Public sector bankers plan to ask Finance Ministry for 5-day week

http://www.thehindubusinessline.com/companies/public-sector-bankers-plan-to-ask-finance-ministry-for-5day-week/article5926262.ece

Executives from State-owned banks seem determined to prove to the Finance Ministry that a five-day work week is feasible in the banking sector.

While the ministry turned down bankers’ earlier feelers to this end, this time round, the bankers intend to knock on its doors with a cost-benefit analysis for a five-day week.

The ministry has contended in the past that the cause of financial inclusion would suffer with a shorter week, but bankers feel that in this age of modern technology, a bank is accessible to customers 24/7 via alternative delivery channels such as ATMs, the internet, mobile commerce and business correspondents. Financial Inclusion refers to mainstream banks ensuring all sections of society, in general, and vulnerable groups, in particular, have access to financial products and services at an affordable cost, in a fair, transparent manner.

According to a top public sector bank official, the Indian Banks’ Association will carry out a cost-benefit analysis of the five-day work week pattern and the same will be placed before the ministry for its consideration.

A trade union official wondered why bank employees should be denied the benefits of a five-day week when Central Government employees have been enjoying them for nearly three decades.

To increase efficiency in administration, the Union Government had introduced the five-day week in 1985, increasing daily working hours during the five days by an hour.

According to RBI data, there were 11,75,149 employees working in 169 scheduled commercial banks in the country as of March 2012.

ATMs that retaliate when attacked coming soon !!

Fancy an Automated Teller Machine (ATM) that punches the burglar in the nose if he tries to break it open?

Well, not a punch exactly, but ATMs would soon be armed with a mechanism that would spray hot foam in the face of the attacker if he tries to force it open.

Researchers at ETH University in Zurich have developed a special film that triggers an intense reaction when destroyed.

"This could be used anywhere you find things that shouldn't be touched," said Wendelin Jan Stark, a professor at ETH's department of chemistry and applied biosciences.

Stark and his team developed a self-defending surface composed of several sandwich-like layers of plastic. If the surface is damaged, hot foam is sprayed in the face of the attacker.

The researchers used plastic films with a honeycomb structure for their self-defending surface. The hollow spaces are separately filled with two chemicals: hydrogen peroxide or manganese dioxide.

The two separate films are then stuck on top of each another. A layer of clear lacquer separates the two films filled with the different chemicals. When subjected to an impact, the interlayer is destroyed, causing the hydrogen peroxide and manganese dioxide to mix.

This triggers a violent reaction that produces water vapour, oxygen and heat. The temperature of the foam reaches 80 degrees.

The newly developed film may be particularly well suited to protecting ATMs or cash transports, said the researchers.

The number of attacks on ATMs has increased in recent years.

Ministry considering proposal for fixed term for public sector bank chiefs: report

The Finance Ministry is contemplating giving a fixed tenure to chairmen and managing directors of state-owned banks in order to ensure stability in operations, according to a senior official.

"The government is examining a proposal for having a fixed tenure for CMDs of public sector banks," the Finance Ministry official said.

It has been pointed at many occasions that top executives are appointed for a short tenure that hampers implementation of medium or long-term strategies of banks, the official said.

Therefore, the government is looking at correlating the the tenure with job-related performance, the official added. At present, the retirement age for top executive is 60 years irrespective of his or her performance.
So, generally the term of CMDs varies between one year and five years.

Recently, the Finance Ministry turned down the Reserve Bank's proposal to bifurcate the post of chairman and managing director in public sector banks saying this position does not enjoy absolute powers as is being claimed by some international experts.

The ministry said this in response to the RBI's contention that CMDs of public sector banks enjoy absolute power along with boards. It said the board is a collective decision making organ through which major decisions of the organisation are implemented and to say that CMD enjoys absolute power and disregards the decision of the board of the bank is not factual.

CMDs of public sector banks are thorough professionals, having long career in the banking sector and they are well aware of the issues to be tackled in this segment.

It can be noted that in PSBs, the top executive is designated as chairman and managing director, with the exception of the largest lender State Bank of India, where the top honcho is the chairman and there are four managing directors with clearly defined executive roles under her/him.

The posts of chairman and managing director in the private sector are held separately.

The apex bank had set up a committee under the chairmanship of A S Ganguly in 2004-05 to study the issue of bifurcation of the post of chairman and managing director in banks. The panel had recommended such a bifurcation.

Private sector banks in 2007 implemented these recommendations.

Metro Bank founder to set up UK's first digital-only bank

The founder of Metro Bank is setting up what according to him, would be the UK's first digital-only bank.

In a bold initiative aimed at leveraging the growth of mobile banking, the digital-only bank would have no bank branches and also no telephone banking services available for customers who would manage a full range of personal and business banking products through the internet and mobile apps.

There would be a free helpline number which customers experiencing difficulties would call but they would not be able to move money and perform normal banking functions by phone.

According to Anthony Thomson, who would be the first chairman of the new bank, called Atom, the company's aim was to make it so simple to operate online that would be faster than the time it took to call someone.

Atom would offer a "full range" of personal and business banking products when it opened for business in 2015 including current and savings accounts, as also loan products and credit cards.

Mark Mullen, who ran First Direct since 2011, an online bank operated by HSBC, would become the chief executive of the new bank.

The bank would be based in the north east of England.

Metro became the first new UK consumer bank in over a century with its opening in July 2010. It was attempting to win clients from the UK's biggest banks by opening longer and offering better service than competitors.

Bloomberg quoted Thomson as saying in a telephone interview that there was a significant market for a new bank.

He added people did not like the existing incumbent banks. He said people were asking why they needed to pay for branches that they probably would not ever use adding Metro could deliver better service and better value digitally.

Indian banks may not be able to cope with unexpected losses, says International Monetary Fund

The International Monetary Fund (IMF) has warned that Indian banks don't have enough of a buffer to absorb unanticipated losses, and may have to dip into capital if credit quality deteriorates. In its global Global Financial Stability Report (GFSR) released on Wednesday, the IMF said Indian banks have not set aside enough money from profits to cover bad assets compared with others.

"Relative to regional peers, loan loss provisioning appears low in Hungary, India, Indonesia,  Malaysia, and South Africa, suggesting that any potential credit quality deterioration may need to be absorbed by equity capital,"the report said. While most countries now meet the Basel III minimum Tier 1 capital requirement of 6%, the relative provisioning has created differences in loss-absorbing capacity.

"Hungary and India have the lowest loss-absorbing buffers, followed by Chile and Russia, although buffers in these last two countries meet Basel III requirements,"the report said. Indian company earnings are exposed to exchange-rate and foreign-currency risk, implying that if the domestic currency depreciates sharply, as happens in most emerging markets,
they could face significant stress.

 "Currency depreciation in an environment of rising global uncertainties could lead to higher payments of principal and interest on foreign currency debts and thus to a further erosion of profitability,"the report said, adding that losses could be most in cases where risks are covered largely through natural hedges. "Where foreign currency liabilities are largely hedged through natural hedges, foreign exchange losses could amount to 20-30 per cent of earnings in India, Indonesia, and Turkey,"it warned, calling for assessing the effectiveness of natural hedges as well.

Banking licence for corporate houses will be a retrograde step: AIBEA

Nearly two dozen corporate houses and business enterprises in the country have been waiting for more than six months to obtain permission from the Reserve Bank of India (RBI) to start their own banks. In turn, the RBI has approached the Election Commission to permit them to issue the new banking license.

Terming the present move of RBI as ‘unfair’ as the Parliamentary elections were on, the All India Bank Employees’ Association (AIBEA) general secretary C.H. Venkatachalam said allowing private sector to open banks would lead to ‘profiteering’ and there were chances of public money being diverted by the corporate and business houses to run their ventures without any hindrance.

Substantiating his statement, he said: “Any industry house with Rs.500 crore can open a bank. Thereafter they would become the absolute owner of the bank and can have access to huge cash deposits of public. The funds can be transferred between the bank and their firms swiftly. Accounts can be fudged easily. We don’t want such a thing to happen.”

As per the proposed list, Aditya Birla, IDFC Ltd, IFCI, India Bulls, India Post, India Infoline, LIC Housing Finance, L&T Finance Holding, Muthoot Finance, Reliance Capital, Religare Enterprises, Shriram Capital, SREI Infrastructure, Tourism Finance Corporation and UAE Exchange India others have applied for the banking license.

“Prior to nationalisation of the banks in 1969, most of the banks were owned by one or the other industrial or business house. Their mismanagement and abuse of people’s money resulted in nationalisation of banks. Hence, handing over banking licenses to the corporate and business house is a clear retrograde step. Particularly, when the country is moving towards general elections to elect a new Parliament, RBI’s hurry in this regard overlooking the political views of the Parliament would be unfair,” he said.On Monday, AIBEA sent a letter seeking the intervention of Chief Election Commissioner, V.S. Sampath not to approve such a move stating that would result in conflict of interest and banking institutions cannot be left to the corporate whims.

It may be recalled that AIBEA has been openly criticising corporate houses for being wilful defaulters that led to banks setting aside a large portion of its profits to write off bad debts.

Mr. Venkatachalam quoted the report of Parliamentary Standing Committee on Finance which said: “Banking being a highly leveraged business involving public money and public welfare, the Committee are of the considered opinion that it will be more in the fitness of things to keep banking and industry separate. The Committee therefore desires the Government and RBI to review the licensing guidelines accordingly.”

Microsoft says many ATMs in India yet to be upgraded from Windows XP

As Microsoft ends support for its Windows XP operating system next month, the software giant said a number of ATMs in India are yet to upgraded.

The number of ATMs using Windows XP is higher compared to 16 per cent PCs which need upgradation.

Last month, the US-based firm had said its PC install base for large enterprises in India is about 4 million units, of which around 84 per cent had migrated from Windows XP.

Windows XP, which was launched in October 2001, is three generations behind the latest operating system, Windows 8, which was launched in October 2012.

The current XP version is called Windows XP Service Pack 3 and Microsoft will stop support service to 'Windows XP' OS from April 8.

"The number of ATMs left on Windows XP are higher than PCs as a percentage. Many more ATMs, probably higher than the 35 per cent computers in banks and financial institutions that are still to be upgraded and these (ATMs) are not included in those 4 million computers," Microsoft India GM (Windows business) Amrish Goyal told PTI.

There are roughly about 100,000 ATMs in India and many of them are running Windows XP. They have the same support policy and will be out of support, something which the Reserve Bank of India (RBI) guidelines have also called out, he added.

Indian Banks Association (IBA) chief executive M V Tanksale, however, said only old ATMs may face some problem as all the newer machines run on newer platforms.

He said he does not have the data of such machines which are still running on Windows XP.

Asking banks to take immediate steps, the Reserve Bank of India (RBI) last week warned that banking operations, including ATM services, may be hit as support from Microsoft for Windows XP operating system will end from April 8.

"The probability of attacks on such a system may increase and it may be difficult to defend such attacks in the absence of Microsoft support," the apex bank had said in a circular to banks.

Banks and financial institutions are facing higher risk compared to other sectors, Mr Goyal of Microsoft said.

"Banks and financial institutions are slow in upgrading from Windows XP. Private banks a little bit better. They are more equal to the average of the industry that is around 84 per cent. It is public sector banks and financial institutions that are still lagging," he said.

Of the total computers in the banks and financial institutions that use Windows XP, only 65 per cent have so far upgraded from the OS, he added.

"Banks are definitely well prepared and the industry is seized of the matter. I am very sure that you will not see a problem where ATMs or bank counters are shut because of this," Mr Tanksale said.

According to IBA, there are over 1.40 lakh operational ATMs across the country at present and the number is only going up given the low penetration of the machines.