Bank management, unions meeting called to avert strike-Business Standard 03.01.2015 Unions have called for a one day and 4-day strike over the wage hike issue As another bank strike looms large, the Central Chief Labour Commissioner has called a conciliation meeting on Monday between employee unions and the apex body of management, IBA, to resolve the wage hike issue. C H Venkatachalam, General Secretary of All-India Bank Employees Association (AIBEA), confirmed that the Commissioner, whose office functions under Labour Ministry, has called a conciliation meeting on January 5 in Delhi. AIBEA is part of United Forum of Bank Unions (UFBU), the umbrella organisation of employee and officer unions of nine banks, which has given the call for one-day strike on January 7 and four days from January 21 in support of their wage hike demand pending since November 2012. UFBU is demanding a 23% wage hike, but the Indian Banks Association (IBA), the apex body of management, is willing to give about 11% raise in salaries. If Indian Banks Association comes forward with any positive proposal (at the meeting), we will reciprocate and try to find a solution to the problem. Otherwise, as announced, there would be an all-India bank strike on 7th January followed by four days strike from 21st January, Venkatachalam told PTI. Wage increase has become necessary due to high inflation and price rise as well as heavy increase in the workload of employees, he said. The unions are also planning an indefinite strike from March 16 over the wage hike issue. The bank employees had gone on a day-long strike on the same issue in November last. This was followed by a zone- wise relay strike early last month. FM promises more autonomy to PSU banks Says the level of bad assets in the system is unacceptable India needs to conceive several reforms in the banking sector, Finance Minister Arun Jaitley told reporters on Saturday on the sidelines of a two-day banking retreat. Jaitley added that there is a need to give greater autonomy to banks and that non-performing loans in some cases was unacceptable. There is a need to get the best talent into the system. There is a need for far greater autonomy being given to them (state-run banks), Jaitley told reporters in the western city of Pune. Indias state-run banks recorded the highest level of stressed loans at 12.9% of their total advances in September last year, while the same ratio for private sector banks was at 4.4%, according to central bank data. Indias top bankers have gathered in Pune to discuss long-pending reforms vital to improving the health of ailing public sector banks in Asias third-largest economy. The government, which is a majority owner in 27 public sector banks, that control over 70% of the system, wants to hear the problems plaguing the sector from the bankers and external experts as they know the best where the shoe pinches, he said. The Finance Minister also said there was a need for the banking sector to fund infrastructure and manufacturing sectors to support the ambitions of higher growth. Be socially responsible and commercially viable, banks told-Hindu Business Line 03.01.2015 Gyan Sangam, a two-day conference aimed at reforming the Indian banking sector, was inaugurated today by Jayant Sinha, Minister of State for Finance, in Pune. Pitched as the first step towards creating a new banking paradigm, the conference is being attended by regulators, officials of the Finance Ministry, and the top management of all public sector banks (PSBs), insurance companies and financial institutions (FIs). Speaking at the event Sinha asked PSU banks to be socially responsible while ensuring their commercial viability. “Though this is a Government of the poor...it is also a pro-business Government. So, the trade-off has to be managed by ensuring that the public sector banks are able to function commercially while financing the poor as well,” Sinha said. The participants have been divided into six groups to discuss six main themes: achieving universal financial inclusion; leveraging technology and digitalisation to improve operational efficiency; rethinking priority sector lending; improving risk management, asset quality and recovery; building a robust people strategy for PSBs; and consolidation and restructuring of PSBs for better efficiency, governance and capital efficiency. Each working group comprises a mix of large and smaller banks. CMDs and EDs from the same banks are participating in different working groups. While chiefs of insurance companies are spread across all the discussion groups, those of financial institutions will participate in the priority sector lending group. These groups will hold discussions and finalise their reports and present them to Prime Minister Narendra Modi who will attend the valedictory session on Saturday along with Finance Minster Arun Jaitley. Priority sector rethink Briefing newspersons here on the day’s events, Hasmukh Adhia, Secretary, Department of Financial Services, said: “Since 1972, the 40 per cent target given remains the same and there is surely need for change as per the recommendations of bankers and regulators.” The other issues that needed to be addressed was how to raise the savings rate from 30 to 35 per cent, using the accounts as channels for direct transfer and leveraging technology to improve banking technology. Stake sale in PSU banks only at ‘appropriate valuation: Jayant Sinha-Hindu Business Line 03.01.2015 The Government today made it clear that any decision to undertake a stake sale in public sector banks will be so for an “appropriate valuation’’. “It is our responsibility to ensure that if we’re going to dilute our stake, which is the stake of the people of India, we’ll do it at an appropriate valuation. “We’re certainly not going to do it at a valuation that will result in too much dilution for the people of India,” the Minister of State for Finance, Jayant Sinha, said on the sidelines of the two-day bankers’ conclave at the NIBM here. He, however, declined to give a timeline for the stake sale even though the Union Cabinet recently decided to reduce the Government stake in the 27 PSBs to 52 per cent against the current red line of 56 per cent. “We’re absolutely vigilant on that matter. We completely understand how markets operate, how valuations are set and we’ll take all of that into account when we take decisions, when we dilute our stake,” Sinha, a former private equity fund manager, said. In the recently released Financial Stability Report, the Reserve Bank had flagged concerns over the compressed share prices of the state-run banks. “Capital raising efforts by PSBs other than the capital infusion by the government, face challenges because of their relatively low equity valuations compared to their private sector peers,” it had said. Basel-III norms The need for dilution has arisen as a result of higher capital required for meeting the Basel-III norms by April 2019 and the pressure on state finances. The government has set a Rs. 11,200-crore capital infusion budget for the current fiscal and speculation is on if the government will exceed this given the needs of the banks. “The government is fully committed to supporting and providing all of our financial institutions, whether they are banks, insurance companies, NBFCs, with the capital that they need to be able to provide the liquidity and the credit to the economy which needs to grow,” he said. Credit offtake The lower credit pick-up this fiscal — the year to date credit growth is at 5.2 per cent — has helped the banks conserve capital. Sinha exuded confidence that credit offtake will go up in the next few months. “As the economy turns as the interest rates come down, as they will certainly happen in the next few months, I am very hopeful and I am very sure that credit offtake will increase,” he said. Sinha said he expects a blueprint for reforms to come out from the “unprecedented workshop” of banking industry participants, which will be concluding this evening after the presentation of project reports to the Prime Minister, Narendra Modi. Govts should give up control in banks: McKinsey-Business Standard Consultant cites global best practices on a three-tier structure - very large banks, policy banks and state-linked banks In a presentation on global best practices in the banking sector, global consultant McKinsey on Friday suggested a three-tier structure consisting of banks that are equivalent to some of the global lenders in terms of size; “policy banks” which will implement the government’s policy such as directed lending, and “state-linked” banks, in which the government will not have a majority stake. In the policy banks, the government can have 100 per cent stake, McKinsey said. McKinsey has argued it is important for governments to give up control in banks for increasing efficiency since there are instances of government intervention, which affects lending. The consultant is the knowledge partner at the two-day Gyan Sangam in Pune organised by the finance ministry. The global consultant made presentations on all the six reforms agendas that were listed for discussions — consolidation, financial inclusion, asset quality and recovery, technology, human resources, and priority-sector lending. It has been argued by many experts and also the previous United Progressive Alliance government that the country needs banks of global size given the magnitude of the infrastructure financing requirement. The previous government had said merger proposals should come from respective bank boards and the ministry will not force any banks. As a result, no banks came forth with any merger proposal with another bank. Earlier, an RBI-appointed committee headed by former Axis Bank Chairman P J Nayak also emphasised the need for lowering government stake in public sector banks. The Nayak committee had observed that public sector banks face dual regulation by both RBI and government which crippled their operations. The committee was of the view that government should stop intervening in the matters of public sector banks. While addressing the media before the retreat started, Hasmukh Adhia, secretary, financial services in the finance ministry, said the scope of discussion of consolidation topic was not only mergers and acquisitions but also examining ways in which capital could be raised effectively. “We will see if there is another structure by which we can raise capital, improve balance sheets etc,” said Adhia. The bankers would work till midnight to come up with a blueprint for next generation reforms, he said. One of the biggest challenges that public sector banks face is capital. According to government estimate, public sector banks will need Rs 2.4 lakh crore of capital infusion by government, if the latter wants to maintain its present stake. The rise in non-performing assets in the last few years has increased provisioning requirement for banks, which has depleted its capital.
Posted on: Sat, 03 Jan 2015 15:17:11 +0000
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