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“BEYOND BANKING” BANKING ON SOCIAL ORIENTATION SOUTH ASIA EXPERIENCES asia & pacific Professionals & Managers Contribution for Sustainable Business Growth in South Asia UNI Europa & World Professionals and Managers Conference 15-16 April 2013, London Jayasri Priyalal Director for Finance, Professional & Managers UNI Asia & Pacific - Singapore Presentation Outline Significant Gaps in Finance Industry in South Asia Trends – Successes Failures – Contributions of Unionized Professionals & Managers through Officers Associations in Banking Industry in India Organizing Challenges for trade unions – Case studies from – India, Nepal & Pakistan Way Forward – Owning the Agenda – Voice and Space for P&M for sake of – SENSE of Community Significant Gaps Financial Exclusion – 612 Million Adults in South Asia – Have no access to savings or credits – 59% SME have no loan or overdraft – Source IFC statistics -Unbanked and under banked Drift towards Class Banking – from Mass Banking – Limited Credit flow SME’s- Banking Industry Consolidations in Urban areas Focus on FEE based income – Moving away from financial intermediation to stimulate growth in real economy – Credit for Priority Sectors - market forces to provide As per WEF Global Risk Report 2013 – “Severe Income Disparity” most likely risk to happen in TEN years Trends – Past Present & Future – Based on INDIA Post Independence to Nationalization of Banks 1969 Business in Concentrated in few Industrial houses 3% Credit to Agriculture – 647 towns in India NO bank branches, 444 towns NO Banking Services • Capital infused in Banks by Private Industrial houses was ONE % total deposits but enjoyed 62.7% credit in the economy • No Professional Management and training to assist Rural Development and Agriculture PAST Post Nationalization 1991 1st Wave Liberalization • Out 0f 62000 Bank Branches 35000 were Rural (58%) • Rural Deposits increased 6%to 15% Credit increased from 3% to 15% • Nationalizations Objectives Achieved With the Support Participation of - All Officers Associations in Banking Industry • 2002 - Private Sector Banks Starts – Shift from • Mass to Class Banking Banking Reforms Private & Foreign Banks 8% in Rural Areas are (as per licensing norms 25% in un Banked areas) As at June 2009 80000 Bank Branches Private Sector owns 10% Between 2004 –2009 Loans Below 25K Rupees 6.5% Increase Loans Below 200 K 55% Increase Hub & Spoke Business Models in Private Banks 2nd Wave –2012 Consolidation attract FDI Mergers& Consolidation Limits Financial Inclusion Savings Drying Consumption Driven Banking Model – Neglect Real Financial intermediation- instead Sales and High Fees – Speculation Short Termism Myth Market OR Bank based Finance Industry in INDIA? No Trade Union s in Private Banks – Officers Association under attack PRESENT UNCERTAIN FUTURE CHALLANGES Challenges – Case Studies – Way Forward United Forum of Bank Unions (UFBU )in India – Including the Officers Association are Opposing the new Banking Industry reforms in India. All India Bank Officers Confederation (AIBOC) Commissioned a study on Banking Industry Reforms in 2006 • • • • • • • Private Sector Banks have NO Unions - State Owned Banks lose Talent No Industry wise compensation schemes - Performance Based Compensations are attractive to young professionals 15% Attrition amongst New Recruits to SBI – - 80000 New Recruits in 2012 Divided – Jurassic Trade Union movement needs infusion of new blood – Young Employees have different expectation – Challenge the Status Quo Talent Shortage – Frustrated Employees Joins the Competitor • State Bank of Pakistan – Branchless Banking Expansion through Mobile Phone Banking – 69% accounts belongs to people live on USD 3.75 a day45% users Previously unbanked – 1.4 million accounts June 2012 • Nepal – All Private Insurance Companies are unionized and have collective Agreements – Unique Strategy – First Organize the Regulator UNI Apro Finance Convenes – 4th South Asia Finance Sector Unions Council Meeting on 5th May 2013 in New Delhi – Share Experiences & Strategies UNI Apro Finance – Lobby for Responsible investment of Pension Funds with ADB – Together with Civil Society Organization Alarming Facts for Finance Industry Professionals & Trade Unions Sovereign Savings US$ 5.2 Tn Sovereign Wealth Funds Source : The City UK Research Organization Workers Savings US$ 33.9 Tn Global PENSION Funds