'Changemakers' award for NGO

Two financial initiatives of the Dakshina Kannada-based non-governmental organisation Shri Kshethra Dharmasthala Rural Development Project (SKDRDP) - 'Pragathibandhu' and 'Sampoorna Suraksha' - have won the 'Changemakers' award in the competition 'Banking on social change - seeking financial solutions for all'. The award is promoted jointly by the US-based Ashoka Foundation and Citibank.

A press release by the SKDRDP said here on Wednesday that 'Pragathibandhu' model provides an alternative methodology to finance the farming activities of the small farmers. In this initiative small farmers come together to share and learn.

The model has successfully been implemented in coastal and malnad districts in Karnataka consisting of 1.32 lakh small farmers who have been organised in 23,300 self-help groups, it said.

'Sampoorna Suraksha' is a self-financing multipurpose insurance product to protect the poor against hospitalisation expenses, maternity, death, domiciliary treatment and accidents.

Giving details about the competition, the release said that the Web-based competition evoked response from 280 institutions across 43 countries. On December 1, three models comprising the 'Pragathibandhu', 'Sampoorna Suraksha', and a microfinance model from Argentina were declared the best, the release added. 

SBI mulling overseas acquisition, hints Bhatt

Amidst global financial distress, State Bank of India (SBI) has hinted that it is mulling overseas bank acquisition. SBI Chairman O P Bhatt today indicated that though there were no immediate plans, but the bank was definitely having a look at it.
"It (overseas acquisition) will be. There is no immediate target, there is no immediate plan, but we are thinking about it. We are looking more in terms of consolidation (overseas) where we have business. Increasingly, we are aligning our overseas operation with the Indian diaspora," Bhatt said.
However, Bhatt also stressed that the bank would continue to focus on expansion in the domestic market. "With the way India is growing, there are huge pockets of profitability across the country. There is a need to expand in the domestic market vigorously," he said, while addressing the first press meet after the merger of State Bank of Saurashtra with SBI. Commenting on the bank's exposure to Lehman Brothers, he said that it has fully provided for its $5 million exposure."We expect to recover 60-70 per cent of it (Lehman Brothers' exposure)," Bhatt said.
SBI, the largest lender in the country, has raised concerns about rising interest rates as it may lead to an increase in the non-performing assets (NPAs) of the banking sector.
"At the moment, we are not seeing large increases in NPAs, but we should be watchful of them," Bhatt added.
The bank is eying a credit growth of 24-25 per cent during 2008-09. "Credit growth continues to be relatively high compared with deposit growth in absolute terms," he said, pointing to tight liquidity conditions in the banking system.
Bhatt also said that he did not expect interest rates to fall in the immediate future.

Govt-run financial brands ’ve upper hand

FINANCIAL brands are built on the bedrock of trust and expertise. But with the US-led global financial meltdown spawning an undercurrent of fear and distrust among millions of investors, employees and consumers alike, brand experts say that government-run Indian financial brands like SBI and LIC seem to have an edge, as they are built on strong relationships and a trust that emanates from an implicit sovereign guarantee rather than a claimed ‘expertise’ that many of the (now failed or failing) marquee global names used to harp on. Says SBI Life Insurance MD Uday Shankar Roy: “Government funded financial institutions have always been criticised for being stringent with the regulations and investments. But, we must understand that ultra-modern risk-monitoring practices adopted in the West have failed miserably. Considering the present scenario, the central banking regulatory authority in India stands the strongest. The traditional monitoring and investment practices will certainly see an upswing now.”The meltdown will hit the sheen of western brands hard and a conscious move towards Indian brands will be
noticed among the Indian consumers. Says Ogilvy & Mather India country head (discovery & planning) Madhukar Sabnavis: “Trust is what business relationships in the East are built upon. Culturally, in India, as long as trust remains consumers are willing to live with business ups and downs and accept that as a part of life. Indians as a race is forgiving and hence the importance of trust.”
Public sector banks riding high on credibility have underscored robust growth in the recent times. According to the recent ET-Brand Finance India’s Top 50 Most Valuable (Company) Brands 2008 study, India’s largest bank State Bank of India emerged as the most valuable financial services brand value at Rs 16,595 crore. While Punjab National Bank’s brand valuation escalated by about Rs 570 crore in 2007-08, Bank of India has shown a growth of over 50% as against the previous year. In comparison, now bankrupt Lehman Brothers had shown a drop in its brand value in 2007 ($4 billion) from $4.4 billion in 2006, according to Brand Finance’s annual report on 500 most valuable global brands.
Given the volatility of global financial market and lessons learnt from the South-Asian crisis, subprime crisis and present meltdown, the ideology of safety and security have superseded the ‘cool image and dynamism’ plank. Brand experts across various sectors have echoed the strong sentiment of building relations as the essence of Indian business practices. Says Publicis Asia regional strategist Partha Sinha: “Indian financial brands are build on relationships whereas multi-national have always been expertise driven. But now this edifice of ‘expertise’ is coming unstuck.”
Even as the US suffers from major financial crisis, Tata AIG Life claims to be well capitalised and is confident of meeting stringent local regulatory and capital requirements. “Since the Tata Group holds major stake (74%) in the company, the credibility earned by the conglomerate shields Tata AIG Life from any immediate material impact,” says the company statement.
Future Brands CEO Santosh Desai feels: “Merrill Lynch, Lehman Brothers and too a certain extent AIG are not too big brands for an average Indian. Moreover, the credibility lend by the brand Tata maintains the faith among the stakeholders.”Financial institutions in India see a silver lining amidst the crisis. For instance, Reliance Money acknowledges this scenario as the right time for expansion in the international markets. Says Reliance Money CEO Sudeep Bandopadhyay: “With a century-old American banks collapsing, I think, it is a wonderful opportunity for Indian banks to go international with their intrinsic values. We also see it as a good time to acquire quality assets.”

Raghuram rajan panel want Smaller banks For India

THIS should sound sage advice in the aftermath of the Lehman collapse. The Raghuram Rajan panel has suggested that the Reserve Bank should consider entry of smaller players into the banking sector as failure of small banks will not have systemic consequence created by failure of a giant banking entity. There is no need to believe that smaller banks would fail and historical evidence is not relevant since the situation has changed.
The panel has suggested that the regulator should prescribe tighter capital adequacy and regulatory norms for smaller banks. The Rajan committee submitted its final report on financial sector reforms to the government this week. The panel urged the regulator to “allow more entry to private wellgoverned deposittaking small finance banks offsetting their higher risk from being geographically focused by requiring higher capital adequacy norms, a strict prohibition on related party transactions, and lower allowable concentration norms”.
This means that these banks, if allowed, would be entitled to advance a lower percentage of their deposits as advances in comparison to larger banks. Such norms would minimise the risk of any of the entities going bust, the panel feels.
The committee has also questioned the honesty of the large banks, saying there is “no necessary link between size and honesty, as the recent experience with large banks suggests”. It has, however, suggested that the regulator should be more selective and find “fit and proper” criteria for giving licenses to the smaller banks.
The intent behind the need of such banks is to bring local knowledge to the bankers so that they are able to take decisions quickly in conformity with their customers whom they would personally know. The entry of such financial entities would also help in achieving the government’s goal of financial inclusion.
The committee has clarified it does not recommend smaller banks based on earlier models where governance structure was poor, political and government interference was excessive, besides unwillingness to take corrective regulatory measures.