My Innings

 

With my ever loving spouse, Venkata Naga Satyavati.

My (Second) Innings

B. Yerram Raju

Legacy made my choice in favour of the banking career that started on 1^st August 1966 as a probationary officer and retired on the 28^{th of} February 1994. The career was truly exciting as it was all through a career of learning. As a probationary officer, I was lucky in working under legendary officers like R.K. Talwar, P.K. Nayar, Soloman Raj, Dr. K. Srinivasa Rao, P.S. Prasad Rao, A. Sankar, H.V. Ranga Swamy, P.V. Subba Rao, V. Subba Rao, A.B. Mohan Rao, M. Krishna Murthy, K.G.K. Menon, M.N. Dandekar, V. Mahadevan, C.L. Khemani to name a few. I am grateful to them. All of them respected compliance, regulation, and compassion to the small borrower – whether in farming or small industry. Extension with credit delivered the results. Doing duty in banking was like doing karma.

Exciting part of my career in the bank was as Agent, Agricultural Development Branch; Branch Manager, Nellore Town branch; Senior Faculty at the State Bank Institute of Rural Development, Chief Inspector, Inspection Department – Nagpur and Jaipur zones; and Regional Manager, East Godavari District, Visakhapatnam Zonal Office.

Divi Seema floods in 1974 beckoned me to serve the cyclone-affected areas that took away 10000 lives in its stride. Morvi floods of UP, Cyclone of Tamil Nadu and Andhra Pradesh and recurrence of natural calamities caused distress to the farmers and both the agricultural term loans and crop loans came under stress. Government of India commissioned Agricultural Finance Corporation and IBA jointly, to draft the guidelines to rehabilitation and revival of agricultural credit to the areas affected by natural calamities. Central Office placed me as member of that committee. P.F. Gutta was the executive Chairman of the Committee while Ghulam Ghouse, chairman, AFC was the Chairman. All the calamity affected areas in the country were visited; discussions with stakeholders and local banks and cooperative institutions were held and guidelines were drafted. As member-secretary, I had the privilege of drafting the white booklet containing the guidelines in 1974 that were accepted by the RBI and circulated to the banks for implementation.

While in the Bank, I preferred to do PhD instead of CAIIB, the panchakshari mantra for elevation in the bank. I completed PhD from the Department of Commerce and Management Studies, Andhra University in 1984 while I was Branch Manager, Nellore and my thesis was on Credit Planning and Management – Focus on Medak District. Mrs. Indira Gandhi was the Member of Parliament from Medak Constituency when I was its Lead District Officer. Very rare for an official of my cadre in those days to interact with Mrs. Indira Gandhi and had the privilege of release of the District Plan and District Plan at Sangareddy.

Another challenging opportunity – a unique one – descended on me while I was inspecting Pedder Road branch in 1990. Union Government indented on my services to serve as Professor of Economics, Lal Bahadur Shastri National Academy of Administration, Mussoorie. Shri M. N. Goiporia, the then Chairman summoned me to his office to discuss the prospect and assess me for the deputation. He took the decision to relieve me for this assignment and advised me to keep up the prestige of the Bank as it is very rare that a banker would be requested to such position that involved training of the civil servants of the country. I formulated the syllabus for Economics in line with the liberalization, privatization and globalization policies that were getting under way.

I authored by that time more than 100 articles in the Economic Times, Business Standard, Financial Express and the Hindu and a couple of books. These publications coupled with my proven track record as field executive covering rural development and agriculture caught the attention of International Biographical Society, Cambridge to confer on me the title of INTERNATIONAL MAN OF THE YEAR, 1991. On my repatriation I was posted as Regional Manager, at Visakhapatnam. My assignments at the SBIRD and LBSNAA made me think of a career where knowledge sharing will be possible. Further, I realized that all that one could learn in banking would take place – managing credit, situations, people and customers and conflict resolution – only till scale VII. Unless one learns the art of compromising in life, it will be difficult to rise to the top position. I decided to go for a more independent and peaceful as also a sharing career.

The End of First Innings

sbi TAUGHT ME MANY THINGS AND LEFT MANY ACQUAINTANCES IN awe. lATE t. nAGABHUSHANAM WAS MY gURU IN pROBATION AT VIJAYAWADA AND HE SUCCEEDED ME AS aGENT AT adb, vISAKHAPATNAM AND mAHARANIPET. dR. cHOWDARI pRASAD AND VEDANTHAM JAGANMOHAN PRODDED ME TO WRITE MY AUTOBIOGRAPHY.

 The second innings started from October 1994 with the Administrative Staff College of India, Hyderabad where I was invited as Senior Faculty. Within a year, I became the Dean of Studies. I did not have to look back thereafter. During this period, I conducted two studies on sickness of small-scale industries for the states of AP and Jammu and Kashmir. I have drafted the Small-scale Industries Bill for the Government of India and studied a few organisations for corporate restructuring. This second innings concluded with my attaining the age of superannuation in December 2001. During this second innings, my learning curve sharpened into areas of governance, world trade organization issues and financial management.

Third innings started after retiring from the ASCI. I have set up my own consulting organization. I worked on several consulting assignments with state governments – Andhra Pradesh, Tamil Nadu, Gujarat – and several corporate undertakings. I pursued financial risk management professionally. I toured Southeast Asia, UK, Switzerland and interacted with several who mattered around Risk Management. 2003 and 2004 saw me as MEMBER OF JURY, ASIA-PACIFIC BANKERS’ CONGRESS, MANILA.  In 2005, I was appointed as Member of the SME working group of the RBI.

I had set up chapter of Professional Risk Managers’ International Association at Hyderabad and became Regional Director. I conducted training programmes in risk management for a few banks. Academic experience beckoned me again to head the Indian Institute of Economics as Director for a year. 

Government of Andhra Pradesh invited me in 2009 to be a Consultant to their Cooperative Department. In 2011, RBI inducted me as Expert Member of the Short-term Cooperative Credit Structure of a Committee constituted for the purpose.  

After the formation of Telangana State, I was consulted by the Planning Department for writing their first Socio-Economic Outlook in 2015 and Industries Department. Government of Telangana, seeing merit in my suggestion for establishing a separate institution to tackle the sickness in micro and small manufacturing enterprises had set up Telangana Industrial Health Clinic Ltd in 2017 as NBFC.

I had many innings, and my effective retirement took place in March 2021 from the as Adviser, TIHCL, Government of Telangana after I reached Eighty. Now, happily continuing my hobbies, I keep reading religious scriptures and writing occasionally for reputed dailies and journals a few articles on invitation.  

The lessons I learnt are many. But those that others also may like are: 1. See merit in what others say and listen to them. 2. Take a good morning walk for at least 30 minutes. 3. Have your food conservatively but on time every day. 4. ‘Keep your eyes and ears open but mouth shut’ – an old saying. 5.Keep others happy and be happy. Friends and well-wishers were a great strength to me. I must admit that I had several critiques who made me of sterner strength.

I am happy with my spouse, three daughters, two grand daughters and three grandsons. I wrote over 2000 articles in the leading financial dailies and the Hindu, and authored 16 books – the last book being, my autobiography - ROOTS TO FRUITS – THE JOURNEY OF A DEVELOPMENT BANKER. I have passion for Agriculture and Micro and Small Enterprises.

Here is my family photo with parents and brothers at the time of marriage of my third daughter Shanti Vikas and Vikas Waghrey. 

Published in SBI Pensioners' News Bulletin, November 2021. Acknowledged with thanks. 

Acknowledgement

 

                                                ACKNOWLEDGEMENT

I chose this word to write about, as it has become too mechanical (the mobile or computer email automatically acknowledges a message or mail without the owner ever intending to do. We are now accustomed to receiving acknowledgement through email generated by the system. Here, the institution, either a bank or insurance company does it as a matter of routine. A complaint gets acknowledged but not necessary that the aggrieved person gets his complaint resolved!

Proof of receipt (serves legal purpose): There are others who make it a point to demand the acknowledgement by the recipient – mail post or sent through courier. Here it merely serves the fact of the recipient receiving it whereby it can be established by the originator that the former has received it at a particular time or on a particular day.

Dictionary meanings: Several Dictionaries, like the Webster, Oxford, Cambridge define it in terms of its usage. Some of them are quoted here.

1.     a: the act of acknowledging something or someone - acknowledgment of a mistake

b: recognition or favourable notice of an act or achievement received acknowledgment for his charitable works

c: recognition of the existence or truth of something: the acknowledgement of a sovereign power.

d: an expression of appreciation

e: a thing done or given in appreciation of gratitude.”

2. Law:

1.     a declaration before an official that one has executed a particular legal document.

2.     an official certificate of a formal acknowledging.

3.     public recognition by a man of an illegitimate child as his own.”

This also represents the behaviour/culture of a person when he acknowledges receipt of a book or memento or gift. It should come out of the heart and not out of the lips.

When you are at a podium addressing on a topic, you would love to receive the applause of audience as an acknowledgement of the aspect spoken of. Another body language is a pleasant smile or even loud laugh to represent the other person’s acknowledgement.

When you pray God, it is acknowledgement of the wonderful life bestowed on you.

The word leaves a feeling of happiness in both the giver and taker.

The question that needs answer is why do people fail to do this simple act?

2021 and Beyond

 

It was the best of times, it was the worst of times; it was the age of wisdom, it was the age of foolishness; it was the epoch of belief, it was the epoch of incredulity; it was the season of Light, it was the season of Darkness; it was the spring of hope, it was the winter of despair...” This is how Charles Dickens begins his novel, A Tale of Two Cities.

Bottom of Form

Vision and Strategies Change

 This is an apt description of this age. We are at a maddening speed in technologies. Industry 4.0 has entered. Artificial intelligence, block chain technologies, man machine learning, robotics are the decisive forces of change in most organisations. Digital applications are replacing the traditional gurus (teachers). Tick boxes define the success of persons, whether in schools or office selections. People would like to travel, if possible, at the speed of light. Several corporates are rewriting their vision and strategy documents.   

 Conflicting Contours

 If those characteristics define the age of wisdom, street fights, large family divorces, abandoned children in larger numbers than before, failures in inter-country relationships redefining trade rules, ignoring climate warnings, several persons yearning to cross the boundaries aiming high only to know that ‘distant hills look green’, reflect the age of foolishness. 

 Mobocracy Vs Democracy

 With Joe Biden taking over the reins of the largest democracy, democracy would appear to be on the path of restoration. But, on the other hand, in India, with the unrelenting farmers’ agitation, mobocracy seem to be asserting itself, mainly because of the failure in following the Constitutional process for a well-thought-out reform in the sector. With 123 amendments, Indian Constitution seems to be under attack off and on and begs for a comprehensive overhaul, so as to keep the Fundamental Rights enshrined there intact.

 Financial Sector 

 In the financial sector, Covid-19 shook the world while in India, the scenario is much worse as frauds and cybercrimes are surging, threatening financial stability. Reforms in this sector should move strategies ahead of structures. Two World Bank economists in a recent blog commenting on asset purchases in emerging markets and developing economies, say that unconventional policies and unconventional times had set in. “History is a reminder to central bank’s credibility if asset purchase programs are used for prolonged monetary financing of fiscal deficits.”

 Investments in water, environment, natural resources, education, health and hygiene, and emerging technologies would be the defining features of sustainability.

 Ethics in Governance and Yoga

 Ethics in governance and transformation processes seem to be of criticality. Albert Einstein had said, “We should be men of values rather than men of success, ” Winston Churchill had said “We should extend values beyond our homes.” The corporate executives are selling their professional skills and not their conscience. It is the attitude to life and the value system one has to cherish and live with. Values are not like a sensex graph varying every day or with every person. Values are universal in character. It is the application of values that has been undergoing a change. Clean minds are as important as clean physics and dharmic yoga makes more sense than mere physical yoga embraced by people in different parts of the world, with PM Modi’s clarion call to the nation since 2014. 

 Post Covid, the stars surface

 During this third millennium, with sputnik science reaching for livable space even on Jupiter and the moon, India would be moving ahead of other nations and prove its leadership in space technologies. She has already proved herself as a leader in pharmaceuticals and software and would move its best foot forward in the transformational world. No wonder McKinsey in its most recent article has put Asia as the leader of the future and generations will define the future in terms of pre-Covid and post Covid. 

 The year 2021 and beyond will see the world transiting to a different horizon. The wisdom of the aged will fall behind the expectations of youth and it is this youth that are going to redefine the age ahead. I am not a soothsayer but the writings on the wall are clear.

 (The writer, an economist and risk management specialist, is author of “Roots to Fruits – The Journey of A Development Banker.” The views are personal.) 

   https://www.moneylife.in/article/2021-and-beyond/62745.html

 

 

 

Democracy is in peril - Save Democracies

 Indian Express today carried a banner story with the title: "When history is rewritten, US Courts many be singled out for protecting national elections. Capitol Hill was put to flames and the whole of US should have been in rage. But there are a section of Republicans insisting on the reversal of election process with Trump hegemony to continue. 

There are an estimated 33mn expatriots and several Indians among them serving in the most reputed IT firms either with \US base or with India base. Their voice should also be heard. 

India stands out with the Supreme Court readying to deliver its judgment today on the Farmers' agitation against the three Farm Laws. Most protestors are from the three States of Punjab, Haryana, and Uttar Pradesh in the lead and some vested interests joining them. While it is true that the Acts have come into being without the expressed consent of the State Governments ruled by non-NDA States, there are a few silent supporters to these farm laws. 

Politics of India are dominated by the elitist farmers who were able to exploit the small and marginal farmers and vested interests ruling the Agricultural Market Yards in the States. They now throw the blame on these Acts as capitalistic and in support of capitalists and contract farmers. 

Contract farming is in vogue for the past two decades in one form or other. Organized Retail markets only enhanced their presence but to the absolute advantage of both the farmers, Collective farm organizations, and the customers of farm products. Today will be the historic day when the highest Court would decide their fate.

This apart, there are many a legislation like the one relating to universal identification through Aadhar Card identification that would also see the judgment today.

 "Public Perceptions: Public perceptions play an important role in policy formulation and implementation. In a 2014 report by Oxfam International titled Working for the Few polling from across the world captures the belief of many that laws and regulations are now de-signed to benefit the rich. A survey in six countries (Spain, Brazil, India, South Africa, the UK, and the US) showed that a majority of the people believe that laws are skewed in favor of the rich. Public expectations and perceptions, therefore, need to be considered seriously in public policy management in a democratic set-up.

 

Free Speech: This has been one of the key tests of democracy. After the social media platforms started giving expression to the free speech, governments in different parts of the world, without India as exception, started controlling it. Interestingly the Economist in its issue dated October 24, 2020 reported: “Our cover this week is about the rules of free speech in the era of social media. As online outrage mounts, pressure is growing to restrict ever more material. The big tech firms’ shifting attempts to clean up their platforms mean that a handful of unelected executives are determining the boundaries of what people can say: Is that good for society?" (Excerpt from my Autobiography: "Roots to Fruits, Part 2 Chapter 3, Development, Democracy, and Development with Human Development Focus").

Both Public perception and Free Speech are crucial elements of Constitutional Democracies. This does not imply that outrage and destruction are part of such expressions leading to tremendous waste of public resources at the will of the people. It is time that people who are against such outrage should have a free voice against them.

 

Access to Finance: MSMEs

 

Access to Finance – the Achilles Heel for the MSMEs

Economic restructuring followed by financial deregulation has brought in its wake the need for a change in the very mindset of credit analysts. Infusion of liquidity into banks has strengthened confidence in depositors more than the borrowers.

Share of MSMEs in GDP was of the order of 29 percent with a credit flow constituting 15% of the total credit disbursal of Banks and NBFCs. This amounts to approximately Rs.17trn. Government of India in its overreach to $5trn economy by 2022, has proposed that the share of MSMEs in GDP should reach 50%.

We have seen the most enticing schemes under Atma Nirbhar Bharat Abhiyan Scheme 1 reached only 55% in terms of disbursements, which targeted incremental credit of 20% working capital to the pandemic-struck standard assets in the MSME sector. In regard to the second scheme that targeted the sub-standard and NPAs for revival and provision of equity banks are shy to move fast – in a once bitten, twice shy mood.

It is unfortunate that we should be discussing this issue for decades despite a number of initiatives taken by the RBI and GoI. Priority sector guidelines have been modified allowing banks to co-lend with all NBFCs with no restrictions in order to push lending to this sector. The measure should enhance the risk appetite among banks by co-sharing the risks with the NBFCs. During the years 2015-20, borrowers’ accounting practices moved to the regulatory conformance zone. This should actually rebuild the lost trust among lenders and borrowers.

In Telangana, as many as 8,435 MSME units have commenced their operations since formation of the state, with an investment of about Rs.11,487crore. Since January 2015, MSMEs have provided additional employment opportunities to approximately 1.59 lakh persons.

While micro industries account for approximately 58.07% of total units, their share of investment and employment generation is comparatively less—11.92% and 30.12%, respectively. Small units account for 63.44% of total MSME investment and 55.41% of total MSME employment—the highest for both categories.

Telangana is the only State to have set up a separate institution to revive and restructure the manufacturing micro and small enterprises, viz., Telangana Industrial Health Clinic Ltd with a seed capital of Rs.100mn.

A couple of case studies would be in order where the TIHCL have been successful in not just reviving the enterprise but also substantially scale up their operations, save the lock-down period.

In times of uncertainty as now, investors hesitate to start new enterprises except in greenfield areas like the IT and Pharma. We should not allow the existing viable enterprises to shut their doors for want of some critical funding or margin money or buttressing his equity.

M/s. Deccan Pulverisers Private Limited promoted by two women entrepreneurs, engaged in manufacturing mineral powder from quartz/feldspar mineral stones, availed a term loan from SFC to the extent of Rs.6.2mn without any arrangement for working capital. State Government has sanctioned Rs.2.1mn as investment subsidy and other incentives.

The machinery was ordered as soon as the Financial Institution (FI) sanctioned the loan, but the installation of machinery was delayed from vendors end. The business did not receive expected export orders and the promoter searched for buyers in the local markets. In initial stages could not find an appropriate buyer who can pay in 60 days due to this the receivables were delayed and the payments to the FI were also delayed, FI started charging penal interest for the delayed payments.

In the meantime, the constructed factory shed was damaged due to heavy rains and cyclone, the entrepreneur repaired the shed from his own funds. The project was not feasible with one machine as the margins were too low in the local markets the promoter has installed a second machine with his own funds and increased the unit’s production capacity.

Due to irregularities in the repayment, FI has issued demand notice on 6^th September 2019 asking the unit to pay overdue interest and instalments amounting to ₹ 20 lacs by 1^st October 2019, failing which they will take further steps like legal action etc., The promoter and the company were in the great stress as it shattered their goals and dreams.

After a detailed diagnostic study and discussion with the SFC, we arrived at a revival package for the unit. We noticed that the high interest rate of 17% p.a., and delay in arrival were the principal reasons for the unit to turn incipient sick.

 

TIHCL has extended critical amount funding that enabled him to regularise his term loan account with the SFC. We also arranged for the priority release of incentive blocked for a year. The sword on their necks has been removed and they started production in January this year. But the pandemic struck, and they could restart production only in July this year. At present they attained 80% of their capacity utilization and a turnover of Rs,8.2mn. One of the PSBs agreed in principle to sanction working capital as well.

 Another enterprise, Suresh Textiles, a sole proprietary unit similarly shattered was assisted by the TIHCL. This entrepreneur with 20 years of weaving experience has set up 40 semi-automatic power looms initially. Later he converted them to fully automatic looms to produce shirting cloth in the year 2017. He started commercial production in 2019, the year of slow growth of the economy. The unit stopped its operations during the period of upgradation for nearly six months. During this stress period he approached the TIHCL for a solution.

Problems Identified by TIHCL-

·       Ab Initio sickness detected due to inadequate financing

·       Introduction of GST post-sanctioning of loan caused additional burden on proprietor as equity parked for working capital was utilized for GST payments on machinery.

·       Subsequently this caused cash crunch for production and unit became sick within one year from establishment.

 Revival Package-

TIHCL has conducted diagnostic study and found that the unit has suffered shortage of working capital due to external factors.  It has proposed to the primary lender for enhancing the limits for operating the unit. 

As proposed, primary lender has sanctioned additional loan of ₹14 lakhs and TIHCL has sanctioned margin loan of ₹3.73 lakhs along with the primary lender for the revival of the unit.  TIHCL now handholding and reviewing the unit periodically for efficient business operations and to control the stress in the unit.  

Overall, post revival and rehabilitation by TIHCL, the unit is performing well and improved chances of growing the business.  From nil capacity, the unit has reached 50% capacity utilization during the last three months and is confident of reaching 100% capacity in the next four months.  His experience taught him that raw material bought from outside the State would save the input costs by 15%. He is prompt in repaying the instalments and is now poised for growing big.

 Both the units have digitised their operations and installed ERP solution that enabled the TIHCL to monitor off-site the units’ performance regularly and guide the entrepreneurs.

 In more than 80% of the units that knocked our doors for support, we noticed that their working capital eroded with the banks debiting the instalments on the retail loans sanctioned to them – either for buying a car or home or both. Where the housing loan is taken this automatically collateralized the otherwise CGTMSE guaranteed loan. Their failure to repay due to the eroded working capital, turned them NPA and proceedings against their securities followed as a natural course. MSMEs were the first option of banks to lure them to retail loans, that became their thrust area. It is advisable for the MSMEs to take retail loans from banks other than those that granted them the working capital and also have proper financial planning for their personal assets and enterprise assets for growth.

 Transunion CIBIL has also announced a MSME Health Index based on two parameters – growth and development. Growth is based on the enterprises ability to access credit while development is assessed on the basis of NPA status in banks.

 Rating institutions are yet to come out with rating specifically targeting the manufacturing MSMEs. There are several issues in rating mechanisms and also the extension of guarantee by the CGTMSE. These need resolution for easy access to credit.

 Digitization of all enterprises does not brook delay. Telangana Government entered into an arrangement to provide free accounting software to 20000 enterprises to accelerate digitization. This will certainly bring transparency, accountability, and better compliance of the lending institutions’ terms and conditions of sanction thus rebuilding the lost trust among the banks and MSMEs.

 TIHCL is a co-lending institution and the banks that are interested to speed up their processes of revival and restructuring and take assistance for monitoring and supervision of their MSME assets are welcome to seek our support. Nothing comes free. But the costs that the enterprises and banks incur in their collaborative efforts with us are far minimal and we assure that their NPA portfolio would turn performing with their association with us.

 TIHCL has tailor made loan products for various types of stress faced by the MSEs and for women start-ups and for cluster-based units. Margin loan assistance, Critical amount finance, Margin money for start-ups, working capital requirements for the other types of enterprises. Every enterprise is digitised for its operations under our direction and support. It is for the units and banks to take advantage of our presence. Rates of interest range between 9 and 10 percent.

 TIHCL is keen on ensuring sustainability of enterprises through timely counselling, mentoring and advisory services on a continuing basis and this is our USP.

(This is the text of my address at the MSME Summit held by the CII-Hyderabad on the 7th November, 2020)

 

Roots to Fruits - The Journey of Development Banker

 

ROOTS TO FRUITS

This Book is all about Yerram Raju? Not just that. Apart from his life story, this book is the quint essence of development banking and financial inclusion that the country has been pursuing as its unfinished economic agenda.

 

He is perhaps one of the few to start his writing spree at the age of 20 and continuing for 60 years in a row. Not a single year was without a few articles from him, that too in reputed financial dailies and journals. This is perhaps his last book in life, that will end up with the publication of Part 2 by December 5, 2020.

 

Large families of the ilk to which the author belonged are consigned to history, following the family planning since the 1950s. Eldest of the twelve children, the author describes vividly how his parents have instilled great values, ethics and austerity. This formed the roots of his career path to pluck of the fruits in his later part of life.

 

Author’s mother proudly said that her contribution to GDP of India was significant with two of her children – one a reputed gastroenterologist in Texas and the other a reputed Certified Professional Accountant in the US. The second son is a Professor in Yoga at Chennai. With all the sisters married to their choicest spouses, they had a fulfilled life. The parents of the Author Dr. Raju who lived beyond 94yrs and 81yrs respectively had an enriching life nurturing great ambitions in their children.

 

The Book depicts his intense affection towards parents, his own family, and great reverence to his teachers. His verse on Mother and his prose on Father are moving stories. It is a tell-tale story of the growth of a large family and its contribution to the growth of the economy.  All the children of this large family, however, preferred nuclear families.

          

Since Yerram Raju, the author, grew up in austerity and simplicity, he saw his three daughters grew up in the same environment. Though they all wanted to stay in India when married, all of them moved to different countries.

 

The Book offers lessons to several upcoming youth on the choices one can make when confronted with multiple options having equal opportunities for career growth. The interviews faced by him can guide the youth. His career in Textile Mills threw up lots of challenges that he ably faced. His parental dependence made him leave the opportunity to take up one of the more challenging competitive careers – civil services and financial services.

 

His choice of banking backed by emotion had its fruits. He could see the rarest of rare things to happen – retirement of his father serving the same branch where he was posted as Agent, at his hands. Doing PhD instead of pursuing professional course that would have seen a rise in the banking career faster than he had, speaks of his continued choice of academics. This enabled him later to teach the civil servants at Lal Bahadur Shastri Academy of Administration, Mussoorie and Administrative Staff College of India. He was also an external examiner for doctoral degree of three universities. It is difficult to find a banker adorning     s u c h     position.

 

Lending to agriculture and allied activities, particularly to the financially excluded like the marginal small farmers, potters, small enterprises was an obsession with him. Simplification of systems and procedures always attracted his attention.

 

The author in this brief of 130-odd pages, describes the journey of development banking as it took place post nationalization of Banks in India. For those looking for solutions to the problems of credit to the poor and needy, this book offers ready-made solutions. The presentation is simple and lucid.

 

          According to him, “Development Banking involves deposit mobilization through innovative schemes considering the needs of a variety of customers and servicing them, both online and offline, and financing development projects that add scheme specific infrastructure for lending and financial inclusion. Social banking is part of development banking. Both require efficient credit risk management. Extension services is part of social banking. Handholding, mentoring, counselling are essential requirements for social banking. It is treated as part of narrow banking, these days.”

         

          He won many an accolade both in the Bank and outside. One such is the recognition as International Man of the Year 1991 by the International Biographical Society, Cambridge for his contribution to rural development.

 

This book offers lessons on recovery of agricultural loans. According to the author, recovery is both an art and science. His success as banker, offers many a lesson for the current day bankers deeply mired in NPAs.

 

The Book is laced with quite a few case studies and provides lots of lessons on development banking. Part 1 of the Autobiography of the author up to the age of sixty years, ends with his transition to academics and consultancy. His relocation prompted by his stint with LBS National Academy proved a good decision at the right time of his career.

 

Readers can look to Part 2 for a greater excitement as it covers policy analysis of the country’s transition to liberalization, privatization, and globalization. The key milestones in this part 1 indicate that the areas would cover financial risk management and institutional innovation.

Available at Amazon store: www.amazon.in/amazon.com

 

Human Resources Critical in Banks

 

HR in Banks Remain Critical

Banks are the talking point in any forum today, not because of deposits or credit held by them, but of the attitude of bankers to their customers. For every need, they look to the machine. One of my retired bosses prefers to attribute it to the HR practices in Banks. He preferred to call HR: “highly ridiculous”. Another retired top executive said: when was it good? The issues are worth pondering in the context of banks failing on several fronts and becoming inevitable cog in the wheel in the economy.

More acceptably, another senior banker said that the recipient system should be as responsible as delivery system. Citing his experience, he gave training to the staff at the Airhostess Training Institution. Customers complain of poor service, but when it comes to rectifying it through appropriate action, those same customers do not stand evidence, making a fool of management. This is not to say that all is hunky-dory with banks. Banks these days have no time to investigate. Firstly, they do not accept that something was going wrong and needed correction.

People over Machines

The most important resource for the banks is certainly not the machines – computers and mobiles – but the persons. They deal with customers – again not machines but persons, of all ages from school-going children to the senior citizens. But what is the attention banks pay in harnessing such resource?

At one time, people accused the PSBs as overstaffed and overpaid. Not anymore. The compliance burden on the manager is less known, a regional manager tells. Average The average business per employee – just deposits and credit - has no comparison with what it was during the 1990s.

Regional Manager would invariably say that he is either in a virtual meeting or busy in correcting a system or reviewing the targets for third party products like insurance, mutual funds.  He at best reviews that banking business his boss would like him to review – Mudra Loans or PMEGY or other government schemes. He would hardly claim full knowledge of all the managers and staff working under his control.

The remuneration and the comforts of the employees, thanks to the IBA’s periodical revisions because of negotiations with the bank unions, are market competitive. Social security including medical and health benefits, leave fare concessions allowing even overseas travel leave no grouse for any of them. Yet, none seem to be happy. Most customers in any case are certainly not happy. Frauds are on the increase.  

Higher the cadre in the Bank, more the necessity to toe the line of the boss than the market share in business he should seek to achieve or the business risks he should address. There is disillusionment in most cadres. It is important to go to the root cause of such situation.

High Aspirations

All those recruited into a bank are equally endowed on the day of recruitment, with an aspiration to move up the ladder. Why then, within a few years, either they become indolent or irresponsible? Why would an employee not so much care if his neighbour does not deal with an issue or customer as he should?

More than in any other institution, in Banks, ethics matter most as the employee deals with other’s money and money that is fungible. The entire surveillance system of the bank – monitoring and supervision should devote enough attention to this aspect. Culturing a person into continuity of ethical practices is the prime responsibility of HR management. Therefore, such responsibility rests with every supervisor – whether at the branch or regional/zonal/Head Office/Corporate Office.

If the employee perceives that at the highest level, persons are measured not for what they do but what they appear to do, like the drop of ink on a blotting paper, it spreads. It must be appreciated that persons are always unequal. Getting these unequal persons on board along with equals is the art and science of HR.

When employees see non-performers rise to the top because their slate is clean, for, nothing was written on it, the morale of the organization declines precipitously. Once such persons occupy the leadership positions at the performing levels, hiatus in attitudes develops. This needs to be arrested and this can be done through a process.

HR Balance Sheet

Banks should draw their HR balance sheet annually right from the branch to the Corporate Office with all intermediaries included. Such balance sheet, unlike the financial balance sheet should have more on assets side than on liabilities side for a globally competitive bank.

The balance sheet I am talking of, is that a person recruited has ‘x’ knowledge, endowed with ‘y’ skills and ‘z’ attitude and all persons recruited have x+y+z=1. They should periodically get enhanced with a score given to each of these x, y, Z. This score should increase with training, experience, and interactive processes on the scanner.

Each Manager should take pride in every person working with him. Annual assessment should be not on a tick in the box on self-assessment sheet but with a discussion between the assessor and assessed. A clear record of the assessment made transparently should detail what improvements are required and what supports he would get from the Manager. This exercise should be done at all levels.  

By the time a clerk reaches a supervisory level and a supervisor reaches a top management level, x^2, x^3, x⁴ levels with aggregates of ‘y’ also getting into similar or varying multiples but ‘z’ the attitude remains at the recruited ethical and understanding level. While dealing with customers of various hues, it is but natural that the response would correspond to the customer’s own approach to the issues. Second, it is human to err. Every supervisor should lend broad shoulder to the employee in all genuine mistakes and where required introduce corrections with sensitivity to the situation.

Transparent and timely redress of grievance and timely punishment to the errand should not be allowed to cloud the views of good performers. This is organisational ethics requiring scrupulous attention. If HR is taken care of, all the ills we now see in Banks will become history, worthy to forget.

*The views are personal. Author is an economist and a retired senior banker. My thanks are due to Santanu Mukherjee, former MD, SBH for his valuable suggestions on the draft.

https://telanganatoday.com/hr-in-banks-remains-critical published on 19.08.2020