Banks As Financial Banks As Financial SupermarketsSupermarkets

-B.V.Raghunandan,-B.V.Raghunandan,

SVS College, Bantwal SVS College, Bantwal

Karnataka Bank Staff Karnataka Bank Staff Training College, MangaloreTraining College, Mangalore..

November 15, 2006November 15, 2006

Nationalisation and its Nationalisation and its Impact on BanksImpact on Banks

• Network of BranchesNetwork of Branches• Universal AccessUniversal Access• Implicit Brand EquityImplicit Brand Equity• Professional EmployeesProfessional Employees• Coverage of Both Urban and Rural Coverage of Both Urban and Rural

AreasAreas

Problems CreatedProblems Created

• Non-Performing AssetsNon-Performing Assets• Asset-Liability MismatchAsset-Liability Mismatch• Capital InadequacyCapital Inadequacy• Limited Investment OptionsLimited Investment Options• Regulated Interest RegimeRegulated Interest Regime• Too Much Of Regulation Too Much Of Regulation • Impact of Political CompulsionsImpact of Political Compulsions

Events That Changed the Events That Changed the World of Indian BankingWorld of Indian Banking

• Financial Sector ReformsFinancial Sector Reforms• Opening Up of Insurance SectorOpening Up of Insurance Sector• IT Absorption by Indian BanksIT Absorption by Indian Banks• Money Market ReformsMoney Market Reforms• Reverse Merger of ICICI into ICICI BankReverse Merger of ICICI into ICICI Bank• Establishment of Clearing Corporation Establishment of Clearing Corporation

of Indiaof India• ATMs Emerging as a Business Model ATMs Emerging as a Business Model

RequirementRequirement

• Employee Oriented OrganisationEmployee Oriented Organisation• A Separate BPO ArmA Separate BPO Arm• Longer Business Hours with ShiftsLonger Business Hours with Shifts• Appointment of ProfessionalsAppointment of Professionals• Subsidiaries & Strategic Business UnitsSubsidiaries & Strategic Business Units• Comprehensive Training to Employees Comprehensive Training to Employees

on Financial Markets, Services and on Financial Markets, Services and Derivatives Derivatives

Requirement… Requirement… ContinuedContinued

• Economic ResearchEconomic Research• Changed Mindset for Seamless Changed Mindset for Seamless

Remittance FacilitiesRemittance Facilities• A Bigger and Better Lobby for A Bigger and Better Lobby for

Banking IndustryBanking Industry• More Freedom In Choosing ActivitiesMore Freedom In Choosing Activities• Long Term Profitability vis-a –vis Long Term Profitability vis-a –vis

Short-Term ProfitsShort-Term Profits

Emerging Opportunities Emerging Opportunities AreasAreas

• Housing FinanceHousing Finance• Sale Of Insurance ProductsSale Of Insurance Products• Sale of Mutual Fund Units & Exchange Sale of Mutual Fund Units & Exchange

Traded FundsTraded Funds• Depository ParticipationDepository Participation• Merchant Banking Merchant Banking • Venture Capital FinancingVenture Capital Financing• Sale of Pure Gold Coins & Custodianship of Sale of Pure Gold Coins & Custodianship of

Gold ETF Gold ETF • Factoring ServicesFactoring Services• Leasing FinanceLeasing Finance• ATM Enabled Business ATM Enabled Business

Corporate Clients’ NeedsCorporate Clients’ Needs

• Accessing Markets through Merchant Banker, Accessing Markets through Merchant Banker, Underwriter, Brokers, Banker To The IssueUnderwriter, Brokers, Banker To The Issue

• Registrar & Transfer AgentsRegistrar & Transfer Agents• Custodial ServicesCustodial Services• Stock BrokingStock Broking• Depository ParticipationDepository Participation• Venture CapitalVenture Capital• Factoring ServicesFactoring Services• Cash Management ServicesCash Management Services• Mergers & AcquisitionsMergers & Acquisitions

Corporate Clients’ Needs…Corporate Clients’ Needs…continuedcontinued

• Sale & Lease BackSale & Lease Back• Foreign Exchange NeedsForeign Exchange Needs• Loan SyndicationLoan Syndication• Leveraged Take-Overs & Buy-OutsLeveraged Take-Overs & Buy-Outs• Wholesale BankingWholesale Banking

Functions of A Merchant Functions of A Merchant BankerBanker

• Issue of SecuritiesIssue of Securities• Mergers & Mergers &

AcquisitionsAcquisitions• Financial Financial

RestructuringRestructuring• Management of Management of

Investment TrustsInvestment Trusts• Portfolio Portfolio

ManagementManagement

• Loan SyndicationLoan Syndication• Corporate Advisory Corporate Advisory

ServicesServices• Custodial & Custodial &

Depository Depository ServicesServices

• UnderwritingUnderwriting• Investment Investment

BankingBanking

Banks As Merchant Banks As Merchant BankersBankers

• Economic researchEconomic research• Creation of a Database of Corporates Creation of a Database of Corporates

of the Globeof the Globe• Appointment of Legal, Managerial, Appointment of Legal, Managerial,

and Accounting Professionalsand Accounting Professionals• Continuous Working Out of Continuous Working Out of

Scenarios for Financial Scenarios for Financial Restructuring and M & ARestructuring and M & A

Banks & Secondary Banks & Secondary MarketsMarkets

• Stock Broking & Stock Broking & Commodity BrokingCommodity Broking

• Depository Depository ParticipationParticipation

• Stock Lending & Stock Lending & BorrowingBorrowing

• Internet TradingInternet Trading• Issue of Credit Issue of Credit

CardsCards

• Custodial ServicesCustodial Services• Lending on the Lending on the

Security of StocksSecurity of Stocks• Investor Investor

Grievances CellGrievances Cell• Auction Site for Auction Site for

Unlisted Shares Unlisted Shares

Banks & Venture CapitalBanks & Venture Capital

• Database of ClientsDatabase of Clients• Contacts with Contacts with

Various Industrial Various Industrial CustomerCustomer

• Professional Professional Expertise in Fund Expertise in Fund managementmanagement

• Ability to Provide Ability to Provide Any Financial Any Financial ServiceService

• Contacts With Contacts With Mutual Funds & Mutual Funds & Fund Houses and Fund Houses and High Networth High Networth IndividualsIndividuals

Banks & SMEsBanks & SMEs

• Depository for Depository for SMESME

• Debenture TrusteeDebenture Trustee• Custodial ServicesCustodial Services• Credit Rating Credit Rating

ServicesServices• Advisory Services Advisory Services

• Portfolio Portfolio ManagementManagement

• Market makingMarket making• Advisory Services Advisory Services

on Derivativeson Derivatives

Banks & Mutual Funds and Banks & Mutual Funds and ETFsETFs

• Fastest Growing MarketFastest Growing Market• Risk- Shy InvestorsRisk- Shy Investors• Tie-Up for Sale and RedemptionTie-Up for Sale and Redemption• Asset Management ServicesAsset Management Services• Network of Branches and ATMsNetwork of Branches and ATMs• Custodians of Gold ETFCustodians of Gold ETF

BancassuranceBancassurance

• Only a Distribution FunctionOnly a Distribution Function• Premium Collection Premium Collection • Investor CounsellingInvestor Counselling• Claim SettlementClaim Settlement• Customer RelationCustomer Relation• Almost Acting As a BPO ArmAlmost Acting As a BPO Arm• Avoidance of Opening of Branches Avoidance of Opening of Branches

by Insurance Companiesby Insurance Companies

ATMs-The Super Giant ATMs-The Super Giant BankerBanker

• All the Functions of a BankAll the Functions of a Bank• A Strategic ModelA Strategic Model• Universal Network SharingUniversal Network Sharing• Payment of Utility BillPayment of Utility Bill• Reservation of Every Kind Reservation of Every Kind • Subscription and Redemption of Mutual Subscription and Redemption of Mutual

Fund UnitsFund Units• Subscription to Money Market Instruments ?Subscription to Money Market Instruments ?• Subscription to Primary market issues ?Subscription to Primary market issues ?• Purchase and Sale of Shares ?Purchase and Sale of Shares ?

Retail BankingRetail Banking• Consumer FinanceConsumer Finance• Issue of Credit CardsIssue of Credit Cards• Sale of Mutual Fund UnitsSale of Mutual Fund Units• Sale Of Insurance Products & Settlement of Sale Of Insurance Products & Settlement of

ClaimsClaims• Payment of Every KindPayment of Every Kind• Reservations of Every KindReservations of Every Kind• Buying & Sale of Foreign ExchangeBuying & Sale of Foreign Exchange• Applying to Primary IssuesApplying to Primary Issues• Stock Broking Stock Broking

Retail Retail Banking….continuedBanking….continued

• Tax Planning & Tax Payment Tax Planning & Tax Payment • Investment CounsellingInvestment Counselling• Purchase & Sale of Government Purchase & Sale of Government

Bonds Bonds • Purchase & Sale of Money Market Purchase & Sale of Money Market

InstrumentsInstruments• Accreditation, if CIBIL takes it upAccreditation, if CIBIL takes it up

Agriculture & Rural Agriculture & Rural FinanceFinance

• Self Help Groups Self Help Groups • Micro CreditMicro Credit• Commercial AgricultureCommercial Agriculture• Organised RetailOrganised Retail• Distribution of Insurance ProductsDistribution of Insurance Products• Social Banking Social Banking

ChallengesChallenges

• HR ProblemsHR Problems• Alliance with Insurance Companies: Alliance with Insurance Companies:

Nature of AllianceNature of Alliance• Capital AdequacyCapital Adequacy• Change Management Change Management • Technology AbsorptionTechnology Absorption• Contradictions of RBI & Ministry of Contradictions of RBI & Ministry of

FinanceFinance

TrendsTrends

• Commoditisation of ServicesCommoditisation of Services• Mergers & Acquisitions for Scale of Mergers & Acquisitions for Scale of

OperationOperation• Tie-Ups: For ATMs, OIC, Bank of India & Tie-Ups: For ATMs, OIC, Bank of India &

Union Bank of India, Karnataka Banks’ Union Bank of India, Karnataka Banks’ AllianceAlliance

• Banks Emerging as a Giant Financial Banks Emerging as a Giant Financial Machine for the Entire CountryMachine for the Entire Country

• Impersonal Banking through Internet & Impersonal Banking through Internet & ATMs ATMs

Thank YouThank You