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"HAPPY BIRTHDAY-13TH OCTOBER 2017(FRIDAY) JASWINDER PAL SINGH SENIOR SPL ASSISTANT DON KALAN Jag Bhushan SR. ASST. (BANKING) AMBALA CANTT Jag Bhushan SR. ASST. (BANKING) AMBALA CANTT Om Parkash Sikri DEPUTY MANAGER ISMAILA BALDEV RAJ Addl. Associate 1 HANSLI BRIDGE, BATALA Ramesh Kumar SR. ASST. (BANKING) SME BRANCH, CHANDIGARH VEENA PACHPORE Addl. Associate 1 SEC 35-C, CHANDIGARH Ashok Kumar Goyal DEPUTY MANAGER ZONAL OFFICE HARYANA-GENERAL BANKING Kuldeep Kumar Sharma DEPUTY MANAGER ZONAL OFFICE JAMMU Jaswinder Singh SENIOR SPL ASSISTANT TRIPRI PATIALA Dalbir Singh SR. ASST. (BANKING) UDHAMPUR Ambika Chugh ASSISTANT MANAGER AMBALA CITY Sushma Gupta SR. ASST. (BANKING) CHANDI MANDIR Sushma Gupta SR. ASST. (BANKING) CHANDI MANDIR Parveen Kumar Sharma ASST. GEN. MANAGER NRI JULLUNDER HEM SINGH Addl. Associate 1 KASAULI MANJINDER SINGH RANDHAWA ASSISTANT MANAGER ANAJ MANDI, SIRHIND MANDI ASHUTOSH JAIN Addl. Associate 1 ADB MALERKOTLA DEEP CHAND MANAGER LOHAKA Raj Kumar Bhagat DEPUTY MANAGER BHOGPUR SATISH KUMAR Addl. Associate 1 AMBALA ROAD, ISMAILABAD SATISH KUMAR Addl. Associate 1 AMBALA ROAD, ISMAILABAD MUNISH BALI Addl. Associate 1 BANKING OPERATIONS DEPARTMENT-HEAD OFFICE PATIALA Nitin Soni DEPUTY MANAGER ZONAL OFFICE HARYANA-GENERAL BANKING SANJEEV BHATIA ASSISTANT MANAGER BEESLA Sudhir Kumar DEPUTY MANAGER REWARI Gurupdesh Kaur CUST. ASST. (BANKING) ROPAR PAYAL MEHTA Addl. Associate 1 GHUMAR MANDI, LUDHIANA AMIT RAJ DEPUTY MANAGER HO PATIALA -OUTREACH/FINACIAL INCLUSION DEPTT Nitin Sharma DEPUTY MANAGER(S) ROHRU AMRITA DEEPAK Addl. Associate 2 JALANDHAR ZONAL OFFICE-RO-I JALANDHAR -ADMIN JASWANT SINGH ASSISTANT MANAGER S.A. JAIN COLLEGE, AMBALA CITY Vikas Goyal CUST. ASST. (BANKING) MANSA PANKAJ KUMAR TAMTA DEPUTY MANAGER NOORMAHAL ROAD ,PHILLAUR SIMRANJEET SINGH CUST. ASST. (BANKING) SPECIALISED AGRI COMM BR, PATIALA AVINASH KUMAR Addl. Associate 1 ABLU RIGZIN GURMETH ASSISTANT MANAGER ALSINDI Deepshikha . CLERICAL - ON PROB. MOHALI (S.A.S. NAGAR) Rohit Dutta CUST. ASST. (BANKING) NEAR KHUSHI TRADES, SECTOR-11, PANCHKULA ANKIT . ASST. (BANKING) N.G.M. JIND Rohit Dutta CUST. ASST. (BANKING) NEAR KHUSHI TRADES, SECTOR-11, PANCHKULA ANKIT . ASST. (BANKING) N.G.M. JIND SUNIL KUMAR ASST. (BANKING) GHAGA Sandeep Dhillon ASSISTANT MANAGER AMRITSAR Ram . Kishan CUST. ASST. (BANKING) NAKODAR ROAD, JALANDHAR Amandeep Sharma CLERICAL - ON PROB. NANGAL BHUR *** table>

Thursday, 5 February 2015

Rebooting India’s banking structure

The flurry of applications received by the Reserve Bank of India (RBI) for setting up new payments and small banks is a heartening development and must be seen in the context of how the Indian banking structure is changing.

There are two broad ways to define shortcomings and failures of a banking system. One is to look at the number of banks that have failed to sustain. In this regard, India’s banking system has been pretty robust even if one includes cases such as the Madhavpura Mercantile Cooperative Bank or the Global Trust Bank. The fact is that there have been very few collapses. The other way to look at shortcomings is to look at the extent of financial inclusion (defined by the spread of financial institutions among citizens) and financial depth (defined by the percentage of credit to gross domestic product in the economy). In this regard, India still has some distance to travel.

The reason for both these outcomes, successes and limitations, has been the same—a conservative central bank. RBI has been exceptionally cautious in granting bank licences. The first big thrust of new permits, 10, were given in 1994, soon after the advent of liberalization. The intention was to infuse competition in a banking system that had been weighed down by inefficient and slothful public sector banks (PSBs). Then, in 2004, two more new banks were allowed on an experimental basis. Despite the improvements due to private banks, estimates suggested that close to 90% of small businesses had no links with formal financial institutions. Worse still was the fact that 60% of the rural and urban population did not even have a functional bank account. So in 2014, two more banks were allowed with the aim of promoting financial inclusion.

It has been argued that this banking deficit cannot be set right by piecemeal attempts. Moreover, as the Nachiket Mor committee report laid out in January last year, it is not just more banks but banks with a differentiated licence that are the need of the hour.

India’s attempts at improving financial inclusion suffered from a serious flaw: each solution was seen as the silver bullet, capable of resolving the myriad needs of a huge variety of consumers. From stressing on co-operative banks to bank nationalization to self-help groups, regional rural banks and business correspondents, all delivered only partially. The reason: each of these new channels were trying to clone each other instead of being focused on a niche business opportunity. In the process, the banking system accumulated losses. The story of bad loans induced by priority-sector lending in public sector banks is a well-documented example.

Against this backdrop, the push towards payments banks (which will only deal with deposits and remittances, not credit) and small banks (which are commercial banks but with a sectoral focus among the unserved sections of the economy) is the foundation of an emerging banking structure in the country. It will have vertical differentiation (based on the type of service it offers such as deposits or transfer or credit) and horizontal differentiation (based on a sectoral focus).

There are at least three reasons why this strategy can be expected to work.


 One, there is huge unmet demand in India and any delivery mechanism which covers the business costs will become sustainable due to the sheer volume of transactions. The case of mPESA in Kenya is a good example of a payments bank. According to the Mor panel report, over two-thirds of Kenya’s population now uses this service and about 25% of Kenya’s GDP flows through it. What’s more, while it started as a money transfer platform, it has now become a vehicle through which other products such as bank deposits, loans and prepaid electricity vouchers are being launched.

Two, the Indian economy has seen an upsurge of some crucial infrastructural enablers that make the environment more hospitable for innovative models. These include the massive penetration of mobile telephony, the coverage of unique identity numbers for residents and the progressive network of broadband across the country. 


Lastly, the new structure is acutely cognizant of the incentives in the system. For a traditional government-run bank, with high fixed costs, it makes little sense to chase the business opportunity that lies in funding small and medium enterprises. 

In contrast, some microfinance institutions did roaring business. These setups chose the right technology and service delivery models and that is why one finds several mobile service providers lining up for a payments bank licence. Apart from the banking side of operations, such a licence also allows them to hold on to their client base, especially in rural areas. 

With growth and economic mobility, it is time India saw banking as another fast-moving consumer good—different firms should be free to compete at different levels and tailor their products as per the changing needs of their client base.

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