BANK’S BUSINESS; Few Suggestions. Part…..3.

In part 1(BANK’S BUSINESS; Few Suggestions. PART….1) and 2(BANK’S BUSINESS; Few Suggestions. Part….2) of the blog, different suggestions were put forth for the banks for improving the health of their institutions. Three remaining suggestions are discussed here under:-

  • Creating different layers of income

Banks shouldn’t depend on only one type of income i.e from interest on loans and advances. They have now many other fields available for creating different layers of income such as (1) Bank insurance (2) Selling of mutual funds (3) Trading of shares          (4) Providing Depository services to clients(financial services for clients) (5) Making treasury operations more efficient (6) Better cash management (7) Providing fee-based services to various Govt. departments, institutions and Corporates for collection taxes, fees or their bills (9) Providing cash management services to big religious trusts, Corporates, railways, airlines, and metros etc.(10) Providing consultancy services for different activities (11) Providing non-fund based facilities such as letter of credits and bank guarantees (12) Acting as bankers to The Issue and underwriting the Issue of shares etc. etc.

Earning income is important but plugging its leakages by exercising effective control over all types of capital and revenue expenditures too is very important. ‘Spend where necessary but strictly avoid wastage’ is a mantra for an efficient control system on revenues.

All these services are very lucrative but require properly trained and dedicated manpower to handle these portfolios.

  • Training and upgrading of knowledge.  

Providing proper training and upgrading of knowledge of the staff at the operational levels is very necessary. It is generally observed that the staff doesn’t take the training seriously and consider deputation to training as a pleasure tour on paid holidays. This concept/notion is very dangerous. Providing training to staff is a very expensive exercise and in addition to heavy expenses, it takes a toll on the quality of services which get affected during the absence of the concerned staff from their active duties. We all know that it is only the men in the armed forces who take their training very seriously because they are aware of the fact that they would be the first to suffer the consequences of not taking the training seriously.

Both these aspects of heavy expenses and non serious attitude towards training can be taken care of by following the ‘DEEP SE DEEP’ model of providing training. There is no dearth of prime training institutions in the country and abroad. A few intelligent officers from the senior scales can be deputed for training to a particular institute for training in a particular field with a clear understanding and instructions that they will follow the schedule of training very seriously, have discussions with the experts who provide training in order to remove doubt if any and come well prepared to impart the same training to other fellows in the bank on their return. These officers so trained be required to impart training to other staff members in batches at the bank’s own offices/Premise/training centres in the evening for a few hours. The staff so trained will have to follow the same routine of providing training to other staff and so on. This model will save expenses, make the trainees accountable and experts, and create in-house expertise in many fields of activities. This will also create a lasting bonding amongst various cadres of staff as well as a sense of belonging for the institution. Bank’s training centres can be made self-sustaining and income generation  units by providing training to staff of other banks in specialised fields at a suitable cost/fees.

  • Customer meets with higher level executives.

A good leader is a good listener. People want to be listened to. They feel relieved and delighted once they are listened to. They feel that they are cared for and are important. Bank’s top brass should therefore not ignore this aspect of public feeling at any cost and shouldn’t feel shy of holding customer meets and face criticism if any with a good spirit. This creates long lasting bonds with clients as they feel that they are important. Any cutoff from the masses is suicidal for the banks. Banks, therefore, need to remain in touch with their customers, listen to them and implement the good suggestion forwarded by them.

BANK’S BUSINESS; Few Suggestions. PART….1

Banks these days are under tremendous pressure for mobilizing resources as well as for credit dispensation in social as well as in other financial sectors. A very simple definition of banking is, ‘ TAKING MONEY, GIVING MONEY AND MAKING MONEY’. Banks don’t have their own funds. They take it from the public, lend again to the public, and in the process make money for themselves. They have to ensure that the procedure of running the bank is safe, secured, and a win-win situation for all the stakeholders. Seven things are very important for the banks to run their business in a secure, profitable, and growth-oriented manner;-

  1. A sound resource base.
  2. A proper credit dispensation under well-trained staff (Bank’s NPAs. Causes and Remedies). in a  secured, lucrative, and risk-free market.
  3. A robust follow-up and effective recovery. management system. Management of NPAs -Some recovery techniques.
  4. An intelligent inspection and supervision control DEFECTS IN BANK AUDITS AND INSPECTIONS system.
  5. Non banking/para-banking activities for creating different layers of income.
  6. A systematic system for training and skill development of staff.
  7. Regular contact with the client/public and listening/understanding and appreciating their point of view for a better brand building.

For creating resources Banks try to attract deposits from the public by tailoring different products suiting the capacity, requirement, and affordability of the public. Various products are made by the banks with an eye on a particular segment of society. Fixed deposits with different maturities for those who can afford to deposit fixed sums for a fixed period of time. Monthly deposits for those who can’t afford a fixed sum but can spare a comparatively lesser amount every month. Schemes for pensioners, senior citizens, Students, girl child, salaried class, industrial workers etc. etc. Current accounts for the business and trading community. Saving accounts for general savings etc. etc.

Although scores of schemes for resource mobilisation are launched by the controlling offices yet at the operating level only a few traditional schemes are given preference and the rest find a very little attention, with the result that many target groups remain untapped. Operational level, therefore, needs to focus on all the schemes and try to sell all the products available in their kitty. They should fix scheme/products wise targets of all the products launched by the bank. Staff members should be assigned individual targets of all such schemes and the controlling office should keep an eye on such programmes and encourage staff in meeting their targets

There are some very attractive schemes especially for salaried persons, professionals, self-employed, students, and even the business people who can accumulate wealth by taking benefit of monthly deposit schemes which unlike the saving bank account which has a very low rate of return. These schemes have yields available for the term/fixed deposit. Even the last few installments in such accounts attract the higher rate of interest equivalent to that of fixed deposits. For example, if a normal branch by its concerted efforts opens 1000 such accounts in a year with an average monthly deposit of Rs.5000 per month will mobilise 6 crores of rupees in one year. The figure will go up to 18 crores in 2nd year if another 1000 accounts are added in that year, If the same momentum of opening 1000 account with an average of Rupees 5000 per month is maintained for five years, the deposit growth would go to 36 crores in the third year, Rs.60 crores for the 4th and Rs 90 crores for the 5th year. A normal bank with say 1500 very effective branches will this way mobilize resources to the tune of Rs.135000 crores in just five years. Is not this growth pattern most attractive? and does this not deserve to be paid very focussed attention at all operating levels?.

For the promotion of all such schemes, all that is needed is awareness amongst the staff which further to be spread amongst the public by organizing awareness camps, special deposit mobilization fortnights with individual targets for all the staff members who have to work as a team. Rewards and appreciation letters can be offered to the staff for exceeding their targets as well as for topping in their district. or zone or in the bank as a whole.

Newspaper or other paid media advertisements are a costly affair and the public doesn’t pay much heed to such advertisements. It is advisable to distribute printed pamphlets to the public during awareness camps, through the services of newspaper vendors and also by talking to walk-in customers. A WORD OF MOUTH IS MORE EFFECTIVE THAN A WRITTEN PASSAGE.

One thing lacking in the modern time branches is proper visibility of the products in the shelf of the banks for its clients/public and the rates at which these are available. We presume that the client or the public knows everything but the fact remains that the sale persons at the counters themselves are not aware of the products available in their stores and their attractive features themselves. This needs serious remedial action by the main leadership of the banks………….(To be continued in part 2)

 

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