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Longterm Profitability of Banks -B.V.Raghunandan


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describes the need for ensuring long-term profitability rather than window-dressing the accounts for quarterly reporting

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Longterm Profitability of Banks -B.V.Raghunandan

  1. 1. Long-Term Profitability of Banks -B.V.Raghunandan, SVS College, Bantwal Karnataka Bank Staff Training College, Mangalore. August 27, 2007
  2. 2. Indian Banking Scenario <ul><li>1970-90 Social Banking </li></ul><ul><li>Narasimham Era: Liberalising the Banking Atmosphere (CRR, SLR and Interest Rates) </li></ul><ul><li>1994 Onwards:Financial Sector Reforms putting Pressure on Banking Sector </li></ul><ul><li>Basel Norms & Tier I Capital </li></ul><ul><li>Post 2000: Shorter Settlement Cycles in Stock Market, More Pressure on Banking Sector </li></ul>
  3. 3. 2003- Landmark in Indian Banking <ul><li>Reverse Merger of ICICI into ICICI Bank </li></ul><ul><li>Developmental Banking getting shifted to Commercial Banking from Financial Institutions </li></ul><ul><li>Banks Emerging as Financial Supermarkets </li></ul><ul><li>IT Initiative of RBI </li></ul><ul><li>ATMs Assuming Major Functions of banking </li></ul>
  4. 4. Commercial Role of Profit <ul><li>Profit for Financial Reporting </li></ul><ul><li>Profit to Raise Tier I Capital </li></ul><ul><li>Profit to Create a favourable market Image </li></ul><ul><li>Profit for Continuous Upgradation of IT Systems </li></ul><ul><li>Profit for Organic Growth </li></ul><ul><li>Profit for Inorganic Growth </li></ul>
  5. 5. Redefined Role of Profit <ul><li>Profit with Financial Inclusion </li></ul><ul><li>Profitability and Priority , no longer rivals and are Complementing Friends </li></ul><ul><li>Rural Penetration with Profit </li></ul><ul><li>Usage of Biometrics to Attract the Illiterates </li></ul><ul><li>Branchless Banking </li></ul>
  6. 6. Long Term Profit <ul><li>Life Time Customers </li></ul><ul><li>Free Services for Conventional Banking </li></ul><ul><li>Seamless Remittance Facilities </li></ul><ul><li>Sacrifice of Short Term Profit </li></ul><ul><li>Avoiding Services that will Put Customers to Misery in the Long Run </li></ul>
  7. 7. Immediate Agenda <ul><li>Shift Routine Work to ATMs </li></ul><ul><li>Delegation of Power </li></ul><ul><li>Using services of CIBIL and CRISIL </li></ul><ul><li>Research into Financial Standing of Customers </li></ul><ul><li>Work Out Scenarios of Wealth Management of Customers </li></ul>
  8. 8. Bancassurance <ul><li>Simple -Tie Up for Marketing </li></ul><ul><li>Marketing Products of Many Insurance Companies </li></ul><ul><li>Understanding Every Insurance Product Well </li></ul><ul><li>Predetermining the Suitability of Insurance Products to various Category of Customers </li></ul>
  9. 9. Mutual Funds <ul><li>Agency For Multiple Funds so as to Give a Choice </li></ul><ul><li>Mutual Funds With Consistently good Track Record </li></ul><ul><li>Systematic Investment Plan (SIP) </li></ul><ul><li>Diversification Between SIP and RD </li></ul><ul><li>Advising about Investment Horizon </li></ul><ul><li>Timing of Investment in case of Bulk Investment </li></ul>
  10. 10. Depository Participation <ul><li>Banks Are in the Best Position </li></ul><ul><li>Need to Bring in Flexibility in Procedure </li></ul><ul><li>Use Mobile Banking </li></ul><ul><li>Use Internet banking </li></ul><ul><li>Use Telephone As a Tool to Have a Wider Footprint </li></ul>
  11. 11. Stock Broking <ul><li>A Profitable Activity </li></ul><ul><li>Investor Education </li></ul><ul><li>Redressal of Grievances </li></ul><ul><li>Investment Research </li></ul><ul><li>Investment Counselling </li></ul><ul><li>More Funds Come the Bankers’ Way </li></ul>
  12. 12. Requirement <ul><li>Upgrading IT Skills </li></ul><ul><li>Acquiring Advanced Knowledge in Financial Services and Financial Management </li></ul><ul><li>Establishing a Branch Level Library for the Employees ( Publications on Banking, Risk Management, Financial Management and Services, Derivatives etc) </li></ul><ul><li>Subscribing to Business Journals and Magazines </li></ul><ul><li>Branch level Training Programmes </li></ul>
  13. 13. THANK YOU
  14. 14. Sale of Gold Coins <ul><li>Eligibility to Be the Custodian of Gold ETF </li></ul><ul><li>Agency for Gold ETF </li></ul><ul><li>Consider to Have a Foothold into Commodities Market </li></ul><ul><li>Discretionary Purchase of Gold Coins Back </li></ul>