SBI The Old and The New

 I have the pride and honour of serving for 28 years, the State Bank of India, till February 1994 and as a pensioner for the last 29 years. I see vast difference in the way the Bank deals with its customers from then to now – both internal and external. It has one of the biggest balance sheets among its peers as on 31^st March 2023 and with very low NPAs. There is speed of service for those who help themselves. SBI celebrates 75 years of independence, Azadi ka Amritotsav with a unique gesture of giving a pension bonus for those who are above 75years according to the cadre at which they retired. We, the old-SBI-ites thus had a pleasant surprise in that it still could remember that generation despite the generational divide and technology disruption.

On the 8^th June, 2023 we heard the news that its Chief Financial Officer, Attar resigned from the Bank. In fact, his appointment raised several eyebrows couple of years back, because he came from a consulting experience with Ernst & Young and banking experience with its rival ICICI Bank. Conflict of interest is not ruled out. This is a governance issue. 

For those who visit the Personal Banking branch, one stares at long ques. Technology of which we are all proud of, looks a harrowing experience for the staff. The staff, despite all good intentions feel helpless many a time because the system just does not respond.

The SBI I worked at was ‘the largest bank for the smallest man’. There were concept branches dedicated to Agricultural and SSI sectors. It’s primacy in these two areas and domain expertise whittled away with not many field level managers and staff having no time to visit the villages and enterprises. They do not have much time to discuss with them their problems. Most problems are left for the system to resolve.

The SBI today is SBI plus seven Associate Banks merged with it assimilating seven work cultures. Both are thus entirely different. I am reminded of a Chairman who said a few years ago: “We are a technology company. Banking also we do.” Very true. There are more retail loans, personal loans, vehicle loans, more housing and real estate, and corporate loans. Property and Collateral verifications take more time than client interactions. There is little time for the small segment, who need most the banking services. ‘Its old slogan:” the biggest bank for the smallest man” is consigned to history. Anything small, except where it is a regulatory responsibility, is not to their taste.

Now SBI does little of banking as all the staff and managers look to the machines for instructions. If the machine fails to respond, the employee or manager has no answer for the banking problem that the customer faces. If one wants to post a grievance on the system, there is a drop-down menu. If you can’t click one of them, in ‘others’ you have to post in just 100 letters. The CACHE appears and you copy it. It disappears directing you to re-input. There is also a cultural transformation.

If a pensioner wants to see the Chief General Manager, he has to seek appointment through a letter either by mail or email. Earlier, pensioner could telephone and seek his time and meet him. Both the SBIs are different on several counts.

Earlier, there used to be Customer Committees meeting on the 15^th of every month. They have become things of the past for the last five years.  

I gave an auto-debit instruction for my Electricity Bills. For fifteen years, it worked well. During the last three months the compliance is whimsical. It pays one bill and the other bill of the second meter is not paid. I had to pay a penalty on that count Rs.150 in the next bill!! If I want to change the auto debit instruction, branch does not have a mechanism to do it nor does it appear in the Standing Instruction menu of my internet account. Branch Manager, after spending lot of time and contacting even the system administrator could not resolve it.

SBI Pensioners’ Monthly Bulletin, Hyderabad has a banner line calling the pensioners for securing their ID cards both for the family and self, if alone, through MYHRM portal. The portal is the most unresponsive portal. It rarely works for loading all the inputs needed. When the ‘forgotten password’ is clicked either on mobile application or on desktop, it does not respond.

In fact, all the data that is required is in the form of KYC with the pension paying branch. Pensioner’s details should be available with the HR department. Further, even the spouse’s data likewise is available with the KYC where the pensioner and spouse have joint account and nominee details of the spouse, where the latter is the nominee, on the other deposit accounts held with the Bank. With so much of advanced technology and the Bank mentioning that they have AI application also for a decade, where is the need in the first place, for this harassment of the pensioner on the MYHRM portal? Can’t the Bank pull the data from the branch account of the pensioner? Photo, Aadhar, PAN, residential proof are all available with the Bank Branch.

During the first year of YONO it was ‘you’ for the bank and ‘no’ for the customer. It took two years to make it work efficiently and by this time, the UPI system overtook its strides. I am reasonably tech-savvy but fail to catch up with the SBI HRM portal.

Still, going by the call for a joint ID card with my spouse, I loaded all the details. The outcome is a disaster. My date of pension is wrong: Instead of 28.02.1994, it mentions 31.08.1997. Where from the data is produced, no one knows. Regarding my spouse data that has been faithfully loaded to MYHRM after great difficulty nearly six months back, her details are left blank, when the card is issued. 

I had to give up the card telling the branch manager, that I can do without the pensioner ID with my spouse details incorporated, as we have other IDs.

The staff who should have closed their systems at the end of the day at maximum 5pm sit till even 7pm entering KYC of new accounts or responding to printed requests of service!! They curse the system they work with day-in and day-out, but in silence. This is more because they continue to focus more on the sale of third party products like Insurance, Mutual Funds, Pension Funds etc.

I am writing this note with the hope that the Bank would make better use of technology and help many of my ilk not facing such risk.  Instead of being complacent, the Bank should introspect and it is not correction that is required but total replacement of its technology to stand in competition with its peers HDFC Bank and ICICI Bank.

Pensioners’ Association left a helpful note that those who have difficulty in accessing the MyHRM portal can seek its help in the Association office.

Is this necessary? Doorstep service to the pensioners announced by the RBI is in circulars. Can’t the tech-savvy bank think of better way of helping its customers and pensioners?

There are many unsung heroes. It’s time to have pity on them and find systemic remedies. I wish the Bank would regain its pride of place in the industry.

*The views are personal.

Urban Cooperative Banks - Future Concerns

 

Urban Cooperative Banks – Future Concerns

Urban Cooperative Banks (UCBs) occupy nearly 8 percent of the financial sector space. The topic for discussion at the College of Supervisors on the 24^th  July 2023 was on “Business Development Plans, Risk Management and Governance.”

UCBs are neighbourhood banks coming under the regulations of both the State Cooperative Acts and the Banking Regulation Act 1949 and its amendments. Financial Stability Report June 2023 acknowledges their contribution to the financial sector. Credit growth of UCBs both scheduled and non-scheduled UCBs reaching 6.7 percent and 4.9 percent respectively.

The discussion is timely for more than one reason: After the Third Five Year Plan, there was no mention of Cooperatives as economic sector in the subsequent plans until the NDA government formed a separate Ministry of Cooperation and formulated a National Cooperative Policy. Second, Multi-State Cooperative Act 2023 was on the anvil. (It was passed in the Parliament on the 25^th July 2023. Third, these UCBs were in the media and the press for several reasons: 1. failure of PMC Bank, RBI raising the threshold of guarantee limit of deposits from Rs. One lakh to Rs.5 lakhs; 2. depositors’ interests occupied the prime interest of the regulator after a series of failures and irregularities;3. consolidation of banks through merging of weak banks with strong banks, 4. introduction of 4-tier structure in UCBs based on their business levels considering their heterogeneity, 5. implementing some of the Viswanathan Committee recommendations – particularly to help raising capital beyond the membership through setting up National Urban Cooperative Finance and Development, an Umbrella Organisation, 6. Board of Management with functional experts as a support mechanism for the elected Boards has been put in place; 7.inter-cooperative agency cooperation in strengthening the sector, increasing number of penalties on good number of banks for several regulatory breaches; 8.new threshold of lending to priority sector by 2026 depending on the tier to which they belong, 9. poor governance and 10. risk management standards.

It has been noticed that majority of the Tier-3&4 UCBs have been conforming to the regulatory directives, introduced core banking solutions (CBS), opened ATMs, integrated with the larger payment systems like the UPI through appropriate technologies, and mostly compliant with the prudential norms prescribed by the RBI.

All the UCBs follow the regulation of submitting their Annual Business Plans to the RBI. This is more ritualistic. Business Development Plans are not prepared with bottom-up approach. There is no Board approved strategy for preparation of such plans annually. Even after the constitution of the Boards of Management as adjuncts to the Board (These BoMs do not have any discretion and they perform only advisory role). The credit to risk weighted assets ratio (CRAR) of scheduled UCBs (around 52 banks) remained stable at 15 percent and the non-scheduled UCBs at 17.8 percent. FSR acknowledges that ‘tier-wise CRAR of UCBs is well above the minimum regulatory requirement.’ Net worth of all the
UCBs is stated to be comfortable. Yet there are continuing concerns on their contribution. Some of the financially sound and well managed banks (FSWM) have been attempting total transformation akin to commercial banks relating to technology, like internet banking, mobile banking, one-stop solutions etc. Capacity building at various levels in this regard and cyber security are the challenges they are facing.

Three important aspects that seized my attention while reviewing their performance are: 1. The role of Board of Management, 2. Priority Sector lending imperative, and 3. Umbrella Organization.

Board of Management is supposed to guide and assist the Board of Governance with no delegation or commitment to them. They are outside the actual Board of Directors and yet in it. Instead of such ambiguity, there can be negotiation with the State Governments to adopt certain rules to facilitate the elected Boards to have nominated Directors from professional cadres satisfying the fit and proper criteria for such nominations too. This would settle the issue of enhancing the capability of the Boards. Further, training of the Board of Directors, measuring the performance of the Board of Directors on the basis of a written statement of what value addition they would like to bring to the Board and how they would like to participate in the stability and sustainable growth of the institution, annual Board retreats etc., should receive the attention of the regulators.

Agenda of the Task Force on Cooperative banks (TAFCUB) in several states is being prepared by the RBI while the concerned Registrar of Cooperatives of the State and the Associations as the other constituents are not being consulted mostly, save exceptions. Its functioning has become too routinised during the last ten years. Since the purpose of the TAFCUB is to resolve local regulatory issues without escalating them to higher levels, and improving the functional efficiency of UCBs, it is desirable and necessary that the agenda becomes more consultative.

Viswanathan Committee ‘s view is that “there is ample space for financial institutions that operate on the principles of co-operation and the inclusivity that they get. As such, the Vision for the UCB sector should be to emerge as the neighbourhood bank of choice powered by passion for inclusive finance as the core of the business model. This can happen only if their operations are founded on financial strength, strong branding, cutting edge technology driven processes, and skilled human resources coupled with an enabling regulatory environment. These internal drivers can be available to a bank either on a stand-alone basis or acquired through network arrangements. There are now several enabling factors, both for the UCBs themselves and the RBI as the regulator, to actualise this vision.”

Action still awaits the validated recommendations of the above Committee. Many of these aspects have been discussed while delivering my talk, the PPt of which is attached. 

*Text of the address at the College of Supervisors, RBI on the 24^th July 2023 at Mumbai.