Why do ministers ask for RBI rate cuts? What does Banks Board Bureau do?

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Last week’s Banker’s Trust on the state of affairs in India’s government-owned banks elicited mixed response from the readers. Many have enjoyed the fun piece but the satire has not gone down well with a few.

Still, here is a sequel to the Kaun Banega Crorepati (KBC) of last week, this time anchored by Shah Rukh Khan. (Khan replaced Amitabh Bachchan in 2007 for three years till Bachchan returned as the host in 2010).

This episode is not shot in a studio. The imaginary KBC-2 is shot on the lush green lawn of the State Bank Academy, Gurugram, which hosted the two-day ‘Responsive and Responsible Banking workshop’—a sequel to Gyan Sangam, the first such initiative by the government in 2015 (National Institute of Bank Management, Pune) and 2016 (State Bank Academy, Gurugram).

Six groups, led by the chiefs of IDBI Bank Ltd, Punjab National Bank, Indian Overseas Bank and three managing directors of State Bank of India brain-stormed issues such as tardy credit offtake, financial inclusion, bad loan resolution, et al. I don’t know what transpired in the two-day workshop that ended on 12 November with the secretary financial services wrapping it up in a post-lunch session.

The basic rules of the game do not change. Here, SRK, as Shah Rukh Khan is popularly known, is hosting a show outside the studio to choose the winner who will move on to compete with others for the hot seat. The participants are middle-level executives of public sector banks.

The ritual of lighting of lamps is carried on with chants of Om Shanti Om.

SRK: The fastest finger first. Contestants, fingers on the buzzer please. The one who gets the most correct answers of the five questions will win and proceed to occupy the hot seat.

Pehla prashna—which was the best scheme introduced to solve NPAs (non-performing assets)?

Option A: Flexible refinancing of infrastructure (5/25 scheme);

Option B: Strategic debt restructuring (SDR);

Option C: Sustainable structuring of stressed assets (S4A); and

Option D: Asset quality review (AQR).

(Buzzer pressed, light glows.)

Surprisingly no one answers.

Reply. You can’t think and keep everyone guessing.

All contestants in a chorus: Afsos. None of the options. Every NPA has distinct challenges. While a particular option is appropriate for a case, the same may not hold good for another case. Shah Rukh sir, you need to be specific on the case to get the real answer.

SRK: Computer-Ji let’s see what’s the right answer.

Right answer—Option C—S4A. When none of the schemes worked, as they had shortcomings, a hybrid scheme called S4A was formulated to iron out all glitches… It had more flexibility.

Now, doosra prashna—what was the idea behind instituting Insolvency and Bankruptcy Code, 2016 despite the presence of so many options to solve NPAs.

Option A: Multiplicity of laws and inordinate delay in implementing them;

Option B: Arbitraging opportunity between secured and unsecured loans; domestic and foreign lenders; banks and non-banks;

Option C: Sick companies but healthy promoters; and

Option D: Distribution waterfalls.

(Buzzer pressed, light glows.)

Contestant X: Hmmm. Actually all.

SRK: All! How’s that possible? Yeh toh adbhut hai!

X: What I mean is bits and part of all options, maybe in different proportions. If I can’t say all, then let me use my first lifeline—the audience poll.

SRK: Granted but why not “phone-a- friend” or “50:50”? Usually, the participants use one of these two lifelines in the beginning.

X: This may be true in the studio version of KBC shoot. Here it is a live telecast from the State Bank Academy. I don’t want to hurt or outsmart anyone. I want to be the winner taking everyone along with me.

SRK: Ok, Computer-Ji, activate the voting pads of the audience.

(While the graphs dance to the background music of Kabhi Haan Kabhi Naa, there is a tie between option B and option D.)

X: I will go by option D.

SRK: Shall I lock it?

X: Befikar

SRK: Let me ask —what made you choose option D?

Aspirant: We lenders are interested only in distribution. (A distribution waterfall describes the method by which capital is distributed to a fund’s investors as underlying investments are sold.) Our mandate from the headquarters is “recovery” at any cost and hence option B doesn’t stand a chance.

SRK: Galat jawab; sahi jawab option A.

Before I ask you the next question, all participants please note you have three more questions and three lifelines—phone-a-friend. 50:50 and flip the question.

Teesra prashna—since the bankers are expected to keep a tab on day-to-day operations of the borrower, why do they come to know of NPAs at the last moment?

Option A: The bankers believe in their customers and have blind faith in them;

Option B: The bankers believe that borrowers will go all out to keep their business alive and kicking;

Option C: The bankers are not equipped to handle situations when external developments play the spoilsport; and

Option D: The bankers are always worried on being penalized by investigative agencies and losing their retirement benefits for being proactive.

(Buzzer pressed, light glows.)

Y: Option D.

SRK: Sahi jawaab.

Ladies and gentlemen, girls and boys: please give a big applause for the first right answer.

At this point, a lady from the audience says: “Shah Rukhji, can you please repeat the salutation dialogue of Rab Ne Bana Di Jodi when you picked up the phone?

SRK: “Punjab power, lighting up your life.”

Madam, can you please come on the stage. What’s your name?

The lady: I am Rukh Jana.

SRK: Please give her a great applause. We welcome you at today’s episode of KBC telecast live from Gurugram. Where are you from? Which bank to do work for?

Rukh Jana: I am from West Bengal and work with XXX Bank at its XXX branch.

SRK: While I respect your wish to hear the particular dialogue, I am curious to know why do you want to hear it? None till date has asked me ever for this at so many stage shows that I have hosted.

Rukh Jana: I have an eight-year-old son studying in 3rd standard at an English medium school. He has taught me to greet everyone whoever I meet, depending on the time of the day. This has made me rethink about customer support and customer experience for the people who visit my bank branch.

I used to greet my auto-rickshaw driver and the bus conductor with a “Good morning bhaiya”. On reaching the office, I would greet my colleagues and all my customers. The impact had been enormous. The rickshaw driver would wait for me even if I’m late; the bus conductor would see to that I get a seat.

On my phone, I added the salutation before the voice-over of my bank’s tag line. But my colleagues felt that I had a hidden agenda in wishing all my customers who would flock to my counter. I have been transferred; now my job profile does not allow me any public interface.

SRK: A loud applause for Ms Rukh Jana, a brave human being. Today, you have moved not only me but millions. Let me assure you that you have the full support of each one of us and the entire world for being humane and acting with humility and politeness.

Chautha prashna—why are the banks not proactively pursuing NCLT (National Company Law Tribunal) as a process to resolve the stress?

Option A: Bankers will have to take decision within a stipulated timeline which is very short—270 days;

Option B: Bankers are not happy with 50% provisioning for bad loans being referred to NCLT;

Option C: Bankers still believe in the promoters’ efforts in reviving the accounts; and

Option D: The top management in banks are more worried of their next postings.

(Buzzer pressed , Light glows)

Contestant Z: Option D.

SRK: Sahi jawaab; plus 10 points

Panchva prashna—what is the future of public sector banks and their employees?

Option A: Consolidation and fewer banks;

Option B: The banks will be privatized:

Option C: The bank staff will get VRS (voluntary retirement scheme) and use the funds to invest in equities as the stock market is booming;

Option D: Some weak banks will continue to shrink in size but they will keep on getting capital till such time India remains a democratic country.

(Buzzer pressed, Light glows.)

Contestant Z: Option B.

SRK: Galat jawab. Minus 10. Sahi jawab option D.

Rapid Fire Round

Now we will proceed to the rapid fire round for the audience —all bankers. Ten points for right answers and minus-five for wrong answers.

There is no lifeline to assist.

While answering the question please give your bank’s name and city where you work.

Pehla prashna—which authority is responsible for appointment of managing director and executive directors in public sector banks?

(Hand goes up immediately.)

SRK: Yes sir, please ….

Q from audience: My name is Gulam Mustafa; I work for XXX Bank at Moradabad, Uttar Pradesh.

SRK: What is Moradabad famous for?

Aspirant: Brass handicrafts.

SRK: Audience, please give him a big hand. Now, the answer.

Q: Ministry of finance.

SRK: The answer is wrong. Anyone else please? Okay… You madam, on the fourth row, wearing pink saree.

From audience: My name is Aditi Shukla, I work for XXX Bank in Gurugram.

“A committee consisting of representatives from the ministry of finance, Reserve Bank of India (RBI), a retired banker and an HR expert.”

SRK: No. Banks Board Bureau (BBB).

Aditi: But sir, the BBB is just a showpiece…

SRK: Please do not use such language. Dusra prashna—how many payments banks have taken off?

(Hand goes up immediately.)

SRK: Yes sir, what’s your name?

From audience: My name is Manju A; I work with Bank of ——————–at Ernakulam, Kerala.

SRK: What’s Ernakulam known for?

Manju: God’s Own Country.

SRK: Kshamikkanam (Sorry). No madam, that’s Kerala Tourism’s tagline. Ernakulam is known for?

Manju: Appam, sir.

SRK: Super. Abhinandanangal (Congratulations).

Manju: Can I answer now? Three out of 11 entities that got licences. But sir, why did so many seek licences? What can they do which commercial banks cannot?

SRK: Congratulations. Ten points for the right answer. And, you’re here to answer, not question. Okay?

Audience, please given her a standing ovation. All of you know that literacy levels in Kerala are 93.91%, much higher than the national level of 74.04%.

Sister, I am proud of you and the state.

Teesra prashna—why do ministers ask for a rate cut when RBI is no longer the boss for rate action; it’s the MPC (monetary policy committee) that deliberates and decide.

(A hand goes up immediately.)

SRK: Give her a big hand. I am happy to welcome probably the youngest participant today.

Yes Ms…..

From audience: I am Malaikah from Talab Tillo, Jammu; working for XXX Bank.

SRK: Asalaam Alaikum (Greetings).

Malaikah: Shall I answer?

SRK: Of course, go ahead.

U: It’s in the DNA of the government.

SRK: A big applause for Ms Malaikah. Full 10 points for the right answer.

Finally, all small loans are now being called Mudra loans. So, we have millions of Mudra loans. Now, if we want to give all retail loans a new tag, what will be it?

(Some one raises a hand from the audience)

SRK: Yes, what’s your name and where’re you from?

From audience: Sir, I am Tilakraj from XXXX Bank in Gorakhpur, Uttar Pradesh.

SRK: Suswagatam (Welcome)! What is Gorakhpur famous for?

V: Geeta Press.

SRK: Great. What’s your answer?

V: Vikas. Sir, we will call all auto loans, home loans, personal loans, education loans Vikas loan.

SRK: What a wonderful idea. Unfortunately, as no single participant was able to answer more than one question correctly, there’s no winner.

Now, all of you please rush back to your bank branches and make sure that all bank accounts are Aadhaar-linked. Your time starts now…

Tamal Bandyopadhyay, consulting editor at Mint, is adviser to Bandhan Bank. He is also the author of A Bank for the Buck, Sahara: The Untold Story, and Bandhan: The Making of a Bank.

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