Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

Bank of Baroda has now opened swank new branches in Hyderabad and Bangalore to attract IT professionals; SBI is gung-ho on ATM, Internet and phone banking; while Punjab National Bank has initiated its 8 to 8 banking campaign and started ‘Doorstep Banking’ as a pilot project in New Delhi. Most PSBs are also gleefully hiring savvy and smart-talking MBAs for their marketing and sales operations, which till a few years ago was purely the prerogative of the ICICIs and HDFCs of the Indian banking world.

To get a reality check for ourselves, we visited a branch of a state-run bank in the NCR last week to open a new savings account. The branch did look cleaner than it did a year ago (this author has a savings account there – courtesy their locker facility – for the past six years) but the sense of bureaucratic apathy is still writ large on the bank’s overall packaging ambience. Notwithstanding the gruelling training sessions with staffers; decades’ old mindsets do not change in a day. Sure the guy at the counter was more helpful (and even smiled!) but the sense of urgency was absent. Like Barack Obama, guess PSB’s will sooner or later have to figure that campaigning for change and implementing change are opposite sides – not of the same but – of different coins!

If state-run banks are flexing their muscles, you will be wondering why private and foreign banks are keeping mum. It’s the global financial watershed, silly! When Wall Street’s worries made way into India, one of the first casualties was ICICI Bank - the nation’s largest and most aggressive private bank. People were seen lining up to withdraw their savings at ICICI branches, no thanks to malicious rumours about the bank’s financial exposure to Lehman. In an unprecedented move, the RBI had to intervene and issue a statement about adequate liquidity at ICICI. Unlike their public sector counterparts, private banks have also gone on the defensive even in their positioning. So in this downturn, ICICI Bank’s ads are doling out the message of ‘trust us’, giving PSB’s a free run to communicate their ‘change’ agenda.

Sure state-run banks have all had a haircut, shaved and worn designer suits... but will it be smooth sailing from hereon to win back the young and savvy customers in metros and big cities? Halve does not think so! The first step he feels is for them to get their respective ‘change agents’ up and running across the spectrum and the second is innovation in ‘reaching out’ strategies. “Right now, state-run banks have simply reached that threshold level at par with private banks. The next step now should be to widen the service bundle.” He’s hinting at the shape of things to come. After all, like with most services-based industries, differentiation is what will eventually decide victory. The one-size-fits-all -strategy will not work forever and a segmented approach is bound to replace it. Who knows the next initiative from Canara Bank will tantamount to service guarantees? So if your account is not opened in 30 minutes, the bank will actually pay you a fine for the inconvenience (a la Domino’s 30 minutes or money back scheme)!!

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Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

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An age - ‘old’ theory

The Most Revolutionary Concept In Education PLANMAN CHE CENTRE FOR HIGHER EDUCATION, Supported by IIPM India’s Leading B-School

With all modern investment instruments taking investors for a ride, traditional investment options are back in action with all guns blazing

The lust for big bucks has taken its toll on the public’s otherwise robust investment function lately. Maturity in the debt and capital markets had spawned a great deal of interest in non-traditional instruments and the response had been overwhelming. If not for the economic turmoil, non-traditional instruments would have continued with their frenzy in a flexible investment-high return scenario. However, after the recent chain of events, with investors losing money and sleep, the apparently forsaken traditional instruments are back in action.

R. K. Gupta, MD, Taurus Asset Management Company avers, “Traditional instruments of investment are for social security and are held by investors in order to meet future requirements and uncertainties.” Agrees Ramesh Dalal, VP (Financial Planning), Bajaj Capital, “Traditional investment instruments are basically meant for wealth preservation or regular fixed income. Suitability of an investment vehicle depends on one’s objective, time horizon and risk appetite.”

There are a plethora of traditional investment instruments in the market today and investors can choose as per their requirements. Each instrument is designed with a separate investment/ return scenario and investors are advised to take into account their personal preferences before going forward. Such instruments are effective for those investors who are looking at a steady flow of income irrespective of the comparatively lower rates as compared to those offered by non-traditionals. First on our list is a tried and tested instrument of Public Provident Fund; the instrument takes 15 years for maturity and has upper investment ceiling of Rs.70,000 annually. Return on investment comes to an uncompetitive but sufficient at 8%. The investment does not come under the tax net and is a friendly option for the working class. The limitation of investment is perhaps the only impediment in this investment. The monthly income plan of the post office is another productive option for the salaried and those looking for a regular income option. The plan has a lock in period of 6 years and has a maximum ceiling of Rs.4.5 lacs. The income earned from this source is exempted from tax as well. National Saving Certificate comes next in line with an investment period of at least 3 years; an investment up to Rs.100,000 is entitled for benefit under section 80C of IT Act. These instruments are virtually risk free and investors are required to have prior knowledge of such investment avenues. A diligent follow-up of the capital and money market is uncalled with such investment instruments. Considering the downturn when preserving existing capital itself is a problem, traditional investment options are the best way to beat volatility.

Investors should however bear in mind that these forms of investments are not intended for a rapid fire wealth creation. “You cannot create wealth by keeping money in the bank you have to take risks for that to happen,” opines Gupta. As per Dalal, “For short to medium term horizon and conservative investors, traditional investment avenues are definitely a better option but for long term wealth creation, one may consider market related instruments.” In all, there is enough talk on the traditional mode of investment and the ever green status of this avenue stays in this difficult time.

Karan Mehrishi

For more articles, Click on IIPM Article.

Source : IIPM Editorial, 2009

An Initiative of IIPM, Malay Chaudhuri and Arindam chaudhuri (Renowned Management Guru and Economist).

For More IIPM Info, Visit below mentioned IIPM articles.
1500-plus IIPM students placed across the country with 44 bagging international offers
IIPM set to beat economic slowdown
IIPM Admission Detail
IIPM - Admission Procedure
IIPM, GURGAON
IIPM : EXECUTIVE EDUCATION