The thick, dusty ‘financial institution ebook’ — weighing over a stone — not on time the experience returned domestic almost all working days. Bank bosses of the ’70s and 80s preferred perfect trial stability, even though it intended maintaining their workforce up all night. Junior bank officials were made to account for each lacking anna or paisa before the ledgers were locked again within the safe.
“Even a 2-paisa shortfall had to be reconciled at the stop of the day… The ‘day ebook’ stored us in workplace until eight–9 pm those days,” reminisces Arundhati Bhattacharya, former chairman of State Bank of India.
Cross-checking counterfoils, sharp pencil ticks against individual entries and poring over humongous numbers of day by day transactions for that missing paisa past due into the evening should have irked Arundhati then, however the probationary officials’ education she obtained at SBINSE -1.Seventy six % — hyped to be the quality schooling ground for any aspiring banker -– organized her to take rate of India’s biggest bank 4 decades later.
“We have been lucky to get excellent schooling lower back then… We were all generalists and it ideal the enterprise we did. We knew a piece approximately every banking feature,” she says.
Public region banks rotate their personnel even now, across functions and geographies. Their common sense: position rotation allows junior bankers to learn most banking features on-the-job, and is also a measure to mitigate chance. New generation personal banks, but, do not trust in moving around their employees loads; they like to spawn area specialists and no longer generalists like they did in antique-world banking.
The pertinent question then is could there be sufficient well-rounded bankers when the old guard bows out in some years’ time? The MD/CEO positions of several personal banks will come up for renewal over the following couple of years. Poster-boy bankers including Aditya Puri of HDFCNSE -zero.28 % Bank and Romesh Sobti of IndusInd Bank might retire quickly; ICICI’s Chanda Kochchar and Axis Bank’s Shikha Sharma bowed out within the ultimate area of 2018.
“Senior bankers of present times have learnt from old-timers who believed in prudent approaches of banking… This breed is dwindling rapid,” believes K. Cherian Varghese, who commenced his banking profession in 1970, and went on to move Union Bank of India, Corporation Bank and South Indian Bank.
“New-age bankers aren’t skilled well nowadays… There’s no grooming whatsoever. That age-old practice of elders hand-preserving their juniors isn’t always there anymore,” Varghese adds.
CHANGES AT THE HELM
Aditya Puri took a price of HDFC Bank in September 1994 and has been on the helm for over 24 years. Sobti of IndusInd Bank has held the MD-CEO chair for over ten years. Shikha Sharma and Chanda Kochchar have led Axis Bank and LICENSE -zero.20 % Bank for more than nine decades while Uday Kotak spearheaded Kotak Mahindra Bank since its inception in early-2000. Puri and Sobti would vacate their nook room offices in 2020, as they would contact the RBI-mandated CEO retirement age of 70. Kotak has a few extra years at the pinnacle provided the bank’s shareholders, and RBI wants him there.
“Some of those banks may also see modifications at the pinnacle after playing 20 – 25 years of control continuity… Am now not saying the modifications might be drastic, and therefore risky; however there could be a lot of modifications in techniques whilst new leaders take price,” says Ashish Gupta of Credit Suisse, a global investment firm.
Gupta and his team had positioned out a document hinting adjustments at the helm of a few personal banks, however did not encompass any ‘advisory bit’.
“Banking (in India) is practiced inside a tight regulatory framework. There are inbuilt tactics… But individuals do matter. The incoming CEO may additionally have his plans for the financial institution he inherits,” Gupta explains.
The views of maximum bankers and banking analysts, whom ET consulted, coincide with Gupta’s analyzing of the scenario. They expect nearly all banks with new leaders (on the helm) to exchange little by little, over some time. And those adjustments could be primarily “approach-related,” and not actually around each day operations.
Now there’s no denying the truth, numerous bank MDs have taken important choices at numerous factors in time that might modify the path of banks they constitute. Take, as an example, Aditya Puri of HDFC Bank; when other private banks decided to expand distant places for extra commercial enterprise submit-2006, Puri decided to go sluggish, and used the interlude to develop HDFC’s retail e-book.
When non-public banks determined to lend extra to corporates, Puri held himself lower back by using lending most effective to satisfactory company borrowers – although it supposed lesser advantage-unfold or slower boom of the asset e-book. Likewise, when M. Venugopalan emerged to steer the Bank of India in 2003, he urged his officers to grow the retail e-book. The concept becomes to create a fresh blend of a company and retail business for the age-vintage bank. The working example being, although banking is notably regulated, and within a decent framework, new leaders have the leeway to adjust the unknown direction of the financial institution.
“Every new chief would love to depart his very own footprint…,” says Shyam Srinivasan, MD-CEO of Federal Bank.
“Now if the brand new chief is employed internally, there may be some continuity in method. If the hiring is external, a few stage of path-correction is forthcoming,” he adds.
Industry-watchers foresee strategy-associated modifications whilst new leaders take price. Well-run banks which includes HDFC won’t see a whole lot deviation from its tried-and-tested operational rules inside the brief-run; but over a time frame, the leader replacing Puri might also want to stamp his personal mark.
“No CEO could undo the best paintings of their predecessors… But they will make a few properly-meaning changes,” says Arundhati. “See, while a brand new CEO is appointed, the regime of the past will now not preserve,” she provides.
GENERALISTS AND SPECIALISTS
According to veteran banker PH Ravikumar, chairman of Bharat Financial Inclusion (formerly SKS Microfinance) and one of the founding contributors of ICICI Bank, the trend of moulding “vicinity professionals” was commenced by way of private banks. Till 1995, banking in India became extra a generalist characteristic -– with maximum officials knowing a chunk about the entirety.
These days maximum mid-degree bankers (of private banks) focus on one sphere of banking. It might be anything — as numerous as treasury control to company banking, retail banking, compliance or credit. Very not often non-public bankers get all-spherical working publicity.
“A financial institution officer who best knew one thing (of banking) became not considered a banker in any respect,” says Ravikumar.
“But this has changed through the years… In truth, skillsets required for banking has also changed,” he adds.
Most new-age bankers are professionals; they spend many years learning a small-however-sizeable banking feature. Would those ‘professional bankers’ make correct CEOs?
“The task of a CEO is to get the desired work executed… If the CEO, who’s a function expert, manages to hire officials with complimenting skillsets under himself, he’ll be capable of do his process properly,” says Ravikumar.
Rajiv Anand, ED (retail banking) of Axis Bank may be an amazing instance of this seamless profession switches. Rajiv specialised in treasury operations, fund management and capital markets before taking fee as retail head of Axis.
“I became lucky to get opportunities throughout treasury, monetary markets and retail operations in my 25 years as a banker,” he says.
“As you grow to be a senior banker, you don’t need to realize in an element all factors of banking. You want to a fair idea approximately how things paintings… But you need to realize a way to construct an efficient crew around you,” Rajiv adds.
Four a long time in the past, banking was no longer as complicated as it is now. The lone process of a banker was to mobilize deposits from savers and lend to the needy. The first leg of the transaction turned into comfortable as customers were “greater loyal to the banks that were regularly occurring their cash.” Bankers did now not chase depositors returned then. They handiest needed to identify exact debtors and lend.
Young officials joining the financial institution had been taught to choose out “fibbers” and “possible defaulters” before getting a loan permitted. Even overseas banks lend money after an intensive “in-man or woman verification” through senior bank officials. When Shyam Srinivasan joined Citibank in 1990, he was a given a “negative listing” of great low borrowers.
“Those days we did no longer have credit score agencies… Our handiest device turned into the poor listing, which became now not continually correct. The most effective sensible way to lend was to recognize the borrower properly,” Shyam says.
The thumb-rule of lending those days changed into quite simple -– if no longer outright rudimentary. Never lend to any borrower who has the same opinion to all the situations positioned forth with the aid of the banker. A right borrower will usually a good buy, according to several veteran bankers.
Other checkpoints inside the vintage bankers’ listing are: by no means lend to flashy debtors. Check the own family heritage of debtors; don’t borrow if the own family is profligate, or if the borrower is associated with wastrels or near relatives with vices along with playing or immoderate ingesting. Never allow a borrower most effective carrier hobby price, at the same time as rolling over the significant quantity; the banker has to accumulate the entire principal amount. A sparkling loan can best be given 15 days after the previous mortgage is “absolutely closed.”
“Those practices were excellent… we could keep away from numerous trouble-makers and fibbers returned then,” admits Arundhati.
Over the years, the methods of assessing a borrower have changed. These are times when data and synthetic intelligence rank above non-public due-diligence reviews. Credit scoring groups spit out voluminous quantities of data, which can be used to assess a borrower.
“But that’s all beyond statistics… What if a borrower with accurate credit score scores (assessed from past facts) default?” quips Varghese. “Technology is ideal… and it has made banking clean and available to all. But somewhere we’ve to merge vintage-global banking with new-world generation,” he adds.