STATE BANK LEARNING CENTRE, INDORE

PRE PROMOTION TRAINING FOR MMGS-II TO MMGS-III

FOR AND AGAINST PROPOSITIONS

Our bank should not conduct Govt. business.

For- Our branches have become over crowded with public transacting Govt.
business and we are not able to give efficient service to P segment and high net
worth customers. Due to overcrowding, these customers do not prefer banking
with us.

Against- Bank is able to have a large chunk of float funds on account of Govt.
business which can be utilized for productive purposes. Further, we earn good
commission on this business.

Associate Banks should be merged with SBI.

For- It will lead to greater group synergy and consequent business development.
Further, unhealthy competition at a good no. of centers will be reduced. We will
be able to increase our net worth further.

Against- it will be difficult to manage such a large number of branches. Further,

cultural differences will affect the working of the merged entity.

The unviable rural branches should be closed.

For- It will lead to efficient use of our resources and will reduce our transaction
costs. Further, the banks should do the business purely on commercial lines to
compete globally.

Against- The basic purpose of opening SBI and nationalization of banks will be
defeated. The rural areas are the emerging markets of the economy and we will
not be able to exploit the potential after closure of these branches. It will also
lead to resistance from various social groups.

The bank should only concentrate on P segment advances.

For- The growth potential of this segment is very high due to increasing no. of
middle class customers in the country. Further, the incidence of NPAs is also
very low in P segment as repayment is ensured through check off or post dated
cheques. Credit off take in other area is very low and major growth during
preceding financial years has been recorded in P segment only.
Against- The growth in P segment can not be sustained without the
development of core sectors like industry and business. It has also been
observed that the addition to NPAs in P segment has been increasing. Further,
various P segment loans like housing and education may create asset liability
mismatch. It is also very difficult to supervise such a large no. of accounts.

Bank should go for film financing in a big way.

For- Film industry has also been given a status of industry and offers a great
potential for our advances. Further, returns on good films are also very high.

Against- Film production is a very risky venture and a very few films become hit.
In the film production, returns can not be estimated in an objective manner.
Investment in the films is also very high and film producers want to finance them
through black money for evading tax.

In view of the computerization/ networking, the number of branches should

be rationalized.

For- Customers will be able to perform their banking requirements only with a
few branches if these are networked. Further, if the ATMs are installed at
strategic locations, branches at all locations are not required. It will reduce our
transaction cost which is very essential for survival in this low interest rate
regime.

Against- Branches can be used for cross selling of our products. Further, human
relationship is very important in this era of cut throat competition for marketing of
our products. Machines can not replace individuals especially in a country like
India.

Award staff of the bank should be transferred freely.

For- It is essential that the staff pick up the ability to work in different
environment, will prevent vested interest being developed by the staff. Further,
staff working in rural areas will get opportunity to work in towns/cities.

Against- It will affect family responsibility especially for women in the Indian
context. It is also very costly.

Priority sector lending should be discontinued.

For- Substantial amount of bank’s funds are locked up as NPAs in the priority
sector advances. These are also cost intensive and consume staff time
considerably. Further, in this era of liberalization, banks should be given the
freedom to devise their loan policy freely so that they can compete globally.
Against- In a developing country like India, development of priority sector can
not be left to the market forces. Since banks can not function in vacuum and only
in the society, they must have some obligation for the society. It is not correct to
say that NPAs occur only in priority sector advances.

The nationalized banks should be privatized.

For- Customer service has deteriorated steeply after nationalization. Under

private sector, a better accountability to share holders would be established and
the use of resources would be optimized.

Against- It will be guided only by market considerations and advances to priority

sector and weaker sections will be adversely affected. Further, as observed
empirically, privatization does not guarantee good performance.

Trade Unions should be banned in the banks.

For- Changes in the labour laws is very essential in the emerging markets so that
the banks are able to compete globally. Unions have been found obstructive of
changes in these areas. Also hampers working environment in the banks.

Against- Unions are tremendous constructive force throughout the 19th /20th
centuries contributing to the welfare of the workers. Abolition would lead to
oppression of the workers as they will be treated as machines.

Weak banks should be merged with healthy banks.

For- This would avoid closure of any bank which will affect the morale of weak
depositors/employees. Financial instability can be avoided.

Against- It will be treated as rewarding the inefficient. Integration of

culture/systems has been found to be very difficult. The efficiency of the healthy
bank will be adversely affected.

Banks shall concentrate on High Value Customers

For- The Main source of business and profits is High Value Customers. Hence
Banks shall concentrate on High Value Customers.

Against- High Value customers are mainly a source of deposits for the Banks. If
the Bank wants an appropriate Marketing Mix, we have to concentrate on other
customers also.
Bank must close down many learning centres.

For- The capacity utilization of the Learning Centres are coming down drastically
over the period. Hence Bank should close down underutilized Learning Centres.

Against- Training and Learning is a continuous process. Appropriate measures

must be taken to improve the capacity utilization of the Learning Centres.

Banks shall fix a floor rate among themselves below which no Bank shall
lend.

For- This will remove the cut throat competition among the Banks. The bottom
lines of the Banks improve.

Against- It is an indirect cartel system, where by the customer is put to loss. This
shall not be allowed.

Cross Selling non-Banking services will reduce the business of the Bank

For- The time and costs spent by the staff to cross sell the other FI’s products
naturally reduce the business opportunities of the Bank to that extent.

Against- The Net Interest Margin is thinning day by day due to stiff competition.
Cross Selling is one of the opportunities to increase our profits.

Balanced Ranking System will adequately recognize the performers

For- When there is a cap for awarding marks in the range of 91 to 100 in AARF,
naturally the performers will be adequately recognized under the new system.

Against- Even in the new system, there is scope for biased rating by the
Reporting Authority which depends on the personal relationship rather than
business considerations.

Examinations for promotions from Scale II to Scale V must be dispensed

with.

For- Once we recruit officers directly or through promotions, we are conducting

exams. This will sufficiently filter the meritorious people. Examinations involve
monetary, time and resources costs. These can be avoided.

Against- There shall be a proper method of evaluating the knowledge and

experience of the staff while considering them for promotion. Examination is the
best method.
Banks shall stop opening accounts for the illiterate customers.

For- As the country is aiming at full literacy, this will be disincentive for the
illiterate people. Thus more literacy can be achieved. The operational costs can
be reduced.

Against- The Bank will be inadvertently losing business from this segment of
people who represent a major chunk of the population. Banks can not afford to
do it.

Locking the Grill Door with chain during the business hours must be
discontinued

For- It will be convenient for the customers to enter the Bank easily. The Bank
can attract more number of new customers who are hesitant to enter the Bank.

Against- This system is in vogue to ensure safety for conducting Banking

transactions during business hours. It creates a warmth feeling of safety.

SBI must be merged with its Associate Banks

For- We can reduce the operational costs and achieve economy of scale in our
operations. We achieve a status of one of the biggest bank in the world.

Against- Associate Banks in most of the centres are giving stiff competition to
us. If we merge, the business will be going to a third Bank. The efficiency of
Associate Banks is better than SBI. By merging, the efficiency is diluted.

Exit Option Scheme must be immediately withdrawn

For- We can retain the experienced staff members in the Bank. We can reduce
the Staff Costs.

Against- The average age of the staff members is comparatively high in our
Bank. Through Exit Option, we can replace aged staff with young staff thereby
reduce the average profile which is crucial in meeting the stiff competition from
young Banks.

Capital Adequacy Norms shall be Bank specific and not uniform for ASCBs

For- All the Scheduled Commercials are not of same size or with the same
capital or with the same number of branches. Hence prescribing a uniform
Capital Adequacy Norms will affect large banks drastically.

Against- To compare the efficiency of any Bank, the CAR will be a Yard Stick.
Hence uniformity must be maintained in Capital Adequacy Norms.
There shall be an enactment, restricting the take over of loans from one FI
to the others

For- This will avoid cut throat competition among the Financial Institutions to
resort to unethical methods in achieving business growth.

Against- When we are focusing on Liberalization, Privatization and

Globalization, we shall not have such restrictions, which will affect the interest of
the customers.

TPM must be restricted only for Funds Lent to and Funds Received from
Central Office

For- Of late excessive use TPM for giving incentives or creating disincentives for
various operations at the branch level is resorted to. This will only distort the
correct efficiency of a branch in terms of profit.

Against- TPM is the easy way of passing incentives or creating disincentives to

the branches. It is one of the tools in the hands of the management to implement
the policies.

The profitability of the Branch / Region / Zone must be determined on

operating profit only.

For- The Net Profit we arrive after application Central Office Interest is only an
imaginary figure and it can not be a good tool to measure the profitability of the
Branch / Region / Zone.

Against- Deposit intensive branches will incur operating losses only hence their
efficiency can not be judged on operating profit. TPM must be implemented.

Employees’ Stock Option Scheme must be introduced in the Bank

For- This will help the Bank in creating common goal for the staff members. It
also creates motivation for achieving the common goal among different
category/grades of employees.

Against- ESOP is another form of deferred payment system. Most of the

employees will sell away the stocks as soon as the lock-in period is completed.

The concept of Circle Audit must be dispensed with

For- Though the Circle Auditors have only 12 delegated areas to inspect or audit,
the efforts are duplicated /overlapped by the Corporate Auditors.

Against- The periodicity of each Corporate Audit spreads up to 24 months. 24

months is a longer period to leave the branch without any Inspection.
Bank shall adopt the policy of recruiting staff at lateral levels

For- Because of competition in Banking Industry, the Bank requires specialists at

all levels. Recruiting specialists at younger age at higher levels will improve the
efficiency in operations.

Against- Banking nowadays is vast subject and operations are also different and
variant in nature. People can manage at higher levels only through experience.

Bank must resort to campus recruitment for new appointments

For- Conducting open written examination and selecting the people is

cumbersome, involves time and monetary costs which can be avoided.

Against- Our choice of recruiting the best available talent in the market is
restricted through campus selections. We can not assure quality through campus
selection process.

All the PSBs must be merged into 3-4 bigger Banks

For- This will bring efficiency and standardization in all the Banking and Financial
services we extend to the customers. We can create strong Banks.

Against- Different Banks have different culture, values and efficiencies. Merging
all these in the 3-4 Banks will deny the benefits to the customers arising out of
competition.

Banks shall start closing down the non-viable branches on a large scale
now

For- After implementation of Technology initiatives and on line Banking, there is

redundancy in branches which can be avoided by closing down the branches.

Against- We have not yet achieved the reasonable people covered per branch
ratio. Closing down the branches will adversely affect this ratio further.

Bank shall stop introducing so many loan schemes under different

segments

For- All loan schemes are variants of Demand Loan / Overdraft / Cash Credit /
Term Loan only. These unnecessarily create confusion in the minds of the
customers.

Against- Different schemes are designed to cater to the needs of different

group/segment of customers. The more the varieties, the more we attract
customers.
We shall not cross sell Mutual Fund Products

For- If we cross sell Mutual Fund Products mean we are diverting our deposits to
Mutual Funds thereby we are losing our business.

Against- We can not at any cost stop the customer to invest his funds in Mutual
Funds. By cross selling we will improve relationship and remuneration.

Umpteen numbers of boards, placards shall be displayed in the banking

hall to educate the customers about our products, systems and procedures

For- This will reduce frequent queries of the customers about our products and
systems and procedures.

Against- We can not expect the customer to read and understand all the
products and systems and procedures. We are here to help the customers in
arriving at the decisions. Keeping many boards in the banking hall affects the
ambience.

Project Ambience must be stopped forthwith

For- It involves huge costs without immediate gains. We are spending on

intangible assets i.e. creating brand image.

Against- To face the competition effectively created by the new generation

private banks and foreign banks, we have to change the ambience of our
branches.

Sanctioning / Recommending powers of loans must be re-allocated to

Branch Functionaries in respect of Asset Processing Cells

For- The main point of sale in the Bank is the Branch. There fore the Branch
Manager must be given the Loan sanctioning / recommending powers to improve
the customer relationship and customer convenience.

Against- Asset Processing Cells will bring in standards in loan processing and
sanctioning. Specialists will be working in the cells and this will improve the
quality of assets which is not possible by the branch level functionary.

Posts of Grahak Mitras which are not effective must be discontinued at the
Branches

For- It is the tendency of the branch managers to utilize the services of the
Grahak Mitras to attend to other duties in case of staff shortages. Frequent
dislocation of GM will affect the Customer expectations vis- a- vis service delivery
which leads customer dissatisfaction.
Against- GM concept is a BPR initiative which has been implemented after
proper testing and assessing the results. Branch Managers must be counseled
not to discontinue the GM’s services at any cost or under any circumstances.

8 to 8 branches must be increased at all centres

For- This will give a competitive edge over our competitors. Increases the
business and avoids over crowding of branches during the peak periods.

Against- These branches face staff dislocation, increase in staff costs and
reallocation of duties and staggering. But the business is not increased
immediately.

Outstanding of GLIF entries reflect the efficiency of the branch

For- Any long outstanding GLIF entry means, the staff have not taken proper
care in generating the transactions. More the GLIF entries means more inefficient
is the branch.

Against- The main reason for generation of GLIF entries is system failure. We
will be unnecessarily passing on the inefficiency to the branch.