 7.08 2.37 1.28 1.83 2.15 2.82 0.87 2.46 2.86
2 Andhra Bank 1.79 0.93 0.28 2.27 2.77 3.46 3.10 3.54 3.97
3 Bank of Baroda 3.72 2.99 1.45 2.38 2.53 3.10 1.92 2.43 1.71
4 Bank of India 5.37 4.50 2.77 2.43 2.67 3.20 1.97 2.35 0.80
5 Bank of Maharashtra 4.82 2.46 2.15 2.22 2.69 2.95 1.58 2.16 1.25
6 Canara Bank 3.59 2.89 1.88 2.50 2.98 3.51 2.26 2.97 2.48
7 Central Bank of India 7.02 5.57 2.98 1.68 1.82 2.07 0.77 1.58 0.93
8 Corporation Bank 1.65 1.80 1.12 3.29 3.66 4.38 4.06 4.98 3.95
9 Dena Bank 11.83 9.40 5.23 2.42 2.74 3.13 1.08 2.23 0.60
10 Indian Bank 6.15 2.71 1.35 1.74 1.89 2.46 0.85 1.85 1.87
11 Indian Overseas Bank 5.23 2.85 1.27 2.04 2.55 2.69 1.70 2.12 2.66
12 Oriental Bank of Commerce 1.40 Nil 1.29 3.43 4.16 5.15 3.40 5.10 5.20
13 Punjab & Sind Bank 10.89 9.62 N.A 1.96 2.05 N.A 0.05 0.09 N.A
14 Punjab National Bank 3.86 0.98 0.20 1.96 2.28 2.77 1.43 1.88 2.42
15 Syndicate Bank 4.29 2.58 1.59 1.80 2.40 2.80 1.30 1.62 1.53
16 UCO Bank 4.36 3.65 2.93 1.97 2.49 3.21 0.85 1.79 1.43
17 Union Bank of India 4.91 2.87 2.64 2.50 2.86 3.47 2.15 2.78 2.81
18 United Bank of India 5.52 3.75 2.43 1.62 1.69 2.08 1.77 1.76 1.72
19 Vijaya Bank 2.61 0.91 0.59 1.94 2.49 3.13 1.76 3.73 3.48
TOTAL OF 19 NATIONALISED
BANKS [I]
II. State Bank of India (SBI) 4.5 3.48 2.65 1.91 2.11 2.43 1.48 1.77 2.07
III. ASSOCIATES OF SBI
1. State Bank of Bikaner & Jaipur 4.13 1.24 1.61 1.46 1.70 2.20 1.63 2.44 1.69
2. State Bank of Hyderabad 3.25 0.65 0.61 2.26 2.66 3.40 2.25 2.87 1.91
3. State Bank of Indore 2.66 Nil 0.01 2.21 2.31 2.94 3.06 3.45 2.07
4. State Bank of Mysore 5.19 2.96 0.92 1.46 1.63 2.04 1.19 1.82 2.16
5. State Bank of Patiala 1.49 Nil 1.23 2.46 3.05 3.61 2.76 3.69 2.48
6. State Bank of Saurashtra 3.53 Nil 1.40 1.68 1.93 2.50 1.25 2.40 0.56
7. State Bank of Travancore 3.06 1.39 1.81 2.18 2.72 3.46 1.51 2.16 2.21
TOTAL OF 7 ASSOCIATES [III]
TOTAL OF STATE BANK
GROUP [II+III]
IV. OTHER PUBLIC SECTOR BANKS
1. IDBI Ltd. 1.74 13.50 6.85
TOTAL OF PUBLIC SECTOR
BANKS [I+II+III+IV]

N.A. : Not Available

Contd from Page 27

2003-04 to 3.1 per cent during 2004-05.
16 banks have the interest spread ratio of
more than 3 per cent during 2004-05.
Non-Performing Assets – As mentioned
before, both the gross and net non-
performing assets showed declined in
absolute terms and as percentage of net
advances during 2004-05. For majority of
the banks, this ratio is less than 3 per cent.
Dena Bank has the highest ratio with 5.2
per cent during 2004-05.
Operating Expenses - Ratio of operating
expenses to total expenses increased to 34.6
per cent during 2004-05 from 33.0 per cent
of the previous financial year.4 banks have a
ratio of more than 40 per cent during 2004-
05. Majority of the banks recorded a higher
ratio than the previous year.
Business per Employee – Business per
employee of most of the banks were
higher than that of the previous year.
Highest per employee business was
recorded by IDBI Ltd. with Rs. 13.5 crores.
Lowest business ratio was shown by
Central Bank of India with 2.1 crores during
2004-05. Majority of the banks recorded a
business ratio of Rs. 3.0 crores to Rs. 4.0
crores during 2004-05.
Profit per Employee – Majority of the
banks recorded a lower profit per
employee ratio than the previous year.
Highest ratio was recorded by the IDBI Ltd.
with Rs. 6.85 lacs during 2004-05.This ratio
for majority of the banks ranged from
Rs.1.5 lacs to Rs. 3.0 lacs during 2004-05.
Conclusion
Compared to 2003-04, the performance
of the Public Sector Banks was not
impressive during 2004-05. Resource
mobilisation and investments were lower
during 2004-05 as compared to 2003-04.
Disbursement of credit was impressive
during this year. Total income and total
expenditure of these banks were higher
than the financial year 2003-04. Since
growth in expenditure were higher than
the growth in income, the banks recorded
deceleration in operating and net profit
during 2004-05. A significant achievement
for the banks was reduction in the gross
and net non-performing assets of the
banks in absolute term and also as
percentage of net advances during 2004-
05. Banks were able to maintain spread at
the same level as that of the previous year.
Slight deceleration in the Capital Adequacy
Ratio and Return on Assets were also
observed during 2004-05. Productivity ratio
showed improvement than the previous
year. However, profitability ratio was lower
than the previous year. ❑
Prepared by Mrs Jayshree Menon, Manager
with data support from
Mr. Ramesh Kumar Nair, Officer,
DRS Dept. IBA.

34 IBA BULLETIN
AUGUST 2005
Contd. from page 25...
SHGs has come to be accepted as an
important tool to ensure standards in SHGs.
In the enthusiasm to ensure monitoring of
SHGs every stakeholder had their own
innovation in designing a new tool for
grading of SHGs. This has resulted in flooding
of market with rating tools with slight
variation here and there. Multiplicity of rating
tools though is a good indication for the
concerns of many players is on quality aspects.
Administration of these tools remained
largely one of monitoring the SHGs rather
than ensuring how these tools become
internalized at SHG level for their own self
monitoring. It is interesting to notice that there
has been good number of participatory tools
developed by stakeholders for the self-
assessment by SHGs themselves. Over a period
of time the parameters set within the rating
tools become a benchmark for the SHGs to
reach such milestone in their quest to reach
higher grades. It is also important that this
assessment shall not be a one off approach
being administered at the time of lending by
banks but rather a periodic self assessment
by SHGs and rating by other stakeholders
perpetually, giving scope for raising the
benchmarks over a period of time. In a study
conducted by Andhra Pradesh Mahila
Abhvriddhi Society (APMAS) in 400 randomly
selected SHGs across 40 randomly selected
mandals in 8 selected districts in Andhra
Pradesh, only 22% of the groups were
reported to be appraised using rating tool
before bank linkage by banks and DRDAs.
Market distortions
The largesse perpetrated by Government
programs has been worrying the micro
finance specialists and apart from
disintegrating the groups, setting wrong
precedents, inequity in subsidy distribution,
pulling down the quality of groups in
general, there has been perceived market
distortions caused by the subsidy oriented
Government programs. The sector has been
crying fowl over such reckless sprinkling of
unhealthy practices; as the whole SHG
movement is built on structured, process
intensive and a time bound program to
ensure group formation, grading of groups,
credit linkage, ensuring definitive credit
demand. The quick spread culture
perpetrated by such mass scale programs
has played spoilsport with the established
conventions and best practices. Distortions
are galore due to easy-go-approach
followed by many stake holders and
promoters leaving the hilly, tribal, dry tracts
without giving the benefit to such remote
areas even the smell of the SHGs have caused
lopsided distribution of SHGs and many
potential pockets in north east and east are
deprived of sizeable chunk of SHGs. As The quest for promoting
against 16.18 million SHGs credit linked, only
34238 SHGs (a mere 2.1%) represent north SHGs cannot become
east, against the 8 north eastern states, Assam
alone accounts for 31234 SHGs. It is also the merely a number driven
fact that in many states over 80% of the SHGs
are anchored by large Govt. initiatives.
agenda and the one and
Federations
half decades of
The urge for aggregating the SHGs at a experimentation on SHGs
higher level without appraising the value-
add and the cost implications has been a
shall gradually evolve into
source of worry. It is also corroborated by setting new benchmarks
many studies that as more and more the
on the quality and
”
SHGs are up streamed at higher level without
getting convinced on the role for such
intermediaries, more and more the clients
standards of SHGs.
are distanced from the intermediary
structures including the banks. There is also
a tension between SHGs and federations as
perceived by the clients. It is not out of place
to mention that in many places the quality
of SHGs have gone down after they are
federated. In the quest of ensuring the
sustainability of federations, which was the
strong reason for why federations have
come into being, the challenge remains as
to how to overcome the quality issues and
how the federations can directly contribute
for this. While there is a big debate on the
need for federations, it is to be ensured
that the zeal for making federations
shall not end up in belittling the
role of SHGs and cut into the Shri Devaprakash is an Agro Economist holding
very quality aspects of SHGs. masters degree from TamilNadu Agricultural
Comparative analysis of University, Coimbatore. He is a Technical Support
good practices with Specialist working for CASHE (Credit And Savings for
best practices
Household Enterprise) Project of CARE India. CASHE
The variations in
happens to be the largest national microfinance
practices at SHG
level have been initiative, outside the Govt. programs and NABARD
s p u r r i n g linkage program which attempts to address
innovations in
inadequacies and gaps in the micro finance sector
terms of products,
systems and
in the country. At present he is anchoring the sector
methodologies building initiatives on microfinance at the national
and encouraging
level. Earlier Devaprakash worked for Indian Bank in
new standards in
various capacities heading the Gramodaya
SHG promotion and
Kendras(Rural Development Centers) of the bank in
p r a c t i c e s ;
nevertheless it has various places contributing towards poverty
brought lot of lending, rural finance and micro finance mandate
incongruity in the
established practices. A of the bank.
comparison of such
IBA BULLETIN 35
AUGUST 2005
practices with the recommended practices standardized rating or grading tools. While
leads us to revisit some of the established much has been said about the relevance of
parameters and norms set in the the rating tools, there is certainly a need to
COMPARATIVE ANALYSIS OF SOME EXISTING PRACTICES WITH THE RECOMMENDED PRACTICES IN SHG
Details Normal practice
Fund Management Groups savings and external loan funds are held
separately.
Group Meetings SHGs take it as a rigor to meet frequently
Fee for services Not all services the members are accessing are
priced; as some services are small and frequent
Leveraging Process -Retailing or wholesaling Retailing from formal financial sector at SHG
level as a means of mainstreaming
Subsidy dependence SHGs deriving more subsidy and more and more
moving on towards subsidy regime
Growth in Savings Static savings as clients agree to pool in same
amount of savings all through out
New financial services SHGs are comfortable only with credit and
savings and consider other services as not
falling within the mandate for which they
are established
Affiliation to federation SHGs remain, as stand-alone piece without any
affiliation to SHG-upstream like clusters/
federations and more often feel their role will
be limited in a federal set up.
Inter group lending SHGs do not lend to other groups as a matter of
policy though more of idle funds are locked
up within SHG, as the scope of lending within
the group is limited beyond certain extent
Risk Fund SHGs operating themselves risk fund and
at times embarrassed at huge pay outs at times
of emergencies without adequate reinsurance
back ups
Rotation of leadership Rotation of leadership is seriously taken, with
the result clients with poor leadership qualities
come to manage the SHGs very often on turn
basis
Sharing of dividend Resources are kept as reserves, as such and any
slicing up of reserves as dividends may erode
the fund base
Sharing the funds available as loans Loan funds are shared equally as loans amongst
members at any point in time without taking the
individual needs into consideration. More or
less a supply based approach to decide the
loan quantum
Type of loan account Mostly term loans are from the external finance
institution with clear terms and many times
repaid much in advance
36 IBA BULLETIN
AUGUST 2005
standardize the grading tools across the
board and the process of such design itself
needs to be revisited periodically.
Recommended practice
Group savings and external loan funds are
pooled. Accounting principles shall need to
take care of this.
SHGs meet at appropriate intervals as and
when needed appreciating the high
transaction cost for members for attending the
group meeting.
Services are priced across the board though
some may appear to be small and intermittent.
This is to inculcate the habit of appreciating the
need for paying for services
Retailing at SHG level and slowly moving on to
wholesaling with formal sector for bulk funding
for mother units ( cluster/ federation/ NGO/ MFI)
SHGs moving out of subsidy regimen and
phasing out subsidy dependence
Growth in rate of per capita savings over years
will make the SHGs leverage more and more
funds from external sources
SHGs are open to mainstreaming new financial
services like insurance, money transfer, pension
etc., and need not directly deal with such
services and open to the idea of clients
accessing such services
SHGs are moving to affiliating to cluster/
federations and SHGs shall feel that they will
have space for their operation in the larger
domain of federation framework
SHGs proactively look at inter group lending as
an option to park the idle funds if they are
confident of managing such risks
SHGs understanding the implications of big pay
outs, buying such services from professional
service providers rather than managing such
risks themselves
Rotation of leadership is adapted wherever
feasible and not as a matter of routine
periodically and limited to persons of
leadership quality
Resources as earnings are shared periodically
which will be a sort of incentive to perk up the
interest of clients further
Need assessment is the basis and loan funds are
not divided equally amongst the members. A
demand based approach to decide the loan
quantum
A line of credit called cash credit limit which is
a revolving account which will be renewed
periodically
Details
Loan hedging
(productive uses Vs consumption)
Multiple membership within the family
Marital status of members
Unisex or multi sex group
Neighbourhood or Diversity
Activity based groups
Common economic activity
Targeting Strategy and Tool
Investment policy of SHG
Participation in political process
Participation in PRI
Encouraging visitors
Normal practice
SHGs especially when they are mature tend
to invest more in productive loans than
consumption loans
Sometimes, promoters find it easy to include
members from the same family for easy
management of groups
SHGs for the sake of membership may include
all women including spinsters
Some SHGs especially activity based SHGs are
mixed groups having the presence of both sexes
Many promoters believe the peer pressure
works more vigorously amongst neighbuorhood
members
Activity based groups are favored to push
micro enterprises easily on the members
Common economic activity is preferred in
some cases like SGSY groups due to project
compulsions
Income based poverty line and reference to
ration cards/ revenue records are taken as
benchmarks
Lending to SHG members is the normal practice
and if resources are idle lending outside the
group is encouraged
Many SHGs separate politics from business and
do not allow clients to be part of the political
process on the pretext, participation in political
process will play spoilt sport.
SHGs get glued to their business and think
participation in PRI may not have any strategic
value for itself
SHGs believe that visitors may borrow their own
concepts and keep certain things within as tricks
of trade and do not encourage visitors
Recommended practice
SHGs shall not bother about productive nature
of loans and narrow down their priorities to
productive uses of credit alone; instead they
shall fairly assess and appreciate other non-
productive uses of credit and prudently hedge
the risk by pricing more for consumption loans
than production loans to cut down
ostentatious consumption
Membership shall not devolve more than a
person from each family unless and otherwise
there are any specific reasons like widow/
deserted or physically challenged persons
existing in the same family as second/third
eligible member
It is better to include only married women in
SHGs in anticipation of migratory problems
once the women get married. This shall not
cause any erosion of membership to a large
extent
The experience shows that unisex groups are
fairing well than mixed groups where peer
dynamics are limited and there is less space for
articulation for women in mixed groups
Neighbourhood alone shall not be the criterion
as this may result in inbreeding. Diversity in
terms of members’ profile will spur new thinking
and bring new values in SHGs. Ideally a
combination of neighborhood and diversity
will help the SHG’s dynamics grow
Activity based groups does not work in many
cases as issues of economic activity takes the
foreground than the group dynamics itself.
On many occasions common economic activity
does not work and members prefer to mange
activity individually and may like to draw
linkages from common sources. Common
economic activity coming on volition shall be
supported
Move away to non-income based accepted
tools like wealth ranking, housing index, means
test, geographic targeting etc
Lending outside the group for the purpose of
earning interest on the pretext of investing
the idle money is not a sound practice
Politics is integral part of life and more and
more clients participating in the process will
help SHGs apart from leveraging external
linkages will ensure a say for clients in the
political system of the village
SHGs need to associate itself in village
development and PRIs are right forums to
propagate much inclusive development
planning and SHGs shall need to spare time for
such development centered activities
SHGs must follow transparent practices
including encouraging visitors and if possible
visitors need to be charged for taking their
time off
IBA BULLETIN 37
AUGUST 2005
 Details
Subsidized interest rate or market rate
Common interest regimen for all clients
Common regimen for all purposes
Loan Terms
Encouraging voluntary savings
Nominal savings
Depositing in banks
Parallely taking loans from banks as
individuals
Dependence on promoters
Key research questions?
It is more important to know that why we
need to do this comparison rather than
merely knowing the better practices. Such
analysis will lead to know the process part
of delivering the best practices. While a much
38 IBA BULLETIN
AUGUST 2005
Normal practice
SHGs feel that less and less is the rate of interest,
more and more it can satisfy the members
SHGs practice common interest regimen for
all categories of clients
SHGs fix uniform interest rates for all purposes
regardless of the purpose for which the loans
has been taken
Uniform loan terms for all loans irrespective of
whether they are productive loans or
consumption loans and even within this
there is less scope for further variations.
Voluntary savings is not encouraged for fear of
bringing in inequity amongst members
Collecting savings from non-members in the
name of members to shore up the fund base of
SHGs
SHGs may tend to deposit idle funds with
banks in the beginning and in the process
cultivates this as a habit and some bank
branches may also insist for this
Members are not allowed to take loans from
banks individually once they are registered in
SHGs, as this may bring inequity amongst
members. Such loans are looked upon as threat
to the very survival of SHGs
SHGs looking for more and more technical
support from promoters and looking for
promoters’ role in all operational issues which
will cause inordinate delays in clients accessing
essential services
deeper analysis may need to go into
investigating the reasons for the huge
variation between established practices and
how it is broadcasted in the field, it is
worthwhile to compare between
Government promoted vis-à-vis NGO
Recommended practice
SHGs shall need to work on the market rate and
establish an acceptable rate of interest to strike
a balance between the formal and informal
sector. Interest rates need to respond to the
markets and not to client’s interests
Realizing that within the groups some clients
like widows/ deserted persons/ physically
challenged need special treatments as
relatively limited opportunities available to
them, SHGs having differential interest
regimen with clear policy on ground without
scope for misinterpretation to include in-
eligible clients the benefit of such preferential
treatments
A forward looking interest regimen needs to
look at the purposes of such loans and tweak it
to the requirements
Loan terms are decided based on the type of
loans, which shall take into account the stream
of income flow into the purposes lent. Holding
tight on the policy of uniform repayment
period for all loans may be regressive and mat
breed loan delinquency
Voluntary savings will increase the funds
available to SHGs for on-lending and mop up
such savings potential in the community as
individuals. If this is not harnessed fully such
savings will anyway be leaking into other
established informal rural financial systems in
villages
Nominal savings are prohibited by RBI Act and
many times there is scope for misappropriation
and false claims on such savings which can not
be monitored by SHGs effectively
Depositing in banks leaves little return for SHGs
and this is not to be encouraged as a matter of
routine and SHGs need to invest internally on
loans to members which will give better
returns to both SHGs and members
Members depending on their needs may
approach banks for their individual needs and
SHGs shall be used to leverage funds for
individual enterprises. This is apart from what
SHGs collectively leverage from banks for all
members. SHGs shall actively encourage such
loan linkages for individual clients
SHGs looking at promoters only for strategic
issues and able to manage more and more of
operational issues which are quite routine
managed groups, rapid growth of SHGs
versus systematic growth, standardised tools
vs adhoc processes. How SHGs in South are
ranking compared to North, how MFI
promoted SHGs are scoring when compared
to bank linkage model, whether SHGs of
micro finance focus are faring better than
integrated models of SHGs, whether huge
rating difference is observed between bank
promoted SHGs and NGO nurtured SHGs. Are
SHGs linked to federations doing better than
stand alone SHGs? Quality differences
between community formed groups and
others and how the remotely located SHGs
are putting up as against closely located SHGs.
Yet such comparisons are leading to large
gaps between what is the accepted practice
and what is being observed as of now.
Way forward
The quest for promoting SHGs cannot
become merely a number driven agenda
and the one and half decades of
experimentation on SHGs shall gradually
evolve into setting new benchmarks on the
quality and standards of SHGs. Analysis of
SHGs’ performance over years by many stake
holders (however stake holder centric the
analysis might be) have revealed dip in
qualitative attributes like repayments, group
dynamics and robustness, business focus,
interest of clients in participation in decision
making, attendance of group members in
group meetings, zeal in taking leadership
responsibilities and increase in delinquency
in savings, client drop outs, etc.
Issues of excessive dominance of dairy
activity even in SHGs, bunching of credit
linkages to the last quarter of the financial
year, credit camps being practiced in SHG
lending make them as good as any other
rural credit product which banks in India
has been experimenting with and certainly
to make a difference. SHGs need to over
come the ‘Quality blues’, the control of which
rests with the stakeholders themselves, given
the right orientation and attitude. Let’s set
things right before the celebration of
success wanes into a story of mourning. ❑

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:

z Fringe Benefit Tax - Its nuances and implications

z Boosting of fee based income of Banks – ways and means

z Role of Banks in Commodity Markets

z Implications of CBS in Banks – utility, application and customer perspective

z Financing Software Developments/Exports.

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 39
AUGUST 2005
 Change, Competition, Leadership &
Rethinking Future
Globalisation brings
along with it the ‘Change’
in the form of local
competition to product
and services. In business
scenario, change takes
place in the form of new
technologies, changing
attitudes and consumer dynamics.
The evolving customer needs, also fosters
change from traditional methods of serving
the customer to use of technology
transcending all geographical barriers.
Change has also altered the manner of
competition. Change is now looked more as
an opportunity and not as a threat. To really
understand change, examination of the
fundamental would reveal why the need for
change has arisen. Firstly, there has been shift
from industrial economy to information
economy, national economy to global
economy, hierarchies to networking, either
or options to multiple options. Quite
naturally working in such changed
environment has brought along with it
different skill sets, radically different from
what had been practiced in the past.
Procedural competencies have given way to
customer assistances competencies, routine
repetitive work to non-routine abstract work,
isolated work to group interactive work. In
short, there is a cultural change in the form
of demand for skill required to operate in
an everchanging environment to earlier well-
defined stable environment. This signals a
new era of ‘Competition’ totally different
from the traditional one.
The changing role of the present day
customer, from isolated to connected, from
unaware to well-informed, determines the
future competition. Banks are competing
with one another to woo the customer
through variety of service and product
Shri Gopinath is General Manager (IIS), Indian Bank, Head office, Chennai.
40 IBA BULLETIN
AUGUST 2005
innovation by the use of technology. Strategy
and tactics adopted have to move from the
traditional bank centric value creation to
customer centric value creation. Innovated
products and services have to be marketed
and sold based on what value and
satisfaction it creates for the customer. Banks
can no longer assume that value resides
exclusively in the bank’s product and services
and thereby go about marketing and selling
products and services which bank feel are
good, without understanding and studying
whether there is any value creation in these
products and services for the customer who
is the final user. The success of failure of
products and services to a large extent
depends on this factor. For example, some
banks have launched credit cards on co-
branded basis with other service providers
(like Airlines etc.) aimed to provide more
value creation and satisfaction from the
customer‘s point of view. This implies that
future competition is based on value
creation and not merely on the introduction
of plain vanilla products which was good
enough few years ago. Market proactive
banks have started realising the importance
of Customer Relationship Management and
have already started pricing, based on
customer relationship. Hence in the future,
banks will have to focus on what they can
offer, juxtaposed with the desire and
satisfaction of the customer, for only this,
can result in value-creation and a win-win
situation for both.
This brings us to the importance of
‘Leadership’ in the new era. It is thought
that, to meet future competition, we need a
new organisational step up but what is
equally important is that traditional
leadership has to give way to 21st century
leadership. The new leader has to be more
forward looking, have a vision, should be
K.M. Gopinath
able to spot early emerging trends, seize new
opportunities, leverage on technology and
human resources to derive the best before
others get there. In other words, new leaders
should, inter-alia, have strategic direction. As
someone said“Strategy is cerebral but the intent
to put into practice is the absolute lever to
productivity of any business endeavour”.
Traditional leadership style to micromanage
every minute details leads to over-managing
the present, which leaves no time to create the
future. The mantra is to empower, delegate, defy
traditions, get bureaucratic shackles off the feet
which alone is certain to ensure success as this
would encourage decision making at all levels
which sadly is at discount at Public Sector Banks
due to the fear of accountability.
This leads us to the ultimate, i.e. ‘Rethinking
the Future’. As stated earlier, we have moved
from the industrial era to an information
age of networking. Therefore, we cannot
expect the future to be a continuation of
the past. Hence the planning for the future
will be quite different because the
fundamentals and assumptions of the past
will no longer hold good for the future. The
classic example is the introduction of Core
Banking Solutions which is in tune with
information age. This leads us to re-think
whether the present organizationl structure,
in existence over the years is capable to
handle the complexities of the information
age. Banks have traditionally structured the
organizational set up, functional-wise
whereas in the information age, there is a
need to reorganise it on major business lines.
The leaders of today cannot be just content
in just improving the business in terms of
greater market share. While this is important
to remain profitable, more important is to be
a true leader (or trend-setter). He should
have a vision, create new ideas and take the
organisation forward in that direction. In
short, it calls for inventing the future. ❑
 Counter – The Best Marketing Joint
The very old tradition of
Counters in the banks
just like the Great Walls
or Cages have become
obsolete and the
present day hitech
environment changed
the pattern of counters.
Now-a-days the counters are just like the
tea tables between the bankers and
customers.
Take the example of any organization,
company or business concern, counter acts
as a mediator between the customer and
the seller. We can say that the counter is the
gateway of any business wherein entire
business starts and grows through the
counters only. Counter is just like a battle
field but where it is not the battle for
freedom or kingdom but the battle for
relation with the customers to improve the
business.
Counter staff should be like warriors who
always be alert to capture the financial stress
of the customers and give the solutions to
get them absolutely satisfied. Whatever the
plans, policies, budgets, targets, products etc.,
are introduced or adopted, it is the counter
that only push them through the customers
who feel tension free from his burden of
money management.
In a broader extent, we can say that counter
is just like a market place where bankers
give the service, explain the features of
various products and customers transact
their banking business. It is the duty of every
banker to make the customer a good
marketing zeal for the bank. Take a small
example how the customer himself becomes
the marketing man sometimes. If the quality
of food, service and prices are appreciable
and reasonable in a small hotel, certainly a
visitor who tasted these will tell his friends
and known persons about them. Without
his knowledge, he has become a marketing
Shri Naidu is presently working as Manager, ING Vysya Bank, Davangere.
executive for that hotel simply for no reason.
Marketing Courtesy
Clear Vision C Empathy
Financial O guide him to the proper person
Services U Service
N Skills of
Negotiation Negotiation
T first and answer him accordingly point
MIS
E by point. Interfering in between his
Dignity of Relational
Organization R Approach
From Management Towards Customers
Here the counter management or branch
management is the key task which helps to
make customers experience the relationship
banking and banker to experience the
professional banking. In a bus, the driver
should be perfect then only the passengers
reach the destination safely, likewise in the
branch, counter staff should be well-
experienced to fulfill the objectives of both
the customer as well as the bank.
Following are the five special skills of counter
staff which helps both banks as well as
customers.
1. Patience : The first and foremost quality
required is patience. This is the only
main skill which takes you to the
maximum heights if you possess the
nature of hard work along with it.
2. Courtesy : Patience is an inner skill and
courtesy is the outer skill which
includes wishing with a smile, calling
the person by name, offering the
customer a seat, paying a special heed
etc. These qualities make the customer
friendly and feel happy at your service.
3. Versatility : The counter staff should
have thorough knowledge about
various products of banks, rules and
regulations. If the customer asks for
S. Pradeep Naidu
service/clarifications the staff should
be in a position to render the service/
clarified the doubt and if not possible,
concerned.
4. Attention : Allow the customer to speak
conversation will irritate the customer
and ultimately the bank will lose the
customer.
5. Smart : This is more important than
the above skills or features because
the first impression to the customer
should always be the best. You should
be smart in dress, way of talking, style
of functioning and delivering the
transactions. The impression makes the
customer confident that he will be
guided properly in his financial
transactions and his money will be
safer.
The employee at the counter carries the
brand of the bank and he has to live in the
Brand i.e. confidence of the Bank and
customer so that the customer certainly gets
new relationships into the fold of the bank.
Earning and spending are not important;
Earning, spending and saving are important.
Likewise getting customer is not important;
getting customer, retaining the customer and
enriching your banking family with new
relations are important. Every new customer
relation brings many more new relations
unless you should be a Relationship banker.
Hence, Counter is the threshold where the
relation begins; bank grows; customer
prospers; employee Cherishes which
ultimately lead to the growth of the
economy. ❑
IBA BULLETIN 41
AUGUST 2005
 Whether Amendement to CPC –
A Boon or Myth
Government of India has
made certain
amendments to CIVIL
PROCEDURE CODE Vide
CPC (Amendment ) Act
1999 i.e. Act 45 of 1999
and CPC (Amendment)
Act 2002 i.e. Act 22 of 2002 and the
amendments came into force with effect
from 1.7.2002. However the amendments
were challenged in Supreme Court and
Ultimately Supreme court has upheld the
Amendments in June 2003.
Main aim of the Amendments
The aim of the amendments inter alia is to
reduce delay in disposal of cases,
empowering courts to refer the cases to
alternate dispute resolution systems like
Arbitration, Lok Adalats etc., fixing specific
time limits for various processes of courts
etc.
Some of the important amendments which
reduces delay and pave way for faster
disposal of cases are as under.
● Summons are to be issued to
defendants within in 30 days of filing
of suit.
● Plaintiff has to produce documents and
copies of plaint to defendants within 7
days of orders of Court.
● If Summons to defendants are returned
undelivered, Plaintiff has to apply for
fresh summons within 7 days of return
as otherwise suit will be dismissed.
● Written Statements are to be filed by
Defendants within 30 days of Service
of Summons.
Shri Shivaramakrishnan is Manager & Faculty , Canara Bank, Regional Staff Training Centre, Hyderabad.
42 IBA BULLETIN
AUGUST 2005
● The date of hearing will be adjourned
for non-appearance not later than 7
days from the date of original hearing.
● Courts will not grant more than 3
adjournments.
● All endeavour should be made to
pronounce Judgement within 30 days
from the date of conclusion of hearing.
● Decree has to be drawn within 15 days
from the date of pronouncement of
Judgement.
What Is the Factual Position
While the aim of the Amendment is to
reduce delay and ensure faster disposal of
cases, in practice , in majority of cases this is
not happening for the following reasons :-
● Written Statements are to be filed within
30 days from the date of Service of
Summons.
However since maximum time limit is given
upto 90 days, courts are extending time
invariably upto 90 days and even they
extend time beyond 90 days as well.
In effect, it takes atleast 90 days for filing
written statement as against the envisaged
time limit of 30 days. Also courts are allowing
further 30 days time to defendants for filing
additional written statements.
● Eventhough adjournments due to non-
appearance should not be later than 7
days, courts are granting longer
adjournments.
● As per the amendments, courts cannot
grant more than 3 adjournments. But
in practice, courts are invariably
granting more than 3 adjournments for
K. Shivaramakrishnan
some reason or other.
● Courts are expected to pronounce
Judgement within 30 days from the
date of conclusion of hearing and in
extraordinary circumstances the time
limit can be 60 days. In practice courts
take longer time and also in some cases
courts reserve the Judgements.
● As per the amendments, Decree has to
be drawn within 15 days from the date
of pronouncement of Judgement. But
in practice courts take longer time and
even months together in some cases to
draw a decree on some grounds or
other.
In spite of all the above one can definitely
notice a lot of improvements in disposal of
cases. Eventhough courts could not strictly
adhere to time norms prescribed under the
amendments for some reason or other, still
time consciousness is developed while
conducting cases. Instead of simply
postponing/adjourning the cases
indefinitely without any time limit as was
being done during earlier times, now courts
have started implementing reasonable time
norms though not strictly as per CPC
amendments as above.
For any new act/amendment, it takes
considerable time to settledown and
implementation part gets streamlined in
course of time. While hoping for better fruits
of the CPC amendments in the ensuring
periods, by having proper rapport and constant
follow-up with the advocates, the benefits of
the above amendments in CPC can be reaped
by the banks to the fullest extent. ❑
 Legal Decision Affecting Bankers
Fixed Deposit Payable “Either or Survivor”
Cannot be pledged by Either
Anumati
Versus
Punjab National Bank
2004 (9) Scale 10
The appellant Mrs. Anumati and her husband
Mam Chand got issued a fixed deposit
receipt for Rs. 20,000/- with the respondent
bank for a period of 84 months. The amount
payable on maturity was Rs. 39,930/-.
According to appellant, half of the deposited
amount belonged to her and the other half
belonged to her husband. A loan was taken
by one Khem Chand in his sole proprietary
business M/s. Verma Agro Industries. The
bank filed suit against M/s. Verma Agro
Industries, Khem Chand and appellant’s
husband Mam Chand. During the pendency
of the above said suit a legal notice was
servied on the bank, by appellant and Mam
Chand for premature encashment of the
fixed deposit receipt. The bank filed an
application in the court that the fixed
deposit receipt had been “mortgaged” as
security towards the disputed loan and the
amount of fixed deposit has been credited
in the disputed loan.
The trial court allowed the banks application
holding that the amount of fixed deposit
account had rightly been adjusted in the
account of the disputed loan. Mam Chand
challenged this order by way of a revision
application under Section 115 of CPC. The
revisional court held that the application was
not maintainable and that it was open to
Mam Chand and his wife to initiate legal
actions/proceedings for the receovery of the
amount deposited against the Bank and it
was further held that the order of trial court
would not in anyway inhibit the appellant
from initiating such proceedings since she
was not a party either in the suit or to any
other proceedings initiated by the Bank. The
revisional court found as a fact that the fixed
deposit receipt did not bear the thumb
impression of appellant and the only thumb
Contributed by Shri Ajit Singh Cheema, Senior Manager, Punjab & Sind Bank, Amritsar.
impression appearing thereon was that of
Mam Chand and it also held that since the
FDR was not mortgaged as guarantee for the
loan taken by M/s. Verma Agro Industries or
Khem Chand the dispute regarding the FDR
was not in issue in the suit filed by the Bank.
The appellant then filed a complaint before
the District Forum under the Consumer
Protection Act. The District Forum came to
the conclusion that the appellant was
entitled to recover half of the amount of
the FDR i.e. Rs. 19,965 because she had never
mortgaged her share of the fixed deposit in
favour of any party. It was further held that
since the receipt was in the joint names of
the appellant and her husband, the bank
should not have accepted any pledge of the
account without informing the appellant
and getting her consent. The Bank preferred
an appeal to the state commission, which
proceeded on the basis that Mam Chand
had validly pledged FDR. The FDR was
payable to “either or survivor”, it showed that
the Bank could have got discharge by
making payment to either of the account
holders. According to the State Commission
when payment could have been made to a
single individual in terms of the directions
of the depositors then the bank was at liberty
to accept mortgage of the FDR on behalf of
one of the depositors and the consent of
the other depositor was not necessary. The
appeal was accordingly allowed and its
complaint was rejected The National
Commission merely concurred with the State
Commission and held that the financial
institutions had every right to protect their
interest by taking “conscious decision”, the
bank has taken “conscious decision” in this
case and it could not be faulted and there
was no deficiency of services. Aggrieved by
the decision and the National Commission,
appellant preferred the present appeal to
the Supreme Court.
The Supreme Court held as under –
A fixed deposit receipt in the joint names of
two persons is nothing but a joint account
Ajit Singh Cheema
which, as the name suggests, is repayable
on the expiration of the agreed period. The
FDR is merely a written acknowledgement
by the bank that it holds a certain sum to
the use of its customers. The Bank is thus a
debtor to the account holders in respect of
the amount deposited. A debt which is
repayable by the Bank to the account
holders with interest on the expiry of an
agreed period. An “either or survivor” clause
in such an account means that the amount
payable by the Bank on maturity of the fixed
deposit may be paid to either of the account
holders by the Bank in order to obtain a
valid discharge. In other words under a
triparitite agreement between the joint
account holders inter se and the Bank, the
Bank may, on maturity, make payment only
to either of them. This tripartite agreement
cannot be bilaterally modified by one of the
joint account holders, for example by
pledging the account with any third party
including the Bank itself in its capacity of
creditor, so that the amount becomes
payable to such third party, without the
consent of the joint account holder.
In the present case, the contract in respect of
the joint account was between the Bank and
the husband and wife. The fixed deposit was
not a debt due by the bank to Mam Chand
alone which could be set off by the bank
against any claim that the bank may have
against Mam Chand. Besides the right of Mam
Chand was to receive the money deposited
only after it matured, if he survived, supposing
Mam Chand had died before the fixed
deposit matured, the only person entitled to
get the money would be the appellant. This
right of the appellant could not have been
taken away without her consent.
Under the circumstances it was held that the
Bank had no right to refuse payment of the
amount deposited to the appellant. The
District Forum was correct accepting and the
State Commission and National Commission
erred in rejecting the appellants complaint.
The appeal allowed ❑
IBA BULLETIN 43
AUGUST 2005
 Banking Scene : Indian
Mid Term Appraisal of the 10th Plan
Targets
The Mid Term Appraisal of the 10th Plan
conducted by the National Development
Council (NDC) noted that in some areas of the
economy is doing well and these gains need
to be consolidated, but there are also important
weaknesses, which if not corrected could
undermine even the current performance level.
Overview of the performance of the economy
and problems of the economy are summarized
as follows:
GDP growth has averaged 6.5 per cent in the
first three years, which is below the Tenth Plan
target of 8.1 per cent. Positive factors include
(a) improvement in private corporate sector
investments, (b) positive international
perceptions on India (c) tolerant inflation level
(d) comfortable external payment position
with substantial inflows from abroad leading
to comfortable foreign exchange position.
Industrial sector also showed signs of
improvement. The ultimate aim should be to
consolidate the gains in these developments
and to overcome the weakness in the economy.
Key weak areas are identified as follows:
Aggregate Growth : Though the plan fixed
a target of 8.1 per cent, it is difficult to achieve
the target and the likely growth rate is
expected to below 7 per cent during the plan
period. An important reason for the lower
growth is that investment did not increase in
line with available investible resources.
44 IBA BULLETIN
SEPTEMBER 2005
Agriculture Growth : Agriculture growth is
very poor over the last two decades.
Agriculture growth has decelerated sharply
from 3.2 per cent to 1.9 per cent between
1980-81 and 1995-96. There is a need to
revamp the entire strategy and more action
is called for to improve the performance in
agricultural sector.
Infrastructure Problems: Inadequate
infrastructure in both rural and urban areas
are a major factor constraining India’s growth.
The quality of infrastructure impacts on our
ability to compete globally and also to attract
Foreign Direct Investment.
International Developments : Owing to
high oil prices, our import outgo is quite high.
Since we have ample foreign exchange
reserves at the moment, the impact of the oil
prices are not passed on to the users. But if
the oil prices remain high, its impact need to
be passed on to the consumers, which will
lead to inflation or fiscal deficit in the country.
Another cause of concern is the downturn in
the world economy, which will affect our
export growth considerably. It is estimated
that every 1 percentage point reduction in our
export growth rate will reduce the growth rate
of GDP by 0.2 percentage points.
Social Development : Our social indicators
are not only lower than the levels in East Asian
countries, but they are lower even in
comparison with the levels achieved by these
countries twenty five years ago. The social
indicators also show wide disparity in the
gender gaps, large rural and urban differences
and wide variation across states.
Employment : This is another area of grave
concern. Studies based on data collected from
organized and unorganized sectors state that
while employment may be increasing in the
unorganized sector in response to growth,
there is actually a contraction in employment
in the organized sector, which is the preferred
sector for employment by new entrants to the
labour force.
Inequality and Poverty : Though the poverty
has declined, the decline was less than
targeted. The moderate improvement in
education and health indicators implies that
access to more productive employment
remains limited, especially in backward
regions and amongst disadvantaged groups.
Balanced Regional Development : Regional
imbalances in the development of different
states present a picture which require
focussed attention. Some states were able to
reap the benefits of the economic reforms,
but some others were not able to do so. Even
district backwardness in a well performing
state also presents a grim picture.
Resources in the Public Sector : The
availability of resources in the public sector
to meet targeted levels of plan expenditure is
an area which deserves attention. Neither the
Centre nor the States have been able to
mobilize the resources needed to keep
outlays in line with Tenth Plan projections and
this has led to significant under funding in
many sectors. The consolidated public debt
of the Centre and States taken together is
about 80 per cent of the GDP which is among
the highest in emerging market economies.
The scope and time for correcting these
deficiencies during the 10th plan period is
very limited. The Mid Term Appraisal suggest
various corrective measures in these areas.
These corrective measures could be
considered for formulating the 11th Five Year
Plan targets and policies.
Declaration of Dividend
The Reserve Bank has decided to grant
general permission to banks to declare
dividends, provided they comply with the
following conditions:
Eligibility Criteria
1. Only those banks, which comply with the
following minimum prudential
requirements, would be eligible to
declare dividends without the Reserve
Bank’s prior approval :
(a) capital to risk-weighted assets ratio
(CRAR) of at least 9 per cent for
preceding two completed years and
the accounting year for which it
proposes to declare dividend.
(b) Net non-performing assets (NPAs) of
less than 7 per cent.
In case any bank does not meet the
above CRAR norm, but is having a
CRAR of at least 9 per cent for the
accounting year for which it
proposes to declare dividend, it
would be eligible to declare
dividend provided, its net NPA ratio
is less than 5 per cent.
2. The bank should comply with the
provisions of Sections 15 and 17 of the
Banking Regulation Act, 1949.
3. The bank should comply with the
Reserve Bank’s prevailing regulations/
guidelines, including creating adequate
provisions for impairment of assets and
staff retirement benefits, transfer of
profits to statutory reserves, etc.
4. The proposed dividend should be
payable out of the current year’s profit.
5. The Reserve Bank should not have placed
any explicit restrictions on the bank for
declaration of dividends.
Regarding the quantum of dividend, the
following stipulations were made by the RBI.
Banks which fulfil the eligibility criteria, may
declare and pay dividends, provided –
● The dividend payout ratio does not
exceed 40 per cent. [Dividend payout
ratio should be calculated as a
percentage of ’’dividend payable in a
year’’ (excluding dividend tax) to ‘‘net
profit during the year’’.
● In case the profit for the relevant period
includes any extraordinary profits/
income, the payout ratio should be
computed after excluding such extra-
ordinary items for reckoning compliance
with the prudential payout ratio.
● The financial statements pertaining to
the financial year for which the dividend
is declared, should be free of any
qualifications by the statutory auditors,
which have an adverse bearing on the
profit during that year. In case of any
qualification to that effect, the net profit
should be suitably adjusted while
computing the dividend payout ratio.
The Reserve Bank will not entertain any
application for a higher dividend payout ratio
than the one for which the banks qualify.
Door-step Banking
The Reserve Bank has advised all scheduled
commercial banks to formulate a scheme for
providing services at the premises of a
customer within the framework of Section 23
of the Banking Regulation Act, 1949.
Accordingly, the banks have to formulate the
scheme with the approval of their respective
bank boards and send the same for RBI
approval. In the interregnum, agency banks
may continue to lift cash and credit
instruments, etc., from the premises of central
and state government departments.
India’s trade deficit
India’ s exports recorded an increase of 19.5
per cent during the first quarter of the current
fiscal. Imports on the other hand recorded a
sharper growth of 38 per cent during the
same period. As a result, the trade deficit
doubled to $11.4 billion in the first quarter of
2005-06 compared to $5.9 billion in April-June
2004-05. ❑
Compiled from different sources by
Smt. Jayasree Menon
IBA BULLETIN 45
SEPTEMBER 2005
 Banking Scene : Global

ADB gets tougher on Philippine Reforms activity in the fast –growing economies of Vietcom bank is viewed by the analysts as the
Central and Eastern Europe. According to a best managed of Vietnam’s big four state
The Asian Development Bank (ADB) has
study conducted by the Austria’s co-operative commercial banks, which together account
announced a new three year strategy for the
banks, one of the biggest financial group in for about 70 per cent of total loans. However,
Philippines, under which new lending could
the region, the demand for retail banking they are highly susceptible to political
range from zero to as much as $1.5 billion
products has soared on the back of strong pressure to lend to loss-making state
depending on the pace of fiscal consolidation
economic growth and rising affluence. While enterprises. Vietcom bank is slated to be
and key sector reforms. The ADB expects the
demand for retail banking products has transformed into a public company, with
Philippines to proceed with measures to
neared west European levels in some central common shares issued and sold and
boost tax collection and cut the budget
and eastern European countries, massive accountability to all its shareholders, rather
deficit. If the fiscal consolidation is weakened,
growth potential remains in less developed than political leaders. The analysts also view
the bank may stop lending to the country. On
or affluent regions. The penetration of debit this as a critical test of the Communist
the other hand, if the government succeeds
and credit cards in Slovenia and Croatia is government’s ability to undertake tough but
in improving public finance, the bank will
about 1200 cards for every 1000 inhabitants essential structural reforms. Inspite of all the
consider to double future lending to $1.5
which is now virtually at Austrian levels. But efforts, the government is planning to retain
billion in the next three years. Around 90 per
other parts of Eastern Europe still have huge 70 per cent of the equity. According to
cent of the new loans would be quick
room for growth. In Romania, one of the least banking industry sources, Vietcom bank had
disbursing, but they are high-conditionality
developed banking markets in the region, approached potential investors, but the
programme loans that could help the
Raiffeisen International is opening between institution’s asset quality is a concern and due
Philippines cut costly commercial borrowings
40,000 and 60,000 new retail accounts a diligence is expected to take a longer time.
to refinance maturing debt. International
month. But in a relatively developed Hungary, Vietcom bank, on its part had already shifted
Credit Rating Agencies like Standard & Poor,
upto 25 per cent of people still has no bank its lending away from state enterprises, which
Fitch and Moody’ s have cut the outlook for
account. Demand for consumer credit is so accounted for just 50 per cent of its total loan
Philippine credit ratings over the future of the
strong in Croatia, Bulgaria and to a lesser portfolio, down from 90 per cent in 2005.
existing government. They felt that the
extent, Romania that local authorities have Consumer lending and mortgage lending,
existing government would not be in a
taken action to prevent overheating in the now about 15 per cent of the loan book, are
position to avoid budget deficit and avoid an
market. Their measures have varied from expected to grow to around 40 per cent by
Argentine-style debt default. Against this
ceilings on lending to forcing banks to 2012.
back drop, the ADB had stated that the level
increase the level of non-interest bearing
of financial support for the Philippines for Reforming OECD
minimum reserves they deposit with central
2005 to 2007 would be contingent on
banks. Demand for mortgages has soared in The Organization for Economic Co-operation
significant front loading of the fiscal
these regions. Strong underlying economic and Development (OECD) is essentially the
consolidation process, backed by an
growth rates and the potential in retail and economic policy research unit of 30 rich
enhanced tax effort to ensure the
corporate banking suggest foreign banks will nations, establishing guidelines on
sustainability of economic reforms. It would
expand further in the region. Growth in these everything from telecoms liberalization and
also stop the other funds because the counter
regions is expected to come through farm subsidies to macro economic policy. The
part funds from the government will not be
takeovers of the dwindling number of local oversight of the OECD is undertaken by a
there once the government falls. As such, the
banks still available, and consolidation among huge diplomatic staff from member countries.
bank intends to disburse $1.5 billion in new
big foreign banks, which are already present. It entails more than 100 formal meetings
structural adjustment loans, which do not
require counterpart funds. But if phillippines Vietcom bank seeks partner annually. Though discussions are on to
improve tax revenues and implemented increase the OECD members to include some
Vietcom bank, one of Vietnam’s four main emerging economies and other European
other policy reforms, then it is a strategic shift
state-owned commercial banks, wants to sell Union countries, but before that, the
in approach and modality.
a strategic stake to a foreign partner as part organization wants to reform internally.
Retail Banking is catching up in Central of its planned privatization. The bank is America has proposed that the OECD’s
and Eastern Europe looking for a partner, which is culturally fit and council meet only four times a year, instead
also help the bank to change fast and improve of twice a month. It also wants new
Retail banking is catching up with corporate
the corporate governance structure as well. procedures for setting work priorities, voting
business as the main driver of financial

46 IBA BULLETIN
SEPTEMBER 2005
rights and budget matters. The challenges of
reform and enlargement have to be met with
courage and it also calls for certain tough
measures in the near future.
General Guidance for Payment System
Development
Committee on Payment and Settlement
Systems (CPSS) issued a consultative report
on general guidance for Payment System
Development which aims to give assistance
and advice on the planning and
implementation of reforms in the payment
system as a whole. The report includes 14
guidelines and accompanying explanatory
text on payment system development. The
CPSS had released these guidelines in May,
2005 and sought comments by 30th
September, 2005. The Guidelines are grouped
together to reflect the four key dimensions
of developing a national payment system. 1)
the role of the banking sector 2) effective
planning and project implementation 3)
developing the institutional framework
required to sustain payment system reform
and 4) designing a safe and efficient payment
infrastructure to meet the particular
emerging needs of a country’s economy.
These guidelines are developed on the basis
of the actual reform experiences of the
different countries. Since the development of
a national payment system is highly country-
specific and conditional on a variety of
institutional, financial and economic factors,
the specific implementation approach for a
particular guideline should be considered in
the context of each country’s own
environment. Therefore, from this angle, these
guidelines cannot necessarily be the “best
practice standards” for every country.
Guidelines are summarized below:
Banking System
1. Keep the central bank at the center :
Due to its overall responsibility for a sound
currency, the central bank has a central
role in the development of the use of
money as an effective means of payment.
For Subscription kindly contact the Communication Department, IBA
Tel. : 022-2217 40 40 • Fax : 022-2218 42 22 • tushar@iba.org.in
2. Promote the role of a sound banking
system : Payment accounts, instruments
and services available to end users are
mainly provided by banks, which
compete individually but often need to
act co-operatively as a system.
Planning
3. Recognise Complexity : Planning
should be based on a comprehensive
understanding of all the core elements
of the system and the principal factors
influencing its development.
4. Focus on needs : Identify, and be
guided by, the payment needs of all
users in the system and by the
capabilities of the economy.
5. Set Clear Priorities : Plan and Prioritise
payment system development
strategically. Top priority should not
necessarily be assigned to the
introduction of highly sophisticated
technology. The plan should consider
which elements of the existing system
can be an avenue for future
development.
6. Implementation is key : To ensure
effective implementation of the
strategic plan, the success of the
payment system reforms depends
crucially on the effective
implementation of the strategic plan.
Institutional Framework
7. Promote market development : The
expansion and strengthening of market
arrangements is a key aspect of the
evolution of the payment system.
8. Involve relevant stakeholders :
Encourage the development of effective
consultation among relevant
stakeholders in the payment system.The
involvement of relevant stakeholders in
information sharing, consultation and
collaboration facilitates coordination
between the central bank and other key
IBA Bulletin
players on emerging payment system
changes and policy initiatives.
9. Co-operate with other authorities :
Effective payment system oversight by
the central bank requires collaborative
arrangements with other authorities.
Arrangements between the central
bank and other agencies to exchange
views, collaborate on relevant issues and,
where needed, coordinate relevant
policies can help to ensure safe and
efficient development of the system.
10. Promote legal certainty : Develop a
transparent, comprehensive and sound
legal framework for the system.The legal
framework is necessary to provide legal
certainty and reduces the risk.
Infrastructure
11. Retail – give more choice to more
people : Extend the coverage and
choice of non-cash payment
instruments-and services available to
end-users by expanding and improving
infrastructures.
12. Large value –business case leads,
technology follows : Develop a large-
value payment system based primarily
on the needs of financial markets and
the growth in time-critical interbank
payments.
13. Securities-Plan Securities and
payment systems together : Co-
ordinate the development of the
infrastructures for securities and large-
value payments.
14. Retail, large value and securities-co-
ordinate settlement : Co-ordinate
settlement processes for the core
systems to effectively manage the
interrelated liquidity needs and
settlement risks among them. ❑
(Compiled from various sources by
Smt. Jayasree Menon)
IBA BULLETIN 47
SEPTEMBER 2005
 Book Review
Book : Mannual on Foreign Exchange (Exchange Rate Mechanism and Foreign Currency Financing Options)
Author : R. S. Arora
Publishers : Skylark Publications, 1/5, Bhagat Singh Lane, Gole Market, New Delhi - 110 001
Year of Publication : 2005
Price : Rs. 250/-
Pages : 458
Manual on Foreign Exchange is a textbook or
a reading material covering wide ranges of
topics on Exchange Rate Mechanism, Foreign
Currency Financing Options, International
Trade (Export and Import of goods and
services) and matter relating to Foreign Trade
Policy, Capital Account Convertibility and
Anti – Money Laundering Guidelines.
The book contains thirty chapters, which are
divided into five sections. In Section I (ten
chapters), after giving introduction on the
concept of foreign exchange, it deals with
Exchange Rate System, Exchange Rate
Mechanism, Natural Real Exchange Rates,
Forex Derivatives, etc. Section II (ten
chapters) discusses about Export-Import
business, Export Credit, EXIM Bank, External
Book : A Customised Banker
Author : Dr. M.G. Kale
Publishers : Varada Prakashan Pvt. Ltd. 397/1, Senpati Bapat Marg, Pune - 411 016
Price : Rs. 450/-
A Customised Banker – A monologue Book
by Dr. M.G. Kale by name itself suggests he has
explained in detail about the relationship
between a Banker and a Corporate Borrower.
Dr. Kale who himself had a long stint at one
of the nationalized Banks and covered in
detail in terms of Credit (Appraisal) in 3 parts.
The first part consists of Eight chapters which
covers the changing Indian Banking scenario,
the role of banker as an advisor both the
cultures of banker and borrower and finally
about good governance, which is of great
importance as of now and also in the days to
come as we are also fast moving from
48 IBA BULLETIN
SEPTEMBER 2005
Commercial Borrowings, Foreign Currency
Financing Options, etc. Section III (three
chapters) basically deals with the concepts
and issues in Inward and Outward
Remittances. Section IV (six chapters)
elaborates on Foreign Trade Policy, FEDAI
rates, Anti-Money Laundering Guidelines,
Sodhani Committee Report and Tarapore
Committee Report on Capital Account
Convertibility. Section V (one chapter) gives
Foreign Exchange Arithmetic with practical
examples. Updation of Foreign Trade Policy of
India as on March, 2005 is also given in the
annexure that follows.
The book, although is an updation of the
earlier version, has many add-on new features
that have been introduced in the process of
Corporate Governance to Entrepreneur
Governance.
The 2nd part which consists of six chapters are
really useful for a banker especially those who
are handling credit in their day to day
functioning. It covers topics like – credit
appraisal and assessment of WC and WC
management and also practicial tips as to what
a Banker has to do during his interactions and
visits to the client’s place of work.
The last part consists of 6 chaptes mainly
deals with Human Resources subject. It tunes
one’s mind to the knowledge management,
liberalisation.The book is best suited for bankers,
exporters/importers, corporate having foreign
exchange component of business, consultants
and professionals, for students appearing for
CAIIB exams and for all those who have interest
in international business.
The book, written by a senior and seasoned
banker Shri R.S. Arora, is not only authentic in
its information content but also an interesting
piece as the author has presented the theory
and concepts punctuated by his practical
experience. This book is a treasure trove. The
content of the book truly reflects its title
“Manual on Foreign Exchange”. ❑
Reviewed by : Shri P. K. Nayak
Assistant Advisor, Reserve Bank of India,
Mumbai - 400 001.
individuals emotional competence and
intelligence and how the CRM Technology
can be scientifically utilized to the better
benefit of the individual and through him for
the benefit of the organization.
In total, this book, which has been the great
efforts of a professional banker, is really useful
to the existing as well as new entrants in the
banking sector. ❑
Reviewed by : Shri T. Ravi Sankar Trivedi
General Manager, Andhra Bank,
Mumbai.

Book Review
The new developments in Indian financial
markets are but offshoots of implementation
of financial sector reforms and de-
regularization of markets. In a decontrolled
financial market, interest rates are guided by
intense competition and demand & supply
theory will aptly apply.
The falling returns on traditional investments
like bank deposits led the common public to
move towards other avenues, which will give
better returns.
In this backdrop, it has become imperative to
both financial students, as well as, common
investing public to understand various facets
of Securities & Financial products.
At the outset, I would like to appreciate IIB&F
efforts to develop and nurture qualified and
competent bankers / financial professionals.
The author of the book Mr. Sunder Sankaran
did a splendid job in preparing the
enlightening course material. This book will
be immense use to the readers.
Structured in 10 chapters, majority aspects
related to Securities and Financial Investment
products are explained in a simple, easy to
understand manner.
In chapter ‘Investment Concepts & Asset
Classes’ different investment concepts, their
features, risks etc., have been brought-out.
Different investment styles, important terms
like short settling, margin trading, hedging,
diversifiication, immunization etc., have been
explained. Debt & Equity investments are also
methodically covered.
Chapter on ‘Financial Investment Products’
contain useful information regarding
investment terms like equity, preference
debenture, bank deposits, mutual fund
investment, postal savings etc. The bona fide
benefit to the reader is detailed elucidation
on different types of derivatives, forward
contracts, futures, options and swaps. Every
financial student needs to go through this
chapter meticulously.
Chapter on ‘Statistical and Mathematical
Tools’ are particularly important for finance
Book
Author
Publishers
Price
Pages
and investment professionals. Complex
calculations/tools like differentiation, liner
equation, quadratic equation, compounding,
discounting, arithmetic mean, geometric
mean, standard deviation, Z-scale, co-variance,
R-square etc., are explained in an enchanting
manner. Indeed, a multifaceted stuff
explained in a coherent manner.
The chapter on ‘Risk & Return’ illustrates the
investor’s ability and willingness to invest or
determine suitable investment options.
Important terms like opportunity set,
indifference curve, meeting point, utility
analysis, and absolute/relative returns are well
covered. Also explanied are portfolio risk,
portfolio return, counter party risk, credit risk,
inflation risk, re-investment risk etc.
To follow up with the different statistical/
mathematical methods deliberated already,
the chapter on ‘Portfolio Analysis’ contains
different examples on portfolio analysis.
Different mathematical/statistical formalae
described in previous chapter are showcased
in example manner for the benefit of readers.
Essential terms/investment models like Beta,
Capital Assets Pricing Model and Arbitrage
Pricing Model are brain stirring and are of
intellectural stuff. These calculations are
useful tools in assessing security risks and
returns. Though of limited significance in
India, the case of International Investments i.e.
global diversification and its advantages have
been highlighted.
The relation between information, response
of markets to information is well explained.
The alternative efficiency of markets, i.e. weak,
semi-strong and strong is covered in a fine
way, which will ultimately, determine the
investment strategies and potential returns
from the market. Key points of Prohibition of
Insider Trading Regulation 1992 Act, i.e.
Insider, Connected Person, Price Sensitive
Information, Prohibition, Compliance Officer,
Trading Window etc., are deliberated in a step
by step method. Undeniably, this is a useful
chapter for officials of many a Indian
Company/Financial Institution.
Different types of primary issues, namely IPO,
: Securities Market & Products
:
:
IIB&F
Taxmann Allied Services P. Ltd.
59/32, New Rohtak Road
New Delhi 11 0 005
: Rs. 175/-
: 271
public issue, rights issue, bonus issue, raising
capital through GDR/ADR, de-mutualization
and corporatization of stock exchanges have
been discussed in chapter ‘Securities
Market’. The role of SEBI in protecting
investor interest, Investment Bankers role in
primary issues and Merger & Acquisition
transactions, borkers/sub-brokers role in
public issues is well discussed.
The chapter on ‘Depository and Investment
Process’ throws light on depository
functioning and related aspects. The chapter
contains vital information on how to
determine likely return from a share
investment. It also describes the ground rules
followed in stock exchanges for settlement
and the ways to handle defaults. I suggest
that small investors should go through this
chapter for protecting their securities and
enhancing returns on them.
Last chapter, i.e. ‘Regulatory Frame Work’ is
well structured. The regulatory aspects of
derivatives, FIIs & Collective Investment
schemes are well explained. Various
regulatory aspects realted to SEBI & its
functions; Securities Contracts Regulation Act
1956; RBI, Companies Act; Corporate
Governance rules etc., are described in a
simple and intelligible manner. Enhancement
of shareholder value, keeping in view the
interests of other stakeholders is the essence
of Corporate Governance.
There is no exaggeration in stating that this
book is worth its gold in terms of content.
Author Mr. Sunder Sankaran provided a
qualitative and knowledge boosting material
on a subject that is taking roots in India. I
advocate that this book should be made a
subject for all financial students.
Price (Rs. 175/-) is quite irrelevant considering
the content and its worth.
I recommend this book to a) all students of
finance, banking & treasury and b) to all small
investors. ❑
Reviewed by : Shri V.S.R. Murthy
General Manager, Union Bank of India,
Mumbai - 400 021.
IBA BULLETIN 49
SEPTEMBER 2005
 uesKe
DeeefLe&keâ JeefOe&le cetuÙe
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keâe cetue leòJe Ùen nw
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(keâj meceeÙeesefpele) - Hebtpeer HeÇYeej
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Skeâ Ssmeer ¤HeevlejCe keâF& hegjmkeâej Øeehle ngS nQ~
lekeâveer k eâ nw ef p emes
DeeFyeerS yeguesefšve 51
Deiemle 2005
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¤HejsKee Hej efveYe&j keâjlee nw~ Fmeer lejn,
mebmLeeiele (HeÇesHeâeFue) Deewj efvepeer efveJesMekeâ
keâce mes keâce yeQkeâ keâer cetue GOeej oj Hej lees
HeÇefleHeâue keâer Gcceero keâjlee ner nw~
efveJeue HeefjÛeeueve ueeYe
efveJesefMele hetbpeer (meceeÙeesefpele keâj Iešekeâj)
hej Øeefleheâue · ² 100
Deewmele efveJesefMele Hetbpeer
z Hetbpeer ueeiele keâe Yeeefjle Deewmele : Hetbpeer
ueeiele keâe Yeeefjle Deewmele Skeâ DeJemej ueeiele
52 DeeFyeerS yeguesefšve
Deiemle 2005
nw pees Gme oj kesâ mecekeâ#e nw efpemes efveJesMekeâ
DevÙe legueveerÙe peesefKece Jeeueer keâcHeefveÙeesb kesâ
mšekeâ cesb ueieekeâj HeÇeHle keâj mekeâlee nw~ Skeâ
keâcHeveer keâes Ssmeer HeefjÙeespeveeDeesb kesâ yeejs cesb
mebYeeJeveeDeesb keâer leueeMe keâjveer ÛeeefnS peneb
efveJeue HeefjÛeeueve ueeYe Hebtpeer ueeiele kesâ Yeeefjle
Deewmele mes DeefOekeâ nes efpememes Fmekeâer Hebtpeer
keâer GHeepe&ve #ecelee ceW Je=efæ nes mekesâ pees
Fmekesâ efveJesMekeâesb cesb efJeleefjle keâer pee mekesâ~
Fmeer lejn, keâcHeefveÙeesb keâes Ssmeer HeefjÙeespeveeDeesb
cesb Yeeie veneR uesvee ÛeeefnS peneb efveJeue HeefjÛeeueve
ueeYe (keâj meceeÙeespeve kesâ yeeo) Hetbpeer ueeiele
kesâ Yeeefjle Deewmele mes keâce nes~ Hetbpeer ueeiele
keâe Yeeefjle Deewmele JeemleJe cesb $e+Ce Deewj
FefkeäJešer keâe Deewmele Yeeefjle ueeiele nw~
DeeefLe&keâ JeefOe&le cetuÙe kesâ ceeHe
DeeefLe&keâ JeefOe&le cetuÙe Je=efæMeerue HeÇefleHeâue keâe Skeâ
ceeHe nw Ùee Skeâ keâcHeveer keâer Jen ÙeesiÙelee nw peneb
Fmekeâe HeÇefleHeâue Hebtpeer keâer ueeiele mes DeefOekeâ nw~
Ssmes DeeefLe&keâ JeefOe&le cetuÙe keâes mekeâejelcekeâ keânles
nwb~ peneb HeÇefleHeâue Hetbpeer keâer ueeiele mes keâce nw Jeneb
Fmes vekeâejelcekeâ keâne peeÙesiee~
DeeefLe&keâ JeefOe&le cetuÙe keâe Heâecet&uee
DeeefLe&keâ JeefOe&le cetuÙe · efveJeue HeefjÛeeueve ueeYe
(keâj meceeÙeespeve kesâ yeeo) - Hetbpeer HeÇYeej
Ùee
efveJesefMele Hetbpeer Hej HeÇefleHeâue - Hetbpeer ueeiele keâe
Yeeefjle Deewmele
yeQkeâeW ceW DeeefLe&keâ JeefOe&le cetuÙe %eele keâjves keâer HeÇCeeueer
z efveJeue HeefjÛeeueve ueeYe (keâj meceeÙeespeve kesâ yeeo)
(keâ) kegâue DeeÙe.....
(Ke) HeefjÛeeueve ueeiele.....
(ie) DeeÙe (yÙeepe Deewj keâj Iešekeâj)......
(Ie) keâj keâe HeÇeJeOeeve.....
(*) DeemLeefiele keâj ceW HeefjJele&ve
(Ûe) efveJeue HeefjÛeeueve ueeYe (keâj meceeÙeesepf ele
keâjkesâ)
· { (ie) - (Ie) - (keâ) }
z efveJesefMele Hetbpeer
(1) HeefjÛeeueve Ûeeuet DeeefmleÙeeb { (keâ) ± (Ke) ±
(ie) }
(i) vekeâoer SJeb YeejleerÙe efjpeJe& yeQkeâ
ceW pecee jeefMe
(ii) yeQkeâeW SJeb ceebie cegoÇe yeepeej
cesb pecee jeefMe
(iii) DeefieÇce (3 Je<e& keâer HeefjHekeäJelee Jeeues)
(2) yÙeepejefnle osÙeleeÙeW { (keâ) ± (Ke) ± (ie)
± (Ie) }
(i) osÙe efyeue
(ii) GHeefÛele yÙeepe
(iii) Devle: DeeefHeâme meceeÙeespeve (efveJeue)
(iv) DevÙe (HeÇeJeOeeve keâes Meeefceue keâjkesâ)
(3) HeefjÛeeueveerÙe keâeÙe&Meerue Hetbpeer {(1) - (2)}
(4) mLeeÙeer DeeefmleÙeeb (Hegvecet&uÙeve Deejef#ele
efveefOe Iešekeâj
(5) DevÙe HeefjÛeeueveerÙe DeeefmleÙeeb { (keâ) ± (Ke) } :
(i) DeefieÇÇce (3 Je<e& mes DeefOekeâ HeefjHekeäJelee
Jeeues) - efveJeue Devepe&keâ DeeefmleÙeeb
(ii) efveJesMe
(6) DevÙe HeefjÛeeueveerÙe osÙeleeÙeW ({ (keâ) ± (Ke)
± (ie) } :
(i) Hetbpeer
(ii) Deejef#ele efveefOe (Hegvecet&uÙeve Deejef#ele
efveefOe Deueie keâjkesâ)
(iii) DeOeervemLe $e+Ce Deewj DevÙe yÙeepe
Oeeefjle yeeC[
(7) DevÙe HeefjÛeeueveerÙe DeeefmleÙeeb (HeefjÛeeueveerÙe
osÙeleeDeesb keâes Iešekeâj) { (5)-(6) }
(8) HeefjÛeeueveerÙe efveJesefMele Hetbpeer { (3) ±
(4) ± (7) }
(9) iewj-HeefjÛeeueveerÙe Hetbpeer {(keâ) ± (Ke)} :
(i) efveJeue Devepe&keâ DeeefmleÙeeb
(ii) DevÙe DeeefmleÙeeb
(10) kegâue efveJesefMele Hetbpeer { (8) ± (9)}
z Hetbpeer ueeiele keâe Yeeefjle Deewmele
[e@. yeer. meeceue (2003) ves Hetbpeer ueeiele keâe
Deewmele %eele keâjves kesâ efueS 2000-01 kesâ
efueÙes FefkeäJešer keâer ueeiele 10.5 HeÇefleMele
Deewj 2001-02 kesâ efueS 10 HeÇefleMele keâer
oj mes efveOee&efjle efkeâÙee nw~ Ùen HetJee&vegceeve
Jele&ceeve yÙeepe ojeW SJeb yeepeej Heefjo=MÙe Hej
DeeOeeefjle nw~
[e@. yeer. meeceue (2003) ves Je<e& 2001-02 kesâ
DeeOeej Hej efveJesefMele Hetbpeer Hej HeÇefleHeâue keâes efveJeue
HeefjÛeeueve ueeYe (keâj meceeÙeesepf ele keâjkesâ) Deewj Deewmele
efveJeseMf ele Hetpb eer kesâ DevegHeele mes efvekeâeuee nw~ je<š^eÙr eke=âle
yewkb eâeW keâe efveJeseMf ele Hetpb eer Hej HeÇelf eHeâue 7.82 HeÇelf eMele
(efmebe[f kesâš yeQkeâ) Deewj 10.13 HeÇelf eMele (Deesejf Sbšue
yeQkeâ DeeHeâ keâe@ceme&) kesâ yeerÛe jne~ Fmeer lejn, Hetpb eer
ueeiele keâe Yeeefjle Deewmele 6.53 HeÇelf eMele (yeQkeâ DeeHeâ
FefC[Ùee) Deewj 22.27 HeÇelf eMele (Fbe[f Ùeve yeQkeâ) kesâ
yeerÛe jne~ Fmekeâe efJeJejCe Deeies meeefjCeer ceW efoÙee ieÙee
nw~
 meeefjCeer
je<š^erÙeke=âle yewbkeâesb kesâ DeeefLe&keâ JeefOe&le cetuÙe
yeQkeâ keâe veece efveJesefMele Hetbpeer Hej hetbpeer ueeiele keâe 2-4 3-5 DeeefLe&keâ JeefIe&le cetuÙe heejcheefjkeâ efJeefOeÙeeB
Øeefleheâue Yeeefjle Deewmele (keâjesÌ[ ®heÙes ceW) mebÙegkeäle jQkeâ
1 2 3 4 5 6 7 8 9 10 11 12 13
2000-01 2001-02 2000-01 2001-02 2000-01 2001-02 2000-01 jQkeâ 2001-02 jQkeâ 2000-01 2001-02
1. Fueeneyeeo yeQkeâ 8.60 8.82 7.35 7.19 1.25 1.63 252.92 10 370.69 10 11 14
2. DeevOeÇe yeQkeâ 9.62 9.67 8.32 7.81 1.30 1.86 240.19 11 347.86 11 5 4@
3. yeQkeâ DeeHeâ yeÌ[ewoe 8.77 8.75 7.22 6.99 1.54 1.76 848.54 3 1098.62 4 6 10
4. yeQkeâ DeeHeâ Fbef[Ùee 8.47 8.58 7.17 6.53 1.30 2.04 694.66 4 1288.33 3 8 9
5. yeQkeâ DeeHeâ ceneje<š^ 8.66 9.39 7.38 7.62 1.28 1.77 222.84 12 386.44 12 10 8
6. kesâveje yeQkeâ 8.61 9.50 6.96 7.34 1.65 2.16 985.02 1 1389.33 1 4@ 4@
7. mesvš^ue yeQkeâ DeeHeâ Fbef[Ùee 8.41 8.52 8.92 6.98 -0.51 1.54 -214.30 15 725.89 6 12 13
8. keâejHeesjsMeve yeQkeâ 10.21 9.58 7.91 7.29 2.30 2.29 394.85 7 466.40 9 1@ 1
9. osvee yeQkeâ 7.84 10.07 9.92 10.48 -2.08 -0.41 -311.64 16 -64.24 16 16@ 16
10. FefC[Ùeve yeQkeâ 8.11 8.95 24.60 22.27 -16.50 -13.33 -3605.26 19 -3253.73 19 16@ 17
11. FefC[Ùeve DeesJejmeer]pe yeQkeâ 8.48 9.40 7.41 7.47 1.07 1.93 294.98 8 617.53 8 7 7
12. DeesefjSbšue yewbkeâ DeeHeâ keâe@ceme& 10.20 10.13 8.41 7.76 1.79 2.37 444.97 6 690.29 7 3 2@
13. Hebpeeye vewMeveue yeQkeâ 8.88 9.26 7.30 7.18 1.58 2.08 897.79 2 1347.80 2 2 2@
14. Hebpeeye SC[ efmebOe yeQkeâ 8.77 9.06 7.82 7.64 0.95 1.42 114.14 14 178.10 15 14 15
15. efmebef[kesâš yeQkeâ 8.04 7.82 6.98 6.66 1.06 1.16 269.16 9 331.87 13 1@ 3
16. Ùetkeâes yeQkeâ 8.92 9.28 15.94 14.09 -7.03 -4.81 -1541.70 18 -1310.16 18 13 11
17. ÙetefveÙeve yeQkeâ DeeHeâ Fbef[Ùee 8.84 9.08 7.53 7.11 1.31 1.96 461.36 5 782.80 5 4@ 5
18. ÙegveeFšs[ yeQkeâ DeeHeâ Fbef[Ùee 8.75 8.66 15.10 13.52 -6.35 -4.86 -1182.75 17 -956.89 17 15 12
19. efJepeÙee yeQkeâ 8.83 9.42 7.33 7.63 1.51 1.79 192.77 13 264.75 14 9 6
je<š^erÙeke=âle yeQkeâ 8.78 9.09 8.92 8.40 -0.14 0.69 -760.46 4306.65
meÇesle : DeeFyeerS yeguesefšve ceeÛe&, 2003 @ yejeyejer keâe jwbkeâ

Fmemes Skeâ yeele mHe<š nes peeleer nw efkeâ je<š^erÙeke=âle yeQkeâeW keâe DeeefLe&keâ JeefOe&le cetuÙe Glmeenpevekeâ nw~ 19 je<š^erÙeke=âle yewbkeâesb cesb, 15 yeQkeâeW keâe DeeefLe&keâ JeefOe&le cetuÙe mekeâejelcekeâ jne nw
peyeefkeâ 4 yeQkeâeW keâe vekeâejelcekeâ jne nw~ Fmemes Ùen Helee Ûeuelee nw efkeâ Fve 15 yeQkeâeW ceW efveefOe keâe HeÇyebOeve keâce yÙeepe ojesb kesâ JeeleeJejCe cesb HeÇYeeJeMeeueer jne nw~
HeejcHeefjkeâ ceeHeoC[eW - efveJeue yÙeepe ceeefpe&ve, DeeefmleÙeeW Hej HeÇefleHeâue, FefkeäJešer Hej HeÇefleHeâue Deewj HeÇefle MesÙej GHeepe&ve #ecelee Deewj mebÙegkeäle jQkeâ kesâ DeeOeej Hej yeQkeâeW keâes ßesCeeriele efkeâÙee
ieÙee nw~ Fme lejn HeejcHeefjkeâ ceeHeoC[eW SJeb DeeefLe&keâ JeefOe&le cetuÙe kesâ DeeOeej Hej yeQkeâeW keâer ßesefCeÙeeW ceW meceevelee veneR nw~ Deepe peye ueieYeie meYeer je<š^erÙeke=âle yeQkeâ yeepeej mes Hetbpeer keâer
Gieener keâj jns nQ lees Ùen GHeÙegkeäle meceÙe nw efkeâ yeQkeâ DeHeves efve<Heeove kesâ HeejcHeefjkeâ ceeHeoC[eW mes yeenj Deekeâj DeeefLe&keâ JeefOe&le cetuÙe DeHeveeÙesb efpememes MesÙejOeejkeâesb kesâ cetuÙe cesb Je=efæ
nes mekesâ~ ‰

Deiemle 2005
DeeFyeerS yeguesefšve 53
 uesKe
ceevekeâ Je Devepe&keâ DeeefmleÙeeb :
yesnlej ØeyebOeve
$e+Ce osves keâer JÙeJemLee ceW
heefjJele&ve keâjkesâ mšeheâ
keâer menYeeefielee yeÌ{eveer
ÛeeefnS keäÙeeWefkeâ mšeheâ keâer
efmeheâeefjMe hej efoÙee ieÙee
$e+Ce keâYeer Yeer SveheerS
veneR nes mekeâlee~ $e+Ce
osles meceÙe meYeer mšeheâ
keâes ceeuetce jns efkeâ
DecegKe JÙeefkeäle keâes Decegkeâ
$e+Ce efoÙee pee jne nw~
Fmemes Deiej $e+Ceer ceW
keâesF& keâceer nesleer nw lees
Gmes menpe hekeâÌ[e pee
mekeâlee nw~ otmeje, mšeheâ
keâes Jemetueer kesâ efueS Yeer
Øesefjle efkeâÙee pee mekeâlee nw
Deewj $e+Ce keâes mšeheâ keâer
menYeeefielee mes SveheerS
nesves mes yeÛeeÙee pee
mekeâlee nw~
54 DeeFyeerS yeguesefšve
Deiemle 2005
Deepe kesâ yeoueles heefjÂMÙe ceW GoejerkeâjCe,
efvepeerkeâjCe Deewj Yetceb[ueerkeâjCe kesâ oewj ves
efpeme ØeeflemheOee&lcekeâ yeepeej keâe efvecee&Ce
efkeâÙee nw GmeceW efkeâmeer Yeer yeQkeâ Éeje Dehevee
DeefmlelJe yeveeÙes jKeves kesâ efueS Deheveer
keâeÙe&ØeCeeueer SJeb JÙeJemLee heefjJele&ve ceW
Deewj yesnlej ØeyebOeve keâer DeeJeMÙekeâlee nesieer~
Dele:, Deepe kesâ «eenkeâesvcegKeer yeepeej ceW «eenkeâ keâer Dehes#eeDeeW
keâes hetje keâjles ngS Deewj $e+Ce GlheeoeW keâer iegCeJeòee keâes yeÌ{eles
ngS ceevekeâ DeeefmleÙeeW keâes yesnlej ØeyebOeve Éeje Devepe&keâ DeeefmleÙeeW
ceW peeves mes jeskeâe pee mekeâlee nw~
ceevekeâ DeeefmleÙeeW keâes ceevekeâ DeeefmleÙeeb yeveeÙes jKevee efveleeble
DeeJeMÙekeâ nw, DevÙeLee Ùes Devepe&keâ DeeefmleÙeeW ceW yeouekeâj iebYeerj
¤he ues uesleer nQ~ Fmemes yeÛeves kesâ efueS yesnlej ØeyebOeve Éeje
Devepe&keâ DeeefmleÙeeW keâer Fme iebYeerj Ûegveewleer mes menpe Je meheâueleehetJe&keâ
efveheše pee mekeâlee nw~
ceevekeâ DeeefmleÙeeW keâes Devepe&keâ DeeefmleÙeeW ceW peeves mes jeskeâves kesâ
efvecveefueefKele oes efJekeâuhe nes mekeâles nQ :
(keâ) JÙeJemLee ceW heefjJele&ve Deewj
(Ke) mebØes<eCe ceW JÙeeJeneefjkeâlee
(keâ) JÙeJemLee ceW heefjJele&ve : ceevekeâ DeeefmleÙeeW keâer
Jemetueer yesnlej ØeyebOeve mes leLee JÙeJemLee ceW heefjJele&ve
keâjkesâ menpe SJeb efveÙeefcele yeveeÙeer pee mekeâleer nw
Deewj $e+Ce keâes Devepe&keâ nesves mes yeÛeeÙee pee
mekeâlee nw~
mejpeerle efmebn
Ùes heefjJele&ve efvecveefueefKele nes mekeâles nQ :
z
$e+Ce osves ceW osjer ve keâjvee
z
omleeJes]peerkeâjCe keâe mejue nesvee
z
$e+Ce osves ceW mšeheâ keâer menYeeefielee yeÌ{evee
z $e+Ce osves ceW osjer ve keâjvee : Ssmee osKee ieÙee nw efkeâ
$e+Ce osves Jeeuee (yeQkeâj) $e+Ceer keâes yeQkeâ kesâ Fleves DeveeJeMÙekeâ
Ûekeäkeâj keâšJeelee nw efkeâ $e+Ce uesves Jeeuee hejsMeeve nes peelee
nw Deewj Fmekeâe ØeYeeJe efveefMÛele ¤he mes $e+Ce Jemetueer hej
heÌ[lee nw~ Deepe kesâ heefjÂMÙe ceW $e+Ce osves ceW osjer veneR
keâjveer ÛeeefnS, efpememes $e+Ceer KegMeer ceve mes $e+Ce keâer
Ûegkeâewleer keâjlee jns~ Dele: yeQkeâjeW keâes Fme JÙeJemLee ceW
menÙeesie keâjvee ÛeeefnS~
z omleeJes]peerkeâjCe keâe mejue ¤he ceW nesvee : yeQkeâeW ceW
$e+Ce keâe omleeJes]peerkeâjCe Skeâ peefšue Øeef›eâÙee nw efpevnW
hetje keâjves ceW yengle-meer hejsMeeveer Deeleer nw Deewj meceÙe keâer
yeyee&oer nesleer nw~ Dele: yeQkeâeW keâes $e+Ce osves kesâ omleeJes]pe Yeer
mejue Je mešerkeâ ¤he ceW yeveeves ÛeeefnS~ otmeje, Devepe&keâ
DeeefmleÙeeW keâer Jemetueer kesâ keâevetveer omleeJes]pe Yeer mejue Je
mešerkeâ neW, efpememes SveheerS Jemetueer keâe MeerIeÇ GheeÙe nes
mekesâ Deewj keâevetve keâer uebyeer Øeef›eâÙee mes yeÛee pee mekesâ~
z $e+Ce osves ceW mšeheâ keâer menYeeefielee : JÙeJemLee ceW
heefjJele&ve keâe Ùen cegKÙe Debie nw efpemekesâ Éeje Devepe&keâ
Deeefmle keâes jeskeâe pee mekeâlee nw~ yeQkeâeW keâer MeeKeeDeeW ceW
Dekeämej osKeves keâes efceuelee nw efkeâ MeeKee ceW $e+Ce osves Jeeuee
›esâef[š ØeyebOekeâ Deheves Deehekeâes Denced mecePelee nw Ùeeefve
$e+Ce mebyebefOele efveCe&Ùe Gmekesâ mJeÙeb kesâ nesles nQ Deewj DevÙe
mšeheâ keâer menYeeefielee veieCÙe nesleer nw~ menÙeesie uesves keâer
pe¤jle ner veneR mecePeer peeleer~ Devepe&keâ nesves hej DevÙe
 mšeheâ keâer Ùeeo Deeleer nw efkeâ Gkeäle $e+Ceer kesâ
mebheke&â ceW efkeâmes Yespee peeS efpememes ØeYeeJeMeeueer
Jemetueer keâer peeÙes~
Dele: $e+Ce osves keâer JÙeJemLee ceW heefjJele&ve keâjkesâ mšeheâ
keâer menYeeefielee yeÌ{eveer ÛeeefnS keäÙeeWefkeâ mšeheâ keâer
efmeheâeefjMe hej efoÙee ieÙee $e+Ce keâYeer Yeer SveheerS veneR
nes mekeâlee~ $e+Ce osles meceÙe meYeer mšeheâ keâes ceeuetce
jns efkeâ DecegKe JÙeefkeäle keâes Decegkeâ $e+Ce efoÙee pee jne
nw~ Fmemes Deiej $e+Ceer ceW keâesF& keâceer nesleer nw lees Gmes
menpe hekeâÌ[e pee mekeâlee nw~ otmeje, mšeheâ keâes Jemetueer
kesâ efueS Yeer Øesefjle efkeâÙee pee mekeâlee nw Deewj $e+Ce keâes
mšeheâ keâer menYeeefielee mes SveheerS nesves mes yeÛeeÙee pee
mekeâlee nw~
(Ke) mebØes<eCe ceW JÙeeJeneefjkeâlee : mebØes<eCe Skeâ
Ssmee #es$e nw efpemekesâ Éeje $e+Ce Jemetueer Deewj SveheerS
Jemetueer keâes mejue Je megiece yeveeves ceW ceoo efceueleer nw~
Dele: mebØes<eCe keâer Yetefcekeâe keâes vekeâeje veneR pee mekeâlee
nw~ mebØes<eCe ceW JÙeeJeneefjkeâlee keâes Yeer leerve ¤heeW ceW
efJeYekeäle efkeâÙee pee mekeâlee nw :
z $e+Cekeâlee& keâes Devegmceejkeâ he$e Yespevee :
yeQkeâeW keâes Deheveer MeeKee kesâ mlej hej efoÙes ieÙes
$e+Ce kesâ yeejs ceW $e+Ceer keâes meceÙe-meceÙe hej
Devegmceejkeâ he$e Yespevee ÛeeefnS efpememes $e+Ceer
keâes efkeâmle Ùeeo Deeleer jns Deewj meceÙe hej $e+Ce
Jemetueer nesleer jns~ SveheerS $e+Ce KeeleeW kesâ yeejs
ceW Yeer yeQkeâ MeeKee keâes meceÙe-meceÙe Jemetueer
veesefšme DeJeMÙe efvekeâeueveer ÛeeefnS~ Fmemes $e+Ceer
hej ceveesJew%eeefvekeâ ØeYeeJe heÌ[lee nw Deewj $e+Ce
Jemetueer Deeves keâer p]Ùeeoe Gcceero jnleer nw~ Dele:,
Ssmee he$eeÛeej mebheke&â efvejblej yevee jnvee ÛeeefnS~
z JÙeefkeäleiele mebheke&â yeveevee : $e+Ce osves mes
henues SJeced $e+Ce osves kesâ yeeo yeQkeâ mšeheâ keâes
$e+Ceer kesâ mebheke&â ceW yevee jnvee ÛeeefnS~ Ùen yeQkeâ
keâer cegKÙe Øeef›eâÙee nw~ Fmemes JÙeefkeäle keâer henÛeeve
keâe helee Ûeuelee nw~ otmeje, JÙeefkeäleiele ØeYeeJe
mes $e+Ce Jemetueer mejue yeveeÙeer pee mekeâleer nw~
Dele:, yeQkeâ ØeyebOeve keâes $e+Ceer kesâ JÙeefkeäleiele
mebheke&â ceW efvejblej yevee jnvee ÛeeefnS efpememes
$e+Ce Jemetueer keâer yeeOee keâes jeskeâe pee mekeâlee nw~
Ùen Jemetueer keâe meMekeäle ceeOÙece ceevee ieÙee nw~
z
šsueerheâesve Éeje mebheke&â jKevee : Ùen mebheke&â
keâjves keâe leer›e Je meMekeäle Fueskeäš^e@efvekeâ ceeOÙece
nw~ yeQkeâ keâes $e+Ceer keâe heâesve vebyej jKevee ÛeeefnS
efpememes meceÙe hej legjble mebheke&â efkeâÙee pee mekesâ
”
Deewj $e+Ce Jemetueer kesâ efueS Øesefjle efkeâÙee pee
mekesâ Fme Øekeâej, $e+Ce keâes SveheerS nesves mes yeQkeâ MeeKeeDeeW keâes meceÙe-meceÙe hej ieebJeeW ceW
yeÛeeÙee pee mekeâlee nw~ Jemetueer keQâhe keâe DeeÙeespeve keâjvee ÛeeefnS Deewj
Deepe kesâ oewj ceW, yeQefkebâie GÅeesie keâer Devepe&keâ
DeeefmleÙeeb Skeâ iebYeerj Ûegveewleer nQ~ SveheerS yeQkeâeW
Ùen Jemetueer keQâhe leye ueieves ÛeeefnS peye
hej efvecveevegmeej oesnje ØeYeeJe [euelee nw : efkeâmeeveeW keâer heâmeue lewÙeej nes Deewj hewmee
(i) ceevekeâ DeeefmleÙeeW hej Øeehle nesves Jeeues Øeefleheâue efkeâmeeve kesâ neLe ceW Deeves ueies~ Ssmee keâjves mes
keâes keâce keâjlee nw~
SveheerS Jemetueer keâes efveefMÛele ¤he mes Øeeslmeenve
(ii) yeQkeâeW keâer ueeYeØeolee keâes ØeYeeefJele keâjlee nw~
”
SveheerS mes leerve mlej ØeYeeefJele nesles nQ : (i) yeQkeâeW keâe efceuesiee~
efJeòeerÙe DeeOeej (ii) ceevekeâ DeeefmleÙeeW keâe Øemeej, Deewj
(iii) osMe keâe DeeefLe&keâ efJekeâeme~
keäÙeeW neslee nw SveheerS?
Ùeneb SveheerS mecemÙee keâe efveoeve {tBÌ{ves mes henues Ùen
peevevee pe¤jer nw efkeâ ceevekeâ DeeefmleÙeeW keâes Devepe&keâ
DeeefmleÙeeW ceW yeoueves Jeeues keâejkeâ keäÙee nes mekeâles nQ~
Fmekesâ efvecveefueefKele keâejCe nes mekeâles nQ :
Yeü° lejerkeâe : mJeÙeb yeQkeâ DeefOekeâejer Éeje Yeü° lejerkeâe
Deheveekeâj Ùee jepeveereflekeâ ØeYeeJe ceW Deekeâj efoÙee ieÙee
$e+Ce SveheerS nesves keâe keâejCe yeve mekeâlee nw~
Øeeke=âeflekeâ keâejCe : Øeeke=âeflekeâ Deeheoe Deeves
hej yeQefkebâie $e+Ce SveheerS nes mekeâles nQ~
mJeÙeb $e+Ceer : $e+Ceer Éeje $e+Ce
jeefMe keâes Deheveer Iejsuet pe¤jleeW
ceW ueiee uesves mes $e+Ce SveheerS ßeer efmebn yeQkeâ Dee@heâ yeÌ[ewoe, meerkeâjer Kego& MeeKee,
nes mekeâlee nw~
ieeef]peÙeeyeeo (G.Øe.) ceW keâeÙe&jle nQ~ efJe%eeve ceW
mejkeâejer veer e f l eÙeeb :
mejkeâej Éeje meceÙe- mveelekeâ ßeer efmebn ves meerSDeeF&DeeF&yeer keâer hejer#ee
meceÙe hej $e+Ce ceeheâer Yeer GòeerCe& keâer nw~ Deeheves yeQkeâ keâer keâF& MeeKeeDeeW
keâer Iees<eCee Ùee $e+Ce
Jemetueer keâes mLeefiele ceW efJeefYevve keâeÙe& efkeâÙee nw~ Deeheves yeQefkebâie leLee
keâjevee Deeefo Yeer $e+Ce
Jemetueer keâes ØeYeeefJele meeceeefpekeâ efJe<eÙeeW keâes keWâõ-eEyeog yeveekeâj keâF&
keâjleer nw pees $e+Ce uesKe efueKes nQ~ efheÚues 7-8 Je<eeX ceW Deehekesâ
SveheerS nesves keâe keâejCe
yevelee nw~ yeQefkebâie leLee DeeefLe&keâ efJe<eÙeeW hej efJeefYevve uesKe
DeveeJeMÙekeâ osjer : $e+Ce ØekeâeefMele nes Ûegkesâ nQ~
keâes SveheerS ceW yeoueves keâe
ØecegKe keâejCe DeveeJeMÙekeâ osjer
ceevee ieÙee nw efpemeceW yeQkeâj "erkeâ
DeeFyeerS yeguesefšve 55
Deiemle 2005
meceÙe hej GefÛele $e+Ceer keâe ÛegveeJe veneR keâj heeles nQ,
efpememes «eenkeâ keâes yeQkeâ kesâ DeveeJeMÙekeâ Ûekeäkeâj ueieeves
heÌ[les nQ~ Dele:, yeeo ceW $e+Ce Jemetueer ceW hejsMeeveer keâe
keâejCe yevelee nw~
mebheke&â ve jKevee : ØeeÙe: osKee peelee nw efkeâ ØeyebOekeâ
$e+Ce osves kesâ yeeo $e+Ceer mes mebheke&â veneR jKe heeles nQ
Deewj ve ner meceÙe hej veesefšme Yespeles nQ efpememes $e+Ce
Jemetueer ØeYeeefJele nesleer nw Deewj $e+Ce SveheerS yevelee
nw~
mšeheâ keâer menYeeefielee ve yeveevee : ceevekeâ DeeefmleÙeeW
keâe Devepe&keâ DeeefmleÙeeW ceW yeoueves keâe ØecegKe keâejCe
mšeheâ keâer menYeeefielee ve yeveevee ceevee ieÙee nw~ ›esâef[š
DeefOekeâejer $e+Ce osles meceÙe efkeâmeer Yeer mšeheâ keâes mebheke&â ceW
veneR ueslee nw efpememes $e+Ceer kesâ yeejs ceW peevekeâejer DeOetjer
jnleer nw Ùee mšeheâ $e+Ce Jemetueer ceW efoueÛemheer veneR ueslee
nw Deewj $e+Ce SveheerS nes peelee nw~
Dele: keânvee GefÛele nesiee efkeâ keâneR-ve-keâneR ØeyebOeve ceW
keâceer jnleer nw efpememes ceevekeâ DeeefmleÙeeb neefvekeâejkeâ
DeeefmleÙeeW ceW heefjJeefle&le nes peeleer nQ~ Devepe&keâ DeeefmleÙeeW
keâer Jemetueer kesâ efueS efvecveefueefKele GheeÙe efkeâS pee
mekeâles nQ :
(keâ) MeeKee mlej hej Jemetueer FkeâeF& keâe ie"ve
(Ke) ØeefleYetefleÙeeW kesâ Øeefle mepeielee
(keâ) MeeKee mlej hej Jemetueer FkeâeF& keâe ie"ve :
SveheerS Jemetueer kesâ efueS yeQkeâeW Éeje MeeKee mlej hej
Fme Øekeâej Jemetueer FkeâeF& yeveeÙeer pee mekeâleer nw :
MeeKee mlej hej Jemetueer keâ#e keâe ie"ve : $e+Ce osves
Jeeueer MeeKee kesâ mlej hej oes Ùee leerve mšeheâ keâe
ÛegveeJe keâjkesâ Skeâ mesue keâe ie"ve efkeâÙee peeS Deewj
meceÙe-meceÙe hej FmeceW mšeheâ meomÙeeW keâe heefjJele&ve
nesvee ÛeeefnS~ mesue ceW Skeâ ›esâef[š Dee@heâermej neslee nw
pees mesue keâe ØeYeejer Je mLeeÙeer meomÙe yevelee nw Deewj
otmejs meneÙekeâ keâce&Ûeejer pees DemLeeÙeer meomÙe nesles nQ~
mesue kesâ meomÙe SveheerS keâer Jemetueer kesâ efueS $e+Ceer kesâ
DeeFyeerS yeguesefšve kesâ efueS uesKe Yespeles meceÙe ke=âheÙee Dehevee heemeheesš& Deekeâej keâe veJeervelece heâesšes Deewj yeeÙees[eše DeJeMÙe YespeW leeefkeâ uesKe ØekeâeefMele
nesves keâer efmLeefle ceW Gmekeâe GheÙeesie efkeâÙee pee mekesâ~
56 DeeFyeerS yeguesefšve
Deiemle 2005
heeme peeSbies~ Fme Øekeâej keâer Øeef›eâÙee mes efveefMÛele ner
SveheerS Jemetueer hej mekeâejelcekeâ ØeYeeJe heÌ[lee nw~
MeeKee mlej hej Jemetueer SpeWš keâer efveÙegefkeäle : osKee
ieÙee nw efkeâ ØeeFJesš efJeòeerÙe mebmLeeSb oyebie ueesieeW Éeje
Deheves $e+CeeW keâer Jemetueer keâjeleer nQ~ FmeceW $e+Ce Jemetueer
100 ØeefleMele nesleer nw~ Fmeer Øekeâej, yeQkeâeW keâes Yeer
Deheves MeeKee kesâ mlej hej efkeâmeer Jemetueer SpeWš keâer
efveÙegefkeäle keâjveer ÛeeefnS~ yeQkeâ Fvekesâ SJepe ceW Jemetueer
keâe oes Ùee leerve ØeefleMele keâceerMeve os mekeâles nQ~
MeeKee mlej hej Jemetueer keQâhe keâe ie"ve : yeQkeâ MeeKeeDeeW
keâes meceÙe-meceÙe hej ieebJeeW ceW Jemetueer keQâhe keâe DeeÙeespeve
keâjvee ÛeeefnS Deewj Ùen Jemetueer keQâhe leye ueieves ÛeeefnS
peye efkeâmeeveeW keâer heâmeue lewÙeej nes Deewj hewmee efkeâmeeve
kesâ neLe ceW Deeves ueies~ Ssmee keâjves mes SveheerS Jemetueer
keâes efveefMÛele ¤he mes Øeeslmeenve efceuesiee~ Deblele: yeQkeâ
keâe SveheerS keâce nesiee~
(Ke) ØeefleYetefleÙeeW kesâ Øeefle mepeielee : yeQkeâeW kesâ
›esâef[š Dee@heâermej keâes $e+Ceer keâer ØeefleYetefleÙeeW kesâ Øeefle
mepeie jnvee ÛeeefnS~ Ùeeefve efpeme efove $e+Ce Keelee
heemš [dÙet Ùee DeefveÙeefcele nes peelee nw Gmeer efove Ùen
peeve uesvee ÛeeefnS efkeâ ØeefleYetefle megjef#ele nw Ùee veneR~
ØeefleYetefleÙeeW kesâ Øeefle peeie¤keâlee kesâ yeeJepeto kegâÚ $e+Ce
Keeles SveheerS nes peeles nQ Deewj SveheerS Jemetueer kesâ
GheÙeg&keäle meYeer ØeYeeJe efJeheâue jnles nQ~ leye efvecveefueefKele
GheeÙe efkeâS peeves ÛeeefnS efpevnW keâevetve Éeje SveheerS
Jemetueer keâe ØeÙeeme keâne pee mekeâlee nw, pewmes -
efJeefOekeâ keâej&JeeF& Éeje : yeQkeâeW kesâ SveheerS keâes keâce
keâjves kesâ efueS mejkeâej ves keâ"esj keâoce G"eS nQ~
efJeefOekeâ keâej&JeeF& SJeb GmeceW megOeej nsleg mejkeâej Éeje
21 petve, 2002 keâes Skeâ DeOÙeeosMe ueeiet efkeâÙee
ieÙee nw~ Fme DeOÙeeosMe kesâ Devegmeej yeQkeâeW Je efJeòeerÙe
mebmLeeDeeW keâes DeefOekeâej Øeoeve efkeâS ieÙes nQ efpememes Jes
efkeâmeer keâesš& Ùee efš^yÙetveue ceW peeS yeiewj ner yebOekeâ Ùee
Âef°yebOekeâ kesâ Debleie&le jKeer ieÙeer ØeefleYetefle keâes Øeehle
keâjves keâer keâej&JeeF& keâj mekeâles nQ~
uesKekeâeW mes DevegjesOe...
Fme DeOÙeeosMe kesâ Devegmeej, yeQkeâ SveheerS Keelesoej
keâes Skeâ efueefKele veesefšme Yespe mekeâlee nw (efpemeceW mee"
efove kesâ Debleie&le $e+Ce keâer hetjer Ùee yekeâeÙee jeefMe
Ûegkeâeves nsleg efueKee nes) Ùeefo $e+Ceer Ùee ØeefleYetefleoelee
Dehevee oeefÙelJe efveOee&efjle meceÙe hej hetje veneR keâjles nQ
lees yeQkeâ efvecveefueefKele keâej&JeeF& keâj mekeâles nQ :
z yebOekeâ Ùee Âef°yebOekeâ DeeefmleÙeeW keâes Deheves
DeefOekeâej ceW ues mekeâles nQ~
z $e+Ceer Ùee Âef°yebOekeâ DeeefmleÙeeW keâe ØeyebOeve Deheves
neLe ceW ues mekeâles nQ~
z efkeâmeer DevÙe JÙeefkeäle keâes DeeefmleÙeeW kesâ ØeyebOeve
kesâ efueS efveÙegkeäle keâj mekeâles nQ~
ueeskeâ Deoeuele : MeerIeÇ vÙeeÙe efoueeves kesâ efueS mejkeâej ves
meved 1987 ceW ueeskeâ DeoeueleeW keâe ie"ve efkeâÙee ieÙee~
yeQkeâ SveheerS Jemetueer kesâ efueS ueeskeâ Deoeuele ceW pee
mekeâles nQ~ ueeskeâ Deoeuele oesveeW he#eeW keâes megveves kesâ yeeo
MeerIeÇ vÙeeÙe keâjleer nw Deewj Jemetueer ØeceeCe he$e osleer nw
efpemekesâ DeeOeej hej yeQkeâ keâesš& mes ef[›eâer Øeehle keâj mekeâles
nQ Deewj SveheerS Jemetueer keâes ØeYeeJeer yevee mekeâles nQ~
mecePeewlee-ØemleeJe : Ùen ØemleeJe Oeve kesâ mececetuÙe hej
DeeOeeefjle nw~ Fmekesâ Debleie&le Skeâ Deesj ØeefleYetefle keâer
Jemetueer keâef"ve nw Deewj otmejer Deesj keâevetveer Øeef›eâÙee
uecyeer, peefšue Je {erueer nw~ Fve meyemes yeÛeves kesâ efueS
mecePeewlee-ØemleeJe Skeâ mejenveerÙe Je leer›e SveheerS Jemetueer
keâe keâejkeâ yeve mekeâlee nw~ Fme lejn Øeehle jeefMe keâes
hegve: ØeJeen ceW ueekeâj yeQkeâ Deewj DeefOekeâ ueeYe keâcee
mekeâles nQ~ Ùen SveheerS Jemetueer keâe Debeflece keâoce ceevee
peelee nw~
Deepe YeejleerÙe yeQefkebâie kesâ mece#e Devepe&keâ DeeefmleÙeeW
keâer Jemetueer Skeâ iebYeerj Ûegveewleer DeJeMÙe nw~ hejbleg,
Fmekesâ yesnlej ØeyebOeve, JÙeJemLee heefjJele&ve Deewj mšeheâ
kesâ Deehemeer menÙeesie Je meodYeeJevee Je ÂÌ{ FÛÚe Meefkeäle
Éeje GefÛele mecevJeÙe yeveekeâj Fmes menpe Je mejue
yeveeÙee pee mekeâlee nw~ ‰
COMMUNICATION@IBA

IBA-TFCI jointly organized a conference ‘BANKING SECURITY 2005’

on June 22, 2005 at Mumbai. The Conference brought together all the facets
of banking security for frank and meaningful discussions, learning and
strategizing to ensure the industry’s Collective Security future.
Some of the event highlights were : Shri Dirk Mohrmann, President - Managing Director - InfraSoft
◆ Shri S.C. Basu, Chairman & WorldCompliance; Shri Matthew Technologies; Shri John Hele, Global
Managing Director - Bank of Syme, Product Marketing Manager Product Head - BSI Management
Maharashtra; Deputy Chairman - - Nortel Security Solutions; Systems and Shri S. Shankar
Indian Banks’ Association was the Shri Neeraj Dotel, Industry Manager Narayanan, Head (Information
Presiding Host; Shri V. Leeladhar, (Financial Services) - Microsoft India; Security Practice) - 3D Networks.
Deputy Governor - Reserve Bank Shri Sujan Pandit, Program ◆ Locknote Panel Discussion on ‘‘Cyber
of India was the Chief Guest and Manager - CIANT; Shri Vineet Mittal, Crime, Security & Compliance : It’s issues
Shri Rajiv Vaishnav, Regional Practice Head (Enterprise) Web and the future for the Banking Industy’’
Director - NASSCOM was Master of Services & Identity Management by Shri Nandkumar Saravade,
Ceremonies. Practice) - Sun Microsystems, India Director (Cyber Security & Compliance)
◆ Keynote Session by Shri A.N. Roy, and Shri Vivek Gupta, Security - NASSCOM; Shri Satish Warrier, Head
Commissioner of Police - Greater Consultant - IBM Global Services. (Information Security) - IDBI Ltd.;
Mumbai. ◆ Other Industry & Sponsor Speakers Shri Srivalsan Ponnachath, Director
◆ Interactive and Educative sessions were : Shri D.V.S. Prakash, AVP (Financial Services) - Sun Microsystems
on IT Security, Anti Money (Product Manager) - Financial and Shri Venugopal R. Iyenagar,
Laundering, Financial Crime & Software and Systems; Shri G.N. Practice Director (eSecurity
Fraud. Nagaraj, Director (Sales) - Onward Competancy and Consulting Services)
Novell; Shri Hanuman Tripathi, TCS.
◆ Key Speakers presenting were :

(Links to these events are available at www.iba.org.in)

Chief Guest Shri V. Leeladhar, Dy. Governor, Reserve Bank of India lighting the lamp and inaugurating the Seminar, flanked by (L-R)
Shri Balmohan Tarakad, President & ED-TFCI, Shri A.N. Roy, Commissioner of Police, Greater Mumbai, Shri S.C. Basu, Dy. Chairman,
IBA & CMD, Bank of Maharashtra. IBA BULLETIN 57
AUGUST 2005
 FINANCE MINISTER’S MEETING WITH CEs OF
PUBLIC SECTOR BANKS - 3rd June, 2005
Shri P Chidambaram, Hon’ble Union Minister of Finance took a review meeting of the Chief Executives of Public Sector Banks and FIs on
the 3rd June, 2005 at New Delhi. The key issues addressed by the Finance Minister in the meeting relate to performance of the PSBs on the
flow of credit to agriculture, Rural Housing, Educational Loan Scheme, Flow of Credit to Small and Medium Enterprises, Performance of
Regional Rural Banks, Debt Recovery Tribunals (DRTs), Convergence in the Banking Industry, NPA Recovery, Human Resources Development,
Consolidation of PSBs and Review of Managerial Autonomy.

Shri P. Chidambaram, Hon’ble Finance Minister (2nd from left) chaired the meeting. Shri Vinod Rai, Addl. Secretary,
DEA (BD) [to his right] ; [to his left] Shri V. Leeladhar, DG, RBI; Shri A.K. Purwar, Chairman IBA and Chairman SBI;
Shri V.P. Shetty, Chairman IDBI Ltd. and Shri S.C. Basu, CMD, Bank of Maharashtra.

At the sequel to discussions of the meeting, the Banking Division, Ministry of Finance has sought banks specific action reports on the following
issues:
Recovery of NPAs : Banks having net NPA in excess of 5 percent were directed to take measures to reduce the NPA Level within a definite
time frame.
Consolidation of PSBs : CEOs were advised that before considering any proposal, the unions might be suitably sensitized on the need and
advantages of consolidation.
Review of Managerial Autonomy : The Government would focus its role to the four main areas viz., (i) Nationally important policies;
(ii) Uniform Standards of Corporate Governance; (iii) Appointment of CMDs/EDs; (iv) Performance measurement, monitoring and discipline.
Banks would be required to sign MOU with the Government for the above purpose.

Meeting in Progress
58 IBA BULLETIN
AUGUST 2005
 FAREWELL TO EX-MANAGING COMMITTEE MEMBERS
22nd July, 2005 Mumbai

IBA had arranged a felicitation function on July 22, 2005 at Mumbai

for Dr. Dalbir Singh, former CMD, Central Bank of India and
Shri M.Y. Khan, Ex-Chairman & CEO, Jammu and Kashmir Bank Ltd.,
who were also members of the Managing Committee of the
Association Dr. Dalbir Singh was also Chairman, IBA during 2001 to
2003. Many Chief Executives/Top Executives from the Member Banks/
Financial Institutions graced the occasion.
M r.
D r.
D a l b ir Si n g
h
M . Y. K h a n

Shri A.K. Purwar Chairman, IBA presenting bouquets to Dr. Dalbir Singh (L) and Shri M.Y. Khan (R)

Shri V.P. Shetty, (right) Chairman, IDBI Ltd wishes Shri M.Y. Khan Shri K.V. Kamath, MD & CEO, ICICI Bank (right), felicitating Dr. Dalbir Singh

Standing ovation to Dr. Dalbir Singh and Shri M.Y. Khan by the
IBA BULLETIN 59
Managing Committee Members / Chief Executives
AUGUST 2005
23rd July, 2005 Mumbai
As a part of leadership programme, the Association launched the Power Breakfast Series for CEOs/MDs/EDs/DMDs in which various
strategic issues will be discussed. The first programme of the series was held on July 23, 2005 at Hotel Taj President, Mumbai. The topic of
the programme was ” The Indian Bank CEO’s Agenda”. The thought speakers were David Rhodes, Senior Vice President & Director, Carlos
Trascasa, Senior Vice President & Director and Andrew Dyer, Vice President & Director of The Boston Consulting Group.
Chief Executive/Top Executives from member banks/financial institutions had attended the programme.

In Association With
THE BOSTON CONSULTING GROUP

Indian Banks’ Association

Speakers on the dias (L - R) Mr. Andrew Dyer (BCG), Mr. David Rhodes (BCG),
Mr. Janma Jaya Sinha (BCG), Mr. H. N. Sinor (IBA) and Mr. Carlos Trascasa (BCG)

Mr a M r. a r
. Jan nh M r. s Carlo s Trasc as M r.
A n dre w D ye
m a J ay a Si D av i d R h o d e

IBA’s Forthcoming Events

SR. NO. DATE CENTRE ORGANISERS TOPIC
1. 19/8/05 Mumbai IBA - BCG Power Breakfast Series
(Investor Communications and
Board Management)
2. 23/8/05 Mumbai IBA - KPMG Basel-II Norms
3. 27/8/05 Mumbai IBA Annual General Meeting
4. 30/8/05 Mumbai IBA - Logica CMG ANTI MONEY Laundering

60 IBA BULLETIN
AUGUST 2005
 Statistics

Licenced To Post without pre-payment under Licence No. 406 at Mumbai Patrika Channel Sorting Office, Mumbai - 400 001 on 5th and 6th of every month.
Registered with the Registrar of Newspaper under Reg. No. RN31661/78, Postal Reg. No. Tech/47-1345/MBI/2003-05,
1. Banking and Money : All Scheduled Commercial Banks 5. Forex Reserves As on A year ago
(Rs. in crore) (Including Gold & SDR) (24-06-2005) (25-06-2004)
Rs. in crore 605060 547939
Outstanding on % Variation over
US $ million 138890 119407
June 24, June 25, Last Last End
2005 2004 Month Year March 6. Bank Rate Per cent Effective
(25-03-2005)
1. Bank Rate 6.00 29-04-2003
Aggregate Deposit 1789864 1559933 0.65 14.74 4.76
1. Demand 260112 212553 2.84 22.38 2.05 2. IDBI Minimum Term Lending Rate 10.25 30-01-2004
2. Time 1529751 1347380 0.28 13.54 5.23
7. Deposit Rates
Bank Credit 1161387 877408 1.52 32.37 6.35
1. Food 44804 43061 -2.02 4.05 7.82 A. Term Deposits w.e.f. 01-11-2004
2. Non-Food 1116583 834347 1.66 33.83 6.30 7 days and above deregulated
Cash in Hand 9730 8523 3.19 14.16 11.37 B. Saving w.e.f. 01-03-2003 3.5% per annum
Balance with RBI 95986 78388 7.12 22.45 -12.82
Investment 740078 717408 -1.34 3.16 2.49 8. Lending Rates per annum w.e.f. 29-04-1998

Money Supply as on Amount Per cent

M3 (a+b+c+d) 2359789 2076750 0.57 13.63 4.17
i) Upto Rs. 2,00,000/- Not exceeding PLR
a. Currency with Public 375439 329836 -0.55 13.83 5.03
ii) Over Rs. 2,00,000/- Banks to fix
b. Dem. Dep. with Banks 295417 243425 3.15 21.36 0.08
c. Time Dep. with Banks 1684012 1499949 0.35 12.27 4.77
d. Other Dep. with RBI 4920 3541 1373 38.94 -7.48
9. Ratios Per cent
2. Price % Variation over
2005 2004 Month Year 1. CRR 5.00 02-10-2004 @

WPI : 1993-94 =100 (June) 192.9 183.7 0.42 5.01 2. SLR 25.00 22-10-1997 @
CPI : 1982 =100 (May) 527 508 -0.38 3.74 3. Cash Deposit Ratio 5.91 24-06-2005 #
4. Investment Deposit Ratio 41.35 24-06-2005 #
3. Bullion As on A year ago 5. Credit Deposit Ratio 64.89 24-06-2005 #
(30-06-2005) (30-06-2004)
(@) w.e.f.
Standard Gold (Rs. per 10 gms.)* 6220 5985
Silver (Rs. per Kg.)* 10755 9590 (#) as on
* Closing price at Mumbai
10. Foreign Exchange Rates as on 24-06-2005
4. Crude Oil (US $ per Barrel) As on A year ago
(30-06-2005) (30-06-2004) US$ Euro∈ 100¥ Stg‡
North Sea Brent 55.80 33.32 Buying 43.5550 52.3925 39.9450 79.1050
Selling 43.5650 52.4225 39.9650 79.1350
FEDAI Indicative Rates (spot) (Rs. per unit of foreign currency)
TOTAL DEPOSITS OF SCHEDULED COMMERCIAL BANKS -
MARCH 2004 11. DFHI Rates as on

2000000 Discount/Rediscount Per cent p. a.

No. of Accounts in Thousands Rate for
1511273

Bid Offer
Amount in Rupees Crore
Treasury Bills – –
Commercial Bills – –
1500000
Certificate of Deposit – –
Commercial Paper – –
Call Money Rates as on 24-06-2005 5.70% to 5.90% –

1000000
717679

12. Prime Lending Rates as on 26-06-2005 (% p. a.)

US CANADA ECB JAPAN SWISS BRITAIN HONGKONG

457158

6.00 4.250 2.000 1.375 2.590 4.750 6.000

330295
268216

500000 (As lending practices vary widely by location, these rates are not comparable).
195081
138760

120651

99571

98176

Sources: 1, 5, 6, 9 - RBI Weekly Supplement.

2 - RBI Weekly Supplement, CMIE, Mumbai, 3, 4 & 11 The Economic Times.

0
Urban

7, 8, 10 - RBI.
politan
Metro-

India
Urban
Rural

Semi-

All-

12 - The Asian Wall Street Journal.

Source : RBI