Banks and bankers: misused?

Now that everybody knows the state of nationalized banks; lesser said the better.

There were days when banks accepted deposits and lent funds to the needy.   There was not much intervention, either from the Government or from politicians.   Govt. schemes were very less both in number as well as in value.

Somebody thought cleverly that the footfalls in banking halls are huge and it has got a potential to market their products.    Banks became malls; called financial supermarket.   Bankers sold products, which they neither used nor understood.  

Life Insurance policies were marketed for fraction of a commission what insurance companies would have otherwise paid to their agents.   General Insurance plans were sold for the benefit of companies which otherwise would have appointed agents nationwide at a huge cost.    Health Insurance was sold without the knowledge of claim procedure.   Insurance claims, when rejected by the companies, affected the bank loan repayments, as they were sold through corporate clients.  

Mutual funds were dumped on the bank customers without considering the suitability of the scheme.   Many customers lost a portion of their principal itself, as it is inherent in such products when the stock market tumbled.    Had it been a bank deposit; customers would have got their principal plus interest intact.   Investments in all the above were paid out from bank deposits.   In other words, instead of mobilizing more deposits; bankers used to find ways to part with their funds.     We counted pennies; losing pounds.

It may also be noted that customers accepted the products, not for its quality, because it was sold by the bank.   They succumbed to the pressure of bankers to sell such products.

Marketing officers in banks think that marketing of banking product means selling of insurance and MF.   Cross-selling means offering health insurance and life insurance to the existing customers.   While serving other companies, we forgot our own existence and its purpose.   The time and energy we spent on others’ products should have been profitably spent on our products viz. retail loans, deposit schemes, foreign exchange and others.    Fee based income should have been earned from products like LG, LC, Safe deposit locker, etc. banking products instead of other non-banking companies’ products.

We also waste our own precious time in various other ways, where other institutions ride on our back:

• Collecting school & college fees
• Issuing applications for admission to institutions
• Collection of local body taxes; government taxes
• Paying salaries & pensions for Govt. departments & other institutions
• Calendar distribution by some banks
• Selling Gold, Govt. bonds
• Collecting donations
• Offering depository services; etc.

Let us remember we do not have separate trained staff for all these work; the same set of branch staff will be ‘jack of all trade’.    Their best times are spent on counting the trees; forgetting the woods.     The time and energy spent on these ‘other business’ should have been spent on follow up and recovery of our own advances.   This is the reason why our top line always improved while bottom line suffered.

Then who should be blamed?

Govt. whose business was done in the banking hall? Regulator who didn’t stop banks from non-banking business? Management? Competitors? Companies whose product was sold across the counters?  Let’s move on.

Now banks have come a full circle.   At least now banks should delink themselves from ‘time wasting – less paying – resource draining – core business affecting’ work and concentrate only on basic banking; the good old ‘accepting deposits and deploying funds’.

Target should be only for bottom line (profit target) and not for others' products.  Such sale should be incidental.

Others have misused Banks and bankers; now this is the time to introspect and take corrective action.