‘Harness new technology to change face of higher education’

Y.S.P.Thorat

In order to change the current state of higher education in the country, new technology must be harnessed and teaching methods of liberal education must be implemented. This was suggested by eminent speakers at a symposium on ‘The current state of higher education and institution building in India’, hosted by the Foundation for Liberal And Management Education (FLAME) on its Lavale campus in Pune on October 1. The seminar was addressed by Kiran Datar, advisor, National Knowledge Commission; Jayant Narlikar, founder-director and professor emeritus, Inter-University Centre for Astronomy and Astrophysics (IUCAA) and YSP Thorat, former chairman, NABARD & former Executive Director, Reserve Bank of India (RBI). Stressing on the need to integrate new technology with the advent of beneficial technologies, renowned astrophysicist Narlikar said, “There is a problem in today’s education system and it needs a solution, which is technology. Internet can help in expanding a classroom-like situation. In astronomy, for example, Internet star-gazing is a very common phenomenon that is gaining momentum in the recent years.” He further spoke on reservations and said that reservations should be there at entry level and should be limited thereafter. Sharing her views, Datar said, “The arts curriculum at the University of Delhi has not been changed in the past 50 years. Education at university level needs restructuring. The process of re-structuring an educational institute is extensive. It is spoken about extensively, but is never attempted.” She said that new technology must be harnessed to revolutionise higher education in the country. Speaking about the philosophy of education and the role of educators in shaping a student, Thorat asked whether students are encouraged to make their own choices and take responsibility for their choices or are they taught survival lessons only. He also asked the students whether they knew the meaning of life and how would they prioritise the elements of life. The seminar was organised to honour Parag Shah, the founder of FLAME, who recently retired from his post as chairman of the institute. The conference ended with a question and answer session, wherein the speakers tackled questions from students and faculty.

DNA

Expensive Note - The falling rupee is no cause for cheer



Nervous Laughter

The RBI guv and the FM



Managing one of the world’s fastest growing economies just got 6.8 per cent tougher. That’s the quantum of the unexpected fall in the rupee vis-a-vis the dollar in September alone; it’s now flirting with the psychological mark of Rs 50 to a dollar. If the Eurozone crisis and the dismal economic data from the US weren’t bad enough, the weak rupee has just added another dimension of extreme uncertainty to the basket of problems which Indian companies and policymakers are grappling with. Given the volatility in exchange rates, it’s unclear which way the rupee will move. K. Gurumurthy, currency analyst with Calcutta-based Kshitij Consultancy, expects the rupee to reach levels of Rs 50.5 by the end of the year. “In the immediate range, for the next couple of weeks, we will be looking at Rs 48 on the downside and Rs 49.5 on the upside,” says Gurumurthy. In another estimate, FIEO president Ramu S. Deora feels the rupee may go up to Rs 45-46 levels by next month. Truth is, nobody really knows for sure; many see the rupee being yet another victim of global turmoil, which is upsetting other applecarts. Look, for instance, at the falling commodities prices. Even gold, which has recorded the highest jump in prices in one year, is witnessing a slide as there is increased movement towards the “safe haven”, the dollar.

What is complicating matters is the RBI’s reluctance to intervene to prop up the rupee. In a TV interview in New York last week, RBI deputy governor Subir Gokarn clarified, “If we do intervene at all, it would be with a very narrow perspective...of what might be a very volatile market situation, but nothing beyond that.” Whether RBI intervention would boost the rupee is itself in doubt. Consider South Korea, which has seen a sharp fall in its currency value despite the intervention of its central bank.

In India’s case, there is also the potential stress on foreign exchange reserves given that $130 billion or 42 per cent of the country’s external debt commitments have to be met in the short term. “The RBI strategy to intervene only to check any sharp fall is not unrealistic as we are facing a situation where there are more forex obligations to be met,” underlines HDFC Bank chief economist Abheek Barua. Of course, the RBI knows that, for India, a weak dollar means a further ballooning of the import and subsidy bill, fuelling inflation, which it is watching like a hawk. For now, though, softening of global commodity prices (particularly crude oil) is a relief. Prospects seem brighter for IT and the IT services sector (booming exports become more lucrative with a depreciating rupee). Having burnt their fingers post the October 2008 crisis, FIEO president Deora points out that currently most exporters book 50-70 per cent forward hedging. “I am doing 50 per cent forward booking for my company, so I am able to hedge my risks. We don’t lose so much or earn so much during sharp volatility in rupee-dollar,” avers Deora. In any case, the weakness in demand in the US and Europe could negate this advantage in future. Of course, firms having import components in manufacturing—like gems and jewellery sector—are not so fortunate (particularly those who haven’t hedged risks). Another major concern is for Indian companies who borrow overseas. “Indian companies will have to work with an increase in the cost of borrowing,” points out Barua. For now, there’s an uneasy wait—only a positive signal, globally, will prop up the rupee.

The Outlook 

Reserve Bank of India Governor D Subbarao to hold pre-policy meet today

MUMBAI: Reserve Bank of India Governor D Subbarao will hold a customary pre-policy meeting with the chiefs of some of the large commercial banks on Tuesday. During the meeting, the governor will try to gauge bankers' view on liquidity conditions, credit demand and expectations of bankers from the central bank. The RBI is scheduled to announce its half yearly policy on October 25. Besides the bank chiefs, RBI's four deputy governors will also attend the meeting.

ET

Bankers to seek a pause in rate hikes

Mumbai: Bankers will ask for a pause in rate hikes when they meet Reserve Bank of India (RBI) Governor D Subbarao on Tuesday as a part of the pre-policy consultative process. The RBI has increased its key policy rates — repo and reverse repo — 12 times over the past one-and-a-half years to cool down inflation .. The bankers will also discuss issues like credit growth, non-performing assets and the liquidity situation prevailing in the industry. KR Kamath, CMD, Punjab National Bank, said that the meeting would be followed by an interaction with RBI deputy governor Subir Gokarn. Gokarn is likely to interact with the bankers on resource the mobilisation programme. Other bankers expected to attend the meet include P Chaudhury,chairman, State Bank of India; S Raman,CMD, Canara Bank’ Aditya Puri, MD, HDFC Bank’ and MV Nair, CMD, Union Bank of India. Justifying their demand for pause, the chief of a state-owned bank said that commodity prices have started coming down. “Equity market has also started falling. There is more uncertainty in the system. Keeping this in view, the RBI may refrain from further hikes.”

FE

Government aks PSU banks to open more branches in North East

KOLKATA: The government has issued a directive to public sector banks to open branches in every un-banked block in the North East by September next year. The seven sister states - Arunachal Pradesh, Assam, Meghalaya, Manipur, Mizoram, Nagaland and Tripura - are home to 70 unbanked blocks and 55 underbanked districts as banks have generally shied away from this economically backward terrain mired by insurgency. The progress under Reserve Bank of India's (RBI) viability gap funding scheme for opening branches in this region has also been slow.  Development of the North East assumes great importance to the UPA-2 government as the region is a prominent gateway for the country's border trade with Bangladesh and Myanmar. In step with this, the RBI has decided to open offices in all seven northeastern states. It recently opened one in Agartala, Tripura. The government, has written to the chairpersons of public sector banks to prepare individual plans for improving bank penetration in the North East. Two senior banking executives confirmed having received such a letter from the ministry of finance.  Banks had earlier decided to open 26 branches in brickand mortar form and a total of 400 banking outlets in this region. The government feels there should be at least one branch for every village with a population of 5,000. Severe communication bottlenecks in the remote areas of the North East have stifled economic and banking development here over the years.  To surmount these hurdles, the Usha Thorat Committee had advocated IT adoption levels and usage of intermediaries like business correspondents and business facilitators to serve people in these areas. In the last few years, however, banks have grasped the business potential of the region as branches here significantly help improve current and savings bank account ratios. Various banks have opened around 400 branches in the seven states in the last six years. But the government, concerned about the dismal level of bank penetration, wants to do more and reach out to every unbanked block in the next year.

ET

Is RBI out of sync with crop loan insurance?

 

CHENNAI: Is insurance cover for crop loans mandatory? Depends on whom you are talking to. While the Deputy Governor of Reserve Bank of India, K C Chakrabarty, claims that the National Agriculture Insurance Scheme (NAIS) is “not compulsory for all loanee farmers” and that “no person could be forced to take up insurance cover,” the operational modalities of NAIS, put up on the Department of Agriculture and Cooperation website, provides a completely different picture. Saying that “one must read the guidelines of the schemes properly,” Chakrabarty argues: “Just like a person cannot be forced to take up life insurance, a farmer cannot be forced to take up insurance cover.” He was answering a question on the poor penetration of NAIS even among notified crops in Tamil Nadu, at a press conference on Sunday at a sensitisation meet of bankers and farmers here. However, in a document titled ‘National Agriculture Insurance Scheme (NAIS) - Scheme and Modalities’ available on the website of the department, under the head ‘Farmers to be Covered’, it is clearly stated that “all farmers growing notified crops and availing Seasonal Agriculture Operations loan from Financial Institutions, i.e. Loanee Farmers” should be covered under the scheme “on a compulsory basis”. Senior agriculture officials point out that hundreds of government circulars since the scheme took effect in 1999-2000 have reiterated the modalities of NAIS and they have always worked according to it.

IBN Live 

RBI can't monitor all bank branches: Chakrabarty

Chennai: The Reserve Bank of India “cannot be monitoring each and every bank branch” in the country to check if such banks were taking jewels as pledges from farmers. If the branches demand security for loan amount that is less than `1 lakh, aggrieved customers could lodge a complaint with the banking ombudsman and get their grievances sorted, said K.C. Chakrabarty, Deputy Governor of RBI. Addressing reporters after a sensitising meet of bankers and farmers on mobile phone-enabled Kisan Credit Cards, Chakrabarty said that “he had not received any complaints” regarding crop loan scenario in the State. One of the reasons for the high number of jewel loans could be that the “farmers felt their jewels were safer at banks than at home and provided them as pledges,” he said. Prakash Bakshi, Chairman of NABARD, said that farmers sometimes pledged jewels and availed of loans as documentary evidences were necessary for proper crop loans. Adoption of new technology, such as the mobile-enabled Kisan Credit Cards, was one of the ways to help farmers avail of loans without cumbersome processes, he said. 

Expressbuzz

Empowering farmers with mobile-enabled kisan card system

It has been launched on pilot basis to benefit farmers in Villupuram district

A mobile-enabled kisan card system to help the agricultural community engage in cashless transactions, especially with their input providers, was launched here on Sunday to benefit farmers in Villupuram district of Tamil Nadu by Pallavan Grama Bank. K.C. Chakrabarty, Deputy Governor, Reserve Bank of India, who launched the pilot project, said there was nothing new about mobile banking. “But this is for the first time that a structured launch involving the farming community have been done.” This would not only bring down the transaction cost but also the time involved. And it would be a 24X7 facility. This would be user-friendly, paperless and enable doorstep-banking transactions by farmers using their mobile handsets towards purchase of farm inputs. He said this could be extended all over the country any time.  “The only issue is whether the farmers are accustomed to mobile banking. Besides not all the Regional Rural Banks (RRBs) are computerised. We are trying to popularise mobile banking on a large scale.” Dr. Chakrabarty expressed hope that in the next five years if every farmer and every worker were to have a bank account, this mobile banking system would automatically become popular. Earlier he addressed a sensitisation meet for farmers and bankers in this regard.

Chairman of the National Bank for Agriculture and Rural Development (NABARD) Prakash Bakshi said mobile banking using kisan credit card was conceived because it was found that most of the agriculturists used to draw their loans as a lump sum. This involved substantial outgo of interest even when the loan was not fully utilised and, at times, resulted in multiple visits to the bank. The entire benefit of the subsidised loan that had been granted to them was lost.  “Now, farmers can place the order over phone and transfer the purchase price through their mobile handset in no time. They can do multiple transactions as well.” The project, with Rs.44.66 lakh grant assistance from NABARD. Those who took part in the function included T.M. Bhasin, chairman and managing director, Indian Bank, which has extended the technical support for the project, and G. Rangarajan, chairman, Pallavan Grama Bank.

HBL

State-run banks may be allowed to revamp wages

Govt accepts most of the recommendations on HR policies; officers may get variable pay, perks on performance

State-run banks, which lag behind private sector and foreign rivals when it comes to staff compensation and human resource (HR) policies, may soon get the freedom to raise their standards with the government set to speed up the revamp of personnel management at lenders controlled by it. The government has accepted most of the recommendations made by a panel headed by former Bank of Baroda chief A.K. Khandelwal on HR policies at public-sector banks (PSBs) last year, according to two persons familiar with the development. They asked not to be named as the information is yet to be made public. “Once implemented, this will pave way to significant changes in the way employees are treated,” said one of the persons. State-run banks will be allowed to decide their own wage structure based on individual efficiency and the lender’s overall performance, besides officers getting variable pay and performance-based perks. The government set up an advisory group under Khandelwal to prepare a 10-year road map for individual state-run banks, according to the person. This committee, which has been asked to complete the process in a year, will also look at the technology and business process reengineering reforms required for different banks. India has 27 public sector banks, which together account for more than 70% of the country’s banking sector. These banks together employ around 700,000 people. Out of this, more than 100,000 lakh—including 7,736 executives, over 50,000 officers and around 48,000 clerical staff—are scheduled to retire over the next five years. “Over the next three years, there are going to be a lot of retirements in the upper management of PSBs, especially at the level of assistant manger and above,” said Vaibhav Agarwal, vice president, research, at Angel Broking Ltd. “Nearly 50-60% of the people are expected to retire. Due to the difference in pay scales, getting people from competitors in private and foreign banks will be highly expensive for these banks, hence revamping the current system is critical.” Besides Khandelwal, the advisory group consists of HR expert T.V. Rao and former Indian Banks Association (IBA) chief executive H.N. Sinor, said the person cited above. Traditionally, employees in state-run banks are paid less than counterparts in private and foreign banks. The pay scale is currently decided through negotiations between the IBA and unions once in five years. Employees also face delayed promotions and lack of recognition for individual performance, putting state-run banks at a disadvantage in attracting and retaining talent, bankers said. “The introduction of variable pay can definitely help to improve the performance,” said M. Narendra, chairman and managing director of Indian Overseas Bank. “Reforms are essential also to attract and retain executives for certain specialized jobs.” There can be “some autonomy” for state-run banks in manpower management, he said. Late last year, Reserve Bank of India (RBI) governor D. Subbarao said there was “good reason” to revisit the current salary structure in view of the attrition at state-run banks. “The executive compensation in the public sector, as is well known, is lower than that in the private sector,” Subbarao had said. The move comes as new private sector banks are likely to be set up in the next one year. RBI has issued draft norms for this and is currently in the process of accepting feedback. The Khandelwal panel, which submitted its report in the middle of 2010, had recommended that stock options be given to the best-performing 15% of staff apart from better remuneration for the chairman and managing director. Other recommendations include the induction of HR specialists, the appointment of an executive director for HR, 50% direct recruitment of officers against 25% now and compulsory three-year rural service for new recruits. Senior officers should be subject to appraisals on the basis of feedback from colleagues, subordinates and customers, the committee said.  It also proposed Maharatna status for State Bank of India (SBI), and Navaratna and Miniratna tags for the other state-owned banks. State-run companies are accorded the status depending on their size and are allowed a greater degree of financial autonomy than those without the ratna tag. Some time last year, the government had appointed another committee under joint secretary financial services, Alok Nigam, to study the Khandelwal panel report.
Mint

State UCBs' advances grow faster than deposits in FY11

Urban cooperative banks in Gujarat lent money to 563,000 people. Advances by the urban cooperative banks (UCBs) in Gujarat have outperformed deposits during the financial year ended March 31, 2011. The advances grew by over 11 per cent over previous year, while deposits rose by close to 4.5 per cent on year-on-year basis. As per the figures provided by the Gujarat Urban Cooperative Banks Federation (GUCBF), the advances given by the state UCBs stood at Rs 12,056 crore, up 11.7 per cent from Rs 10,645 crore registered in March 2010, while deposits rose by about 4.5 per cent from Rs 20,443 crore in March 2010 to Rs 21,404 crore in March, 2011. At a recently held annual general meeting of GUCBF, Jyotindra Mehta, the chairman of the federation informed that UCBs in Gujarat advanced money to about 563,000 people during the financial year 2010-11. Speaking about the future growth of urban cooperative banking system in India, Mehta said, "We are proud that Reserve Bank of India (RBI), under its Malegam panel, has opened the doors for new cooperative banks in India." The federation has decided to celebrate the year, 2011-12 as the International Cooperation Year, in line with the United Nation's decision to celebrate the year to recognise the importance of the small cooperative banks and credit unions. "Some time back when the global economy was struggling through a slowdown and many large banks and financial institutions collapsed. At that time credit unions and cooperative banks in Europe and the US stood firm against all odds. It is a pride for us that UN has decided to celebrate the year of 2011-12 as the year of International Cooperation Year," added Mehta at the 36th AGM held in Ahmedabad recently. Currently, the state has 249 UCBs operational, while experts anticipate about 40-50 new UCBs to get operational after the newly issued norms recommended by the Malegam Committee in due course of time. The committee, which was appointed by the RBI on licensing of new UCBs under the chairmanship of Y H Malegam recommended that, 'the existing well managed cooperative credit societies, which would meet financial criteria like profits, capital adequacy and NPAs' proportion should be given priority for granting licenses as UCBs mainly in the unbanked or inadequately banked districts of the country.”

BS

Bank falls prey to Nigerian's fraud

...the Office of the Banking Ombudsman for Kerala, the Union Territory of Lakshadweep and Mahe, has now reported a case of a bank letting its guard down to allow a fraudster from Nigeria to play havoc with a customer account.....

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Forex hedging

Regarding the article “Policy on ECBs needs to change” (Business Line, September 27), an important issue is the impact of exchange rate movements on foreign currency borrowing. The recent decline in the rupee has increased the outgo on unhedged foreign currency borrowings. It would also be correct to ensure that the corporates have a dynamic risk management in place and do not leave it to the banks to advise them. Further, proper hedging techniques would need to be invoked by the corporates. The RBI should also insist on some form of disclosure of their compliance by corporates, as to their hedging / risk management techniques. However, if the foreign exchange borrowing is adequately hedged, the cost differential with the local currency borrowing will not be advantageous. The RBI would need to take a call on exposing the corporates, and consequently the country, to the Damocles sword of exchange rate fluctuations.

Srinivas (HBL)

Boston Consulting Group's take on Indian banks

...In an atypical communication to all public sector banks, the Finance Ministry last month circulated a Boston Consulting Group (BCG) report on Being Five Star in Productivity: Roadmap to Excellence in Indian Banking. .....

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Unique identity crisis

...RBI’s reluctance to fully accept the Aadhaar numbers for the KYC norms is surprising, given that more than a dozen leading banks in the country are partnering with UIDAI to deliver Aadhaar numbers to the citizens, and also when the Aadhaar numbers have been accepted by the insurance companies and Sebi for meeting KYC norms.....

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