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SCENARIO
YES
BANK: Starting a Greenfield Bank - - Rana Kapoor
Yes
Bank has recently started its operations and is adopting latest
technology to provide innovative and customized solutions
to its customers. The bank is concentrating more on fee based
services. To maintain the quality level, it is concentrating
on six-sigma levels of quality and ISO certification. The
bank has a pool of experts and a vision to champion Responsible
Banking.
© 2005 Yes Bank. All Rights Reserved.
STRATEGY
Innovation
in Banks: Need to Push Full Throttle Ahead - - Manoranjan Sharma
Increasing
knowledge among societies is forcing the banks to adopt international
best practices to remain in the business. Important dimensions
of change are market, customers, competition, technology and
society. Banks should focus beyond technologies and geographies
to accelerate growth. Indian banking sector has adopted many
dynamic innovations but still some more are needed like risk
management, e-Commerce,m-Commerce etc. The new game requires
new strategies with an accent on innovation and organizational
transformation.
© 2005 IUP. All Rights Reserved
STRATEGY
Survival
is the Mother of Innovation - - BNV Parthasarathi
Banks
can provide innovative products and services to their corporate
or retail customers only when creative people are in place
along with latest technology. Such people might provide innovative
ideas to customers and banks. By converting their acceptable
ideas into reality, banks can get an edge to compete effectively
in the global village. Indian banking is also changing its
shape rapidly by adopting innovative technology, products
and services.
© 2005 IUP. All Rights Reserved
STRATEGY
Payment
and Settlement System in India: Vision 2005-08 - - Onkar Singh
Major
problems associated with current payment and settlement systems
in India are their regionality and different local practices.
These are also roadblocks for the product innovation in payment
system. RBI has planned a national entity for payment and
settlement system which will be helpful in new product innovation
besides increased awareness among customers about various
channels available for payment and settlement system.
© 2005 IUP. All Rights Reserved
CREDIT
MANAGEMENT
SME
sector needs Innovative Lending Approach under Basel II - - SK Kar
According
to RBI's roadmap for Basel II adoption by 31st March 2007,
banks can use standardized approach for credit risk. This
may affect negatively on small and medium enterprises (SMEs)
sector because loan to SMEs whose credit ratings are not good
require 150% risk weight. But, according to RBI's regulation
about retail portfolio (Feb 2005), banks can classify loans
to SMEs as retail loan and can assign risk weight of 75% if
a prescribed criterion is fulfilled. Advanced approach to
credit risk offered by Basel II also gives the concession
of 25% risk weight for loans to small sector.
© 2005 IUP. All Rights Reserved
CUSTOMER
SERVICE
Innovation
in Customer Service in Banks - - Sharad Kumar
Satisfied
customers are the best guarantee for stability and growth.
Customers will be satisfied only when the banks provide the
customized and innovative products and services at reasonable
cost. This article focuses on the kind of services provided
by developed countries and level of innovative services provided
by Indian Banks. Many innovative services are currently available
from Indian banks like e-banking, ATMs, anywhere banking etc.
But there is a vast scope for improvement.
© 2005 IUP. All Rights Reserved
PRODUCT
Novel
Islamic Banking and Insurance Products - - Martin Mankabady and Vinod Joseph
With
the increase in wealth in many Islamic states, a number of
Muslims are now seeking to invest this wealth in products
which comply with Islamic law i.e., the Shari'ah. This has
encouraged the development of a vibrant Islamic investment
market. Banking and insurance institutions are offering new
products to reap the benefit. India, with the world's second
largest Muslim population, has been slow to offer such Islamic
products. but it is only a matter of time before banks and
insurance companies wake up to this potential market.
© 2005 Lawrence Graham LLP (www.lawgram.com). All Rights Reserved.
PRODUCT
Future
Banking Lies in Prepaid Debit Cards - - C Rama Gopal
Prepaid
cards are poised to capture the opportunities available in
the world's financial market as the global financial industry
embraces electronic payments by displacing cash and cheques.
Prepaid debit cards are experiencing significant growth to
replace personal cheques, gift certificates, vouchers, and
travelers cheques. Major reason for choosing the prepaid card
by customers is its convenience and security. Indian banking
is also embracing this opportunity gradually.
© 2005 IUP. All Rights Reserved
TECHNOLOGY
Investing
Innovatively in Technology: If in Doubt, Invest in Technology - - Harsh Bisht
Rs.
1,20,000 cr have been spent over the last four years on IT
in the Indian Banking and Financial Services sector. There
are approximately 200 active banksleading the technology brigade
in India. And future budgets, upward of Rs. 150-200 cr per
bank are not unheard of. This article elaborates on how these
decisions are made. What is the impact of this expenditure?
Has the Rs. 1,20,000 cr generated an equivalent value? How
long will the payback be? How can it be hastened?
© 2005 Eicher Consultancy Services Limited. All Rights Reserved.
TECHNOLOGY
Risks
and Benefits of Adopting Innovative Technology - - Pramod Gupta
Banks
are adopting new technology to get the benefit of speed, efficiency,
customized product development and increased volume of activity.
New technology has direct impact on the operational cost of
banks. It is very difficult to measure the net benefits from
the adoption of new technology. Major risks associated with
new technology are agency conflict, integration with old system
and cost control problems.
© 2005 IUP. All Rights Reserved
RISK
MANAGEMENT
Compliance
Risk: The principles and best practices - - T Vijay Kumar
Compliance
risk is a new risk for banks. Basel committee has also identified
it as one of the major risks facing banks today. Compliance
starts at the top and is effective if the board of directors
and senior management lead by example. Failure to comply with
banking supervisors could result in widespread negative effects
on the bank. Banks can adopt the principles issued by Basel
committee for effective compliance.
© 2005 T Vijay Kumar. All Rights Reserved.
RISK
MANAGEMENT
Liquidity
Risk Management: A Strategic Tool for Banks - - BK Swain
Liquidity
risk is one of the important risks banks face during their
operations. The analysis of liquidity profile in the banks
needs to be done on both static as well as dynamic basis.
This article discusses critical factors to avoid any eventual
liquidity crisis. These factors are maturity ladder, core
deposit, projected cash flow, management of liquidity sources,
contingency plans and asset liability approaches.
© 2005 IUP. All Rights Reserved
RURAL
BANKING
Nabard's
Innovations in Rural Development - - AK Bandyopadhyay
To
achieve rural development and provide easy finance to the
rural areas, NABARD has initiated several actions. Major among
them are: exploring innovative investment opportunities, creating
infrastructure base, creating leadership and entrepreneurship,
educating the rural masses, building sound network of rural
financial institutions and building research and development
activities.
© 2005 AK Bandyopadhyay. All Rights Reserved.
RURAL
BANKING
Paradigm
Shift in Rural Banking A Case of Microfinance Movement in
India Through SHG-Bank Linkage Program - - A Ramanathan
Nabard
is trying to free the small rural borrowers from the clutches
of local money lenders by providing loans to them at affordable
rates through 750 NGOs and 3,64,000 client managed self help
groups. Average loan size provided by these SHG is less than
$22. Recovery performance is considered good. These savings
led self help group program of Nabard is really an innovative
one.
© 2005 IUP. All Rights Reserved.
QUALITY
CONTROL
Adopt
"5S Principles" in Bank and Improve Productivity - - A Lakshminarasimha and S Murali
5S
principles are well accepted by manufacturing industry and
are successful in enhancing productivity. These are proper
arrangement, orderliness, cleanliness, clean up and discipline.
By adopting these good practices banks would be in a position
to achieve quantum increase in productivity both in the front
and back-end operations. These principles would also enable
banks to be more customer focused.
© 2005 IUP. All Rights Reserved.
REGULATION
Microfinance
Institutions and Microinsurance: Can regulation play an Innovative
role? - - S Rajagopalan
According
to IRDA, an insurance company that enters the Indian market
must write a minimum percentage of insurance policies in rural
sector. To make the insurance companies to reach the gross
root level, in its recent concept paper IRDA has come out
with a model in which micro finance institutions (MFIs) will
work as agents of insurance companies and provide the target
market for micro insurance. In return, MFIs will earn commission
on business
© 2005 IUP. All Rights Reserved
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