Canara Bank - Banking Frontiers

Rakesh Sharma MD and CEO, Canara Bank

Canara Bank Canara Bank

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Vol. 15 No.3 July 2016 `75

Pages 64

Bridging innovation gap

Use of social media

UPI may change landscape

Banking in the Gulf

Banking Frontiers July 2016 3

July 2016 - Vol. 15 No. 3

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Editor : N. Mohan

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Consolidation effort

The five associate banks of the State Bank of India group are finally merging with the parent. This will ensure that an Indian bank will finally figure in the list of top 50 banks in the world, specifically at the 45th position with

assets of the order of $550 billion. Some figures make interesting reading: 1. Post-merger, the entity will have a balance sheet of `37 lakh crore against the current `27 lakh crore. 2. It will have an aggregate deposit of `21 lakh crore, advances of `18 lakh crore and a net profit of `11,589 crore. 3. There will be 22,500 branches, 252,300 employees, 58,000 ATMs and gross NPA of 5.4%. 4. The group’s market share will increase from 17% to 23%.

Chairman Arundhati Bhattacharya was bullish saying: “The merger ... is a win-win for both. While the network of SBI would stand to increase, its reach would multiply. One can expect efficiencies to be created from rationalization of branches, common treasury pooling and proper deployment of a large skilled resource base.... With this merger, visibility at global level is likely to increase.”

Many experts feel the merger will create obvious benefits to the banking sector as a whole: 1. It will be a major step towards creating strong banks rather than more number of banks. 2. It is possible to have a better credit rating through better risk diversification and profitability. 3. There can be further consolidation in the banking sector which will lead to the growth of the economy. 4. Larger and sound banks can manage large funds to the corporates as India becomes a major player in the global economy. 5. The reach of the banks will increase as they will be forced to spread out to the unbanked and underbanked areas of the country.

Global rating agency Moody’s is, however, skeptical. It said it is possible that consolidation, in the current economic environment, can create risks that could offset the potential long-term benefits. It pointed out to the increase in stressed assets since 2012 and doubted whether any entity would have the financial strength to assume a consolidator’s role without risking its own credit standing post-merger. It, however, agreed that from a credit perspective, industry consolidation would strengthen the banks’ bargaining power, help save costs and improve supervision and corporate governance across the banking system.

One important aspect of the merger is the integration of the employees. It will be a challenge to integrate different formulas for pension, superannuation and gratuity into one system. In addition, there could be substantial duplication of roles, which will mean job cuts. Also the associate banks are not as tech-savvy as the parent, which is another integration challenge.

Hopefully, the merger should encourage further consolidation in the banking sector in the country and substantial divestment by the government of its holdings in these banks. Such an initiative should also lead to privatization of banks and running them as businesses rather than as social security vehicles. Like in most of the developed countries, India should have just two or three very strong government-owned banks and the rest should be all private entities in order that the sector becomes efficient and professionally managed and provides banking facilities strictly on business terms.

Editor’s BlogN. MohanMobile : 9322895820Email : [email protected]

4 Banking Frontiers July 2016

HOUSING

HIGHLIGHTS July 2016

Canara Bank - future readyAnother South-based bank, Canara Bank, is in the midst of an organizational transformation. Rakesh Sharma, MD and CEO of the bank, explains the roadmap that has been created for the purpose14

Using social mediaAnthony Jacob, CEO, Apollo Munich Health Insurance, outlines the company’s strategy to design the right products, price them right, and most importantly provide right servicing

UPI may change the landscapeIn this second part of the interaction, Mahadevan Balakrishnan delves into the prospects of Unified Payments Interface and the scope of the new generation banks in India24

Bridging the innovation gapZone Startups India is creating accelerator programs for banks and corporates so that these entities can make effective use of fintech innovations. A report:12

28

Compliance ...........................................5

Project Pipeline ....................................6

LENDperfect .........................................8

News Regulator .................................10

Conduct risk .........................................11

ECGC ................................................... 23

Research Notes.................................26

Edelweiss Finance ...........................40

Brokerages .........................................42

ICICI Prudential AMC ....................... 43

SLBC meetings ..................................44

News Capex....................................... 47

News Cyber Security .......................48

News MFIs ..........................................50

Thrissur DCB ......................................52

Shivalik Bank uses cloud ................54

GP Parsik Coop Bank ......................56

Rajaram Bapu Coop Bank ..............58

News Pix .............................................60

People Track .......................................61

Other interesting stories

Cover Story

Banking in the GulfHighlights of banking activities in the Gulf region18


Compliance

Reflections Bimbadhar Mishra

The Reserve Bank advised all scheduled commercial banks (excluding RRBs) to immediately put in place a cyber-security policy elucidating the strategy containing an appropriate approach to combat cyber threats given the level of complexity of business and acceptable levels of risk, duly approved by their Board.

The Reserve Bank placed the Payment and Settlement Systems in India: Vision-2018 on its website that aims at building best of class payment and settlement systems for a ‘less-cash’ India. The broad contours of Vision-2018 revolve around 5 Cs – coverage, convenience, confidence, convergence and cost. To achieve these, Vision-2018 will focus on 4 strategic initiatives, such as, responsive regulation, robust infrastructure, effective supervision and customer centricity.

The Reserve Bank issued guidelines on a ‘Scheme for Sustainable Structuring of Stressed Assets’ (S4A) in order to further strengthen the lenders’ ability to deal with stressed assets and to put real assets back on track by providing an avenue for reworking the financial structure of entities facing genuine difficulties.


Project Pipeline

BoI looking for ATM e-Surveillance systemBank of India proposes to implement an e-Surveillance system w i t h c e n t r a l i z e d monitoring to cover around 3000 ATM locations. The bank also wants to have roaming attendants (beat marshal) for cluster of ATMs. It has sought proposals from

entities to undertake this task on a 24x7x365 basis. The bank wants the e-Surveillance system to have intrusion detection sensors, fire detection, intrusion alarm, user alarm activation switch, other sensors to raise alerts during various contingencies affecting tampering of ATM, UPS, control panel, etc. The system should also be able to provide CCTV Surveillance of the ATM room and ATM back room and external area, detection of lingering or unauthorized activity within the ATM site and storing of images of CCTV for a minimum of 90 days. Another important component of the system is a two-way audio to deter /warn criminal attempts/activities. The service provider would also be required to monitor all sites 2 times a day every day for ascertaining the cleanliness of the site. In addition, the system should also facilitate the bank to remotely view any of the ATMs under this solution whenever required, carry out mock drills etc.

SBI to upgrade AML/CFT solutionState Bank of India is seeking software solution that can fulfil all the regulatory requirement of FATF, Financial Intelligence Unit, RBI, regulators of foreign countries where the bank has overseas offices, IBA and other regulatory bodies. The solution would be implemented across the entire SBI group. The bank has been using Anti Money Laundering/Combating Finance of Terrorism (AML/CFT) solution for the last 9 years but it has found that the AML product has undergone many changes. It therefore wants to upgrade/replace the existing AML/CFT system for meeting all existing and those likely to be proposed guidelines/compliances effectively. It plans to implement the AML/CFT Solution as a part of the monitoring, administration and compliance functions. The solution would need to be interfaced to the Core Banking Solutions of the bank and other third party solutions (etrade application, SWIFT, exim bills, etc) to meet the business requirements of the bank.

BoB to have reconciliation systemBank of Baroda is planning to implement a universal reconciliation management system as it wants to improve reconciliation, which is a key part of the financial streamlining and control functions of a bank. Since manual reconciliation is time-consuming, tedious and error-prone, it is looking for an automated reconciliation solution to provide a cost-effective and efficient means of achieving the reconciliation requirements. It wants the system to have the following functionalities: flexible, universal data loading engine that can support data loading from multiple data sources, data format and standard interface like ISO 8583, ISO20022, ISO15022, SWIFT message, CTS, XML; flexible and visual tool to define business rules: ability to define reconciliation process to streamline reconciliation processing and ensure the 4,6 eyes; flexible data matching engine, data quality check, central integrated exception management and ability to generate reports, transform matched data to specific data type for using with another system.

New treasury for Andhra Bank Andhra Bank is proposing to have a comprehensive integrated treasury management system. Currently, the bank is using ITMS application and is looking for a complete end-to-end solution, which will be fully integrated with the CBS and other surround applications. The bank wants a service provider to undertake the work of implement ing the system, the scope of which would include procurement, supply, installation, customization, integration, migration, testing, training, onsite support and maintenance of all necessary software, RDBMS and other utilities. The solution should be web-based/web-enabled 3-tier architecture.

BoB to outsource contact centers

Bank of Baroda intends to expand its contact center capacity from the present level of 350 agents to 600-700 agents in a phased manner and also to outsource the operations to a service provider, who can establish two centers - one at Gandhinagar in Gujarat and another in a south Indian city. The bank wants to enhance its capability to handle more calls and provide more services through various channels, as an omnichanel contact center. It aims to expand the scope of services through inbound/outbound calls, webchat, video chat, email management, co-browsing, voice/SMS blasters etc.


Device binding solution at PNBPunjab National Bank is planning to implement a device binding solution for secure file transfer, secure remote access of system over network and e-Com transactions of customers and the internal connectivity based solutions of the bank. It is looking for a system integrator for the purpose. The solution would have features such

as multifactor authentication, MITM proof and end to end encrypted channel of communication, device binding, secure data and file transfer and is expected to protect the bank’s customers and employees from various forms of attack vectors including phishing, pharming, DNS poisoning, registry hijacking etc.

Bank of Maharashtra looks for SMS facilityBank of Maharashtra is looking for a service provider for transmitting SMSes generated by the bank to its domestic as well as international customers and to receive incoming SMSes from domestic/ international customers. The bank has sought offers from service providers for a solution with facilities for secure authentication system. The bank wants the system to have features like the SMS services should cover the facility like push service and pull service using short code/long code with/without virtual mobile number. It should also have provision to send promotional SMS after scrubbing of DND numbers at the same rate at transactional SMS. The system should also have SMPP and/or HTTPS - API with/ without XML support with multiple accounts for sending messages. This should be the primary channel for and the API should support the encryption-decryption for the entire API parameters supporting DES/ 3DES/ AES algorithm.

Sidbi to have web gateway solutionSidbi is proposing to have a secure web gateway solution for its data center and DR site at Mumbai and Chennai respectively. All the applications of the bank are hosted at the data center and the same are accessed over MPLS VPN based WAN by all locations and offices. The bank has also implemented a complete managed IP MPLS VPN based WAN at all locations/offices. The primary connectivity at the locations is wired or wireless with backup on 3G, CDMA, RF etc. It wants the solution to have proxy with caching, web/URL filter, antivirus, antimalware solutions in high availability mode. The bank also intends to have cloud based web filtering requirement for few remote user laptops/tablets/phones to start with and thereafter add additional users based on its requirement. The service provider will be responsible for the design, supply, installation, configuration, testing, commissioning, training, migration of users, warranty, AMC and maintenance support of the solution.

Consultant for Canara Bank Mission 2020Canara Bank intends to engage a consultant for its transformation and turnaround strategy - Mission 2020 and for a comprehensive assessment and roadmap for the proposed tie-up with a payments bank. The selected consultant will also be responsible for undertaking a comprehensive assessment of payment needs of retail customers, its implications for the bank and defining the roadmap for proposed tie-up with players in the payment ecosystem. Besides, the consultant would help the bank in creating a truly industry-leading growth story.

Vijaya Bank to have eLearning system

Vijaya Bank, with the induction of a number of young talent in recent years, has found it necessary to educate this workforce on the latest trends in the industry in order to reap the benefits of technology. The bank intends to set up an e-learning system for its employees (initially all its officers). The bank believes that this can create an opportunity for the employees to learn at ease, on the move, provide an access to lessons/sub jects based on the interest of the user or based on the job profile and help in assessing the knowledge level of the employees. Hence the bank proposes to implement an e-learning solution to cover all its 7000 plus officers.

Andhra Bank looking for AML solutionAndhra Bank is proposing to replace its existing AML solution AMLOCK with a solution that would meet all the regulatory requirements. It wants to offer the work as an end to end project and the all the items required for making the application operational should be the responsibility of the service provider. to be selected The bank wants the solution to be capable of migrating the data including archived data in the existing solution and reading the same for inquiry purposes. The service provider would act as a system integrator for providing the AML solution, providing all the required hardware, middleware, application software and third party utilities, and allied work.


Launch Pad

Indian agriculture has always depended on weather conditions and conventional farming methods

– both of which impact the produce and thereby the subsistence of the farmer. Uncertainties in such major dependencies of agriculture make farmers, most of whom have limited funds at their disposal, dependent on loans needed for cultivation. Agriculture being a priority lending sector in the Indian banking industry, it becomes increasingly difficult for the lending institutions in mitigating their risk while lending to the agriculture sector.

Times have changed. Technology helps the lenders to fine-tune their risk mitigating factors and the reluctant farmers need not approach the banks to get money for growing their next crop.

LENDperfect Agri On-The-Go – a revolutionary app launched jointly by IBM and SysArc Infomatix spells out the solution for all the problems faced by both the farmers as well as the lenders.

LENDperfect Agri On-The-Go is a revolutionary new generation software solution that will enable the lender to collect the required information at the farmer’s doorstep and the farmer need not take the trouble of going to any bank branch for getting the desired funding.

LENDperfect Agri On-The-Go was launched recently in Mumbai, India in the presence of lending luminaries and other banking experts with the flair the product deserved.

During the launch Sundar Garg, President & CEO of SysArc Infomatix, iterated the maxim ‘lending delayed is funding denied’, therefore the ensuing prosperity of farmer’. According to Sundar Garg ‘business in the banking industry will not be the same. The survival of the existing banks would depend on the environment of policy of

inclusion, reachability and penetration. Banks need to completely re-engineer themselves, re-educate and enable technology to the last mile in order to succeed in new age banking’. This literally sums up the need for a software solution like LENDperfect Agri On-The-Go.

Manoj Rawat, of RBL Bank, India emphasized the need for technology intrusion into the rural sector. He expected the next IT revolution to be in the food and agriculture sector, especially in the developing regions of India, Africa and South East Asia. He said currently ‘close to $120 billion is flowing as credit in the Indian agri-business’.

Yashpal Negi, Country Manager, Business Development and ISVs - IBM, stressed that the agricultural industry,

including fisheries and forestry, is one of the largest contributors to the nation’s GDP. This sector has been undergoing “a lot of transformation over last couple of years. It is expected to generate greater momentum over the next few years due to increased investments in improving agricultural infrastructure and a series of incentive program. To support this growth, IBM intends to further strengthen our engagement with the ISVs focusing on agricultural infrastructure vertical in offering latest innovative solutions.

Sanjay Upmanyu, Sales Leader, ASL Business, IBM Analytics, India-South Asia, spoke on the topic of ‘Changing the rules of game? ASL Database Business Model – IBM and SysArc’.

LENDperfect Agri On-The-Go - A New Age Solution for Agriculture Loan Automation

Yashpal Negi, Sundar Garg and Manoj Rawat launching LENDperfect - ‘On-The-Go’


He said LENDperfect has IBM DB2 as its database that enables seamless operation and uninterrupted performance of the system.

LENDperfect Agri On-The-Go – Features and BenefitsFurther, during the launch SysArc team showcased the following features and benefits of LENDperfect Agri On-The-Go.

LENDperfect Agri On-The-Go is a mobile lending application changes the traditional rules of the game – lenders do not wait for farmers to approach them at the branch; lenders go to the familiar settings of farmers to originate and process loans. A decision to lend occurs at the farming field. The state-of-the-art app includes facility to upload the demographic details of the farmer by scanning the AADHAAR card using QR code at the field, add multiple co-applicants, facility to download credit reports, scan and attach all the KYC documents of the applicant and the co-applicant, proceed with the underwriting of the application based on pre-defined business rules and generate ‘in principle’ sanction letter instantly right at the farmer’s doorstep. LENDperfect Agri On-The-Go allows the bank user to geo tag the agriculture field and also enables recording the interview with the farmer. It automatically includes the terms and conditions of the selected loan product. Finally, LENDperfect Agri On-The-Go enables digital signing of all documents by the prospective borrower, without the need to print out any of the documents.

Simply put, the operational rules of agriculture lending have changed forever!Once an ‘in principle’ sanction note is sent to the prospective borrower, LENDperfect Agri On-The-Go pushes all the collected data, including the documents, to the lender’s main application server and places the loan application in the work flow queue

for further underwriting. Any query or clarification can be emanated from branch offices and replies on these queries and clarifications will automatically be updated into the loan application in the central server. Since LENDperfect base system will be tightly integrated with the core banking / processing system, all demographic data as well as the loan application data will be automatically validated with the lender’s defined business rules.

All types of agriculture loan products are made available through LENDperfect Agri On-The-Go with specific business rules to each of these products. Depending on the loan product selected LENDperfect will automatically display the list of required documents, terms and conditions for approving the loan, etc.

LENDperfect supports defining of rule based loan products and LENDperfect Agri On-The-Go will automatically consume these pre-defined rules into the tablet / smart phone app, enabling the bank user to adhere to the bank defined business rules while collecting the application data as well as while processing the application through the decision-making process.

LENDperfect includes a dynamic workflow engine in which multiple types of business process can be defined as workflow statements. These workflow statements can be product specific, loan value specific, customer segment specific or even geography specific. The loan application travels electronically through the defined process. Exception workflows can also be defined in LENDperfect. The workflow engine automatically calculates the Turn-Around-Time of every application as it travels through the workflow process. An efficiency report generated by the system will help the bank management to identify the bottlenecks in the process and take corrective actions at the appropriate time.

Some of the banks / financial institutions that are already using the Agriculture lending module of LENDperfect include RBL Bank, Bank of Baroda, Union Bank of India, Federal Bank, Ujjivan Financial Services, SAFL, Central Bank of India, Andhra Bank, Canara Bank, Karnataka Bank, Corporation Bank, City Union Bank, Syndicate Bank, Bank of India, UCO Bank, Janalakshmi Financial Services and IDBI Bank.

[email protected]

Manoj Rawat, Executive VP & Head - Agribusiness at RBL Bank addressing the audience at the launch event


N E W S Regulators

ECB allows visitorsThe European Central Bank (ECB) is allowing registered visitors into its headquarters for guided tours. For the first time since the ECB moved into its new headquarters in 2014, members of the public will be able to explore the office tower and the historical Grossmarkthalle and enjoy a breathtaking view of Frankfurt from the 27th floor. The tours will take place on the first Saturday of every month, at least until the end of the year. Between

12:00 and 16.30, groups of up to 25 people will be offered guided tours in English or German lasting about one hour. The ECB invites schools, students and other groups to register for visits. Such educational visits cover the history and functioning of the euro area, and more specific topics can be arranged on request.

Bangladesh Bank ends Mandiant probeBangladesh Bank has decided to end the forensic investigation by cybersecurity firm Mandiant into the $81 million cyber heist four months ago. The money is still untraceable. Mandiant, owned by US security firm FireEye, had been investigating how the hackers infiltrated the bank’s computer systems and filed fraudulent money transfers with its account at the Federal Reserve Bank of New York. Mandiant had requested a contract extension that would have allowed nearly 600 extra hours to complete its probe. However, this was turned down by banking officials as the costs quickly mounted. An official of the central bank said it would take steps on its own to improve security. According to reports, Mandiant was paid roughly $280,000 for about 700 hours of work.

Governor blames flaws in money transfer systemAtiur Rahman, former governor of Bangladesh Bank has blamed the flaws in the global money transfer system for the $81 million cyber theft from the bank. He said in newspaper interview that the loss had been a systemic failure and Bangladesh cannot be blamed for something going wrong in the chain. He specifically blamed the Federal Reserve Bank of New York, where Bangladesh’s central bank had placed the money. He said if one wants to take $500 out of his account in the U.S., he will be asked several questions. But here, millions are going, and there are no questions. Rahman also said that he wanted to engage an online security firm a year ago to help the bank reinforce its defenses but it had been hired only after the theft because of bureaucratic delays.

Cubans can use MasterCard at ATMsThe Central Bank of Cuba has authorized the use of MasterCards issued by Stonegate Bank in the US and Banco Popular of Puerto Rico in operations at ATMs in the Cuban capital. A statement from the bank said the possibility starts after having solved the pending financial and legal issues and thanks to the actions of the responsible Cuban entities charged with processing MasterCard and the external provider that enables the country to process their operations. Using MasterCard was limited to transactions in outlets such as hotels or shops. It was not possible to withdraw cash from the ATM network. In the initial phase withdrawals from ATMs using the card will be limited to Havana. It will gradually extend to the whole country.

Egyptians can use debit card abroad

SLCB governor steps down

The Central Bank of Egypt has clarified debit cards linked to Egyptian pound bank accounts can now be used outside the country in a regular way. The bank had sent instructions to banks, which appeared to ban customers from using them abroad. It said the ban is applicable to individuals misusing debit cards to acquire large amounts of foreign currency without a clear reason for doing so, which saps banks’ foreign reserves. The bank also said it is up to each bank to set limits on its clients’ usage of foreign currency abroad through debit cards linked to local currency accounts.

The governor of the Central Bank of Sri Lanka Arjuna Mahendran has stepped down in the wake of a campaign by sections of civil society activists and political parties. Mahendran, who was made the governor immediately after the present government took over in January 2015, is serving the reminder of the term of his predecessor, Ajith Nivard Cabraal, which was expiring on 30 June. He told the Monetary Board of the CBSL that he would not seek re-appointment until the Parliamentary Committee on Public Enterprises (COPE) made its findings known on the issuance of treasury bonds in 2015 and 2016. His decision to float bonds in February 2015 through auctions had triggered a controversy.


Notes on Risk

Since the financial crisis of 2008-2009, banks and financial institutions across the world have been facing

financial and reputational difficulties and the last few years have highlighted various scandals not just in India, but from around the world – from the recent advance export remittance scandal in India to the LIBOR fixing scandals in the global markets – which highlight how banks are unable to remediate the cultural norms since the financial crisis, says Muzammil Patel, partner, Governance Regulation & Risk Advisory, Deloitte Touche Tohmatsu India. He was giving details of a recent Deloitte report on ‘The Culture of Risk’ which was released at the South Asia Risk Summit 2016 in Mumbai. Patel says such a situation has culminated in reputational damage, regulatory fines and penalties. Moreover, a major impact on unhealthy cultural norms has led to a loss of public trust.

Several bodies such as the Group of Thirty, the Financial Stability Board, the IOSCO, the European Systemic Risk Board, and the Basel Committee have recognized conduct risk to be of significant importance to the overall systemic stability of the financial markets, says Patel. 2016 witnessed an improvement in public trust on financial services, but it continues to lag behind other industries.

The Financial Services Board will consider reforms to reduce the likelihood of misconduct including by a) assessing reforms to risk governance, compensation structures and benchmarks and, where appropriate, proposing additional measures in these areas and b) considering ways to improve market structure, standards of practice and incentives for good conduct in financial markets more broadly.

Patel pointed out that the Financial Conduct Authority of the United Kingdom, in 2006, summarized the 6 approaches that banks and financial institutions must maintain with their customers and external stakeholders. Similarly, banks and financial institutions in India, too, maintained similar practices with customers and

external stakeholders which were driven either through regulatory directives or self-maintained codes of fair practices. The risk factors include information asymmetries across various groups within the firm with the external stakeholders, not dealing with internal conflicts of interest or lack of incentives around doing the right thing, and responding to external and environmental change emanating from the economy, the financial markets, technological disruptions, and changing market dynamics.

CONDUCT RISKPatel says various foreign banks have enhanced their brand and values committee to factor in conduct management and re-establish it as a ‘conduct risk committee’ so as to constantly monitor reputational vulnerabilities and behaviors expressed by the employees of the firm with the external stakeholders. “The conduct risk strategy highlights the strategic directives to manage conduct risk and also specifies the governance and oversight or manner in which the ‘tone at the top’ is established by the board of directors and senior management of the financial institution,’ says he, adding “Developing the framework deals with identifying the various exposures to misconduct that the financial institution can express internally and externally, the channels and platforms across the three

lines of defence of the firm in which poor behavior can be expressed, and the manner in which these risk exposures need to be addressed so as to ensure minimal-to-no form of gap identified across the operating model when dealing with conduct risk.”

CULTURE OF COMPLIANCEBoards and senior management in the south Asia region are placing more emphasis on promoting a culture of risk management and this was the sentiment at the first-ever South Asia Risk Summit 2016. U.K. Sinha, Chairman, SEBI said: “Corporations should be open to a culture of compliance for effective and timely supervision. SEBI and government are actively working towards streamlining processes and driving use of technology for efficient functioning. As a nation, we need to take a forward view and set up systems to analyze early warning signals and alerts which keep us ahead of the curve.”

“The governments have an ethical responsibility towards whistleblowers that are saving millions of dollars by volunteering information at a huge personal risk. Whistle blowing is a key control which works in parallel with other risk controls including screening of clients, training of the employees and monitoring of transactions,” said Martin Woods, a former whistleblower and currently head, Financial Crime at Thomson Reuters.

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Impact of conduct risk on the financial services sector

Panelists at 'The Culture of Risk' seminar at Thomson Reuters South Asia Risk Summit 2016


Helping Hand

Banks and large corporates are increasingly reaching out to startups and fintech companies

for innovation. But identifying the right technologies and the right startups has always been a challenge for banks. So somebody has got to play the role of matchmaker and program manager. And that is where startup accelerators come in.

Zone Startups India, a prominent tech startup accelerator, was launched in 2014. It is a joint venture between the BSE Institute and Toronto-based Ryerson Futures. Over the past 2 years, Zone Startups India has built an impressive portfolio of 78 startups, of which 30 startups have gone on to raise funding from angels and venture capital funds. It has recently formed separate partnerships with two major Indian banks - Barclays India and Axis Bank. With the inclusion of these two recent startup accelerator programs, Ryerson has now launched a total of six accelerators – with four accelerators under the Zone Startups brand.

Its programs are supported by the department of science & technology, government of India. And its startup accelerator program is the first to receive a grant under the government’s National Science & Technology Entrepreneurship Development Board, or NSTEDB, program.

Ajay Ramasubramaniam, director, Ryerson Futures India and Zone Startups India, says he is keen to form more alliances with Indian financial companies in the coming months. Apart from banking and finance, Zone Startups India is also forming startup accelerators for large companies in other sectors.

“The actual essence of an accelerator is in the program management of the

accelerator. This includes sourcing the right startups and developing the right programs to ensure they succeed. These (startups) are mature companies that are beyond the proof of concept stage. They are looking to scale up and for this you need special skills to help these companies grow. We bring in the program management abilities for managing accelerators and many corporates have employed our services,” says Ramasubramaniam.

Zone Startups India offers services that help startups deliver their proof of concept, or PoC, through mentoring. The startups are in a mature stage and already have a product. Zone Startups helps them

fine-tune their products to address the problem statement of the bank/corporate.

RISE ACCELERATORZone Startups will manage and operate the Rise Accelerator program for Barclays. This is the 5th accelerator program being set up by Ryerson Futures under the Zone Startups branding. Recruitment process for the Rise Accelerator will commence soon and the first cohort will start in early September. The program is expected to be 4-months long and will conclude with a grand demo day in January 2017.

Says Himanshu Warudkar, director - India Digital Office, Barclays Technology Center India: “Rise Accelerator is a very important component of the overall Rise program and we are very excited at the opportunities this will open up for startup community, Barclays and Zone Startups to work together in bringing about fintech disruption and building some really cool products and services.”

Elaborating on the partnership with Barclays, Ramasubramaniam says: “We help identify the right kind of companies that could address the pain points of Barclays. At the same time, we devise a program that helps these startups solve the problems that Barclays is facing. So we bring together mentors, subject matter experts, and programmers to enable this.”

Ramasubramaniam adds that Zone Startups India will be accepting applications from both Indian and global startups for the Rise Accelerator program. And the applications will be accepted through a website. “We are looking at a 4-month phase per cohort, which will be restricted to 8-10 startups. And we would be looking at a second cohort in January 2017. But we will do only 1 fintech accelerator per Indian city. Apart from banking and finance, we

Bridging the innovation gapZone Startups India is creating accelerator programs for banks and corporates so that these entities can make effective use of fintech innovations. A report:

Ajay Ramasubramaniam is keen to form more alliances with banks and financial institutions and hopes to bridge the innovation gap in banks


also set up accelerators for other industries such as retail, lifestyle & luxury, media & entertainment,” says Ramasubramaniam.

THOUGHT FACTORYZone Startups India has also been selected by Axis Bank to manage an accelerator program ‘Thought Factory’ at Axis Bank’s Innovation Lab in Bangalore. With this, Axis Bank becomes the first Indian bank to set up a dedicated innovation lab, which will include an accelerator. Under the agreement, Zone Startups will manage the accelerator program. It will focus on developing prototypes that address internal technology problem statements floated by Axis Bank.

The announcement comes less than a fortnight after Zone Startups launched the fintech accelerator with Barclays in Mumbai.

“Technology is causing a huge shift in consumer behavior and business delivery models. Emerging technologies such as AI, Blockchain, IOT, mobile and cloud are bringing the next wave of innovation in every business. With Thought Factory, we intend to build the future of banking. We aim to simplify banking for customers, increase operational efficiency and build disruptive business models. With the Accelerator, a dedicated 3-month program run by Zone Startups, we will partner with the start-up community to fast-track the innovation journey”, says Amit Sethi, CIO, Axis Bank.

Ramasubramaniam adds that creating a verticalized accelerator program in India’s startup capital Bengaluru is a great opportunity. “Axis Bank’s domain expertise, coupled with our program management expertise is a powerful combination for fintech startups to leverage. We have been working with Axis Bank on many

initiatives over the past months and have had a fruitful engagement with the startup community. With the accelerator program, we look forward to taking our engagement to the next level.”

INNOVATION CHAMPIONSWith the entry of non-traditional players who are extremely tech-savvy and strong on the innovation front, traditional banks are now on an innovation drive. Some have set up internal innovation cells, isolated from the rest of the organization. Others choose to collaborate with fintech companies.

“Banks are still confused about what they want to do, but they are open to internal innovation being a part of their innovation strategy. They realize that they need to be at the forefront of innovation if they are to survive the competition. So they are increasing looking at leveraging what startups are doing. Most of the innovation that banks are trying to bring in are consumer facing, which is very iterative in nature. And startups are good at developing these solutions,” says Ramasubramaniam.

While retail banking is the first to reach out to startups, Ramasubramaniam maintains that even corporate banking and institutional banking are going the digital way or cloud-based way. And that

is why there are many more banks showing a willingness to talk to startups.

“Banks have a huge customer base; they know the gaps that they are not able to address. But they have a limited knowledge about the technologies that are being developed outside, because they do not have the resources or bandwidth to engage with startups on a daily basis. Banks need to appoint an innovation champion who knows both the banking business and the technology trends,” says he, adding, “This innovation champion should be very assertive and should be able to identify internal problems and external solutions to address these. This innovation champion should be empowered to take decisions.”

He is of the view that banks are currently taking a flawed approach. They are first identifying all the technologies (AI, Blockchain, machine learning) and then trying to map that to their problem statements. It should be the other way round: first identify the problems and then the tech to solve these.

He concludes: “Internal innovation teams are working in silos and not talking to the internal sponsors. If a bank decides to pursue some innovation, there must be internal sponsors that come from different departments. That is not happening”.

[email protected]

Zone Startups India and the Ministerial delegation from Government of Canada


Cover Story

N. Mohan: How does Canara Bank take

care of the key issues like customer

care, ease of doing business, technology

efforts and profitability so that it makes

a difference? Is the focus more on retail

business or on corporate?

Rakesh Sharma: Canara Bank is one of the premier commercial banks in India, having established more than a century ago in 1906. Since then, the bank has grown from strength to strength and at present it has an elaborate branch network - 5849 branches - and 9251 ATMs. This is the highest number among nationalized banks.

True to its founding principles, the bank has always remained a customer

focused bank. It has been undertaking a slew of innovative initiatives and measures to remain customer centric, be it in the IT front or in the new products and processes. These initiatives have been improving customer satisfaction and enhanced delivery system. To take a few examples, instant in-principle sanctions for home and car loans, loan application and tracking systems, updated net and mobile banking applications, eInfobook, mWallet, customer grievance redressal system etc, are some of the innovations in IT, which are increasing customer satisfaction.

Given its elaborate branch network, we are focusing on growing our retail

business – mobilizing retail deposits and deployment in retail assets like agriculture, MSMEs, housing, vehicle, education etc. We are able to grow our customer accounts to over 7.25 crore, and this is growing day by day.

Can you talk about the human capital in

the bank? How ready are you in terms of

people to take on the fierce competition

that is there in the banking domain? What

are the measures that are being initiated

in order to make the personnel perform

in a competitive environment? Is training

a focus area?

One of the biggest challenges for banks

Another South-based bank, Canara Bank, is in the midst of an organizational transformation. Rakesh Sharma, MD and CEO of the bank, explains the roadmap that has been created for the purpose:

Cover StoryCover StoryCover Story

Canara Bank Canara Bank


today is human capital. With the fierce competition among the banks in public and private sector, there is an urgent need to keep the staff ready for facing any competition that comes along. We at Canara Bank have in place a robust HRD system, which continually meets the training needs of the staff, compartmentalized into 4 genres of activities - Internal Training, External Training, In Company Training and Foreign Training. Internal training is handled exclusively by our Staff Training College, along with the entire array of 23 Regional Staff Training Colleges, which take care of the entire training process right from identification of officials to posting them for various trainings in different disciplines. Focused and need based external trainings at various institutes of repute are also given.

Our prime aim is to keep our staff skilled and updated to face the competition at the industry level. During the last four financial years ending March 2016, we have recruited more than 24,500 employees. Our staff profile is getting younger and they are the real assets for us to forge into new growth frontiers. The average age of employees as on 31 March 2016 is 41 years.

What are your turnover targets for

the coming 3 years? What customer

segments according to you will fuel most

of the growth?

The bank has crossed `8 lakh crore business as at March 2016, comprising `4.8 lakh crore under deposits and `3.25 lakh crore under advances. The industry is growing at little over 10% yoy at present. Being a large PSU bank in India, we have kept our growth at above 12% for FY2016-17. Our retail assets segments are continuing to register good growth yoy like, priority credit (23%), agriculture (14%), MSME (10%), retail lending (27.8%), including housing loans (38.6%) as at March 2016. We are confident that with the turnaround in the private corporate sector in FY2017, it would be feasible for us to sustain the double digit growth in the next three years. We have been reorienting our focus on growing retail segments, which

shall continue to get the attention in the medium term also, including agriculture, MSME, and lending to various retail segments like housing, vehicle, education and other personal loans.

The emphasis will also be on marketing quality corporate business with efficient risk management. We had a 3-tier organizational structure for both retail and corporate business. We have gone for an organization restructuring system thereby putting up 4-tier structure for retail, SME and agriculture to improve on customer connect and staff connect. For corporate business, we have introduced 2-tier system to ensure faster delivery and monitoring mechanism. At present, we have 12 Prime Corporate Branches (PCBs) which now directly report to the head office. We propose to increase the number of PCBs to 15 shortly. Similarly, for effecting faster recovery of NPAs, we have created a separate vertical for asset recovery and management branches.

Canara Bank has branches in London,

Hong Kong and Shanghai as well as

representative offices in major world

capitals. Do you intend to expand this

operation? If so, which are the markets

which will be initial targets?

At present, we have overseas footprint in 9 countries, which include branches in London and Leicester (U.K), Hong Kong, Shanghai (China), Manama (Bahrain), Dubai International Financial Centre (DIFC) (U.A.E), Johannesburg (South Africa) and New York (U.S.A); a representative office at Sharjah (U.A.E) and a joint venture bank, viz., Commercial Indo Bank LLC in Moscow (Russia) in association with State Bank of India. A new subsidiary has also started commercial operations at Dar-es-Salaam in Tanzania from 9 May 2016.

As of now, our overseas branches are contributing 6.32% to our total business. We are aiming to take this to about 10% in medium term. We have approval from the RBI for expansion in another 5 international centers such as Frankfurt (Germany), Sao Paulo (Brazil), Tokyo (Japan), Jeddah (Saudi Arabia) and Jakarta (Indonesia), which shall be explored for expansion.

Can you give highlights of the bank’s

treasury operations? What is the volume

of business in general?

Our aggregate investments (net) reached a level of `142,309 crore as at March 2016. The yield on investments was 7.92% as at 31 March 2016. Despite a fall in yield, our trading profit under domestic treasury operations has been a handsome `990 crore during the year ended March 2016. We are an active player in the Government Securities market as a primary dealer, which shall be continued going forward.

We also have a significant portfolio in the foreign business turnover, aggregated to `201,860 crore as at March 2016, comprising `98,767 crore under exports, `54,047 crore under imports and ̀ 49,046 crore under remittances. Our aim is to churn out maximum volume to reap benefit from the segment.

Rakesh Sharma is aiming to make Canara Bank a knowledge based bank by converting heterogeneous data into information


Cover Story

How much is the bank’s total spent on

information technology? In percentage

terms to its turnover?

Canara Bank’s total business stood at `8.05 lakh crore as at 31 March 2016. The bank has always been an IT savvy organization and has pioneered various IT initiatives. As such, the IT spent of the bank over the years has always been in sync with the IT roadmap and vision of the bank.

What are the technology transformation

tasks the bank has on hand at the

moment? Can you give the details?

As you know, Canara Bank has always been proactive in implementation of technology in various areas of its operations and offering the latest digital services to its customers. It has been a constant endeavor for us to harness new technology breakthroughs and digital solutions for improving productivity, efficiency, security and customer and employee satisfaction.

We are a future ready bank having our own detailed digital strategy with reliable and scalable infrastructure in place. Our CBS version upgradation process is in progress. We are in the process of opening hi-tech self-service branches, equipped with complete banking solutions through digital devices, aiming to provide end-to end digital experience to customers. We are also in readiness to be part of the Unified Payment Interface, an initiative of NPCI for providing universal electronic payment services to our customers. We

propose to provide geo-mapping facility for our customers, wherein the customers can locate the nearest branches/ATMs/eLounges and other specified locations in map with an option for suggested direction routes to reach the desired location. As part of our green initiative, a new digital document management system is also proposed. Many other digital initiatives like eSign, eLearning, payment hub etc are also in the pipeline.

Which are the core areas that you focus

in this technology transformation - digital

as a whole, mobility, self-service and

customer delight?

As all of us know, the customer expectations have increased many folds in the recent past. Intense competition among the banks has redefined the concept of the entire banking system. Banks are looking for new ways not only to attract but also to retain the customers and gain competitive advantage. The technology and digital services offered to them constitute one of the major differentiating factors now. The aim of digitization is to improve organizational efficiency, secure data and provide customer delight with banking services provided at their fingertips. Many of our new tech initiatives like mSecure, eInfobook, new versions of mWallet, internet and mobile banking have propelled our digital transactions growth to 57% yoy. As part of making our customer centric digital packages

popular, we have ensured that these are device compatible in all major technology platforms and mobile devices.

Is the bank according to you prepared

technologically to take on the competition

that is evolving in the banking domain at

the moment? Can you elaborate?

The Indian banking industry has seen an aggressive implementation of digital solutions by new and established financial / retail entities. We are aware about the changing situations and challenges and have taken many proactive decisions to mitigate the same. With stabilized CBS architecture and multi-channel infrastructure in place, we have introduced a number of digital solutions. We have revamped our mobile banking and internet banking applications recently to make them at par with the market trends. We have also implemented a number of digital solutions for improving our operational efficiency along with regular upgradation of our digital infrastructure and software in line with the business needs. Canara Bank, I can say, is a future ready bank having its own detailed digital strategy with reliable and scalable infrastructure in place.

Where do you see the bank say in five

years from now in terms of technology

induction? Will this usher in a paperless

bank ultimately?

With more digitization of banking services happening, the future will be for paperless banking. Our vision is to establish an information, communication and technology infrastructure, which is the best in the industry and to transform the bank into knowledge based bank for bringing customer delight, improving operational efficiency, enabling automated, integrated and reliable and real time decision support system for all our stakeholders. We will leverage the massive heterogeneous data across all systems for converting it into information and transform the bank into a knowledge based bank. We will also aim to have a multi-pronged approach to IT involving people, process and technology with empowered and efficient

A Canara Bank kiosk


IT governance framework in place. As part of our green initiatives we are moving towards digitization of documents and also providing eKYC portals to our branches.

Do you think it is relevant to initiate

technology projects keeping in mind

the fact that ultimately it is the mobile

that is going to be preferred medium of

transactions?

Mobile is already a preferred medium of transaction and going forward it will be more prominent. The mobile phone is one of the widely accepted channels for communication and getting information on your fingertips. The mobile phone reach is phenomenal with over 100 crore mobile connections in India, and there is further scope as only 10% of the market is tapped. The mobile will play a key role in reaching the rural mass and in implementation of financial inclusion plans of our government so that the banking services are readily available to the entire nation. We have revamped and released the latest version of mobile, internet banking, and mWallet recently with enhanced customer friendly features, which is on par with industry standards.

Have digitization efforts suffered at any

point of time because of your being a

public sector organization?

No, whether public or private, all sectors have their own set of challenges. We have an IT policy in line with our corporate policy which are guided by RBI and government directives.

What are the plans for mobile money?

Do you intent to launch a mobile wallet?

Have your customers expressed desire to

have P2P fund transfer facility provided

by the bank?

Mobile wallet (mWallet) and P2P fund transfer facility are already in place. The first phase in mobile banking was to provide basic banking transactions like balance enquiry, mini statements, funds transfer etc. The future will be mobile commerce where in customers can make purchases/payments through mobile commerce. With

high mobile penetration, mobile will be the preferred channel for urban as well as rural customers.

Do you think with mobile revolution

happening, internet banking will lose

its current status as the most preferred

channel among the GenNext customers?

Mobile and chip based banking will be the future. In terms of number, mobile banking transactions have overtaken the internet banking transactions and in future with a more secured mobile banking platform in place, high value transactions also will start happening through this channel. It is evident that technology has been evolving as per the market trends and customer demands at a fast pace.

Can you speak about the products and

services that you offer to your corporate

clients making use of technology? Is the

bank planning to have mobile banking

facility to corporate?

Corporate internet banking with enhanced features is enabled for our corporate customers. Apart from NEFT/ RTGS payment facility, fund transfer using MMID (Mobile Identifier), tax payment etc are also available. We are in the process of adding more features to our corporate internet customers. A supply chain management solution is also in place providing high end technology to create an integrated procurement and distribution

mechanism coupled with matching payment dispensation and collection systems to our corporate clients.

What are the new security systems that

you intend to implement as you proceed

with your digital initiatives?

We are in the process of implementing a Security Operations Centre (SOC) for dealing with information security issues at an organization level with continuous monitoring of events / data from security aspects providing better monitoring and management of security threats. This facility will take care of Security Information and Event Management (SIEM), Privileged Identity Management (PIM), Database Activity Monitoring (DAM), Automated Vulnerability Assessment Scanners and Proxy and Internet Gateway Solution.

Is the bank considering virtualization

technologies? If yes, what are the

priority areas?

Yes, virtualization is the future trend and we are in the process of finalizing our server and storage virtualization. It will help us to adopt industry standards and for better utilization of hardware resources. It will help us reduce capital and operating cost, improve business continuity, improve responsiveness and easy upgradation, besides easy monitoring and maintenance.

[email protected]

Banking in the Gulf


For the past five years, International Islamic Financial Market (IIFM), the global standard setting body in Islamic financial

markets, publishes a valuable compendium of developments in the global Sukuk market. The recent ‘Sukuk Report’ presents the evolution of the Sukuk market globally and outlines various facets of the market evolution through data, case studies and assessments. The report, available for download from www.iifm.com, highlights the growing interest in this form of Islamic financing while underscoring the challenges in the deepening of the Sukuk market in the coming years in the presence of global macroeconomic challenges such as oil price shocks to oil exporting countries. In the subdued macroeconomic backdrop, the report sheds light on the variety of Sukuk structures used in raising finance in the Islamic way.

Sukuk, popularly known as a ‘Sharia compliant’ bond, is actually quite different from the conventional bond in its characteristics. While a conventional bond indicates a debt obligation, Sukuk is described by ownership of Shari’a compliant assets. While bond pricing is predominantly based on the creditworthiness of issuer, Sukuk prices are dependent on the assets backing them. Moreover, valuation of Sukuk depend on underlying assets, not interest contracts. However, like bonds, such ownership can be traded in secondary markets for Sukuk, though such markets are at their infancy.

expanding to new jurisdictionsWhile there are lots of valuable insights in the IIFM report, a few major observations on the evolution of the Sukuk market over the past decade may be highlighted here.

To begin with, there are several positives that augur well for the Sukuk market. The time series information of Sukuk issuances (both domestic and international) draws attention to the strong growth trajectory of the market during 2010-

2014 followed by a slowdown in 2015 owing to oil price movements causing reduced demand for finance in depressed markets. At the same time, the decision of Bank Negara Malaysia (the Malaysian central bank) to discontinue short term Sukuk issuances supported by the policy rationale of growing maturity and liquidity of Islamic money markets in the country also contributed to the deceleration in Sukuk issues. The silver lining for the market was, however, the expansion of the product to new jurisdictions - as Sukuk issuances were carried out by South Africa, Hong Kong, Oman, Ivory Coast and Senegal.

geographic potentiaLIn terms of geographical coverage, there seems to be a lot of potential for Sukuk growth. Consider this: In 2015, around 84% of Sukuk issuances came from three countries - Malaysia, UAE and Kingdom of Saudi Arabia. Together, these countries are home to only 3% of adherents of Islam. On the other hand, South Asian countries (Pakistan, Bangladesh and India), Indonesia and Turkey are residence to about half the Muslim population, where Sukuk markets are yet to flourish. Thus, the existing geographical concentration of the Sukuk market generates optimism that in near future just as it shows its limited reach in the present context. It can, however, safely be predicted that with the growing usage of the product, more jurisdictions will add volume to the primary market issuances of Sukuk.

Along with the geographical expansion of market, the issuances in recent years are across both the short and long end of the tenor, thus creating a credible term structure of interest rates. The recent 30-year Sukuk by Malaysian government internationally as well as domestic long term issuances in Indonesia and Saudi Arabia has considerably elongated the profit rate curve for Sukuk, which can be seen as comparable (though different) to the yield curve of conventional bonds.

dr sunando roy

Senior banker and economist based in Bahrain

Global sukuk market is growing, but it has its own challenges that impacts Islamic banking as a whole:

the global sukuk market: prospects & challenges


signs oF MaturitYMoreover, since the formation of International Islamic liquidity Management Corporation (IILM) to develop a secondary market for short term Sukuk to facilitate liquidity management by Islamic financial institutions, the Sukuk markets have begun to show signs of maturity. With the backing of several central banks, IILM has introduced a multi-jurisdictional primary dealer network with 11 well known banks serving as primary dealers to facilitate development of a secondary market. The benefits of such an initiative will far outweigh the costs in the medium term. Such benefits will come from the ability of the banks to manage liquidity and Basel 3 ratios such as the LCR and the ability to benchmark corporate Sukuk issuances and restructurings with available benchmark pricings.

Furthermore, it is pertinent to note that innovations in Sukuk structures have given considerable variety to markets. This, alongwth standardization in rules and standards by Islamic standard setting bodies such as the IIFM Tahawwut Master Agreement and IFX forwards enabling Islamic banks to hedge risk, will facilitate product development and diversity in Islamic finance.

Major chaLLengesAt the same time, several challenges confront the Sukuk market acting as constraints to the achievement of its full potential. The report includes a wealth of case studies that underscore a wide variety of challenges that the Sukuk market has to encounter in the near future.

First, the market continues to be dominated by sovereigns and quasi-

sovereigns with limited corporate presence. The fact that 75% of the market is state-driven demonstrates that the market is still in its early stage of growth. The corporate Sukuk market has to be encouraged in a variety of ways, including available standards, benchmark prices and secondary market exit options.

Second, the market remains wholesale driven. The retail potential of the Sukuk market is yet to be tapped in a big way. The admission of retail investors, particularly in Indonesia and Bahrain, has opened another steady investor base for Sukuk market. This has to be encouraged in future for the stability of the Sukuk market.

Moreover, Sukuk markets are still dominated by domestic issuances as compared to international issuances, as 80% of the market is still domestic demand driven. The international market should expand to capture potential investors residing in countries beyond those currently served by Sukuk.

secondarY MarKets As already mentioned, secondary market growth is key to the maturity of global Sukuk market. The primary dealers should therefore be provided with the needed liquidity support to enable trading in secondary markets, similar to the role played by primary dealers in conventional bond markets.

One area that deserves special attention is the regulatory framework surrounding Sukuk defaults. In bond defaults, penal interest often is seen as a remedy. This is not permissible in Islamic finance and the complexities were seen during the Nakheel near default in the UAE and also during the defaults of Investment Dar Sukuk and IIG Sukuk in Kuwait. A robust framework of restructuring and efficient resolution is a necessity to boost investor confidence in the market. In retrospect, while the global Sukuk market holds a lot of promise, it needs robust infrastructure and continued performance to back it up.

Total Global Sukuk Issuances (Jan 2001 - Dec 2015) - All tenors, all curencies, in US$ mns

2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015

1,172 1,371 7,207 9,465 14,008 33,607 50,041 24,337 38,070 53,125 93,573 137,599 135,870 106,960 60,693

Source: IIFM Sukuk database Total Global Sukuk Issuance 767,099 Million

0

20,000

40,000

60,000

80,000

100,000

120,000

140,000

160,000

Global Sukuk issuances country wise breakdown - all tenors (Jan 2001-Dec 2015, US$ mns)

niarhaB%166.2

nemeY%330.0

ASU%871.0

hsedalgnaB%500.0

malassuraD ienurB%310.0

anihC%830.1

ecnarF%000.0

aibmaG%810.0

ynamreG%320.0

0.286% Hong Kong

3.704% Indonesia

0.028% ivory coast

0.025% Japan

0.016% Jordan

0.010% Kazakhstan

0.320% Kuwait

0.037% Luxembourg

%943.76aisyalaM

%4000.0sevidlaM

%710.0airegiN

%101.0namO

%842.1natsikaP

%440.3rataQ

%257.7aibarA iduaS

%620.0lageneS

%591.0eropagniS

%560.0acirfA htuoS

%621.2naduS

%654.1yekruT

United Arab Emirates 8.092%

%431.0modgniK detinU

Source: IIFM Sukuk database


N E W S Banking in the Gulf

Mega merger of two UAE banksTwo major banks in the Middle East are merging to create a banking behemoth in the region with assets worth $175 billion. The board of directors of National Bank of Abu Dhabi and First Gulf Bank have recommended the merger via a share-swap transaction. This is expected to close in the first quarter of 2017. Post-merger, the entity will have a market value

of about $29 billion, larger than some of the global banks. With a bigger balance sheet and a network that extends to 19 countries, the merged entity could give Abu Dhabi more financial muscle and an international presence to support the emirate’s growth plans at home and overseas. Banking analysts feel the merger will pave the way for more consolidation in the UAE banking sector where almost 50 local and international banks compete. Under the terms of the deal, billed as a merger of equals, FGB shareholders would receive 1.254 NBAD shares for each FGB share they hold, implying a discount for FGB shareholders of 3.9%. FGB’s shares would be delisted after the transaction is completed. Once shareholders and regulators approve the merger, the Abu Dhabi government and related entities would hold a 37% stake in the new entity, which would retain the name of National Bank of Abu Dhabi. Abdulhamid Saeed, FGB’s current managing director, has been named to become the new bank’s chief executive officer. NBAD’s current chief, former Standard Chartered executive Alex Thursby, will continue to be at the bank’s helm until the merger is completed.

HSBC unit now under DIFCHSBC Bank Middle East (HBME), an indirect wholly-owned subsidiary of HSBC Holdings has transferred its place of incorporation and head office from Jersey to the Dubai International Financial Centre (DIFC) effective 30 June 2016. HBME had said in official filings to the London Stock Exchange and the Irish Stock Exchange that it intends to transfer its place of incorporation and head office to the DIFC. HBME is now lead-regulated by the Dubai Financial Services Authority (DFSA). HBME remains locally regulated in each of the countries in which it operates by the country’s central bank and its other regulators. HBME in the Mena region has been operating under regulatory regime administered by the Jersey Financial Services Commission for the past 12 years.

StanChart launches XtraSaverStandard Chartered Bank UAE has launched XtraSaver, a high rate savings account aimed at rewarding customers for keeping their savings deposits with the bank over an extended period of time. Based on transactional behavior, customers will earn 1% per annum each month for the first two consecutive months and then 2% per annum from the third consecutive month onwards, provided not more than one debit transaction is made to the account per month. Additional benefits of the account include a Chip and PIN debit card to pay for purchases or to withdraw cash, daily compounded interest and universal access to the account through online banking, phone banking and the bank’s branches. Shehzad Hameed, head of Retail Banking, UAE, at Standard Chartered, said XtraSaver is a high-interest earning savings account with added flexibility where customers benefit from a better interest rate, and the ability to move funds through the digital channels or in branch.

New CEO for CBQ

Bank links mobile app to happiness index

Emirates NBD has linked the Dubai government’s Smart Dubai Happiness Meter to its mobile banking app. The customers of the bank will now be given the choice to choose between three ratings: happy, unhappy and neutral depending on the quality of their experience with the bank’s mobile banking app creating a direct link for feedback between the bank and its customers. The strategic partnership between Dubai government and the bank is a first in a series of initiatives from the bank aimed to help fulfill the ruler of UAE Sheikh Mohammed Bin Rashid Al Maktoum’s vision to make Dubai the ‘happiest’ city on earth. Hesham Abdulla Al Qassim, vice chairman and MD of Emirates NBD, said the bank will use this tracker as a means of judging its offerings while it continuously strives to achieve every single response as happy.

Commercial Bank of Qatar has appointed a new chief executive – Joseph Abraham, who was previously CEO of Australia and New Zealand (ANZ) Banking Group Indonesia. Abraham replaces Abdulla Saleh Al Raisi, who held the post for nearly three years and has been promoted to advisor to the board of directors. The bank has been in the headlines lately over a public dispute with former employee Shoroq Al Malki. Its decision to name and shame her in newspaper advertisements earlier this year drew ire on social media, with critics accusing the bank of defaming a Qatari woman.


BOKI implements iMalBank of Khartoum of Sudan has implemented iMAL, the Islamic banking system offered by Kuwait-based technology provider Path Solutions, at its BOK International (BOKI) overseas branch office in Bahrain. The bank said iMAL will help the branch to launch and accelerate its growth in banking business by allowing it to provide world-class banking

services in line with the Islamic principles to corporates and high net worth individuals. The Central Bank of Bahrain has granted a license to BOK, Sudan’s biggest privately owned bank, to open a branch in Bahrain. BOK International is the first branch outside Sudan and Bank of Khartoum is the first Sudanese bank holding an Islamic banking branch license in Bahrain. The implementation, which was completed in a short timeframe, included the deployment of CSM, accounting system, trade finance, facility management, Islamic invest, fixed assets system, batch processing, report designer, SWIFT and SAFE, covering the data replication of all above modules.

BAB has a new brand identityBahrain Association of Banks (BAB) has announced a new brand positioning and identity. The new identity has been created by Bahrain-based global brand consultancy Industry. The review was commissioned to define a clear position for the BAB under a fresh, aspirational new brand identity, in order to meet member expectations effectively and attract new members from across the Bahraini financial services sector. BAB’s role is to promote awareness of Bahrain as a major banking center and hub of financial services, with an investment-friendly jurisdiction, a cost-effective and innovative business environment and a strong and stable regulatory system. The resulting new visual identity, which retains the existing name, sits comfortably alongside peer group banking associations around the world, using a distinctive blue reflecting the vivid color of the waters around the Kingdom of Bahrain.

Bank ABC plans to be Mena’s leading bankBahrain-based Bank ABC has hired a number of senior bankers with extensive regional and international expertise to help it in its growth plans and its strategic objective to become Mena’s leading international bank. The bank said it plans to expand its international network of offices by seeking regulatory approval for opening branches in Dubai’s DIFC and in

Singapore as part of its international wholesale banking client strategy and linking Mena to Asian markets. It has also introduced several new initiatives to expand the international services and delivery offered to clients, including the development of a fully-fledged global capital markets platform.

Oman sees growth of Islamic bankingRecent regulations on Sukuk (Islamic bonds) are helping drive growth in Oman’s Islamic banking sector. According to the Central Bank of Oman, growth of Islamic banking is far outstripping that of the conventional banking segment with Islamic banking assets up more than 62% yoy at the end of March. The new rules released by the Capital Market Authority in April regarding the issuance of sukuk should further broaden the segment’s base by encouraging corporate issues. Total assets held by Islamic banks and the Islamic banking windows of conventional lenders in March amounted to OR2.5 billion ($6.5 billion), compared to OR1.5 billion ($3.9 billion) one year earlier.

Doha Bank enhances mobile banking app

Doha Bank has introduced a number of new features to its mobile banking application. It now offers more seamless and convenient digital banking experience to its customers. The app now features an all-new look and feel and a smart layout that makes it easier to use. With new functionalities added to the app, customers can now use their smartphone to transfer funds to any individual with an account in a Qatar-based bank through the ‘local fund transfer’ feature offered by Doha Bank. The app features a ‘location tab’ on the home page that allows customers to select the country they are in to access features specific to them.

Banking in the Gulf


Brian Pereira: How are you making banking

simple and enhancing the customer experience?

Suvo Sarkar: The core focus at Emirates NBD is to offer a superior customer experience by making banking simple and convenient. In the digital age, this means we offer frictionless solutions via our online and mobile banking platforms so that customers can conduct a range of transactions - from remitting funds to depositing a cheque anytime, anywhere at the click of a button.

We take pride in creating first-to-market innovations and I strongly believe that our pioneering service is a key differentiator and separates us from our competition. For instance, DirectRemit, our funds remittance platform, is one of our most successful product launches as it enables expatriates in the UAE to transfer funds back to their home countries within 60 seconds at competitive exchange rates and zero fees.

We are beginning to see the financial results of our digitization efforts with our multichannel customers holding more products with us and having higher satisfaction scores. As much as 8% to 15% of our new business now comes via digital channels, depending on the product.

Emirates NBD has linked its mobile app to the

Smart Dubai Happiness Meter. What led to this

idea and how has it helped you gain mindshare

(and improve business) among customers?

Being the largest bank in the UAE, we have always aligned ourselves with and supported the government of Dubai’s visions and objectives. Sheikh Mohammed Bin Rashid Al Maktoum, vice president and prime minister of the UAE and ruler of Dubai, is a true visionary and he has envisaged Dubai as a model ‘smart city’ as well as a city that values the happiness of its citizens and residents. As a long standing player in the UAE banking sector, we are contributing to his vision by assessing the happiness of our own customers through our digital platforms. The initiative has provided us valuable insight into our customers’ needs and expectations and will help us hone our service offerings to deliver a truly unparalleled customer experience.

The bank has won multiple awards. More

recently, it won the ‘Best Mobile Banking

Experience’ at Smart Cards & Payments Awards

2016. What are the key differentiators?

Our award-winning mobile banking app has over 100 functionalities that simplify our customers’ lives with new features such as full biometric login, the first remote cheque deposit feature in the region, mobile queuing ticket for branches, which allows customers to obtain a token for their branch transactions via the app, and social banking using Twitter.

One of our recent offerings, the Emirates NBD Fitness account, which is a fitness-based savings account designed for the Apple Watch, heralds a new phase in digital banking as it effectively combines customers’ health and lifestyle goals with their banking needs. Our digital remittance service, Direct Remit, covers three countries today and will be expanded to 10 countries by end of next year.

Every product and service that our app offers is made to convenience the lifestyle of our customers. The results speak for themselves and the Emirates NBD mobile banking app is consistently ranked No. 1 in the finance category in the UAE App Store, with an average rating of 4.5/5.

The bank announced that it would invest

AED 500 million over the next three years

towards digital innovation and multichannel

transformation of processes, products and

services. Can you elaborate on this please?

Our AED 500 million investment is towards digital innovation and multichannel transformation and will focus on catering to the new age of online and mobile savvy customers, a majority of whom prefer digital-only interactions with the bank. The investment will focus on five key areas: end-to-end process transformation, smoother, faster and more responsive customer interface, omni-channel experience, fortification of cyber security and anti-fraud capabilities, and enhancement data management and analytics.

The first step towards this transformation will be to build the UAE’s first digital only bank, made by the customers and for the customers, that will use social input and provide customers with self-service money management tools and other financially beneficial applications.

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Suvo Sarkar

Senior executive VP & group head – Retail Banking and Wealth Management, Emirates NBD, speaks about making banking simple:

Digital makes banking simple


Export Credit

The role of Export Credit Guarantee Corporation of India (ECGC), the national export credit insurer of

India, has been and will continue to be very crucial as exporting without suitable credit insurance is fraught with financial and business risks. ECGC paid out record claims of ̀ 1122.84 crore to Indian exporters and financing banks during FY2015-16 in the wake of continuing global economic recession and uncertainties. It settled 172 claims worth `995.52 crore under Export Credit Insurance Covers issued to banks and 439 claims worth `127.32 crore to exporters under direct policies.

According to Geetha Muralidhar, CMD, ECGC, the corporation has been able to meet expectations of its customers as well as stakeholders for the FY2015-16. Also the cover enabled banks to continue to lend to exporters, she says, adding: “During the past three years, Indian exporters suffered financial losses owing to the global economic slowdown and resultant failure of a large number of overseas buyers due to European crisis, slowdown in China, and fall in international crude prices.” ECGC underwrites risk on 237 countries of the world. Geetha Muralidhar reveals that the major sectors under which claims arose are gems & jewelry, readymade garments, agricultural products, synthetic yarn, engineering goods, chemicals, marine products and leather.

COVER TO BANKSThe share of banks covered by ECGC in export credit disbursement is around 75%. All the government owned banks and 14 private sector banks are under the cover of ECGC. The corporation maintains records of about one lakh active buyers all over the world. The data is used for underwriting commercial risks on the buyers. Geetha Muralidhar shares some figures: “On 31 March 2016, we had 11,525 short term

policies and 284 ECIB covers in force. Under the ECIB, some 25,342 accounts of exporters financed by various commercial banks were covered. During the FY2015-16, we added 18,278 new buyers to our database. We covered gross risk value of `135,872 crore under our short term policy schemes for exporters during FY2015-16.”

COVERING EXPORTSOn behalf of the government of India, ECGC operates the National Export Insurance Account (NEIA) Trust to provide insurance support to large value projects in high risk countries, which are beyond its underwriting capacity. It also covers risks of project exporters and banks involved in the medium and long term exports. “Under this sector, we issued 21 policy covers to exporters and 92 covers to banks during FY 2015-16. Major projects supported are being executed in Vietnam, Cambodia, Nepal, Brazil and Argentina,” says Geetha Muralidhar.

PROFITSAfter making adequate provisions for

pending claims and as per IRDA guidelines in respect of impending risks as on 31 March 2016, ECGC earned a profit before tax of ̀ 387.35 crore registering a growth of 51.80% over the previous year. Its paid-up capital stands at `1300 crore, while the authorized capital is `5000 crore and net worth `3279.31 crore. It is rated ‘iAAA’ by ICRA which denotes highest claim paying ability.

Geetha Muralidhar reveals: “Our profit after tax for FY2015-16 stood at `276.22 crore compared to `180.10 crore during the previous years. We also propose to pay a dividend of `78.23 crore to the government of India, which is our sole shareholder. She maintains that the year ahead looks challenging for the exporters and the ministry of commerce is taking several steps to address the difficulties being encountered by the exporters. ECGC is also looking forward to a reasonably good growth in business in FY2016-17 by making credit insurance more easily accessible for the exporters.

PROMOTIONAL SCHEMESDuring 2015-16, ECGC took various initiatives to promote exports and improve services to its customers, viz. exporters and banks. These include organizing customer consultation campaign for non-policyholders and export promotion seminars in association with trade bodies and export promotion councils at export centers across the country, motivating exporters through awards for high performing exporters in different segments. “On April 18 2016, as a first step, we announced the reduction in premium rates for exporters by an average of 17% under several of our insurance schemes. There are other initiatives that are awaiting necessary approvals,” adds Geetha Muralidhar.

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ECGC adds 18,278 new buyers to its databaseExport Credit Guarantee Corporation of India is looking forward to make credit insurance easily accessible for exporters in FY 2016-17, says Geetha Muralidhar, CMD:

Geetha Muralidhar expects ECGC to have a reasonably good growth in business in FY2016-17


Interaction

N. Mohan: In this existing scenario comes

the Unified Payments Interface. How

would you see the emerging landscape?

Mahadevan Balakrishnan: UPI is an interesting innovation in the form of wrapper on top of another innovation called IMPS. It is the latest payment instrument/system that was launched in April 2016, indeed, a unique and innovative experiment. I have the following thoughts and views on this new instrument/system.1. We have to wait and see how its

adoption grows. IMPS already had a merchant payment module and UPI enhances that. If I recall correctly, bulk of the IMPS transactions are P2P transfers and within that bulk of it is using IFSC (Indian Financial System Code) and account number (which combination is unique for India) through internet channel. That indicated that the idea of customers having to go to bank, link the account and get a unique id did not help much in the initial IMPS days. It is the reuse of existing capability that the banks had (to receive IFSC code and account based payments) and what customers already knew (because it was printed in cheque books and pass books and customer account statements) which helped the growth of IMPS. I hope things are changing now and customers will go to the bank, ideally through alternate channels instead of a physical visit to the bank, link the account and get unique id called UPIID (Unified Payments Interface ID) and use it.

2. For merchant payments, UPI apparently follows the IMPS merchant

pricing, which mimics the debit cards pricing. When there are no cards being used and UPI is presumably directly accessing the bank account, why the pricing has to follow the cards scheme pricing is not clear. I believe that perhaps India missed an important opportunity to innovate on pricing and an experimentation. I will be happy to stand corrected on this by someone more familiar with UPI pricing. Also, refer my earlier point as to how much the issuing banks are paying as interchange for ATM transactions to other banks vs how much they are getting as interchange for debit card

transactions at POS and why and how the transaction fee at POS has come down to increase the merchant acceptance of card payments.

3. It is also not clear if one could link UPI payments to credit card accounts at this point in time or it is just restricted to bank accounts /debit cards / prepaid cards. If indeed I could link a unique UPI id to credit cards, then by following IMPS pricing, which is debit card pricing, it could have an impact on credit card payment players. In India, the usage of credit cards for merchant payment at POS is much higher than debit cards despite much smaller number of credit cards in circulation. For the year ended March 2016, there were 32 transactions at POS per credit card for that year whereas that number for debit cards was only 1.77 per year – too low. Of course, the actual number of transactions through debit cards at POS is higher at 1173.61 million transactions for the year ending at March 2016 in comparison to 785.67 million transactions at POS for credit cards. But then, there were only 24.51 million credit cards as of 31 March 2016 against 661.82 million debit cards. So, if UPIID cannot be linked to credit card accounts, may be a significant portion of the opportunity is

UPI may change the landscape but it’s a daunting taskIn this second part of the interaction, Mahadevan Balakrishnan delves into the prospects of Unified Payments Interface and the scope of the new generation banks in India:

Mahadevan Balakrishnan feels UPI must be picking up P2P remittance option and convert cash payments into cashless electronic payments at merchant premises


being overlooked. That being said, we also know that the current POS installations in India is concentrated in big cities and therefore bulk of the POS transactions are happening there. I hope UPI will help spreading the acceptance infrastructure to all over India and move more cash transaction to electronic mode and not cannibalize the existing POS transactions happening in these cities. Just imagine the potential – if UPI is able to create an average of 1 transaction per customer per month on those 661.82 million debit cards – we are already talking about 8 billion transactions per year or over 6 times the current debit card volume at POS. I think that should be the immediate priority for the NPCI and UPI. Take the per capita electronic transactions on the debit card to a number that is higher than the per capita average ATM transactions today which stands at about 12 per year per customer. There are number of use cases that can go electronic in India and this indeed is possible.

5. Since UPI is following debit card pricing, if customers adopt this aggressively, it would have an impact for card schemes. In a sense, that way, UPI allows someone with a bank account and any card, to bypass card schemes completely. Therefore, the card schemes would have to start worrying if the UPI adoption picks up and they need to come out with some differentiated and innovative strategies to stay in the game.

6. That would not be a matter of concern to NPCI - even if there is loss of RuPay revenue, it would only go to UPI revenue. But this does bring up an interesting question. Should NPCI now do anything to promote its RuPay debit and credit cards at all? If it could come up an approach of cardless cash withdrawal at ATMs (it is possible to have cardless cash withdrawal at ATMs these days), then the card becomes redundant. Just a thought

and of course interesting possibilities for sure.So in a nutshell, if UPI picks up only

as a P2P transfer cannibalizing IMPS or cannibalizing the existing POS transactions in cities happening with the use of cards, it does not bring about changes that we would like to see. On the other hand, if UPI picks up as a P2P remittance option and converts cash payments at merchants to cashless electronic payments across India and grows well, it is indeed great news for India.

These are interesting times. Let us watch which way UPI grows.

What would be the role in this evolving

scenario for the proposed payments

banks and small finance banks?

When payments banks were conceptualized, there was no PMJDY. Between the time the payments banks were conceptualized and license issued, PMJDY came in and 200 million+ accounts got opened with many features including possible overdraft facilities. These accounts were supposed to be the prime target for the payments banks. Going by the fact that 3 of the payments banks have surrendered their licenses gives an impression that there are now questions on their viability. What is also interesting to note is that the ones who have surrendered do not have such a massive base of customers. The remaining ones have already a good customer base including NSDL and India Posts and the 4 large telcos. So hopefully, they will not surrender.

My own view has been that there is so much to be done on the payment space

in India. So if the payment banks, which are also known as differentiated banks, look at a differentiated strategy instead of only at assets and liabilities like the traditional banks, they can succeed. If they can focus on payments related infrastructure creation and provide convenient payment options to customers, billions of transactions can get generated and paid through electronic means. I indicated earlier that if payment banks can facilitate on an average 1 electronic transaction per debit card per month in India, that is about 8 billion transactions per year and it can only grow from there. Bill payments, tolls, transportation etc provide huge opportunities. Let us also note that generally if 1.25 billion (India’s population) becomes a denominator on anything, results are going to be small (to me that is the biggest problem of India has to address). However, if it is a multiplier, that is a huge opportunity. That is the opportunity payments banks have. Just to close the argument, in a small city state like Singapore, every customer does 700+ transactions per year. Just imagine if we can do 10% of this in the 100 smart cities envisaged – mindboggling! That is the opportunity.

Before taking up the current assignment Mahadevan Balakrishnan was involved in creating many of the retail payment infrastructure in India in the form of expanded NFS, CTS, ACH, IMPS, ABP, AEPS and RuPay as the COO of NPCI in its initial formative years. The views expressed here are his personal views and do not represent the views of the organizations he is currently working or worked for.

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100% 98% 96% 94% 90% 86% 85%

65%55%

48%

69% 68%57%

47% 45% 43% 38%

20% 14% 11%

Indonesia India Mexico S outh AfricaC hina J apan B razil Australia US A United K ingdom

C as h as % of Volume of C ons umer P ayments C as h as % of Value of C ons umer P ayments

Source: PWC

The Persistence of Cash in Consumer Transactions


Research Notes

As per global real estate consultancy Cushman & Wakefield’s latest report

on private equity investments in real estate, total inflows in the sector increased by 40% in Q1 2016 at `38.4 billion, as compared to the corresponding quarter last year. The total number of deals closed during the quarter increased from 15 to 17 in the corresponding quarter of 2015. The average deal size increased by 23% over Q1 2015 to `2.3 billion. The quarter saw over 48% share of total investment activity focused on residential sector with about `18.7 billion of investments. Domestic

funds have continued to invest and focus primarily in residential asset class, as developers raised funds to meet their growing funding needs of working capital, construction financing and refinancing of loans. The investments are being made mostly at SPV level, amidst slowdown in residential sales over the past 2-3 years. Joint venture partnerships and strategic alliances route have picked up off late over the past 2 years. The firm anticipates that going forward the PE investments would rise.

The investments in Mumbai increased

12 times from the corresponding quarter of a year ago and were spread across retail and residential assets. The city continues to garner majority of the share in total PE investments for consecutively fourth quarter as it accounted for over 44% share with `17.1 billion during Q1 2016. This was followed by Hyderabad (`7.2 billion) and Delhi-NCR (`4.8 billion).

The total PE investments from foreign funds in Indian real estate increased 33%, from $1676 million in 2014 to $2220 million in 2015.

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Commercial vehicle loans recover in 4Q16

India Ratings and Research (Ind-Ra) believes that the recovery that started

in commercial vehicle loans in the 2014 originations has picked pace for 2015. As of 4Q16, the weighted average (WA) 90+dpd delinquency for the 2015 vintage stood at 1.03%, which is 142bp lower than that in the 2014 vintage for similar seasoning levels, indicating a recovery.

Tractor loan portfolios across originators continue to show heightened stress with no improvement in 90+dpd delinquency for 2014 and 2015 vintages. 2015 vintage securitized tractor loans have performed better than 2014 vintage with the former’s WA 90+dpd delinquencies dropping sharply to 4.73% compared

to 9.37% for 2014 vintage at 11 months seasoning.

The stress in construction equipment loans remains elevated with little signs of recovery even after significant seasoning. The plateau observed in 90+dpd delinquency indicates that CE borrowers continue to face stress and are unable to repay loans after missing payments on over 3 instalments. As of 4Q16, the 180+dpd delinquency increased by 263bp to 3.90% in the 12 months ended March 2016.

Ind-Ra has observed a continual drop in WA 90+ dpd delinquency in commercial vehicle (CV) loans since 3Q15. The improvement in asset quality has been evident in 2014 originations with 2015

vintage originations coming out better than the previous year’s originations. CV loans Early Delinquency Index (CV-EDI) which tracks 30+dpd delinquencies also dropped to 5.73% in 4Q16 from 6.83% in 4Q15, indicating an arrest of short-term delinquencies and a recovery in progress.

71% parents prefer debt for children’s college education

PE investments in real estate rise 40%

HSBC’s latest edition of the Value of Education Foundations for

the future study has found that a vast majority (71%) of parents in India were willing to go into debt to fund their child’s university or college education. This rose to 76% among those parents considering a university education abroad for their child.

The study found that fathers (78%)

and younger parents aged 34 or under (77%) were more likely to consider getting into debt to fund their child’s education, than mothers (64%) and parents aged 35 or over (68%). Mothers (45%) were more likely than fathers (37%) to believe that contributing to their own retirement savings was less important than funding their child’s education. Parents with a child at university or college were

spending around `205,000 a year on average on their child’s education.

While nearly all (97%) parents surveyed in India expected to be the main contributor of funding should their child go to university, 13% expected their child to contribute to funding their own university costs. However, only 1% of children currently at university help to fund their own education.

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Health Insurance

Mehul Dani: How do you evaluate the

performance of Apollo Munich Health

Insurance in 2015-16? How do you propose

to up the volume in rural India?

Anthony Jacob: We have had a successful 2015-16. Our performance has given us the boost that will drive us for the future. The goals that we had set for ourselves in terms of customers, people, business model, value proposition and brand have all progressed well. We are confident of a positive, increasing year on year growth and we have been clocking around 20-25% growth every year for the past 9 years. Our product portfolio is quite comprehensive at the moment. However, we would look at launching special products catering to specific needs in the near future. We are well on our way of reaching out to people in the rural areas through various technological innovations that will cut down on application processes and turnaround times.

Have you launched any new products in

2015-16? What have been the responses?

How do you propose to bring in product

innovations in 2016-17?

Innovation has been in our DNA since our inception. We launched 2 products for special diseases in 2015-16. The response for both the products has been phenomenal. The Critical Advantage rider covers treatment for 8 illnesses abroad and also covers the travel and accommodation of one family member, in addition to the insured on a cashless basis. The policy allows for multiple trips abroad, in cases where the sum insured has not been used up in the first instance. Dengue Care policy is a value for money health insurance policy that is focused on dengue treatment and covers both hospitalization and outpatient

treatment. As the incidence of dengue cases during the monsoon season is growing annually across the country, this policy is poised to help people avail best in class medical facilities to overcome dengue, and not worry about the medical expenses. Moreover, customers need not burn a hole in their existing health covers. Dengue Care is also an ideal product for those who seek a basic health insurance policy, but hesitate to purchase a full-fledged policy.

How is Apollo Munich different from other

insurers in terms of pricing?

Our strategy is to design the right products, price them right and most importantly provide right servicing. We know healthcare and health insurance

because of our parentage of Munich Health, the largest composite health insurer globally, and Apollo Hospitals, one of Asia’s largest healthcare providers, and this gives us the competitive edge. We believe in risk based pricing and by leveraging the knowhow of Munich Re, we have developed an age band basis pricing for multi variant options of the product for our customers to choose from. Also, our approach to health insurance lies in our positioning - ‘Let’s Uncomplicate’. It is our belief and our journey. We have positioned Apollo Munich as a straightforward, user-friendly and hassle-free health insurance company that will consistently tackle the general concerns faced by people when it comes to healthcare and health insurance. We focus on the easy uncomplicated process we have for people seeking comprehensive health insurance for themselves and their loved ones. This positioning has enabled us to create a unique brand identity for Apollo Munich raise our market share to 1.12% in the general insurance category.

What are the major problems that private

sector insurance companies face on the

distribution front?

Although the number of players in the health insurance segment has been steadily increasing, the increase in penetration is not gaining the same momentum. Merely, 12% of the Indian population is covered by some form of health insurance. We believe that a major hindrance to penetration has been the inability of insurance agents and brokers to reach across to all segments of population across the country. To increase awareness and then coverage across the country, a stronger distribution network is imperative in addition to the existing brokers and agents.

Using social media to uncomplicate products & processesAnthony Jacob, CEO, Apollo Munich Health Insurance, outlines the company’s strategy to design the right products, price them right, and most importantly provide right servicing:

Anthony Jacob believes in focusing on the easy, uncomplicated process for people seeking comprehensive health insurance


The need of the hour today is to increase penetration in tier 2 and 3 areas and have more people covered with health insurance to ensure they spend as little as possible from their own pockets for healthcare. Insurance companies are slowly but surely moving to tier 2 and 3 towns, but the results will take time.

The opening up of the bancassurance segment for banks to tie up with more than one health insurance provider has also aided in increasing awareness and number of lives covered over the past year. But of course, more work is required for a large increase. Banks and insurance companies must work hand in hand to clear perceptions and help people adopt health insurance.

A new avenue that could be considered would be tie-ups with NBFCs which cater to the rural segment. Health insurance could be bundled along with NBFC products to ensure people enjoy health insurance coverage. Another imperative is the need to develop customized products for various segments of the population, in keeping with the various ailments and diseases that are increasing in the country. Such products would help people counter long term effects and reduce burden of healthcare costs. We aim to build a cost efficient model of distribution which can help us to augment our reach into tier 2 and 3 cities apart from the major metros.

What changes have you introduced in

your IT infrastructure in the last one year

to drive productivity and efficiency?

Today, a customer looks for complete information at one place without any intermediary. Hence providing real time information about his policy and claims give more power to the customer. Taking a cue from the prime minister’s ‘Digital India’ initiative, we have launched a unique, disruptive and technology-driven distribution model and a self-service customer portal last year.

The idea was to offer a seamless and uncomplicated service to our customers. We created the portal to let the customers obtain answers to all their health insurance

queries, without the insurer reach-out process. The portal allows customers to view, change/edit, renew their policies and their claims status. It also allows for downloading the 80D tax saving certificate, claim forms, and helps to track policy issuance status. It is also capable of handling high traffic, and simultaneously providing seamless experience to all the customers at the same time. More than 23,000 customers have visited the portal since its inception and more than 50% of customers registered with the portal have conducted transactions through it.

Approximately 2% of our policyholders bought health insurance policies online in the last financial year. We have been using social media tools to help educate and engage with people on a regular basis. Social media engagement is also a very important tool to gain better insights into how successful we are on social media and how people connect better with our brand. We use social media to uncomplicate health insurance products and claims processes.

How do you view raising the limit of FDI

for the insurance sector?

This has ensured that there is an inflow of expertise from international insurance companies in terms of processes and big data analysis. An enhanced flow of foreign capital and international expertise will result in accelerating overall development of the insurance industry through increased access to international insurance products, distribution channels and world-class business practices. Overall, this has impacted the segment positively as there is an evident boost in the overall growth of the sector and more so for the fast growing health insurance sector through increased levels of awareness and capital for infrastructure development. This infusion will also greatly aid in marketing, distribution and research that will take insurance providers on a higher growth path and aid in greater penetration across the country.

How do you view the prime minister’s

insurance schemes? Will these help in the

growth of the segment?

The government-funded healthcare insurance plan for all citizens is a welcome step. I believe robust IT projects would be required to make this proposal a success because of diversity in India’s demography, climate, scattered BPL families and infrastructure. Also, a great deal of transparency and cooperation among all the stakeholders - government bodies, health care providers and insurers - is paramount.

Do you feel that the current policies

and programs are conducive to improve

the savings and investment environment

in India?

The sentiment among corporates and industry is quite positive, given the economic growth of the country this past year. The government has been pushing several initiatives such as Make in India, Digital India and Skill India which have attracted large investments across various sectors. The Indian economy is certainly a bright spark in the Asia Pacific region and we look forward to another positive year. The growth of the financial sector, especially banks and NBFCs, has also been rising and this is evident in the large numbers of people using savings financial instruments such as savings bonds, mutual funds and insurance schemes to hedge against inflationary pressures. Banks have brought about robust technological advances in infrastructure and have been able to aid in insurance penetration increase through the bancassurance model.

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Pinnacle

Pinnacle is a section on SMART MOVES in Banking Frontiers. Please contact Saaniya Naik on 77380 88612 ([email protected]) or Wilhelm Singh on 77383 87634 ([email protected]) or phone us on +91-22-29250166 or fax: +91-22-29207563. To apply, please email in your resumes to [email protected]

Select Openings

NPCIPosition: Vice President EMV Place of posting: MumbaiEducational Qualification:Minimum post-qualification experience of 15 years with relevant experience of proven business development and sales in EMV Contact- Contactless, NFC Technology Cards / Payment / Banking Industry.Job Code: VP/EMV/NPCI/010716Job Description: Development of RuPay EMV Contact specifications to be self-reliant for EMV Domestic Cards. Develop Uniform Smart National Common Mobility Card (SCMC) specifications for Tap n Go project. Ministry of Urban. Development, Govt. of India has tasked NPCI to create, manage and operate uniform and inter-operable standards for urban transport. Certification of 500 Banks for EMV in view of recent mandate by RBI to commence issuing EMV based Chip & Pin cards from Feb. 01, 2016. Setting up and optimally utilising Certification Body (CB) for Certification & Audit of Banks (issuers & acquirers), Card Vendors and Terminal Vendors. Ensuring smooth functioning of Certification Body & Certification Agency. Coordination with Transit companies to adopt contactless specifications. Centralised Clearing House (CCH) as part of Toll solution. Coordination with Centre for Development of Advanced Computing, National Informatics Centre, Bureau of Indian Standards etc. for seeking support as desired by MoUD.

NPCIPosition: AVP - Application Development Place of posting: ChennaiEducational Qualification: Master/ Graduate degree in Engineering (Preferably Computer Science / Electronics)15 - 20 years relevant technical experience

in design, development, release cycle, and delivering software products Well experience in Open source products Familiarity with payment gateways and solutions Job Code: AVP/AD/NPCI/010716Job Description: Recommends and participates in activities related to the design, development and maintenance of the Applications. Work together with the Product Owner

to plan and execute projects, ensure that teams have appropriate product and technical specifications, direction, and resources to deliver products effectively by establishing realistic estimates for timelines while ensuring that projects remain on target to meet deadlines. Work closely with the Product Owner, Sales, and Business Analysts, for understanding the systems functional and non-functional requirements. Collaborate with the Product Management in defining the Product Vision

DBS BankPosition: VP- Credit Risk, Special Assets Management - (1600018H) Place of posting: Mumbai

Educational Qualification: Job Code: VP/CRAM/DBS/010716Job Experience:Active portfolio mgmt of weak and distressed credits including close liaison with clients, business and support units, and external parties in turnaround business strategies, with improving recovery prospects or minimizing losses for the bank. Active client management and continuous interactions with banks, external agencies

to come up with effective account strategies. Timely resolution of clients issues demonstrating problem solving ability by developing sound proposition, escalating to supervisor with well thought-out analysis, and recommendations of action plan before implementation. Develop strong and cordial relationships with both internal and external parties in the promoting awareness of IBG5’s mandate. Control and quality of the portfolio, using available triggers and adherence to Risk management guidelines and policies. Develops and maintains a detailed knowledge of industry sectors within the customer portfolio. Control and manage the risk profile for the overall Team portfolio.

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Technologies like cloud computing are the kinds that most financial institutions including banks do not easily embrace. Benefits of the cloud include:1. Reduced costs: Banks can reduce costs as they will no

longer need to invest in dedicated hardware, software and resources. The pay-on-demand model of cloud means they pay only for the hardware and software as they need.

2. Increase efficiency: Banks can improve efficiency as the cloud could make it easier to integrate with new technologies and applications. Banks can also drive out complexities as the technology and business operations could be more closely aligned.

3. Improve flexibility and scalability: The cloud enables banks

to respond quickly to changing market, customer and technological needs. Timely scaling of technology as per requirements – upwards as well as downwards - give the banks a competitive edge. 4. Serve clients faster: New products and services can be developed and launched easily and quickly using cloud computing. Time is saved as there is no special procurement of hardware and software. 5. Improves client relationships: With cloud computing,

banks can develop systems which are capable of providing deeper insights of their clients and can make better business decisions. Finesse has a unique composition of Cloud offerings which enables

Banking & Financial Institutions to be more agile and scalable.

250+ Professional Team l 150+ Enterprise Clients l 20+ Nationalities l 15+ International Awards l 10+ Global Locations [email protected] www.finessedirect.com www.facebook.com/finessedirect

Finesse was part of the PayNext, a Banking Frontiers event, held recently at Mumbai. PayNext is a must attend event for all stakeholders of the payments & financial services industry. Finesse

Team was busy showcasing their Big Data, Business Intelligence and Real Time Analytics solutions along with Customer Experience and Fraud Management for Banks, Insurance companies and other Financial Institutions. Live demos of Qlik Sense Analytics dashboards presented how financial institutions can leverage their data to provide actionable insights. Finesse consultants were ready

with information on how institutions can make use of this BI / Anaytics platform for optimizing and streamlining business processes and to make more sense of the information that is available across organizations. Solutions for Enterprise Fraud Management, Customer Experience Management, Anti-Money Laundering, CRM and Cloud were also presented by our consultants.

FINESSE GENERATES INTEREST WITH BANKS AND FINANCIAL INSTITUTIONS FOR BUSINESS INTELLIGENCE SOLUTIONS

Finesse has a very successful practice for Business Intelligence, Big Data & Analytics solutions. Banks can use BI solutions to deliver analytical insights to every business functions and give branch managers the required tools to find out which customers are driving profits. It enables risk managers to determine global exposures at a minute’s notice and shows which products drive the best returns with the lowest risk.

Insurance companies benefit by discovering new insights about their customers. BI tools help them to look for patterns in claims to identify suspicious activity. Thus they can measure key indicators on loss ratios and claims, and find ways to reduce the claims cycle.

Securities and investments companies can measure and optimize their trading strategies. They can keep track of counter-parties and collateral. BI/Analytics help in calculating capital requirements, measure global exposures across multiple products and thereby optimize hedging strategies.

FINESSE SHOWCASES ITS SOLUTIONS TO BANKS, INSURANCE & FINANCIAL INSTITUTIONS AT PAYNEXT 2016

FINESSE APPOINTS ANAND LAKHWANI AS PRACTICE HEAD – IT INFRASTRUCTURE

Finesse appoints Anand Lakhwani for heading their global IT Infra Practice. In his new role, Anand Lakhwani wil l be responsible for enhancing t h e F i n e s s e portfolio of Infra businesses, focusing on Cloud Computing, Data Access and Analytics, Enterprise Mobility, Hyper converged Computing, Unified communications, SDN, Security and Managed Services, thus complimenting the existing software system integration business at Finesse. This will involve Strategic Business planning, Solutioning, Partner Alliances and Customer Experience to increase the Top & Bottom line for Finesse and thus making Finesse a “one stop shop” for end-customer.

Anand is a seasoned executive with demonstrated success of over 8+ years of successfully developed and executed calculated sales strategies, action plans and Key Account Management across BFSI, Manufacturing, Automobile and IT/ITES. He comes with an experience of outstanding success at his earlier avatar in Payments and Infrastructure domain from MasterCard and IBM respectively.

FINESSE HELPS BANKS CHANGE THE WAY THEY WORK USING CLOUD COMPUTING

Sudheer Kumar Raju Director & Chief Technology Officer


Banking Frontiers is pleased to present SMART MOVES, which is its HR section. This section will be of immense help to Banks, IT Compa-nies, Financial Institutions and Insurance Companies which require resources with domain knowledge. They can advertise for people and products in this section. This section is beginning with a listing of key openings in the industry. To advertise in this section and take advan-tage of this opportunity, please contact Shirish Joshi on 7738383850 ([email protected]) or Malaika Monteiro on 9004446030 ([email protected]) or phone us on +91-22-29250166 and fax: +9122-29207563.

Wize Careers ConsultantsDesignation: SME- Capital Markets / Mortgage/ Retail/ Commercial BankingLocation: ChennaiJob ID: 18315579Description: Generating reports such as SOX, Compliance, Portfolio, Resource management, MI and Governance and Data Management, Doing Due diligence, Knowledge transfer and Documentation process for New Reports or process.

Csl Finance LimitedDesignation: Assistant Vice President - Retail LoansLocation: DelhiJob ID: 18792403Description: Candidate would be responsible for entire strategy, business development, growth , operations and functioning of Retail Loans division.

Saisun CompanyDesignation: Credit Manager - Personal loan & Business loanLocation: PuneJob ID: 18628362Description: Minimum of Three years of experience in handling credit proposals of Large/Mid/SME segment;preferably with Banking experience.

ABC Consultants Private LimitedDesignation: Head/VP/GM-TreasuryLocation: DelhiJob ID: 18881401Description: Responsibilities will include standardizing common processes and the related risks and controls to ensure full compliance with laws, rules and regulations.

Golden Opportunities Private LimitedDesignation: Loan Processing - AMLocation: VisakhapatnamJob ID: 18859871Description: Looking for commerce graduates who has good experience in mortgage loan processing, Should have good experience in loan doxcument veri�cation, checking the credit worthiness of the customer.

People Tree ConsultantsDesignation: Finance- Risk & ControlLocation: MumbaiJob ID: 18915928Description: Overall responsibility for the Risk and Control function for Finance shared services, Designing and implementing the control framework.iSource Services

Designation: AVP / VP Corporate Finance DivisionLocation: Delhi, GurgaonJob ID: 18914520Description: Valuations based on suitable methods such as Discounted Cash Flow Method, Market Multiples Method, Net Asset Value Method etc. for fund raising / mergers & acquisitions.

CapgeminiDesignation: Compliance ManagerLocation: MumbaiJob ID: 18911141Description: Document the results of audit, including internal control weakness and / or improvement opportunities via detailed issue logs & executive summaries.

Mangalam Placement Private LimitedDesignation: Head Quality and StandardsLocation: MumbaiJob ID: 18910658Description: Work with content development vendors, publishers to create course ware aligned to the model curriculum.

Vrddhi Management Solutions Private LimitedDesignation: Asst Manager LoanLocation: ChennaiJob ID: 18903080Description: Make strategy & manage relationships with lenders - banks, NBFC's, small �nance banks, etc. for improving the disbursals aim at maximum conversions productive client engagement with lender etc.

Tema India LtdDesignation: Sr. Manager FinanceLocation: Mumbai Job ID: 18388583Description: Must have knowledge of Forex, Treasury, Debts Indications & Project Financing, Review of working capital limits and its utilization.

Athena Consultancy ServicesDesignation: Direct TexationLocation: GurgaonJob ID: 15215037Description: Ensure Compliance with Direct Tax Laws, Transfer Pricing Regulations and Double Taxation Avoidance Agreements.

New Era India Consultancy Private LtdDesignation: Actuarial - Insurance DomainLocation: Bengaluru / BangaloreJob ID: 18644965Description: Prepare and present reports, summarizing �ndings and recommendation for improvements, Valuations of Pension Plans.

Flexi PartnersDesignation: Senior Manager/DGM – Product PricingLocation: Bengaluru / BangaloreJob ID: 18888551Description: To assist in �nalizing the product approval document, Analyze product margins post-issuance and manage the product repricing process.

Vertex Corporate Services India Private LimitedDesignation: Senior Financial Model Auditor Location: Bengaluru / BangaloreJob ID: 18814207Description: 5-7 years of exp in modeling & pricing of �nancial instruments, Experience of valuing market products/ derivatives/ �xed income bonds/etc.

Sampark Search Private LimitedDesignation: Senior Manager AcquisitionLocation: Delhi, GurgaonJob ID: 18125858Description: Sr Manager Acquisition, Develop relationships with recovery/stressed asset manage-ment department of banks/Fis.

Jobseeker - To apply for above jobs1. Logon to www.monster.com2. Type the Job ID in the "Search Job" box3. Click the "Go" button

Employers - To buy Monster products and servicesCall us at 1800-419-6666

oremail us at [email protected]


Banking Frontiers is pleased to present SMART MOVES, which is its HR section. This section will be of immense help to Banks, IT Compa-nies, Financial Institutions and Insurance Companies which require resources with domain knowledge. They can advertise for people and products in this section. This section is beginning with a listing of key openings in the industry. To advertise in this section and take advan-tage of this opportunity, please contact Shirish Joshi on 7738383850 ([email protected]) or Malaika Monteiro on 9004446030 ([email protected]) or phone us on +91-22-29250166 and fax: +9122-29207563.

Anlage Infotech India Private LimitedDesignation: Manager/ Sr. Manager/ AD- Statutory AuditLocation: MumbaiJob ID: 18627375Description: Looking for Manager / Senior Manger / AD-Statutory audit.

Skill VentoryDesignation: Collection Manager Location: Chennai, Cochin / Kochi / ErnakulamJob ID: 18867209Description: Collection Manager (AM/DM)- Collection of Mortgage- Home loans , Loan Against Property.

Unidus Services Manpower Private LimitedDesignation: Wealth ManagerLocation: Hyderabad / Secunderabad, IndoreJob ID: 18847955Description: Ensuring the productivity of Center and RMs (5 nos)*Handling HNI (High-net worth Individuals) clients by themselves for closure of sales on all products. Wings InternationalDesignation: Senior Credit AssociateLocation: ChennaiJob ID: 18921078Description: Ex bankers who worked in Credit Departments from Public / Private sector banks are preferred.

HeadHunters HR Private LimitedDesignation: Senior Financial AdvisorLocation: DelhiJob ID: 18842957Description: Managing the banking and investments relationship of YES FIRST clients and responsible for overall growth of Liabilities & Investment business from HNI segment.

S.B.ConsultantsDesignation: Branch Credit ManagerLocation: Delhi, GurgaonJob ID: 18862326Description: Take sound lending decisions based on available information & interactions with the applicants, Manage credit quality and control delinquencies, frauds.

ELixir Web Solutions Private LimitedDesignation: AM & Sr.Consultant Pension- ActuarialLocation: Noida, Bengaluru / BangaloreJob ID: 18903350Description: Domain SkillsPension or relevant domain knowledge is a requirement. However we may relax this requirement if the candidate is exceptional.

HGS International Services Private LimitedDesignation: Sr. Team Leader- operations - credit collections Location: Bengaluru / BangaloreJob ID: 18857279Description: Candidate should come from credit card collections background, Minimum 4 years of experience, Basic knowledge of dialler.

Nexus Manpower Solutions Pvt LtdDesignation: Assistant Manager_Field CollectionLocation: JaipurJob ID: 18927332Description: Should be able to manage the day to-day planning, Operational challenges , problem-solving of a team of agents, To o�er creative out of the box solutions.

iQuest Management Consultants Private LimitedDesignation: Asst/ Associate Vice President- ApplicationtransformationLocation: GurgaonJob ID: 18925820Description: The Application Transformation Manager will have a proven record of program execution and control, economic analysis and strategic consulting for large programs.

Krehsst Recruitment SolutionsDesignation: Sr Wealth ManagerLocation: ChennaiJob ID: 18897366Description: Serve as a dedicated single point of contact for 30-40 HNWI client, Portfolio management, Review individual account relationships to determine the banking and investment needs of clients.

Indel Money Private LimitedDesignation: Branch Manager / Rtd.Bank Manager/ CRELocation: Alappuzha / Alleppey, Thrissur / TrissurJob ID: 18919067Description: Accountable for functions related to operation and business Development / NCD mobilization etc of a Non Banking Finance Company, which is into Gold Loan, Business Loan etc.

Hector & Streak Consulting Private LimitedDesignation: Assistant Manager - Operational Risk Location: MumbaiJob ID: 18917776Description: The key responsibilities of this role are to support the delivery of the Operational Risk team’s objectives to co-ordinate and maintain the e�ective-ness of risk management processes across the organisation business.

EXECUTIVE TRACKS ASSOCIATESDesignation: Head - Financial ServicesLocation: GurgaonJob ID: 18847868Description: Designing and positioning FS solutions with existing clients/customers, including product catalogue/collateral to introduce to new markets/clients.

Uni�ed Capital Solutions Private LimitedDesignation: Relationship/Sr. Manager positions LoansLocation: NoidaJob ID: 18908484Description: Well versed in interfacing with clients for suggesting the most viable product range and cultivating relations with them for securing repeat business.

RightMatch HR Services Private LimitedDesignation: AVP (Non Motor Claims) - General Insurance Location: ChennaiJob ID: 18906852Description: Manage claims function for Non motor lines of business (i.e, FIRE,Engineering, MISC and Marine class of Insurance) for South India in sync with the overall strategic goals of the Organization.

Jobseeker - To apply for above jobs1. Logon to www.monster.com2. Type the Job ID in the "Search Job" box3. Click the "Go" button

Employers - To buy Monster products and servicesCall us at 1800-419-6666

oremail us at [email protected]


Growth Plans

Edelweiss Financial Services started its retail financing business in 2010 with the idea of tapping

the financially underserved tier 2 and 3 locations, the self-employed and the SME segments. Its portfolio is spread across products like home loans, loan against property and SME financing. It is present in south, west and north India. According to Anil Kothuri, president and head, Retail Finance of the company, there are well over 2 lakh outstanding loans spread across the 46 locations that the company operate in.

The company’s interest rates are in close alignment with the market. Kothuri says while interest rates are important, one of the most crucial aspects for the company is how well it understands the needs of its customers so that it can provide services according to these requirements. “Our ability to underwrite under diverse programs and provide quick disbursements according to the requirements of customers are the key success factors for us,” says he.

DIFFERENTIATORSThe one factor that differentiates the company from others and that which it wants to further drive is ‘simplicity’. The ‘E-Million’ product it launched this year for its SME customers is an example. Kothuri explains: “This is a product with a standardized loan amount, minimal documentation and tab-based credit underwriting for small business loans. The key features of the product are on the spot sanction letter issuance, automated approval communication to all constituents in the business and real-time tracking of the transaction status. We will continue to reach out to our customers through events like loan camps and other promotional events.”

CONSTRUCTION FINANCE The company works with developers for providing pre-approvals for under-

construction projects. It looks for developer reputation, past track records, project approvals and other important aspects, to mitigate risk before it approves any housing project. “We are experiencing good demand in the market, but we are selective in funding projects, based on the comfort we get from the developer,” says Kothuri.

NPA UNDER CONTROlEdelweiss Financial Services has been able to maintain the same NPA levels that it had in FY2014-15 this year too. Its approach towards risk has been to align its product programs and underwriting processes by constantly analyzing its portfolio. “Our delinquency level, especially in LAP, or loans against property, segment, has been steady and at manageable levels, when there has been a growing concern about the LAP portfolio in the market. It has been largely on account of this approach,” says Kothuri.

IT INITIATIvESKothuri believes that technology will provide opportunities to reach out to new customers, which were earlier limited due to geographical reach, servicing infrastructure and operational economies. The company is embracing technology in every aspect of its business be it sourcing, regulatory compliance, underwriting or servicing. Says he: “Some of the initiatives this year have been tab-based underwriting modules for spot sanctions, e-sourcing through aggregators, automated credit processing tools, etc. We began our engagement with Indicia last year to facilitate e-seller loans, which is a new segment for us. Indifi’s segment-specific approach, unique data and tech-based model were the basis for this partnership. Additionally, its full customer life cycle management approach demonstrates the commitment towards the business, which motivated us to go ahead with the partnership expansion.”

40%+ GROwThKothuri sees opportunities in the housing finance market, specifically in the affordable housing segment as exciting. “The loan outstanding is expected to grow 4X, basis enabling factors like favourable demographics and the government’s focus on the affordable segment. The MSME credit space is also expecting a double digit growth, with NBFCs / HFCs leading the way. The overall outlook for the industry looks positive,” says he.

Edelweiss Financial Services would widen its geographic foot print, asserts Kothuri, adding: “We expect to grow our portfolio by over 40%+ in FY2017 and would continue to grow at 25%+ in subsequent years, over the next 3-4 years. This year’s focus is on west India, where we are looking to expand in Maharashtra and Gujarat.”

[email protected]

Edelweiss Services to grow retail finance by 40%Anil Kothuri, president and head, Retail Finance at Edelweiss Financial Services, lays down the roadmap for an aggressive growth plan:

Anil Kothuri claims the company’s delinquency level, especially in LAP segment, has been at a manageable level

45 Banking Frontiers April 2016

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Brokerages

The activity in the currency derivatives segment, which remained subdued

during 9MFY2016, improved during Q4FY2016. During Q4FY2016, aggregate volumes in the segment increased to `14.82 trillion from `11.29 trillion during Q3 FY2016 (`13.75 trillion during Q2FY2016, says the report.

The uptick in the currency segment volumes may be attributed to raising of stipulated limits for bank stock brokers by SEBI within the currency derivative segment

to $1 billion from $100 million earlier. With activity levels fostered not just by improved domestic market outlook but also by easing of inching up along with a host of other tools that facilitated ease of use, the markets saw a retail investor coming back. The retail volumes (in ADV terms) for these brokers witnessed a surge of 49% yoy to ̀ 516 billion in FY2016 from ̀ 347 billion in FY2015 with cash segment witnessing a higher growth as compared to derivative segment.

Broking volumes at top 16 brokerage

houses fell by around 37% (in ADV terms) during H1FY16 to `325 billion. The derivatives segment posted a much sharper decline (of 38%) when compared to the cash segment (which declined by 31%). The recent guideline that is expected to increase the minimum size of the options contract from ̀ 2 lakh to `5 lakh also impacted the derivatives volumes in the retail segment the most (when compared to the institutional segment). We expect volumes in the derivatives segment for retail participants to shrink by 10-15%.

In their short span of 2-3 years, discount brokerage houses have made their

presence felt in the industry, says ICRA in the report. Few discount brokerage houses have also decided to start offering margin funding services to their clients to deepen their client relationships. With increase in client base of discount brokerage houses and other players entering the online broking segment, online volume for the brokerage houses (as a percentage of overall retail volume) rose to 30% from 27% in FY15. In ICRA’s estimates, during FY2015-16, the total revenues of the 11 prominent brokers

analyzed improved substantially mainly driven by surge in broking revenues during the year. Also, revenues from other lines of businesses which include interest income, depository income and wealth management fees also improved during FY2015.

Profitability metrics of the 11 prominent brokers studied by ICRA showed substantial improvement. The aggregate RoA of these companies improved to 4.1% during FY2015 vis-à-vis 3.6% during FY2014. However, the improvement in aggregate RoE of these companies was sharper as the gearing

levels of these companies increased to finance their capital market financing book to meet increased client appetite for equity market exposures. Based on the trends seen till H1FY16, ICRA estimates that the broking revenues for the industry has declined slightly by 7-8% in FY2016 compared to FY2015. Further a rise in cost structures as many players had resumed hiring and expansion plans following a benign FY2015 is expected to keep the overall profitability matrices of brokerage houses under pressure for FY2016.

[email protected]

Profitability of brokerage houses to witness pressure in FY17

After going through a good phase in FY2015, the Indian equity markets

remained weak during most part of FY2016. The total turnover at the exchanges (NSE, BSE and MCX-SX combined) declined (by 9% yoy) in FY2016 when compared to FY2015, says an ICRA report on Indian brokerage industry. On the back of assumptions that the global risks are unlikely to soften in the near term, ICRA expects brokerage revenues and profitability of brokerage houses to witness pressure in FY17 unless corporate earnings show signs of revival. At the industry level, Equity Average Daily Volumes (ADV) shrunk by 10% yoy during FY16 to `3 trillion. The aggregate

market turnover was impacted largely by the declining activity in the largest segment - options. The increase in minimum contract size has resulted in number of option contracts reducing to almost half of previous levels. The industry option volumes were further exacerbated by gradual withdrawal of liquidity enhancement incentives by exchanges on select products. Though ADV moderated in the cash segment as well, the decline in this was relatively lower. The volumes in the option segment revived during Q4FY2016 and ADV during the period stood at `2.5 trillion as compared to `1.8 trillion during Q3FY2016. Turnover in the futures segment remained almost flat

during FY2016 over FY2015. Consequently, the volume share in the overall market shifted away from the options segment with Cash: Futures: Options volume proportions adjusting to 7:17:76 during FY2016 from 6:15:79 in FY2015.

Currency derivatives volumes improved in Q4

Online volume for brokerage houses up


Mutual Funds

Indian mutual funds’ assets under management (AUM) decreased from a record high of `14.22 trillion in April

2016 to `13.82 trillion in May 2016, registering a decline of 2.8%, according to data from AMFI. ICICI Prudential Asset Management Company is one of the largest AMCs in the country with AUM of `1.79 trillion and contrary to market trends, it has witnessed substantial growth in scale - from 2 locations and 6 employees at the inception of the joint venture in 1998, to the current strength of around 1100 employees with a reach across 140 locations reaching out to an investor base of more than 3 million.

Managing money in fiduciary capacity is a huge responsibility and a fund house doing well is bound to attract more investments. Nimesh Shah, MD & CEO of ICICI Prudential AMC, feels it is important to create a long term track record to ensure trust of investors and distributors. “In fact, we call it trust record rather than track record,” he articulates.

consistently Beating BenchmarksThe asset base of equity mutual funds of the industry increased 14% yoy to `3.7 lakh crore at the end of May 2016 as retail investors chose to put their money into these schemes. In May, equity and equity-linked saving schemes saw fund infusion of `4471 crore, the highest in 6 months. In April 2016, the asset base of equity MFs stood at `3.57 lakh crore. What sets ICICI Prudential AMC apart is the consistency it has shown in beating benchmarks. All its equity schemes under management have beaten the respective benchmarks across various time frames. Claims Shah: “In fact, we are the first ones to launch clearly defined defensive suite of products which are impacted less when equity markets fall. Such products have been well received by distributors and advisors.”

right thingsICICI Prudential AMC has consistently offered the right products at the right time, making right macro calls and helping investors allocate to asset classes which are expected to do well whenever there is a major shift in the macro-economy. Here are some examples:

In 2011-12, it was observed that India’s current account deficit and fiscal deficit were significantly high and that the US dollar would strengthen against other currencies. “This placed tremendous stress on rupee-dollar exchange which meant export-oriented and import substitution companies would do well,” says Shah. “We, therefore, turned overweight on these sectors in 2011. Correspondingly, we reduced exposure to banking sector because a weak rupee tightens liquidity conditions thereby affecting banking sector. The strategy didn’t work well initially, but played out during the later part of 2011-12.”

Again, in October 2013, equities presented a good opportunity because valuations were at a level 12-14 times PE of one-year forward earnings. Shah explains: “With stock markets, particularly midcaps turning quite inexpensive, we launched Value Fund Series. This conviction paid off well as they were well received and helped retail investors look at equities as an asset class favourably once again.” The ICICI Prudential Balanced Advantage Fund from our stable has seen the corpus surge from ̀ 250 crore in 2013 to `11,465.64 crore in 2016.”

long termShah says the need of the hour is to move away from selecting products based on short-term performance and look at important parameters like fund house pedigree, consistent long-term performance and risk management. “We are making a sincere effort to move investors towards right funds at right time. Retail investors often tend to look at the past performance. While past performance is only a threshold for selecting funds, concept selling drives investors to the right product for next 2-3 years,” he avers.

core teamICICI Prudential AMC has aligned the strategies of funds to the investing styles of fund managers. Shah explains: “For instance, while executive director, Sankaran Naren’s style is top-down, contrarian and value oriented, deputy CIO, Equity, Manish Gunwani’s is growth style and focus on management and numbers, while deputy CIO, Equity, Mrinal Singh insists on less concentration, diverse portfolio and capability to pick value stocks. With this process, they have ensured sharper and focused investment products that cover all the different shades of the market.”

[email protected]

Right products at right timeNimesh Shah, MD & CEO, ICICI Prudential Asset Management Company, says s the success mantra of the company:

nimesh shah asserts that the need of the hour is to move away from selecting products based on short-term performance


SLBC

The 130th meeting Maharashtra SLBC, 134th meeting of Karnataka SLBC and 60th meeting of

Chhattisgarh SLBC were held recently to review achievements of the banks in the respective states as of Q3, 2015-16.

Sushil Muhnot, CMD, Bank of Maharashtra, and chairman, SLBC, said despite various natural calamities faced by Maharashtra during the past many seasons, the achievement under annual credit plan (ACP) as at the end of Q32015-16 was 73% of the annual target of `186,620 crore for total priority sector lending (PSL) and that for agriculture was 75%; achievement under other PSL was 72%. The achievement for crop loan disbursements was 79% of the annual target, showing yoy growth of 19%. SLBC Maharashtra secured first rank among all SLBCs for maximum number of Aadhaar seeding done under Pradhan Mantri Jan Dhan Yojana (PMJDY).

S.S. Sandhu, principal secretary, Cooperation, government of Maharashtra, informed that of 1.36 crore farmers in Maharashtra, only 60 lakh were covered under bank finance. Disbursement in affected areas was much less and a region wise study was needed.

Banks have converted agricultural short term loans into medium term loans. The first installment of 5 equal installments will become due in June / July 2016. The state government has already decided to provide interest on converted / restructured loans.

Representat ives of banks in Maharashtra suggested that the duration between striking of a natural calamity and actual declaration of aanewari / paisewari must be shortened and that restructuring should be available only for crop loans.

KARNATAKAThe outstanding level of PSLs of banks in Karnataka stood at `202,011 crore as of December 2015, recording yoy growth of 14.86%. The total agricultural advances were of `97,987 crore constituting 19.82% of the total advances of banks. The outstanding advances to weaker sections by banks constituted 13.60% and to SCs/STs 2.39% of the total advances, to 57.92 lakh small & marginal farmers were `57087 crore (58.26%).

Arun Shr ivas tava , chairman, Karnataka SLBC and MD & CEO, Syndicate Bank, said the SLBC has taken several measures to mitigate the hardships faced by the distressed farmers in all the 136 talukas declared as drought hit by the government of Karnataka. LDMs have conducted 86 counselling camps. Banks in Karnataka have restructured / rescheduled 267,207 agricultural loan accounts involving `2464 crore and provided 25,288 fresh crop loan / Kisan Credit Card to the extent of `365.94 crore to affected persons as a relief measure extended in drought affected areas. The SLBC had also taken decision to waive overdue / compound interest of the affected pomegranate and grape growers.

Shrivastava said the banks in

Karnataka have disbursed 86.64% against the target of `112,460 crore up to the Q32015-16 under priority sector credit. Karnataka stood first in implementation of the MUDRA scheme with 145% achievement.

The banks in Karnataka have over-achieved their MSE business by 48.96%. However, they achieved only 33.25% in housing, 34.76% in education and 46.03% in other priority sector areas.

The representative from Kaveri Gramin Bank informed that the farmers are not coming forward to execute the necessary documents for restructuring / rephasing of loans in spite of conducting camps and persuasion by the bank representatives.

GOVT SCHEMES The margin money in respect of National Urban Livelihoods Mission (NULM) proposals asked by the banks in Maharashtra was high.

Meeta Rajivlochan, principal secretary, directorate of municipal administration, government of Maharashtra, said performance of banks in Maharashtra was not reflected on the NRLM bank linkage portal as CBS data is not being shared by the banks and there is low rate of sanctions

Performance of banks in Maharashtra, Karnataka, Chhattisgarh reviewedExcerpts of deliberations by the senior bankers on important issues at the SLBC forums of Maharashtra, Karnataka and Chhattisgarh:

Participants at the SLBC Maharashtra meeting


in respect of proposals under NULM & SULM. She cautioned that SHGs will not get interest subvention if SHG data is not shared. She also informed the meeting about the chief minister’s announcement to implement 0% interest rate scheme in the state wherein women SHGs would not be charged interest on their loans. She suggested that banks should explore extensive use of BC / Bank Sakhi model for all purposes as bank branches were short of adequate manpower.

Shrivastava of Syndicate Bank observed that banks in Karnataka have done well in some of the government sponsored schemes like NRLM, SULM, Karnataka Maharshi Valmiki ST Development. Corporation, Udyogini, Pashu Bhagya, etc. However, in other schemes like NULM, PMEGP, etc, the performance needs to be improved.

Banks in Karnataka have opened 86.81 lakh BSBD accounts under PMJDY up to 5 February 2016, of which, 27.02 lakh accounts are with zero balance and the remaining 59.79 lakh accounts with balance of `1032.60 crore. The banks issued 75.92 lakh RuPay cards.

As per Pradhan Mantri Fasal Bima Yojana (PMFBY) allocation, `700 crore is needed in Karnataka. The premiums to be paid by the farmers were ranging from 2-15% in the earlier schemes. Canara Bank sought government assistance for mobilizing non-loan farmers for insurance coverage. Syndicate Bank requested the government to provide gram panchayat-wise list of farmers to cross-check with the list of loan farmers for ensuring coverage of all the non-loan farmers.

Karnataka is the best performer next to Andhra Pradesh in the country under NRLM Scheme.

Under Rajiv Gandhi Chaitanya Scheme, PKGB, KVGB have already entered into MoU with NRLM and now Vijaya Bank has also come forward. The director of DMA informed that it is developing a portal through which details of interest subsidy will be collected from banks and the eligible interest subsidy will be transferred online to banks / beneficiaries.

The director, DIC, Chhattisgarh has raised concern about non achievement of physical target of Pradhan Mantri Mudra Yojana (PMMY). He stressed for disbursing more of Shishu variant of MUDRA loans. Moreover, the non-performers - Axis Bank and lClCl Bank - were singled out and told to take urgent action. It was stressed that MUDRA loans should be extended to the youth who have secured skill development certificates from Skill Development Centers run by the state government.

Aditya Jha, convenor, Chhattisgarh SLBC and deputy manager, SBl, mentioned that bankers may sanction PMEGP cases on a priority as the same helps them to achieve target under MUDRA scheme. Further the PMEGP e-tracking system should be made widely accessible to the stake holders like DlF, member banks and SLBC so that branch- wise pending position could be monitored effectively.

Many bank branches in Chhattisgarh have neither utilized the subsidy component nor refunded the amount to the concerned department under Antyodaya Swarojgar Yojana and Adivasi Swarojgar Yojana. Therefore, Chhattisgarh Rajya Adivasi Vittevam Vikas Nigam was requested to provide the branch-wise unutilized subsidy list with respective account numbers to SLBC so that the matter be resolved.

BRANCHES, ATMThe SLBC was informed that LDMs in Maharashtra have identified 281 villages with population above 5000 without a

bank branch of a scheduled commercial bank and the same have been allotted among SCBs including RRBs. Banks will peruse the list and submit a status report on opening of their branches at the allotted centers by 31.03.2017 to RBI.

Random visits to bank branches in some districts of Maharashtra by officials of RBI revealed that the bank forms / printed material were available only in English language. All concerned are requested to note the same for necessary compliance in trilingual form - English, Hindi and the regional language.

As at the end of December 2015, there were 10,295 branches and 14,375 ATMs in Karnataka. Out of the 1000 villages with population of above 5000, 790 villages in Karnataka are already having a brick and mortar branch of a SCB, the coverage is almost 80%. The banks were called upon to cover the remaining 210 villages immediately. 85% of 176 blocks are covered with the FLCs. Reddy informed that the allotted banks are yet to open FLCs in the 15 centers (SBI-2; Vijaya Bank-3; Corporation Bank-2, SBH-5, PKGB, KVGB & Andhra Bank-1 each.)

D r K a m a l p r e e t S i n g h , D l F, Chhattisgarh, stressed on the need to open 54 branches and 5 ATMs by the banks within LWE (Left Wing Extremism) affected districts. Regarding the remaining 91 LWE centers, the government has sought enhanced subsidy of `9 lakh from NABARD as a measure to compensate the banks for meeting their expenses during the initial years of operation.

The chairman suggested that

SLBC Karnataka meeting in progress


SLBC

increased weightage may be provided by RBI to banks which have opened branches in LWE affected districts for opening branches in tier 1 center.

RSETI & FLCSS.S. Sandhu observed that only lead banks in Maharashtra were involved in all aspects of the RSETIs and felt that full potential of the RSETIs was not being realized. He felt that the present settlement ratio at 50% must improve.

Dr C.R. Prasanna, mission director, SRLM, Chhattisgarh, advised judicious usage of the existing infrastructure as central government has clarified not to open more RSETIs in newly created districts. The credit linkage issues being faced by the passouts were explained. It was decided to make available the list of passout trainees to SLBC for consideration under MUDRA scheme.

FINANCIAL INCLUSION The Maharashtra SLBC opined that if the banks in the state could issue more number of RuPay Card enabled PoS machines to their Bank Mitras, it will help in increasing transactions. Banks were lagging behind in performance under Atal Pension Yojana (APY) and there is need to enroll at least 30 proposals per bank branch. Maharashtra was ranked at 3rd position in respect of MUDRA loans. NABARD has informed about providing support under Financial Inclusion Fund for setting up of solar powered VSAT to kiosk / fixed CSPs to provide connectivity, to solve problem in providing banking services in the far flung areas of Maharashtra.

BANK FRAUDSIndian Banks Association has informed that some of the banks in Karnataka faced challenges in filing police complaints. The police do not accept the complaints ab initio filed by the bank, by citing various reasons, even in the cases where the bank / customer have suffered actual financial loss. It was suggested that banks go for e-filing with the police and the police accept the e-complaints.

BUSINESSThe aggregate deposits of banks in Karnataka were `658,554 crore as at the end of December 2015, showing a yoy growth rate of 11.17%. The total outstanding advances of banks in Karnataka were `494,443 crore as at the end of December 2015, showing a growth rate of 13.63%. The credit deposit ratio of banks in Karnataka as of December 2015 was 75.08%, showing yoy increase of 1.63%. The CD ratio was at 99% in rural areas, 85% in semi-urban, 73% in urban and 70% in metro areas.

HOUSING FOR ALLHUDCO representative informed about the annual target of 60,000 under Credit Linked Subsidy Scheme (CLSS) of the Pradhan Mantri Awas Yojana (PMAY) in Maharashtra. The housing target under the scheme in Karnataka is 7000. The director, DMA informed that out of 14,000 applications submitted to banks under RRY, which is similar to the present scheme, 7000 pending applications should be considered under interest subvention scheme by the banks.

MAPPING OF ITI SLBC Karnataka has mapped the existing 144 government ITIs (Industrial Training Institutes), 1256 private ITIs, 287 Operational Skill Centers and 9 Vocational Training Partners with the FLCs/bank branches for imparting financial literacy/skill development training.

As many as 2662 loans have been

disbursed in Karnataka amounting to `145.95 crore and the outstanding is 7139 a/cs amounting to `2208.53 crore as on 31 December2015 under the Negotiable Warehouse Receipts scheme.

WEAVERS CARD As against the target of 8000 cards, the banks in Karnataka have issued 646 cards with a limit of `306 lakh as on 31 December 2015, leaving a big gap.

The meeting was informed that instructions of the social welfare department, Karnataka are against the standards set by state / central government regarding placement of government deposits with RRBs. The chairman, Kaveri Gramin Bank requested that instructions be issued to all the principal secretaries / secretaries / MDs of state owned corporations to place their surplus funds with the RRBs.

Punjab National Bank has raised some common issues viz difficulties in getting timely permission from district magistrates for physical possession of securities under SARFAESI Act and notifying new centers for creating equitable mortgage (EM) of properties in Maharashtra. The bankers represented that intervention by the central government would greatly help for early resolution of long pending issues. The chief secretary of the state government was asked about the requisite provision of the SARFAESI Act and he assured that the matter will be taken up with the district magistrates.

[email protected]

PMJDY beneficieries at Chhatisgarh SLBC meeting


N E W S Capex

Exide plans `1400 cr capexExide Industries is planning to spend over `1400 crore on capex during the next one year for technology upgradation and capacity expansion. It will have a major spending on its Haldia facility in West Bengal. The company is implementing the punch grid technology at Haldia facility by building an entirely new unit there. This advanced technology for batteries would be for the first time

in India. The Haldia facility houses two units of the company - one making general batteries and the other traction cells in industrial segment. The company has tied up with US-based lead-acid batteries manufacturer East Penn Manufacturing Company (EPM), which is providing the knowhow, technical assistance and support for the punch grid technology. The technology is being brought to India for the first time.

ITC to focus on food segmentITC will invest ̀ 4000 crore over the next 2-3 years to set up 8-9 factories across the country for manufacturing of food products. According to V.L. Rajesh, CEO, ITC Foods, the company plans to put 8-9 massive factories over the next 2-3 years and it will invest about `4,000 crore to manufacture products across different categories. The company’s branded packaged foods division grew by around 11% to clock a turnover of `7097.49 crore in 2015-16. Food is the second largest business for ITC after cigarettes. Rajesh said the company will be focusing on the health segment of the biscuit market, which is growing the fastest. Key approach is to have a full portfolio across segments, he added. ITC had entered into the dairy segment with ghee in October 2015 and launched dairy whitener in North East recently.

Hathway to have `500 cr capexMulti system operator Hathway Cable & Datacom is proposing a capital expenditure of `500 crore in FY2017. The company expects its content cost to increase by 15%. Investment in broadband will be around `300 crore while cable TV is expected to consume ̀ 200 crore. In broadband, the target is to add a home pass of half-a-million in FY2017. Its capex at the standalone level will be `300 crore with investment in broadband around `250 crore and cable TV capex around `50 crore. The content cost per subscriber (CPS), currently at `27, is expected to go up to `32. Hathway will fund the expansion through a combination of debt and internal accruals. In FY2016, Hathway’s capex was `560 crore.

Supreme Industries to invest `250 crPlastic processing company Supreme Industries is proposing to invest `250 crore for expanding capacity of its various plants and product range during 2016-17. As a part of this expansion plan, the company will set up a 20,000 tonnes annual capacity of PVC pipe at Gadegaon in Solapur in Maharashtra instead of Jalgaon and to install new extrusion lines for PVC pipe and PE pipes at Kharagpur in West Bengal. The company will put up an additional capacity of performance packaging film and raise capacities of protective packaging products at Malanpur (Madhya Pradesh) and Hosur (Tamil Nadu). Besides, the company will introduce and increase range of product offerings in plastic piping system, furniture, material handling products, roto moulded products and bathroom fittings.

Vedanta to spend more on Gamsberg plant

IOC to hike annual investments

Indian Oil Corporation is increasing its yearly investment from the current `14,000-15,000 crore to about `20,000 crore over the next five to seven years. The company said this would cover new projects and expansion of existing ones. The company will also participate in two projects, an `80,000-crore mega refinery in Maharashtra and revival of three fertilizer units, with other state enteprises, at a cost of `15,000 crore. It would invest around ̀ 1.2 lakh crore, of which ̀ 30,000-35,000 crore would be in petrochemicals. The latter now contributes nearly 30% of their Ebitda.

Vedanta Resources is expected to hike its spending on the $400 million Gamsberg zinc project this year. The venture had been significantly de-risked, said Tom Albanese, CEO of the UK-listed mining and energy firm. Vedanta had cut expenditure on the Gamsberg mining project for this year to $40 million which compares to spend of $80 million in the previous financial year, itself a reduction over the $250 million first budgeted. However, the price of zinc for delivery in three months has improved to $1,890 per tonne from about $1,500 per tonne.


N E W S Cyber Security

Cyber criminals now focus on mobile appsThe new focus for cyber criminals is app stores. Cyber security services provider Symantec has recently detected an app on Google Play - Beaver Gang Counter - that masquerades as a score keeping app for a card game. However, one installed on a device, the app has been found to be searching media files related to Viber and sending results to a remote server. Symantec says while apps are verified before being published on the Android store, some manage to escape the store’s mandatory security checks. Viber is popular social media app with over 500 million installs on Google Play alone. The data stolen by the malware could be used for a number of nefarious purposes such as identity theft, blackmail, fraud, or pornography, said Symantec

New PayPal protection programDigital payments platform PayPal has launched a ‘Seller Protection Program for Intangibles’, which is an extension of its existing seller protection program that covered only merchants selling tangible goods. According to an official of PayPal India, growing instances of online fraud act as a barrier for sellers selling online services and other intangible goods to clients abroad. Seller Protection Program for Intangibles can empower freelancers and merchants in India to sell with confidence and assure them that they have the company’s support to grow, he added. The program will cover two types of buyer complaints – unauthorized transaction, when a buyer claims that he or she did not authorize the payment and ‘item not received’, when a buyer pays for the service but claims that he or she did not receive the service.

Spend against e-frauds to go upIt is estimated that there could be a 30% rise in spending by eCommerce merchants and financial institutions on preventing online frauds by 2020. They are estimated to spend $9.2 billion by that time, according to a new report Online Payment Fraud: Key Vertical Strategies and Management 2015-16 by Juniper Research. The report suggests such companies will be working particularly hard to prevent fraudsters targeting mobile transactions. Juniper Research predicts that the global value of online payment transaction fraud is set to hit $25.6 billion by 2020 with three areas particularly vulnerable for online fraud - eRetail (65% of fraud by value), online banking (at 27%) and airline ticketing (6%). Buy online, pay instore and electronic gift cards were identified as two of the key targets for eRetail fraud.

Fraudsters in Indian call centersAmerican experts are now training Indian law enforcement agencies to act against potential fraudsters at the Indian call centers, which the US government feels, continue to be the source of various frauds. Lois C. Greisman, associate director, Division of Marketing Practices, Bureau of Consumer Protection, at US Federal Trade Commission, in her testimony before Senate Judiciary Committee, said certain types of scams are more likely to impact older Americans, such as prize promotion and lottery schemes and imposter schemes purporting to provide technical support to ‘fix’ non-existent computer problems. Greisman listed fraud calls originating from India as a cause for concern. In addition to enforcement cases, the FTC has organized three stakeholder meetings, including two in India, to develop a coordinated and multi-pronged approach to this threat.

RBI framework on customer liability

Password will be out by 2025

The Reserve Bank of India is expected to come out with a customer liability framework to help resolve cyber fraud cases. Deputy governor H.R. Khan said this will help in deciding the levels of liability for a customer and bank in the event of a fraud. As part of its endeavor to encourage technology deployment in payment solutions and cashless transactions, the RBI will also form a working group to study blockchain technology (which is similar to the one used by Bitcoin), he said. This will function like a distributed ledger and facilitate use of digital or electronic money.

A recent study has said that passwords could be phased out by 2025. The study conducted by mobile ID provider TeleSign covering 600 security professionals revealed that 72% of those interviewed believed passwords will be out by 2025. More and more companies, says the study, are replacing passwords with behavioral biometrics and two-factor authentication with 92% of security experts claiming this will enhance account security considerably. The study felt the vast majority of security professionals no longer trust the password to do its job because 69% of the respondents said they did not think usernames and passwords provided enough security.

H.O. Central Bazaar Kottakkal, Kottakkal P.O, Malappuram Dt., Kerala - 676503 Tel: 0483 274 2238 Email: [email protected]

Evening Branch: Thaze Chanhappadi, Kottakkal Tel: 0483 274 0666 Indianoor Branch: Indianoor, Kottakkal Tel: 0483 2705535

Make Savings a Habit...Savings Bank Deposit Scheme

•No. 1 Special Grade Bank•Agricultural & non Agricultural Loans•Fully Core Banking, SMS Banking, Mobile Pass Book •Western Union Money Transfer

High interestfor deposits

Thiruvananthapuram District Taxi Drivers Co-operative Society Ltd

Thiruvananthapuram District Taxi Drivers Co-operative Society Ltd, Thiruvananthapuram, won two awards for Best Deposit Growth and Best NPA Management under the PACS/Credit Society category at the annual Frontiers in Cooperative Banking Awards 2015 organized by Banking Frontiers in Goa.

Fort, Thiruvananthapuram, Kerala 695023 Phone: 0471 257 0572

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In various significant ways these smart-i Biometric Access Control Systems make a Safe even safer and a Strong Room Door even Stronger in a bank branch

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N E W S MFI

SKS Microfinance is Bharat Financial InclusionSKS Microfinance will have a new name - Bharat Financial Inclusion. The company said in a regulatory filing that pursuant to approval of government, ministry of corporate affairs and Registrar of Companies, the name of the company has been changed from ‘SKS Microfinance to ‘Bharat Financial Inclusion’ with effect from 13 June. It is the only

listed company in the microfinancing space in the country. The company had said the decision to change the name was taken as its core had undergone a transformation, equipping it to play a major role in fulfilling the national priority of financial inclusion. It is among the largest microfinance companies in India with presence across 18 states covering 1,00,000 villages, catering to its 63.65 lakh women members.

Disha Microfin to raise fundsDisha Microfin of Ahmedabad is raising capital through private placement as part of its efforts to mop up funds and start its small finance bank operations. It intends to launch the bank in November/December 2016. The company intends to raise `300-400 crore of capital and it has approached private equity firms and financial institutions among others for the purpose. From the current 26% domestic shareholding, the company which has Fincare Business Services as its holding company, will be looking to increase it to over 50% before the start of the bank. Keyur Doshi, co-founder and group CFO of the company, said the company is the only one among those who have received in-principle approval to launch a small finance bank that can raise foreign capital. Of the total `300-400 crore of capital that it would be raising, around `150-200 crore would be domestic and a similar amount would be raised through foreign participation, he added.

Equitas get final licenseEquitas Holdings has received final license from Reserve Bank of India to launch a small finance bank and will commence operations in few months with a network of around 400 branches. The company said the bank will be named Equitas Small Finance Bank and it will start banking operations after receiving few other approvals from various departments of RBI and other agencies. P.N. Vasudevan, MD of the company, said with the company’s ability to service the informal economy through its reach and efficient process and system, it plans to cater all sections of society. The Madras High Court had approved the amalgamation of Equitas Micro Finance and Equitas Housing Finance with Equitas Finance. With amalgamation coming into effect, Equitas Finance will be named as Equitas Small Finance Bank which will carry on the business of banking.

MFIs largest distributor of MUDRA loansMicrofinance institutions have disbursed about 35% of total loans extended under the Micro Units Development and Refinance (MUDRA) Bank. Since its launch in April 2015, MUDRA has disbursed about `1.43 lakh crore worth of loans. It offers three categories of loans: Shishu (covering loans up to `50,000); Kishor (loans above `50,000 and up to `5 lakh); and Tarun (above `5 lakh and up to `10 lakh). The reach of MFIs and the last mile connectivity they enjoy in rural areas with women groups and other clients are some of the reasons for the significant disbursal of these loans by micro lenders.

MFI loan book registers huge riseThe Microfinance Network (MFIN) has come out with data indicating MFIs in India have extended heavier loans to their customers in the last financial year. The loan portfolio of MFIs stood at `53,233 crore as of 31 March 2016, up from `28,940 crore a year ago. This is an 84% jump in loans against 44% increase in the number of clients and indicates that the average loan per customer is on the rise. The number of branches and employees too have grown much slower during the year, at 22% and 36% respectively. Ratna Vishwanathan, CEO, said the loan growth could be the result of the increase in client base and income levels.

Baskar Babu is president, MFIN

R. Baskar Babu, CEO, Suryoday Micro Finance, has been elected president of Microfinance Institutions Network, or MFIN. He takes over from Manoj Nambiar, MD, Arohan Financial Services. Rakesh Dubey, CEO, SVCL Creditline is the new vice president. Baskar Babu has 22 years of experience in financial services and banking and had earlier worked with First Leasing, Cholamandalam, HDFC Bank and GE Capital in various leadership positions.

The South Canara District Central Co-operative Bank LtdKodialbail Mangalore 575003

Phone: (0824)- 2440381, 2440882, 2441341, 2441343 Fax: (0824) 2440231 Email: [email protected]

The South Canara District Central Co-operative Bank Ltd, Mangalore is a pioneer in co-operative banking in many senses. Functioning in the South Canara and Udupi districts in coastal Karnataka, the bank is celebrating its 100th year of co-operative banking dedicated to the agro predominant economy of these districts through a robust network of 101 branches, highly technology driven, to provide a state-of-art banking experience within the ambit of co-operative principles through which it gained an unprecedented success.

Milestones: • Totalbusiness: `5549 crore as of March 2016 with a growth of 22.30% compared to the year 2014-15. The net

profit stood at `23.75 crore. • Depositmobilization: Deposits of `3099 crores as of March 2016 representing a growth of 20.63% from the

previous year. • Advances: Advances of ̀ 1031 crore for agriculture and ̀ 1418 crore for non-agricultural purposes as of March-2016.

The ratio between advances for agricultural and non-agricultural sectors stood at 42:58. • LoanRecovery: For the last 15 years, the bank has made 100% recovery under agricultural advances which is

considered a national record.• Dividend: Dividend of 10.5% for 2014-15• CAMELSC: Categorized under ‘A’ by the Department of Cooperation, Karnataka government. • NewService Initiatives: Introduced ATMs in September 2001 for the first time in the history of cooperative

banking in India. • Banking-on-wheels: Introduced for the first time, bank-on-wheels visits 2 rural areas in a day. • SingleWindowSystem: A customer can avail of all the banking facilities under a single desk. • NavodayaGramaVikasaCharitableTrust:The bank has promoted a habit of savings among the rural and urban

masses through Navodaya Grama Vikasa Charitable Trust

Financial Highlights:

Particulars 31-03-14 31-03-15 31-03-16 Particulars 31-03-14 31-03-15 31-03-16

Share capitals & Reserves 9183 13570 26540 Cash & bank balance 16340 20601 21609

Borrowings 53990 73502 68565 Investment 105892 119010 120984

Deposits 200114 256883 309912 Loans to members 139051 196823 244947

Retained profits 1416 2226 2375 Furniture and immovable 2533 5705 9272

Other liabilities 4645 6411 6227 Other assets 5531 10453 16807

Total 269348 352592 413619 Total 269348 352592 413619

• TechnologyInitiatives: RTGS/NEFT facility, CBS, CTS, RuPay Kisan card.• Vigilance Cell: Vigilance cell to safeguard the interests of depositors and to ensure prudent/transparent

deployment of bank funds.• DressCode: In order to maintain uniformity and discipline among the staff members, the bank has introduced

uniform dress code to all its staffers.• MolahalliShivaraoEducationFund: The bank has created a fund to encourage bright children of rural parents

and of the staffers of the bank.• PromotionofSelfHelpGroups:The bank has helped form 30724 Navodaya Self Help Groups out of 42,536

groups in the entire South Canara District. The SHGs have mobilized a total outstanding savings of `195.5 crore from 2,36,010 members of which more than 71.78% (1,69,411) are women. As of March 2016, 36,936 groups have been extended financial assistance to the tune of `615.94 crores in the 2 districts.

• TrainingCentre: The bank has established a co-operative training centre with all basic facilities in its centenary building.• ApexBankAward: The bank has been awarded to be the Best DCC Bank by the State Co-operative Apex Bank

consecutively for the last 15 years. The bank has also won the Frontiers in Co-operative Banking Award by Banking Frontiers and the NABARD Award for the formation of highest number of Self Help Groups, the bank has bagged the award for 12 consecutive years.

M. N. Rajendra Kumar K. Kishan Hegde M. Vishwanath Nayar Chairman Vice-Chairman Chief Executive Officer


Cooperative

V. Raghuraman: What improvements

have you carried in your branches last

year and what is the plan for this year?

M.K. Abdul Salam: At present, we have 58 branches in Thrissur district. During last year, we undertook the concept of ‘Branch Branding’, i.e. bringing uniformity in all of them. The branches are now similar in both their internal and external appearances. Besides, a few of our older branches have been shifted to nearby, newer and fully air-conditioned sites. This exercise will continue this year as well.

What is the total number of ATMs? We have nearly 50 ATMs. Of these, 10

have been opened in the last financial year. We have a target of opening 11 more during this year. Our ATMs are both on-site and off-site. Of late, we are witnessing increasing footfalls in all the ATMs and this includes a good number of other bank card holders. As part of our financial inclusion program, we facilitated 25 PACS operating in several places in the district by installing ATMs in their premises.

What is the bank’s CASA level in the last

3 years and what is the target level for

March 2017?

N. Jayakumaran Nair: We make constant efforts to improve the CASA level. As part of this exercise, we conduct campaigns in schools and colleges in and around Thrissur with a view to creating awareness amongst them about the latest banking products. Our training center has e-class rooms, e-library, e-conference hall, etc equipped with latest electronic gadgets for the participants to effectively take part in the awareness programs. We arrange periodic customer meet programs at the

center and through these efforts, during 2015-16, we could generate some accounts under the CASA category - 38,000 SB and 25,000 CD accounts, which form 30% of the total number of accounts.

The bank’s net NPA is about 3%. How has

this been achieved?

M.K. Abdul Salam: Yes, we have been able to contain our NPAs at about 3%. The NPA management is taken up in right earnest quite early itself - along with the sanctioning of loan. Lending is generally based on the borrower fulfilling the 3Cs – Character, Capacity and Collateral. Each individual borrower is thoroughly assessed at the branch level. With local employees in the branch assessing the proposal, it is easy

to assess the borrowers and this helps to monitor the case from the loan sanctioning stage itself.

At the post disbursement stage, we ensure that 3 things are carried out: quick identification of NPAs, senior level monitoring of overdue accounts and making sure that impact of NPAs are minimal on the financials. When a default is noted, the borrowers are immediately contacted followed by personal visits and formal letters to ascertain the reason for the default.

The bank has also initiated ‘Overdue/NPA Classification Methodology’. The classification is based on the irregularities persisting from 30 days, 60 days and 90 days. This has helped in initiating proactive remedial measures for early rectification. In this manner, the possibility of overdue accounts getting converted into NPAs are nullified in the early stages itself.

We have a special recovery cell at the head office with 19 officials. Each official is in charge of 3 branches. Headed by a senior executive of the rank of DGM, the cell does quick review on daily basis and detailed review on weekly basis. Thus, loan recovery problems at the branch level are sorted out immediately and effectively. In the last 2 years, our GM has personally visited all the branches and apprised himself of the recovery process and discussed with staff members to understand the problems and rectify their concerns. This has acted as a morale booster to the staff and they take up the task more diligently.

Considering the situation of each case, the loans are either rescheduled or waived through ‘adalath’ meetings, which are usually conducted at the head office to help the needy and genuine defaulters. It is performed in serious default cases,

For TDCB, focus is on agri-lendingM.K. Abdul Salam, president, and N. Jayakumaran Nair, general manager, Thrissur District Cooperative Bank (TDCB), outline the bank’s plans for branch branding and extending credit to thrust areas.

M.K. Abdul Salam speaks about the 3Cs - Character, Capacity and Collateral - the bank looks at while sanctioning a loan


N. Jayakumaran Nair points out to the many technology-based products and services the bank has been able to introduce

where parties are suffering from terminal illnesses such as cancer, kidney failure, etc. Accident cases and death of earning member of the family is also considered as a criterion for inclusion in these meetings.

What are the main technology milestones

achieved by the bank last year? N. Jayakumaran Nair: We have

been pioneer in the state in implementing all modern banking technology-based products. We have implemented CBS, RuPay cards, POS, SMS alerts, missed call alerts, ECS, CTS, LPG/students subsidy, IMPS, e-commerce, eKYC, eLobby, RTGS, NEFT, internet banking, etc. Of these, IMPS, e-commerce, e-KYC and e-lobby were introduced in the last year. We plan to have mobile banking for our customers, especially for the younger generation, and we are awaiting RBI sanction for this.

Please explain your staff training plans?

We firmly believe in acquiring, developing and enhancing human resources. We have a team of talented, qualified and experienced employees. While induction programs are being conducted for the new recruits, refresher courses are organized for the existing staff members. Besides, our staff also undergoes special training programs conducted by premier institutions like BIRD of Nabard, ICM (a state government sponsored training body) and VANICOM Pune.

Apart from the above, we have a training center supported by the Financial Inclusion Fund of Nabard. In this center, workshops and in-house training programs are conducted for directors and the staff in specialized areas like human resources development, information technology, time management, customer service, etc, on a regular basis.

What are your recruitment plans for this

fiscal year?

M.K. Abdul Salam: We recruit only through the government’s Public Service Commission. Recently, we recruited branch managers and we have plans to hire specialist officers for departments such as marketing, cash management, IT, etc.

What impact do you expect from the

newer banks that are to come up soon,

especially India Post?

We do not feel any competition or threat from the newer banks already set up or from the ones proposed to come up shortly. We strongly believe that whoever is able to offer best customer service would be successful and would be able to sustain and flourish in the banking field. We have been offering, and would aim to continue to offer, service to the utmost satisfaction of all our customers both in rural and urban areas. This, we hope, would help us face the threat of new players.

As a premier cooperative bank, our thrust all along has been on agriculture and micro-credit areas. Some of our initiatives clearly show that we have created a special niche area which, incidentally, helps us to face any competition from the existing or new players in the banking arena.

Please share some details of these

initiatives.

Agricultural credit is provided to individual farmers, joint liability groups, farmers’ clubs, self-help groups and kole padavu committees. The minimum and maximum amounts are `3 lakh and `40 lakh respectively. As regards micro credit lending, we extend assistance to entrepreneurs engaged in various non-farming activities. This credit is also extended to individual borrowers, JLGs and SHGs for different schemes promoted by the bank with the support of Nabard. Incidentally, it is these borrowers who have always been remained steadfast and loyal to the bank and helped the bank’s growth.

[email protected]


Cooperative

Brian Pereira: What were the key business

considerations that influenced your

decision to move to cloud?

Arpit Kumar Sharma: We were not willing to invest heavily on cloud. Technology is changing frequently. What is ‘new’ today may become obsolete soon. So, instead of investing a few crore rupees initially and also committing ourselves to heavy recurring expenditure on AMC, we decided to explore and exploit the cloud-based technology. When we discussed this option with IDRBT, they assured us that it was possible even though no bank in the country had gone live with this model so far. We decided to go ahead with this model, finding it unique and challenging and because no one had tried it earlier. The most attractive aspect is that this solution does not need any additional expenditure for version upgradation or hardware scalability.

What aspects of your infrastructure are

now on cloud? Who is hosting your cloud?

Where is your CBS hosted?

We are hosting our e-mail, Loan Origination System, HRMS and Learning Management System on cloud while our CBS is hosted in the CtrlS data center, which is the country’s first Tier-4 data center. We are using private cloud from Airtel, which we find safe and secure.

What were the challenges in transitioning to

the cloud and how were these overcome?

Initially, we faced connectivity as well as some security issues, but we were able to overcome those with the help of our network team and the domain experts at the bank.

Who were all involved in this cloud migration?

We are working with Airtel and IDRBT on the cloud migration.

What kind of innovation was generated

to introduce efficiency and reduce cost?

Since IT is not the core business of the bank, we decided to outsource the data center work to the experts available in the market. It helps us improve efficiency as our staff may be used for more productive work, as well as to reduce cost, as you do not need 24x7 staff/security as well as infrastructure.

Post migration, how have you benefited?

How much is your total investment in cloud?

We benefited a lot but not just post migration. When it was first rolled out, we compared the cost and found a lot of difference. So if you plan an RTGS/NEFT within your own data center you have to invest approximately ̀ 1 crore plus ̀ 30-40 lakh recurring expenses. But on this model we have invested approximately `6-7 lakh as one-time cost and approximately `1.5 lakh as recurring cost.

What are the new /enhanced services

that you have been able to introduce after

migrating to cloud?

It is not related to cloud but the bank was the first cooperative bank in north India to provide RuPay-based debit cards.

Can you explain the road ahead and

future plans?

We are planning to launch RuPay-based Pay-secure/ IMPS / AEPS Off us/UPI/Mobile app. We have already launched AEPS and have become the seventh cooperative bank in the country to provide this service, and the first bank in UP. We are now now aggressively looking to digitize our services to the maximum extent possible so as to offer the fruits of Digital India program to our constituents. I consider myself very fortunate that the bank is being managed by a highly pragmatic leadership including our Chairman Yashvir Gupta and MD/CEO Suveer Kumar Gupta who are technocrats themselves.

How is IT contributing in higher level of

customer satisfaction in your bank?

Though ‘Service with a smile’ is a culture to be imbibed among all employees of the bank, this is not enough to please a bank’s customer these days. Today’s customers expect benefits of latest technological advancements on one hand and personalized care on the other. While we strive to offer the best technology to our customers, we are ever ready to listen to them and encourage them to use whichever channel of communication they feel comfortable with. The feedback is shared with the CEO and necessary action follows immediately.

Shivalik Bank customers know that their views and feelings are of paramount importance to the bank. Various channels of communication like mobile, email and dedicated phone lines are used extensively by us. Customer delight is a core value in our bank which means that we do not stop at mere satisfaction of our customers.

[email protected]

Why Shivalik Cooperative Bank adopted CloudArpit Kumar Sharma, head – IT, Shivalik Mercantile Cooperative Bank, Saharanpur, UP, speaks about the bank’s unique cloud model:

Arpit Kumar Sharma was reluctant at first, but decided to adopt this cloud model as it was unique and challenging

‘The Pleasure of Personal Banking’The Mannarkkad Rural Service Co-operative Bank rose like a phoenix from the ashes of the erstwhile namesake which was ignominiously liquidated earlier. The rural service co-operative bank came into being in 1989 and ever since its inception, its growth has been phenomenal. There isn’t barely a home, a shop, an establishment or a farmland in Mannarkad in Kerala, which hasn’t been a beneficiary of the bank. ‘Enjoy the pleasure of personal banking’ is our motto.

A fully satisfied customer, a friendly financial institution at the beck and call of every one, a dependable friend in times of dire need, a ready sponsor in wait of enterprising entrepreneur – this is the sum and substance of the bank-consumer relationship.

Equipped with ample banking space, fully air-conditioned with every modern amenity worth mention, the infrastructure

embedded with technical and technological devices and connivances, the bank serves the customer community 24 x 7 x 35- Personal Banking Services with men.

The bank keeps abreast of times. It is replete with most modern equipment for accepting deposits, passbook printing, counting, bundling, detecting, separating currency, gold-loan barcoding, touch-screen kiosk and dozens of the like, e-passbook in all android, IOS & in all platform.

The bank has 14,000 members, `15,490.59 lakh in working capital, Rs15,158.69 lakh in deposits, `14,685.89 lakh in outstanding loans. We are guided by our motto of eternal vigilance and avoidance of japthi proceedings. We are immensely happy to put on record that to-date there hasn’t been a single instance of attachment of property for recovery of loan in the bank.

The bank has two branches, one at Thenkara and the other at Kodathippadi.

We run Neethi Store, a fair-value centre for everyday needs of the people. A Neethi Medical Center too we run, which includes diagnostic facilities, scanning centre, a modern clinical laboratory with ECG, X-Ray and so on. The bank has grown green and it has a huge vegetable garden and nursery on its vast terrace. It is also running a eco shop with wide range of organic products including vegetables, organic food to organic hair dye.

The Mannarkkad Rural Service Co-operative Bank had a glorious past it goes through a providential pragmatic present. It has in wait a fabulous flamboyant future.

The Mannarkkad Rural Service Co-Operative Bank Ltd(No. P 922), Mannarkkad (P.O) Palakkad (Dt) Kerala - 678 582, Ph: 04924 222052, 223823


Cooperative

Founded on 21 May 1972 in a remote village in Kalwa in Thane district of Maharashtra, Gopinath Patil

Parsik Janata Sahakari Bank now has 62 branches and 57 ATMs. The bank has added 10 new branches and 14 ATM in 2015-16 and expanded its its reach to Thane, Navi Mumbai, Pune, Nashik, Raigad and Ichalkaranji in the state.

One of the notable strengths of the bank is its people. It has almost zero attrition. Highly experienced employees have been with the bank on an average of 15-20 years. Says Ranjit Patil, chairman of the bank: “Currently we are focusing on hiring personnel with exposure to credit functions and marketing.”

adding new CUSTOMeRSThe bank had a customer base of 360,471 as of March 2016. It is targeting to add 50,000 customers by March 2017. Patil says in order to achieve this, the bank is starting digital social media marketing campaign soon, will be implementing phone banking delivery channel and offer consistent customer experience across all touch points. “This, I believe, is lacking in other cooperative banks,” says Patil.

gOOd BUSineSS pROSpeCTS The total deposits collected by the bank by Q4, 2015-16 was `2445 crore which is yoy growth of 12.81%. Loans sanctioned stood at `1547 crore, registering yoy growth of 22.1%. The NIM of the bank during the last 3 financial years had declined slightly: 4.79 in 2013-14, 4.43 in 2014-15 and 4.21 in 2015-16.

The bank caters to small scale industries, housing sector and small business enterprises. The outstanding loans from SME businesses were `289 crore, from housing sector `285 crore and small business enterprises `253 crore as of March 2016.

Patil is confident in saying: “Because

of the major state government initiative for start-ups, SME loans prospects are good and due to reduction in lending rate, people who were holding on their decision to buy home will now open up to buy their dream homes. Therefore, we see housing loans are going to get a boost.”

The bank has tie-ups with Oriental Insurance Company, TATA AIG General Insurance Company and National Insurance Company. The bank’s income from third party product sales increased from `13.44 lakh in 2014-15 to `26.81 lakh in 2015-16. Patil also maintains that as part of the bank’s targets for 2016-17, deposits will be increased to `3000 crore and advances to be `2000 crore.

iT iniTiaTiveSThe bank had added several new technology-based services and products in the last 12 months. These include eKYC, eLobby as well as security information and event management system (SIEM). “We are planning to add a number of new applications, namely, online account

opening platform, centralized account opening by way of implementing a business process management application, IVR based phone banking service, CRM, UPI and BBPS,” says Patil. One of the salient aspects of the technology infrastructure of the bank is that all critical devices and the server are in high availability mode. The bank has made fall back connectivity a r ra n ge m e n t f o r u n i n t e r r u p t e d connectivity to all the branches, and implemented IP V6.

Says Patil: “As part of the technology enhancement, we are now evaluating cloud based application and data center hosting model. We are also planning to host our near DR on cloud, add storage space, upgrade server capacity and consolidate existing fleet of servers.” The bank has implemented Infrasoft Omni as its CBS. It has 7 staff members as part of the IT infra team and 25 members in the application team. The capex to opex ratio for the IT budget is 60:40. The bank has been using NCR and Diebold brand of ATMs. It has provided CCTV and physical guards at all the ATM locations. There is also an online monitoring technology system from Securens at 12 locations.”

npaThe bank’s gross NPA 2.49%. According to Patil, the bank has been following a strategy whereby there is total transparency at the time of loan application scrutiny, regular follow ups and penal provision for late payment of instalments.

Patil is of the view that cooperative banks have a large scope for penetration into unbanked areas. “Because of the strong presence and scope for penetration, the future of cooperative banking in the country is good. Only those will remain in the competition which will adapt technology early and deliver digital banking services to their customers.”

[email protected]

Ranjit Patil, chairman, Gopinath Patil Parsik Janata Sahakari Bank, recounts the progress of the bank’s network and business:

Ranjit patil is now evaluating cloud based application and data center hosting model

GP Parsik Bank targets `50 bn for 2016-17GP Parsik Bank targets `50 bn for 2016-17

P.O. Kottakkal, Pin - 676503, Malappuram Dist., Kerala Tel: 0483 2742246, 2740033, 2744501 Fax: 2740034

www.kottakkalurbanbank.com, email: [email protected] Code: UTIBOSKCU78 (Fifth Digit Zero)

Exemplary Achievements...

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People Friendly Bank

Dr. U.A. Shabeer Chairman

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•No 1 Special Grade Bank with 22 branches•Agricultural & non Agricultural Loans•Fully Core Banking, SMS Banking, Mobile Pass Book •Western Union Money Transfer•RTGS, NEFT Facility•Locker facility at all branches•Insurance coverage for deposits•ATM facility


Cooperative

Rajarambapu Sahakari Bank, which today has 44 branches and 22 ATMs, proposes to open three new

branches in 2016-17 in Navi Mumbai, Shirval and Jaysingpur. It may also open 4 new ATMs during the financial year. The bank has its own training center for imparting training to its employees and had taken in professionals to man various departments. Rajaram Jakhale, MD of the bank, says the bank intends to add 50,000 new customers in 2016-17 even as it recorded a very good per employee business during the past year. The bank has also been able to seed 10% of the accounts with Aadhar numbers.

rising loans volumesThe bank has a total customer base of over 4.5 lakh as of Q4, 2016-16. It has also maintained good CRAR and CD ratio for a number of years. NIM during 2013-14 was 3.08%, 3.02% in 2014-15 and 3.67% in 2015-16. Its deposits in 2015-16 stood at `1323 crore while loans extended were of the order of ̀ 996 crore. The top 3 sectors receiving loans from the bank are trading, manufacturing and construction. Jakhale feels that there are very good prospects in these sectors during 2016-17 as there is higher demand from the market. The total number of loans approved was 18,107 in 2013-14, 16,125 in 2014-15 and 13,979 in 2015-16.

iT iniTiaTivesThe bank has been trend setter in inducting information technology. It added cash deposit machines, pass book printing machines, eKYC, CKYCR, DMS, NACH, H-H RTGS and NEFT during the past one year. Says Jakhale: “We intend

to add new technology based services and products in the next one year, including mobile banking, IMPS, UPI and EMV Chip ATM cards, utility payment gateways and internet banking. We will establish new connectivity with RBI, procure blade servers for implementations of new interfaces, additional parallel connectivity in branches to improve branch network performance and systems for internet banking and mobile banking.”

CBs replaCed The bank had been using a DOS based TBA software withof Rajarambapu Sahakari Bank was based on DOS operating system using GIST card to enable use of Devanagiri script. It has now implemented CBS using InfrasoftTech’s solution. Jakhale says the bank has 12

members as part of the IT infrastructure team and it provides all support for technical issues, network and data center infrastructure. The bank maintains a ratio of 6:1 as capex to opex ratio for IT budgets, he added.

aTm & CardsThe bank uses NCR brand ATMs, which are available 12 hours every day. It has been getting the ATM cards printed from MCT Manipal. “We have been having approximately 50 transactions per ATM per day at our ATMs, while 400 transactions at other banks’ ATMs. We have provided RuPay debit cards to our customers,” says Jakhale.

npaThe gross NPAs of Rajarambapu Sahakari Bank in 2013-14 was `24.65 lakh (1135 defaulted accounts) while this rose to `26.26 lakh in 2014-15 (1338 defaulted accounts) and came down to `24.15 lakh in 2015-16 (821 defaulted accounts). Jakhale says 2016-17, the bank is trying to further bring down the NPAs, which is below 5%. The bank is putting in place effective recovery mechanisms during the current financial year for this purpose.

The bank wants to achieve a total business of `2950 crore in 2016-17. “Our total deposits are expected to be `1650 crore and total loans `1300 crore by 31 March 2017 and we will expand our branch and ATM network too.

“ G r o w i n g c o m p e t i t i o n w i t h technology adoption in the banking industry is a big challenge and a great opportunity for the cooperative banks in India,” concludes Jakhale.

[email protected]

Rajarambapu Bank targets business of `2950 cr in 2016-17Rajaram Jakhale, MD, Rajarambapu Sahakari Bank, speaks about the growth plans of the bank for 2016-17:

rajaram Jakhale is focusing on branch and ATM network expansion

Sri. P.V. BalachandranPresident

Sri. P. GopakumarGeneral Manager

WAYANAD DISTRICT CO-OPERATIVE BANK LTD. Head Office: Kalpetta North Ph: PBX 04936 209955 Fax: 04936 205080 Email: [email protected]

Lowest Net NPA (2.50%) Best in Agri-allied loan disbursal

Dream wheel loan for the youth

OD facility for Govt. employees

Pragathi Financial Literacy Centre

Farmers Clubs with NABARD assistance

Mobile ATM van with NABARD assistance

PACS development cell with NABARD assistance

Autorickshaw loan scheme for self employment

Business growth in 2016-16.20%

More number of branches in district

Implemented Core Banking project

Outstanding performance in SHG, JLG & KCC loans

She Fashion & She Scooter loans for ladies

NRE/NRO account for non-resident Indians

FCBA 2016 conference-cum-expo-cum awards will be held at Pride Plaza Hotel, Aerocity, New Delhi. Banking Frontiers has made special arrangements with the hotel for the stay of the bankers. Rooms are available on single and double occupancy.

Charges for stay at Pride Plaza Hotel (only for coop banks)

Single Occupancy for 2 nights: `11,000 all inclusiveDouble Occupancy for 2 nights: `13,000 all inclusiveThe above includes stay, breakfast, lunch & dinner. It does not include pick-up or drop. Any other service will have to paid by the banker directly to the hotel. Checkin: 11.30 am on September 17 Checkout: 11:30 am on September 19

Please block your calendar. Airlines offer special discounted fares from time to time. As soon as any such special fare is announced, you may take the benefit of the same. Please book the morning flight so that you can reach New Delhi in time.

Please make a cheque or DD for the appropriate amount in favor of Glocal Infomart Pvt Ltd and courier it to:

Bharat Solanki / Stalin Saldhana / Naresh Katiya

D-312, Twin Arcade, Military Road. Marol, Andheri (E),

Mumbai 400059 Tel: + 91-22-29255569 / 29250166

Details for online payment:Beneficiary Name: Glocal Infomart Pvt Ltd A/C No : 450301010036295Bank : Union Bank of IndiaBranch : Bhavani Nagar, Marol MaroshiIFSC Code : UBIN0545031

Banking Frontiers invites you to FCBA 2016Frontiers In Cooperative Banking Awards

FCBA2016


N E W S Pix

Bank of Baroda opened its 28th Baroda Express 24x7 in Pune. Mayank Mehta, ED of the bank inaugurated the facility, which will provide various banking facilities through automatic machines with minimum human intervention

The State Bank of India and the World Bank signed an agreement for a facility of $625 million for supporting Grid Connected Rooftop Solar Program. Karnam Sekar, DMD, SBI, and Onno Ruhl, country director, World Bank India signed the documents in the presence of Arun Jaitley, finance minister, Piyush Goyal, minister of state for Power, Coal, New and Renewable Energy, and Jim Yong Kim, president, World Bank Group

The new head office of Chittorgarh Urban Coooperative Bank was inaugurated recently. Satish Marathe, Savrakshak of Sahakar Bharati, was the chief guest on the occasion

Central Bank of India has entered into a MoU with Nepal Bank for Cent Nepal Mitra remittance facility for Nepali citizens in India. B.V. Joseph, AGM, CBI, Narendra Prasad Pokharel, incharge-Remittances, NBL, Yogesh Rai, and Sanjeev Kumar, DGMs, CBI, Arbinda Shrestha, DGM, NBL, R. Govind, GM, CBI, and G. Bhasker, DGM, at the function

People Track

61 Banking Frontiers July 2016 Banking Frontiers July 2016 PB

Vishwanathan dy. governor at RBI

S.K. Roy resigns as chairman of LIC

Gunit Chadha leaves DeutscheGunit Chadha, CEO- Asia Pacific, Deutsche Bank, is leaving the bank. The bank’s co-CEO John Cryan, in a note to the staff, said Chadha will be leaving the bank. Cryan said the bank is grateful for his contributions in developing the bank’s presence across 16 countries in Asia Pacific. This is the second high profile exit from the bank. Earlier, the bank had announced that Quintin Price, head of its asset management business and a member of the management board is also quitting. Chadha, 54, had joined Deutsche Bank in 2003 as the CEO for the global lender’s India business. In 2012, he was elevated to co-CEO for its Asia Pacific business and later in October 2015 was appointed in his current role as CEO for the Asia Pacific, in charge of 16 regions in the region.

N.S. Vishwanathan is the new deputy governor at the Reserve Bank of India. He replaces H.R. Khan, who has retired. Vishwanathan was an ED at the central bank and he was chosen by the Financial Sector Regulatory Appointment Search Committee headed by the cabinet secretary - the first appointment to be done through this panel. He will look after department of banking regulation, department of cooperative banking regulation, department of non-banking regulation, Deposit Insurance and Credit Guarantee Corporation, Financial Stability Unit, inspection department, risk monitoring department and secretary’s department. A career central banker, he joined RBI in 1981. His areas of expertise include regulation and supervision of banks, non-banking finance companies and cooperative banks, currency management, foreign exchange and human resources management. He was on a three-year deputation to the Bank of Mauritius, as director (supervision).

Sudarshan Sen is EDSudarshan Sen has taken over as the new ED at the Reserve Bank of India. He will look after department of banking regulation, department of cooperative banking regulation and

department of non-banking regulation. He holds an MBA in international banking and finance from the University of Birmingham, UK. He also holds a master’s degree in Mathematics from the University of Delhi.

S.K. Roy, chairman, Life Insurance Corporation of India has resigned, almost 2 years before the end of his five-year tenure. Roy, who had joined LIC in 1981, took charge as the chairman in June 2013. Although the exact reason for his decision to quit is not clear,

reports suggested he was quoting personal reasons for his action. He has officially tendered his resignation and the finance ministry will send his resignation to the appointments committee of the Union Cabinet for approval.

Brijesh Mehra joins RBL BankRBL Bank has engaged Brijesh Mehra, who was heading the Royal Bank of Scotland - India as head of corporate banking. He will be responsible for developing and managing relationships with large corporates, multinational corporations, public sector undertakings, financial institutions, government departments and local administration, the bank said. Mehra, who has over three decades of experience of working for foreign lenders, will be reporting to the MD and CEO Vishwavir Ahuja. RBL Bank has also changed key portfolios of its senior managers, with R. Gurumurthy, who was heading corporate banking taking over as head of risk and governance and elevation of Neeta Mukherjee as the chief credit officer.

New governor for CBSLDr Indrajit Coomaraswamy, a renowned economist, has taken over as the governor of Central Bank of Sri Lanka. He replaces Arjun Mahendran whose 17-month tenure was clouded with allegations of insider trading in treasury bonds. Coomaraswamy has been with the central bank, finance ministry and

London-based Commonwealth Secretariat. The new governor has a daunting task of restoring the credibility of the bank and also in uplifting the morale of its staff. Unlike the previous two incumbents – Amit Invar Cabal and Mahendran - who were political appointees (apart from their academic qualifications) - Coomaraswamy was selected purely on his academic achievements.

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