Month: June 2018

B Sriram assumes charge as MD and CEO of IDBI Bank

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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B Sriram today assumed charge as Managing Director and CEO of IDBI Bank, according to a regulatory filing.

Sriram was appointed MD and CEO in place of Mahesh Kumar Jain who recently took charge as deputy governor of the Reserve Bank of India (RBI). Sriram has been working as the MD (Corporate and Global Banking) in SBI since July 2014.

The board of Insurance Regulatory and Development Authority of India (Irdai) yesterday permitted Life Insurance Corporation (LIC) to increase the current stake from 10.82 per cent to 51 per cent in IDBI Bank.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Indianomics: Have started the process of digitising, says Bank of Baroda’s Chairman Ravi Venkatesan

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Bank of Baroda has started the process of digitising and  from September  the bank branches will be paperless, said Ravi Venkatesan, chairman of the bank.

“If you are a new customer walking into our bank and you want to open an account, it is now less than 10 minutes you walk out with your account activated and your debit card,” he said

Managing directors of PSU banks need to be given five-year tenures, Ravi Venkatesan, in an exclusive interview with CNBC-TV18, said that the boards of public sector banks need to be empowered to fix governance in these banks.

Edited Excerpts:

Q: What have you done for Bank of Baroda? What do you think you have accomplished?

What we have accomplished is something that time will tell. We have started many things but they are still very much a work in progress and frankly, it is something others should say rather than me. I will perhaps talk about what it is we have tried to do. I started and in the very first week, there was this big issue which was called the Ashok Vihar scam.

It was a money laundering scam where people had exploited our bank and at that time PS Jayakumar had not joined, there was only one ED on board and that was the start of the adventure. Pretty soon Jayakumar came and what we decided is, there a whole host of legacy issues – NPAs, frauds and all bunch of stuff. Then there are a whole set of other issues which going forward are even more important – how do you prevent these things from happening again because they seem to happen with some regularity? How do you create a bank which is able to compete with State Bank of India and with the best of the private sector? How do you catch up on technology so that you don’t get disrupted by the fintech companies etc? We felt that the obsession with stressed assets shouldn’t distract us from this agenda and frankly I have been more focused on these issues.

So, one of the first things we started to do is rethink the architecture of the bank. We said if you look at a contemporary bank anywhere in the world, they have got what is called a frontend-backend architecture.

So your branches that serve customers but all the transaction processing is done in the backend. We said this is obviously happening for some good sound reasons. So we said we will migrate to that and we created a whole shared services subsidiary and took every process from account opening to loan processing, trade finance transactions, digitised them and put them in that subsidiary and this is still a work in progress.

However, it is going to be probably the single most lasting change when it is accomplished.

Q: I particularly had great expectations and I would assume a lot of people, investors from your combination because you come from Microsoft, you come from Infosys, you have come with a lot of technology experience and you came exactly at a time when fintech took over banking. So how much of that fintech could you incorporate in Bank of Baroda?

First we should talk about tech and fintech as a subset of that. When you talk about tech, as I said we started by digitising and centralising processes, we have taken all the paper-based systems and automated them, by October that should be complete. So, you go into a Bank of Baroda branch from September there shouldn’t be any paper. We have implemented tab banking. So if you are a new customer walking into our bank and you want to open an account, it is now less than 10 minutes with Aadhaar and you walk out with your account activated and your debit card.

You can dream about fintech but if you don’t have the core technology platform that is contemporary it is a problem. So we had to upgrade our core banking system which coincidentally was from Infosys and that proved to be a non-trivial transition, we upgraded our mobile banking, internet banking, we have implemented 40 enterprise applications, just enormous amount of work.

On fintech, in particular, we decided this is culturally very different, it requires a different mindset and we have to partner with fintechs and not compete with them. So, we set up fintech vertical and now we have 25 partnerships which are delivering even at Bank of Baroda’s scale a significant amount of business.

You can do all this but technology moves pretty fast. So in two years, you are obsolete again. How do you prevent it from happening? We have created an IT subsidiary and brought in Accenture and IBM as our partners to make sure that this bank stays contemporary.

Q: Have you been able to restrict the number of windows through which frauds can happen because that is the big problem that we are suddenly faced with, with the Punjab National Bank fraud. From your and PS Jayakumar’s experience could you identify the windows through which these seep in?

A: It is a great question particularly in a bank which has a larger surface area, that is a big deal. BoB is India’s most international bank, we have some 70 million plus customers and now you have got all these devices which are also accessing the bank, so it is a great question.

Our approach has rested on three things, one is, of course, centralising, automating and putting them in a shared service centre and separating responsibility. The second thing we have done was to set up a dedicated fraud risk management unit which reports into a third ED who doesn’t have any of the businesses and they are using technology to be able to continuously detect frauds more quickly etc.

The digitisation of the bank is actually the most interesting thing because it is throwing up a huge amount of transaction data and you can completely change the audit process. Today the audit process happens after the fact, it is incredibly manual, it happens in a decentralised way in the branches. Now what you can do is, be preventive, use analytics and you can do it in real time. So, all this thing reduces, probably will never eliminate, the possibility of fraud.

Q: Would you say that now chances of this kind of a fraud – Punjab National Bank fraud passed through so many fingers – it slipped through internal auditor, it slipped through the external auditor, it slipped through bank’s elementary things like change of personnel at a regular level, as well it passed a lot of external tests as well, would you say that in Bank of Baroda, such a thing is now less likely?

A: Yes less likely, one of the things I am expected to do is chair the high-value fraud committee of the bank’s board. I come from a manufacturing background, way before Microsoft, I spent 16 years of building engines and in manufacturing what you do is every time there is a defect, you don’t just fix the defect, you go back and look at the system that produced the defect and make the changes. So we have tried to bring that mindset into each of the frauds. What is the fraud? What is the modus operandi and have we gone back and fixed the system so that this modus operandi is defeated? I think we have moved the needle.

Q: No one can perhaps say never again?

A: Yes but knock on wood, we have made considerable progress.

Q: So you would be able to by August 13, put down a set of standard operating procedures (SOPs) that can be employed in other banks as well?

A: Exactly, I think the whole point of running experiments like BoB is to see what worked, see what didn’t work and why and try and replicate that in the system and I hope wise people do that.

Q: What is your sense is this an experiment worth repeating -getting two private sector people at the highest level, would you say it is a successful experiment?

A: First of all, what the government has decided to do and is a good thing is separate the role of chairman and managing director across the board and that is so sensible.

Now, what you do about the managing directors because there are now several Chairmen who are not very dissimilar to me. I think the crucial role is of the CEO of the bank. I don’t want to say that you should only go to the private sector, I think there is plenty of good talent inside as well.

The crucial issue is to pick the best possible people for the job and give them enough time – three years is not enough time. We (the whole banking system) think CEOs need to have five years to see things through because it is ‘the’ crucial issue.

If you look at why does the State Bank of India so significantly outperform the rest, a lot of it has to do with the fact that they operate under a separate Act, which allows them to grow their own talent – their CMD, their joint-MDs they all come from within and therefore they are able to create a coherent culture, they are able to see through strategic change and transformation which can take five years and seven years.

I think that is an incredibly important thing and I would hope that the government can find a way to replicate this not just at BoB but others as well.

Whether this can be done with government majority ownership is a big question.

The government was mooting the idea of consolidating public sector banks. There was the talk of merging BoB with IDBI Bank, OBC, and Central Bank. Your thoughts?

These were speculative statements. I am unaware of the latest thinking within the government, but from a purely BoB perspective, a merger at this time particularly with a weak bank would not be prudent. In fact, uncertainty about this is one of the factors that is depressing the stock price which indicates that shareholders are also not in favour of a merger.

However as a banking system, India needs fewer, better capitalised and better run PSU banks so consolidation is probably inevitable. But the sequence of events matters. It would be best to start by addressing the fundamental governance and talent framework first, then hive off the bad loans into one or more ARCs, recapitalise and finally merge a few banks.

In other words, consolidation must be part of a broader strategy to fix the banking system- it is not a strategy or panacea in itself.  My sense is that fortunately the idea that merging two weak banks to create a strong one has faded and good sense will prevail.

You referred to the Nayak Committee report. This report urged the government to bring down its stake below 50 percent. Now the biggest private sector bank is also facing regulatory scrutiny. Your thoughts on privatisation as an answer to the PSU banking problems.

Privatisation does not guarantee good governance. However, there are three crucial facts. First, PSU banks have been steadily losing market share to private sector banks and collective share will likely dip below 60 percent in just a few years; margins and operating profits have also been declining.

In other words, they are not competitive. Second, the latest Financial Stability Report from RBI shows that 85 percent of the frauds happened in PSU banks even though they account for 65 percent of the sector. Therefore, they are systematically more accident-prone.

Finally, unlike private banks, PSU banks have had to repeatedly be bailed out by the taxpayer.  These things are happening not by accident but by design because the system of governance and talent management is ineffective. If the government will not reform these, the decline will accelerate.

The Nayak Committee report suggested a thoughtful glide path of reforms which would eventually lead to at least some banks being privatised. What is happening now is privatisation by default rather than by intent as PSU banks hemorrhage market share and capital.

The answer is not to abandon banking to the private sector as we’ve done with healthcare and education; that would be a huge mistake. For the foreseeable future, India will need a few well run PSU banks like SBI.

What is needed is to think through the banking architecture that India will need and develop a strategy to get there. Perhaps this will happen if the next election returns a government with a clear majority.

Q: If you are asked to stay on for another term, will you?

A: Actually, there was an informal request that I do but unfortunately I have made a commitment to start my next adventure in September, and so much as I would like to see things through, it will fall to someone else.

Q: Can you tell us what the next venture is?

A: Not yet.

Q: So that is for the next interview?

A: Yes, never waste an opportunity to talk again.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Fifa World Cup: The underrated underdogs

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The term underdog is underrated. Teams or individuals, barely making it to the top category, are usually cajoled with such a reference. However, time and again, such underdogs have pipped the greatest giants en route their march to victory. And, this year’s FIFA world cup has been no different.

When Lionel Messi, arguably one of the modern-day greats of the game, stepped up to take a penalty against Iceland, he probably took the goalkeeper, Hannes Halldorsson, a bit too casually. Well, for a five-time Ballon d’or winner, it was different this time around. Result: the goalie, a player by the day and a film director by the night, blocked it. Messi was stunned, so were the fans. The underdog had won his battle.

Another five-time Ballon d’or winner, Cristiano Ronaldo, could not put it past the goalkeeper of Iran from the spot. This was the same Ronaldo who had scored from the penalty spot against one of the best goalkeepers of the game, David de Gea. But he couldn’t get it past Alireza Beiranvand, a 25-year-old goalkeeper, who played football in free time, while working as a shepherd. Here also, the Portuguese striker, might have taken Beiranvand a tad too casually. Once again, the underdog stole the show.

Minnows Hitting The Bull’s Eye

Right from the first match, there were goals galore in this year’s edition, except in the match between France and Denmark. With 122 goals, the group games saw an average of 2.5 goals per match. One cannot trivialise the performance of the underdogs in the group stages, not by any means. Minnows such as Japan, South Korea, Senegal, Russia, Nigeria, Iceland, Denmark, Serbia and Morocco found the back of the net at least once in their matches.

Some of these teams were unfortunate to have drawn with heavyweights. While Iran was pitted against favourites Spain and Portugal, Nigeria and Iceland had to battle Argentina and Croatia. Despite heading home after the first round, one cannot dismiss the fight they put up against the stalwarts of the game. Iran gave a tough fight to Spain and Portugal. Spain had a narrow escape against Iran in their final group game.

With 149 clearances, tackles and saves, Iran had the best defence in the group matches. The case was pretty much similar with Morocco as well. An injury-time goal helped the former champions Spain to end their match against Morocco in a draw, while a lone goal from Ronaldo led Portugal to victory.

Similarly, images of German fans after their match with South Korea spoke volumes about the gravity of their loss. The Asian giants knocked out the reigning champions with two injury-time goals.

Messi’s moment of brilliance gave Argentina a breather against Nigeria, while goals from Coutinho and Neymar in the stoppage time helped Brazil to defeat Costa Rica and keep their campaign alive.

Dark Horses Running Wild

The game play of the golden generation of Croatia, and the performances of Belgium have been the highlights of this tournament so far. Croatia, after finishing third in their first world cup in 1998, had a dismal run until Russia. They even failed to qualify for the 2010 world cup in South Africa.

Led by Luka Modric, the team has been on a roll. It is one of the three teams which took home all the 9 points up for grabs in the group stages, along with Belgium and Uruguay.

Their show against Argentina was one of the best so far in this tournament. With the fantastic midfield-duo of Modric and Ivan Raktitc, this team has the firepower to upset some of the favourites going into the knockout stages.

Belgium, with arguably the best team the country has ever produced, can be another giant killer. They defeated England in the final match of the group stage. However, both the teams had rested their key players.

If Romelu Lukaku and Eden Hazard take their form to the knockout stages, it might well be sleepless nights for others. Latin American teams such as Uruguay and Colombia are also doing well this time around. Both teams have the arsenal to upset any opponent on their day.

Over Reliance

Until now, it has been a one-man show for most of the so called “favourites”. The likes of Messi, Ronaldo, Philippe Coutinho, Harry Kane and Isco have been overburdened with the task of firing in every match. That’s too much to ask, isn’t it? It is football, a team game, not a single form of combat.

Despite missing sitters from the penalty spot, Messi and Ronaldo are the go-to-men for both Argentina and Portugal. While, Ronaldo has netted four times in three matches, Messi struck gold against Nigeria in their final group match to take Argentina to the knockout stage. So was the case with Isco of Spain and Kane for England.

Defending champions Germany were not even a shadow of their real selves, making it a bit easier for the underdogs. For Germany’s exit, we might term it as the curse of the champions, but their performance was equally disappointing. Touted to be one of the favourites to lift the trophy in Russia, the Die Mannschaft finished bottom of their group after a miserable campaign.

Issues related to team selection and internal problems also affected their performance. Other favourites such as Brazil, Argentina, Spain and France somehow managed to qualify for the knockout round, but their performance was far from convincing. They have to pull up their socks if they are to win the trophy. Otherwise, a thrashing by the dark horses is on the cards.

Lack of coordination in building up to an attack was one of the important factors that affected most teams. Tinkering with the squad, and making too many changes in the tactics affected their performances as it broke the flow of the game and did not allow the team to gel well in the conditions.

The battle between an underdog and the sports’ greatest is a competition between the heart and the mind. This year, the heart trumped the mind, even if most of them failed to qualify for the second round. They showed it once again that is not the size of the dog in the fight but the size of the fight in the dog that matters.

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KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Government planning to celebrate July 1 as ‘GST Day’

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The first year of GST has been an example to the world of the readiness of the taxpayers to be a partner in the unprecedented reform in Indian taxation, the finance ministry said today. The government will celebrate July 1, 2018, as ‘GST Day’ to mark the first anniversary of the new indirect tax regime.

Goods and Services Tax (GST) was rolled out in the intervening night of June 30 and July 1, last year, in a ceremony held in the Central Hall of Parliament.

“Union Minister for Railways, Coal, Finance & Corporate Affairs Piyush Goyal will preside over as the Chief Guest of the event and Minister of State for Finance, Shri Shiv Pratap Shukla will be the Guest of Honour,” the finance ministry said in a statement.

GST subsumed over a dozen local levies and transformed India into “one nation, one Tax” and binds the country into an Economic Union, it added.

“The first year of GST has been an example to the world of the readiness of the Indian taxpayer to be a partner in this unprecedented reform of Indian taxation,” the ministry said.

It said the introduction of e-way (electronic way) bill is a “monumental shift” from the earlier ?Departmental Policing Model’ to a ?Self-Declaration Model’.

“It envisages one e-way bill for movement of the goods throughout the country, thereby ensuring a hassle free movement of goods throughout the country,” the ministry said.

Transporter of goods worth over Rs 50,000 have to generate an e-way bill and show it to GST inspector, if asked. The inter-state e-way bill system was introduced on April 1. As regards intra-state e-way bill, it was rolled out in phases from April 15.

“GST will have a multiplier effect on the economy with benefits accruing to various sectors such as exporters, small traders and entrepreneurs, agriculture and industry, common consumers,” the ministry said.

Any new change is accompanied by difficulties and problems at the outset, it said.

“A change as comprehensive as GST is bound to pose certain challenges not only for the government but also for business community, tax administration and even common citizens of the country,” the ministry added.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

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Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Match preview: Ronaldo-Suarez face off in Battle Royale in Sochi

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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Portugal and Uruguay meet in Sochi in an intriguing Round of 16 encounter. Portugal narrowly avoided defeat and subsequent elimination to Iran while Uruguay qualified comfortably, one of three teams to win all their Group Stage games. Structurally, both teams have similarities such as an experienced defence, a misfiring midfield, and a potent strike force making it a tight match up. Both teams, moreover, retain the core of the side which led them to continental success with big match temperament abundant.

In a controversy filled second half against Iran, Portugal were in danger of being eliminated by former national team coach, Carlos Queiroz. The midfield did not seem to control the game and suffered from a wave of counter attacks. Had Sardar Azmoun converted his one on one chance in the dying stages of the game, the story in front of us would have been completely different. Portugal were extremely lucky to win against Morocco as well, surviving two strong penalty appeals as they somehow managed to thwart the Moroccan attack. Fernando Santos will be aware that his team hasn’t convinced thus far and will look to iron out the kinks in midfield to emerge successful against a robust Uruguay. Similar to Argentina, Portugal face issues in controlling the midfield tempo. Filled with box to box and holding midfielders, Portugal need a midfielder who can make offensive passes while simultaneously ensuring the quick rotation of the ball through short balls. Moutinho, the veteran midfielder, is one player in the Portuguese roster who can fulfill these functions with aplomb, with his absence from the starting XI clearly showing in the below par show against Iran. Santos may opt to pair Moutinho with defensive midfielder William Carvalho in a 4-4-2 formation. Joao Mario in all likelihood should start as  a wide midfielder on the left, while Ricardo Quaresma should retain his place in right wing after a positive display and wonder goal against Iran. The strike partner for Cristiano Ronaldo is another conundrum, with both Goncalo Guedes and Andre Silva failing to score. Against a physical Uruguay, Santos may start with Milan striker, Andre Silva.

After lacklustre performances against Egypt and Saudi Arabia, Oscar Tabarez managed Uruguay wrung changes to this formation and the starting lineup against Russia. From a 4-4-2, he shifted to a 3-5-2, giving starts to Nahitan Nandez, Diego Laxalt and Lucas Torreira. Torriera was impressive at the base of midfield, breaking attacks, and releasing the likes of Suarez and Laxalt into space. Laxalt was a welcome change from the solid but unadventurous Caceres at left wing back, providing the assist for Suarez’s goal. Getting Cavani on the scoresheet was another positive for the Latin Americans, as they look well set to challenge Portugal. Tabarez will bank on his young midfield trio of Vecino, bentancur, and Torriera to win the midfield battle and expose the likes of Pepe and Jose Fonte in one on one situations against the strike pairing of Edinson Cavani and Luis Suarez.

Player to Watch

Portugal

Ricardo Quaresma: In an area filled with inverted wingers who prefer to cut inside, Quaresma is a refreshing anomaly, a player who is comfortable playing as an out and out winger, confronting the opposing wing back directly, and as a result providing an extra dimension of width to the attacks. After many a false start, Ricardo Quaresma at the age of 32 finally looks settled for both club and country, delivering on years of promise. A virtuoso performance from Quaresma will test the young wingback, Laxalt, and help Portugal in dictating the game according to their terms.

Uruguay

 Martin Caceres: Versatility in football can prove to be a boon or bane for the player concerned. In the case of Caceres, his versatility has proven to be both. Since he can play anywhere across the defence, as well as play in holding midfield, he has not been able to hold a starting spot in teams such as Southampton and Juventus. Frequent injuries too have not helped Caceres’ cause in terms of club football. But for the national team, it is this very malleability which renders him to be held in high regard. Against an in form Cristiano Ronaldo, and the threat of Silva and Quaresma, it will be the tactical awareness and canny of Caceres which may crucial to thwarting Portuguese ventures.

Predicted Lineups

Portugal: 1-4-4-2

 Rui Patrício- Cédric, Pepe, José Fonte, Guerriero- Quaresma, Moutinho, Carvalho, João Mário- André Silva, Cristiano Ronaldo

 Uruguay: 1-3-5-2

Muslera- Nández, Giménez, Godín, Cáceres, Laxalt- Vecino, Torreira, Bentancur- Suarez, Cavani

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow

Tata Steel to create a joint venture with Thyssenkrupp

KV Prasad Jun 13, 2022, 06:35 AM IST (Published)

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The board of Tata Steel has approved the terms to create a 50:50 joint venture of Tata Steel’s European steel businesses and Thyssenkrupp AG.

The Board has also adopted resolutions for the signing of the definitive agreement. This follows the signing of a memorandum of understanding(MoU) in September 2017, Tata Steel said in a BSE filing.

According to the filing, the formal execution of the definitive agreements is expected shortly.

The proposed JV between two of the world’s major steel companies will combine Thyssenkrupp’s and Tata Steel’s European steel operations to create Europe’s second-largest steelmaker after steel tycoon Lakshmi N Mittal’s ArcelorMittal.

Elon Musk forms several ‘X Holdings’ companies to fund potential Twitter buyout

3 Mins Read

Thursday’s filing dispelled some doubts, though Musk still has work to do. He and his advisers will spend the coming days vetting potential investors for the equity portion of his offer, according to people familiar with the matter

KV Prasad Journo follow politics, process in Parliament and US Congress. Former Congressional APSA-Fulbright Fellow