Responsibility and Responsiveness

Responsibility and Responsiveness

Thanks to WhatsApp, if you put two blue ticks on the message, it can be a mere acknowledgement that the reader has seen your message. It does not mean that he or she has read the message. Similarly, your mailers also get responses. Today, most institutions tagged their grievance redress system to technology. Its implications should be seen to be believed. This blog addresses a few common occurrences in that direction and the best that could be done, if the system has to improve.

My friend went to his bank branch to enquire about a transaction that he did not originate. At the counter he approached, he gets a response that he would verify the system and tell him. He confirms that the transaction reflected was correct and that the system says so. If he has any further clarification to seek, he may contact the Manager. The Manager directs him back to the Accounts Manager, who confirms the response of the first counter clerk. He is directed to lodge a complaint on the bank’s website. One is dismayed at the responsibility of the officials. Is this unique to a branch or a bank? This is universal.

When you lodge a complaint to a bank or a Company or a mobile operator or a NBFC, you will receive a message on either your email or mobile phone that ‘Your complaint has been received. It will be responded to within 24/48 hours as the case may be.

When you would like to complain on the website on the contact point, you will be directed to record your complaint on a series of options that the institution chooses to address that may not reflect the concern you may want to raise with that institution. When you click on ‘others’ option, it restricts your message not to cross 100 words in most cases. You should have learnt precis writing in your school days. You are asked to enter the captcha. After repeated attempts, you may succeed, if you are lucky. You wait for the declared time only to receive another message that the complaint has been referred to the concerned official from whom you will receive a response shortly.

In case you are disappointed and try to reach to the Chairman/Managing Director/CEO, you would not have received even a simple acknowledgement. Remember, this top executive at least  three or four personal secretaries of sufficient seniority in the organisation and that does not help the response system.

Government departments are a shade better if the grievance is addressed in person or manually. If you use technology, the templated response system gets activated and is no different from the financial or non-financial institutions.

We often hear of the remarkable success of the technology in improving access to the citizen. If you are tech-savvy, you may do all transactions using network you work with. The digitalized world has enabled smart phones to do all that anyone does manually. Your smart watch records your blood pressure, water or coffee intake, number of steps you walked, and you have any problem with either your mobile phone or the smart watch, there will be very few lucky who get their complaint redressed.

Technology has enabled many to benefit immensely that include myriad of fraudsters. The frauds in financial institutions today are in millions and are mostly unrecoverable. A recent post in Money Life blog mentioned that during the last ten years bank frauds touched Rs.5096crore of which only Rs.127cr could be recovered. There is no record of cyber frauds with the regulator!!

I recall Sadguru Jaggy Vasudev’s definition of responsibility: ‘Ability to respond.’ He adds: “Responsibility is not compulsive action; it offers you the choice of action.”  In several cases, such action is missing although choices are visible. Responsiveness is the willingness to respond coupled with ability. Willingness to respond exists sparsely and therefore, one notices the inaction on the part of institutions against several types of grievance. Many grievances as a result, reach the courts of justice. Several complaints may not have cognizable evidence and so, even genuine complaints have the chance of being treated as frivolous. Where does the remedy lie?

Entire grievance redress system in all departments with citizen interface, should be evaluated if the nation were to really commit to ‘ease of doing business’ and making our democracy work in the best interest of the welfare of the citizen.

 

https://timesofindia.indiatimes.com/blogs/fincop/responsibility-and-responsiveness/

  

Pensioners of SBI need redress

 

Government patronage and Institutional apathy for the Senior Citizens run parallelly

B. Yerram Raju*

I am 80 years old and retired from the country’s biggest Bank, State Bank of India as a Regional Manager in 1994. I read with great interest the story put out by the Economic Times today from the horse’s mouth – the Minister.

The synopsis of the story in Economic Times of 11^th June 2022 attracted me most. India has 8.6 percent of the globally aged and such population is likely to move to 19 percent by the end of 2050.

Despite Article 38(1), 39 (e), 41 and 46 making it incumbent on the states to provide public assistance at the old age, mysteriously, lot many cases are hibernating in different Courts of justice, with Supreme Court, no exception.

Nearly ten thousand senior citizens who retired between 1991 and 1997 from the SBI, that include the Chief General Managers to Assistant General Managers, draw a measly pension of around Rs.28,000 per month, including Dearness allowance. With inflation now, their savings are getting negative returns. A few facts need public attention.

1.      Government appointed a Committee with Murmur as Chairman, and its report is still not implemented. Murmur Committee had recommended that the basic pension of Rs.4250/- has to be converted to Rs.7120/-. The eighth Bipartite retirees were paid pension on pay scale of eighth Bipartite from 01.05.2005; that is, those who retired between 01.11.2002 to 30.04.2005 were paid pension on old scale of Rs.4250/- whereas earlier seventh Bipartite Retirees were already paid pension of Rs.7120/-. This anomaly arose because of the policy of discrimination followed by the SBI and IBA while settling the issue of pensioners of earlier era.

2.      D.A. Formula – In the old Scheme D.A. on Pension was paid on Structured basis. With eighth Bipartite Salary Structure the System of 100% neutralization was introduced. Only 5th, 6th & 7th Bipartite Retirees are paid Structured D.A. The Federation submitted that when 100% neutralization has been accepted and introduced why deprive old Pensioners from this benefit? A small number of such retirees have survived, and it is not going to cost huge expenditure to the Bank.

3.      Commutation factor in SBI: The SBI retirees suffer double loss. The factor which is available in other Banks at the age of 70 is offered to SBI Retirees at the age of 60. As it is all the official get 40% pension. They, therefore, suffer double loss. We emphasized that Ministry should issue directives to provide commutation as per Industry Level norms to SBI Retirees.

Every effort made by the Federation of SBI Pensioners’ Association and even some individuals could not resolve the issue of the rise of basic pension from Rs.4,250 per month to the level obtaining in 2005 even after a wide range of discussions with the Indian Banks’ Association, SBI, and Department of Financial Services, Government of India. SBI has huge pension fund balances. Resources are not the issue for resolution.

Two questions become prominent here: 1. Despite SBI, a statutory institution set up under the SBI Act, having enough resources to raise the pension to such group, why should the bank look to the approval of DFS, GoI? 2. Why the DFS could not take the route of arbitration and conciliation instead of procrastinating the issue in the name and style of ‘matter is sub-judice’ when they were requested for approval, on the ground that a few individuals, seeing no easy solution raised the case with the Courts?

We not merely look forward to a peaceful and healthy life but also a life of dignity and honour. Government of India should bring in the issues of old age and pensions of statutory institutions under the ambit of the Department of Administrative Reforms, Pensions, and Pensioners’ Welfare to direct the institutions concerned to settle such matters through its arbitration not withstanding the cases in the Courts. Courts, to my knowledge and understanding, will be too happy if the parties come to a compromise and withdraw the cases.

National Policy for Older Persons (NP0P) should encompass all the older persons irrespective of the affiliation to a PSU and Atul Vayo Abhudaya Yojana that acts as umbrella for all government-aided schemes for the elderly, and SAGE would be meaningful instruments when their applicability is universal.

Department of Financial Services, GoI should confront a problem head-on and should have timelines for resolving the cases relating to pensions in PSBs and SBI lest many aspirants of justice get resolution only when they reach the grave. Let these hapless old age citizens – in the age group of 75-90 years, get relief sooner than later.

The views are personal.

https://timesofindia.indiatimes.com/blogs/fincop/government-patronage-and-institutional-apathy-for-senior-citizens-run-parallelly/

Published on 11.6.2022

 

Is risk management cost or revenue function?

 

Is Risk management a cost function or revenue function?

B. Yerram Raju*

Ever since enterprises and firms as well as banks and financial institutions got a hang on risk management function, two things happened. One, most viewed it as a regulatory imperative and felt that compliance is firm’s major responsibility. Two, when the enterprises started practicing risk management, it became more its risk culture than a regulatory function. Broadly, all the enterprises, banks and financial institutions realized that we continue to live in a complex and uncertain world despite improvements in technology and data collection. However, not many institutions realize that costs incurred on setting up good risk management practices would enhance their revenues even in the short term. How? Certainly not through mere data collection, and modelling.

The current year and the years ahead seem to pose as many challenges as opportunities and there will be many more border level institutions like the non-government organizations (NGOs) coming to interplay with the rest of the enterprise sector. It is difficult to predict or control with a degree of certainty the future, climate change, environment and social governance would bring together private players and NGOs.

For example, during the pandemic, health of individuals in organizations, migration of individuals from the enterprises to their homesteads out of fear of the outbreak of Covid-19, resettlement of people, work from home and its tracking exposed new risks and there are no models built for tackling such risks. But the enterprises developed common sense based approaches initially to combat them. Governments stepped in with fiscal, financial, and non-fiscal support measures and the whole world evolved coping mechanisms.

Many nations came to conclusion that it is better to learn to live with those risks and cope with them than running away from them. Supposing that it is a cost function, can these risks be managed without incurring them? If they are not incurred, sustainability of firms would be in grave danger. The profit curve dented but loss is minimized. and many firms could bounce back to normalcy in a few nations like India. China, continuing its lockdown as a higher risk mitigation suffered the risks of sustenance and growth.

Pandemic, more than the recession, taught risk managers the lesson that risk management is a revenue function. Further, it also taught us that such risks in the short term will also turn out as opportunities. India became the vaccine producer for the world. Pharmaceuticals, packaging and packing industry and goods transportation have seized the opportunity for growth on a sustainable basis.

E-commerce firms of various hues, that started as small ventures, became big. Food delivery firms like Zomato and Swiggy showed that it is yet another business opportunity in the waiting for many. Several cafes closed only to give space for several households to become food producers to deliver through e-commerce firms. A sea-change occurred in the firms’ growth path.

Cristian deRitis in an optimistic discourse on GARP, says: ‘How much effort we exert to avoid a negative outcome depends on how highly we discount the future. The higher the discount rate, the lower the value to us of avoiding a loss in the future.’

A unified theory of risk management would enable cohesive and integrated risk management function. Persons good at credit and operational risk would realize that they should enhance their knowledge into all other forms of risk to enhance the value of the firm. Such unified theory of risk management provides for better risk identification and assessment capabilities across the geographical spaces and the spaces between the credit, operational, market, reputational, and sovereign risks.

Enterprise Risk Management (ERM) of firms have to develop, train, and cultivate risk management techniques easily understandable to each of the staff and other stakeholders to enable risk culture to thrive and flourish in the organisation not just confining to the cabins of risk managers and chief risk managers. A realisation has to come that risk management enables growth of profit. It is an investment and not cost. The net result would be effective risk culture and governance.

*The author is an economist and risk management specialist and the views are personal.

https://timesofindia.indiatimes.com/blogs/fincop/is-risk-management-a-cost-function-or-revenue-function/