Forcing Bankers to do Aadhar Enrolment - AIBOC Press Release

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Dear Friends,

AIBOC (ALL INDIA BANK OFFICERS’ CONFEDERATION) Has released a Press Note Regarding Forcing Bankers to do Aadhar Enrollment.

for more details please follow below Circular...!!!

Forcing Bankers to do Aadhar Enrolment - AIBOC Press Release

Forcing Bankers to do Aadhar Enrolment - AIBOC Press Release

Forcing Bankers to do Aadhar Enrolment - AIBOC Press Release


Banking News Dated 18th December 2017

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Banking News: December 18, 2017


Banking News Dated 18th December 2017

‘Will carry forward SBI’s 211-yr-old legacy
with same level of efficiency, vision like my predecessors’: Rajnish Kumar, Chairman, SBI

S Kumar, The Pioneer
Published on December 18, 2017

Mumbai, December 17: State Bank of India Chairman Rajnish Kumar believes that credit growth and a forward movement on resolution of stressed assets are his immediate top priorities in the bank. Kumar, who assumed the charge as Chairman on October 7, 2017, after the departure of his predecessor Arundhati Bhattacharya, has served in the bank for more than 37 years having multiple assignments across different verticals, like large credit, project finance, foreign exchange and retail banking, along with two overseas assignments.


Banking News Dated 16th December 2017

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Banking News: December 16, 2017


No MDR charges on debit card payments  up to Rs 2,000 for 2 years starting Jan 1
No MDR charges on debit card payments
up to Rs 2,000 for 2 years starting Jan 1

Beena Parmar
The Moneycontrol News
Published on December 15, 2017

New Delhi, December 15:  From January 1 next year, you will not be charged fees on debit card transactions up to Rs 2,000 for at least two years. In an effort to boost digital payments, the Union Cabinet has decided to waive the merchant discount rate (MDR) applicable on all debit cards, BHIM and UPI transactions up to Rs 2,000. The government will reimburse the same to the banks for a period of two years, starting January 1, 2018.

“Merchant Discount Rate (MDR) applicable on all debit card/BHIM UPI/ AePS transactions up to and including a value of Rs 2000 will be borne by government for 2 years with effect from 1 January, 2018 by reimbursing same to the banks,” the Cabinet decided on Friday. "It is estimated that the MDR to be reimbursed to the banks in respect of transactions less than Rs 2,000 in value would be Rs.1,050 crore in FY 2018-19 and Rs.1,462 crore in FY 2019-20," the government release said.

As a result of this approval, for all transactions less than Rs 2000 in value, the consumer and the merchant will not suffer any additional burden in the form of MDR thereby leading to greater adoption of digital payment modes for such transactions. Since such transactions account for sizeable percentage of transaction volume, it will help to move towards a less cash economy.

A committee comprising Secretary Department of Financial Services, Secretary Ministry of Electronics & IT and the CEO, National Payment Corporation of India (NPCI), will look into the industry cost structure of such transactions which will form the basis to determine the levels of reimbursement.  MDR is the rate charged to a merchant by a bank for providing debit and credit card services when payment is made at a merchant point of sale (PoS). In most cases, the charge is passed on to the customer by the merchant, saying that it eats into his margin.

Citing this, many people make cash payments despite having debit cards. Similarly, MDR is charged on payments made to merchants through BHIM UPI platform and AePS. In order to promote digital payments, the Reserve Bank of India has earlier come out with differentiated merchant discount rates (MDR) for debit card transactions, prescribing separate caps for small and large traders. As per the latest RBI notification, MDR charges for small merchants with an annual turnover of up to Rs 20 lakh has been fixed at 0.40 percent with a cap of Rs 200 per transaction by debit cards through Point of Sale (PoS) machines or online transactions.
For merchants with turnover of over Rs 20 lakh, the MDR cap will be 0.9 percent or Rs 1,000 per transaction, whichever is lower. Similarly, for accepting QR (quick response) code based acceptance infrastructure, the MDR will be 10 basis points lower across both merchant categories.

v         For small businesses, the MDR cap at QR code based infrastructure would stand at 0.30 percent or Rs 200 per transaction, whichever is lower.

v         For other merchants, the MDR cap at QR code based infrastructure will be 0.80 percent or Rs 1,000 per transaction, whichever is lower.

However, most players had been unhappy with the RBI move. A report by Kotak institutional equities had said, “MDR reduction: marginally negative for acquirers. The RBI’s move to reduce merchant discount rates (MDR) for debit card transactions for smaller merchants and QR-code based transactions will likely bode well for broad-based and asset-light adoption of cashless modes of transactions in the medium-term. However, volume is unlikely to make up for the shortfall in reduction of fees in the short term and hence, the near-term impact would be marginally negative for a few players like Axis Bank, HDFC Bank, ICICI Bank and SBI (State Bank of India). Debit card fee is a small but a key area of growth for most of these.”

In a tweet, Amrish Rau, CEO of PayU, said: “RBI has tinkered with Debit charges again. The problem is NOT MDR. Capping of Bank Interchange fees will provide big boost to digital payments.” Interchange fee is a part of the MDR which is charged by the Issuing bank (0.5-0.75 percent), Acquirer (0.5-0.25 percent) which is also shared by the payment provider such as Rupay, Visa and Mastercard.

Debit card usage volume has tripled to 2.4 billion transactions in 2016-17 from around 800 million in 2014-15. The value of these transactions rose to Rs 3.3 lakh crore from Rs 1.2 lakh crore. RBI data shows that debit and credit card payments at PoS terminals have increased from Rs 35,240 crore in November 2016, compared to Rs 47,980 crore in November 2017.

The UPI and BharatQR have different MDR, so it will be a challenge for card networks and the NPCI (National payments Corporation of India) to sort out where the transaction is originating and charge merchants accordingly. On the UPI, merchants are charged a merchant discount rate (MDR) of 0.25 percent for payments below Rs 1,000 and 0.65 percent for all other charges.


Controversial FRDI Bill
With 'Bail-In' Clause, Deferred

The Outlook Online
Published on December 15, 2017

The so-called "bail-in" clause in the draft bill has been commented upon by experts as bringing potential harm to deposits, in the form of savings accounts.

The controversial Financial Resolution and Deposit Insurance (FRDI) Bill, 2017 with the 'bail-in' clause that allows banks to use depositors' savings in case it collapses, has been deferred by the standing committee.

The joint committtee of parliament was supposed to hand over its report on the bill in the first week of the winter session of parliament that began today. The committee will now submit its report during the budget session next year.

The so-called "bail-in" clause in the draft bill has been commented upon by experts as bringing potential harm to deposits, in the form of savings accounts.

The FRDI Bill proposes to create a framework for overseeing financial institutions such as banks, insurance companies, non-banking financial services (NBFC) companies and stock exchanges in case of insolvency.

The 'bail-in' clause theoretically allows beleaguered banks and financial institutions to legally usurp depositors' money in a desperate bid to stop going bust.

Read Also: Preparing For Cyprus Moment: Centre May Allow Banks To Use Your Hard-Earned Deposits In Case It Collapses

The move comes after protests against the 'bail-in' clause despite the finance minister and the prime minister reiterating that the government is only working to protect the interest of bank customers and their deposits.

An online petition against the bail-in provision in the FRDI bill received thousands of signatures even as the finance ministry said that the proposal, under consideration of a joint parliamentary committee, is depositor friendly and provides more protection.

Industry chamber Assocham had on Thursday sought removal of the "bail-in" clause in the draft bill, cautioning that the trust in the banking system runs the risk of being eroded if the clause is not done way with.

The FRDI Bill was cleared by the Union Cabinet cleared in June 2017. It is currently under the consideration of a parliamentary committee. While the bill when it becomes a law will lead to the birth of a Resolution Corporation which will exercise control over banks, insurance companies, and other financial institutions, it contains the hair-raising 'bail-in' clause, already creating panic among bank depositors.

Prime Minister Narendra Modi yesterday said the government is working to protect interest of bank customers and their deposits, as he sought to dispel rumours regarding the proposed FRDI Bill.

"The government's assurance notwithstanding, Sub-section 7 of Section 52 of the proposed law clearly says that the bail-in, to which depositors have strong objection to, shall not be applicable to deposits to the extent only covered by insurance," ASSOCHAM had said.

In India, less than a third of bank deposits in value terms are insured by the Deposit Insurance and Credit Guarantee Corporation of India (DICGC). If a bank goes bust, the DICGC will pay back the insured amount to the depositor but that is restricted to just Rs 1 lakh per depositor per bank. The FRDI Bill is reportedly silent on the extent of deposits to be guaranteed and that remains a key source of concern.


Bank unions escalate protest
against proposed FRDI Bill

Avishek Rakshit
The Business Standard
Published on December 16, 2017

Kolkata, December 15: Major bank unions across the country have upped their opposition to the proposed Financial Resolution and Deposit Insurance (FRDI) Bill, first opting for a preliminary depositors' signature collection campaign with plans to go for a nationwide strike in case the Bill is tabled in the winter session of the Parliament.

Bank Employee Federation of India (BEFI), the third largest of the nine bank unions, will be holding a meeting on December 17 in Chennai to plan its future course of action post which an all-union meeting will be held to form a united forum to oppose the Bill.  "All the bank unions will be meeting to discuss the road ahead. In case the government pushes to pass the Bill in the winter session of the Parliament, we can go on strike", Pradip Biswas, general secretary of BEFI told Business Standard.

Although various bank trade unions are opposing the Bill, there is no united opposition till now and the proposed inter-union meeting is set to arrive at a joint opposition movement to the Bill.  "Soon a joint forum, comprising of all the unions will be formed to mount opposition", Sanjay Das, assistant general secretary — West Bengal at All India Bank Officers' Confederation (AIBOC), told this newspaper.

All India Bank Employees Association (AIBEA), National Confederation of Bank Employees (NCBE), BEFI and AIBOC have embarked upon a depositor's signature collection campaign to stall the FRDI Bill. Das claimed that already over two lakh depositors have signed the petition to stall the Bill, which has been sent to the Centre, and another one lakh people have signed an online petition. Additionally, over WhatsApp, petitions with links have been sent to the Prime Minister's Office, Reserve Bank of India and the union Finance Ministry.

The original copy of signatures collected by BEFI will be sent to Sumitra Mahajan, speaker in the Lok Sabha. The signature campaign also asks the government to make public the names of the loan defaulters every six months, ensure accountability of bank executives for bad loans and amendment in the loan recovery procedure. Additionally, unions are also demanding that the government declares wilful and deliberate defaulters as criminals.

It has instructed its state-level units to organise demonstrations and rallies to show its discontent with the Bill and garner public support. While such a demonstration is already underway on Friday in Kerala, a rally will be organised in Kolkata on December 21. According to the unions, the FRDI Bill puts depositors at risk and they stand a chance to lose their money with the banks.

"The FRDI Bill supersedes all previous Acts and there is no need for this Bill when we already have proper regulators like the RBI and the Insurance Regulatory and Development Authority", Das told this business daily, adding that the FRDA Bill will also snatch away workers' and companies' rights to appeal to the Courts. A circular issued by the unions states that the FRDI Bill proposes to empower the Resolution Corporation to use people's saving to the tune of more than Rs. 100 lakh crore to be used as a bail-in packages for corporate defaulters to the tune of Rs 11 lakh crore.

Bank employees are of the opinion that with the bail-in proposal in place, not only deposits can be endangered as the package finally may not work out, but the banks will also try to regain their financial health by using money parked by the depositors with them.  Recently, CPI-M politburo member Surjya Kanta Mishra, also the former leader of opposition in the West Bengal Assembly, said, "The government wants to come up with a law to use the depositors' money to improve the banks' financial health, but refuses to take any action against the guilty corporates".


Bail-in: Here's why SBI report says small
depositors have nothing to worry about

The Moneycontrol News
Published on December 15, 2017

Mumbai, December 15: There has been considerable disquiet over the draft Financial Resolution and Deposit Insurance (FRDI) Bill. Industry chamber Assocham has also jumped into the ‘bail-in’ debate on FRDI, cautioning the government that the trust in the banking system runs the risk of being eroded if the clause is not done away with.

The industry body, however, seems to be speaking in a different voice than the captains of the banking industry. In a recent banking conference, CEOs of some of the top banks in the country assured people that deposits were not threatened by the new FRDI Bill, as it was an improvement over the present system.

In fact, a report by Soumya Kanti Ghosh, Chief Economic Adviser, SBI has said that the FRDI Bill will be a win-win for all.

In a report titled ‘Some Fallacies Regarding FRDI’ Ghosh toes the government line saying that the FRDI Bill in India would be more depositor-friendly than many other jurisdictions around the world.

The report goes on the say that the statutory bail-in power is intended to achieve a prompt re-capitalization and restructuring of the distressed firm. The bail-in strategy would help to mitigate the systemic risks associated with disorderly liquidations, reduce deleveraging pressures, and preserve asset values that might otherwise be lost in a liquidation. Ghosh says that India’s bail-in is similar to the strategies adopted by EU countries like Cyprus and Greece.

Commenting on India’s bail-in, the report says that the risk is less in the proposed bill. Currently, Deposit Insurance and Credit Guarantee Corporation (DICGC) provides deposit insurance of up to Rs 1 lakh and rest of amount is forfeited in the event of a bank failure. While the FRDI Bill has not specified the insured amount yet, it would definitely be higher than the current limit of Rs 1 lakh.

It is also likely because the amount insured has moved up from Rs 1,500 in 1962 to Rs 1 lakh in 1993 but since then there has been no change, despite a sharp rise in deposits.

Ghosh uses data on Cross Country Deposit insurance coverage limit to prove his point. The data shows that deposit insurance coverage in India is one of the lowest at USD 1,508 as compared to a per capita income of USD 1,709. The coverage of 0.9 times is much lower than 7.4 times provided in Brazil and 2.2 times in Russia.

In India, says the report, around 67 percent of all term deposits are less than Rs 1 lakh. These deposits account for 8.6 percent of all deposits. In other words, the smaller depositors will not be affected in case of a bank going under. The bulk of the deposits in value terms – around 55 percent -- are those that are held by high-value depositors in the range of Rs 15 lakh and above. In number terms, these accounts are only 1.3 percent of all term deposits.

The FRDI Bill establishes a Resolution Corporation which will monitor the financial firms such as banks, insurance companies, stock exchanges, and depositories and pre-empt their failure, and resolve or liquidate them in case of failure.

During volatile times as is the present case, all financial asset classes are interlinked not only in India but globally; the bill helps address an important risk and timely intervention can help prevent the risk from spreading.


Cheque Bounce:
Nod to amend Negotiable Instruments Act

The Business Line
Published on December 16, 2017

New Delhi, December 15:  A Bill to amend the Negotiable Instruments Act, 1881, to provide for interim compensation to the payee of a cheque, both at the trial stage and at the appellate stage, got the go-ahead from the Cabinet on Friday.

The amendment will allow a court to order interim compensation to the payee of a cheque, a part of the amount at the trial stage itself. If the drawer is acquitted, the court may direct the payee to repay the amount paid as interim compensation with interest.

Similarly, appellate courts will be enabled to order the appellant to deposit a part of the compensation awarded by the trial court at the time of filing appeal.

A government official said this is being done to help trade and commerce, particularly the MSME sector, and order to increase the credibility of the cheque as a financial instrument.

The move follows representations from the public and the trading community regarding the injustice caused to payees as a result of pendency of cheque dishonour cases.


Banks want to revive trade
& warehouse insurance

Saloni Shukla
The Economic Times
Published on December 16, 2017

Mumbai, December 15: Indian banks are lobbying with the Reserve Bank of India and the insurance regulator to revive trade and warehouse insurance as the rise of digital tracking and traceable payments has become a lot more robust under TReDS, unlike in the past where inventories could not be tracked and malpractices were rampant in the absence of tech-based tracking.

“We have represented to the RBI that trade insurance should be made available to banks as most of the factoring is done by banks, and we are taking the credit risk when financing lower-rated MSMEs,” said a banker who did not wish to be identified.

RBI did not respond to an email query seeking its response to the story. TReDS is an online electronic institutional mechanism which facilitates the financing of trade receivables of MSMEs through multiple financiers. The platform enables discounting of invoices of MSME sellers against large buyers through an auction mechanism that ensures prompt realisation of trade receivables at competitive market rates.

Banks, till a few years ago, were eligible to get an insurance cover for any money lent to trade and trade receivables, but it was later rolled back after several instances of mis-selling, and bogus bills were brought to Irdai notice.

“If Irdai can extend the insurance cover for trade insurance to banks, it will help us in a big way,” said Kalyan Basu, MD, Invoicemart. “Today, banks want collateral for loans which is a huge impediment for MSME finance. Trade insurance can be taken by MSMEs and buyers, but it is not assignable... if the bank is taking a trade exposure and the insurance cover is not assigned to the bank, then it makes no sense.”

“Today, banks are only taking risks on select corporates. In due course, this can be expanded to corporates with low rating and for those corporates this insurance risk will play a substantial role,” said Sundeep Mohindru, founder, M1 Exchange.


Big data, AI, machine-learning
shaping future of jobs: Cognizant

The Business Line
Published on December 16, 2017

Chennai, December 15:  Technologies such as digital, big data, Artificial Intelligence, automation and machine learning are increasingly shaping future of work and jobs. Despite concerns about humans losing their jobs to automation, the fact remains that future of jobs has never been brighter, according to Manish Bahl, Senior Director, Centre for the Future of Work, Cognizant Technology Solutions.

Work has always changed, and will continue to change. While work that is tedious and repetitive will get automated, machines will always need humans. It would be naïve to underestimate human imagination or ingenuity. While technology will upgrade all aspects of society, it will not only solve but also create new problems that would require humans, he said in a commentary on trends for 2018 issued by Cognizant. Recent media reports said there have been many job loss in top software companies due to automation and digital.

Based on major macroeconomic, political, demographic, societal, cultural, business and technology trends, it envisioned a set of 21 ‘unimaginable’ jobs that would provide sustainable employment to scores of people in the coming decade. And the foundation may well be laid in 2018.

Job descriptions such as walker/talker, fitness commitment counsellor, digital tailor, ethical sourcing manager, AI business development manager and man-machine teaming manager are among the low-to-mid technology jobs that are expected to be on the HR’s radar in the next five years.

All these jobs would share the common theme of Coaching, Caring and Connecting: Coaching being the human ability to help others get better at life; Caring being the human endeavour of improving people’s health; and Connecting being the intellectual leverage only humans can bring in connecting man with machine, traditional with shadow IT, physical with virtual, and most importantly, commerce with ethics, he said in the commentary.


Mapping India’s Economic Future:
Jobs, Growth and Banking Reform

The Knowledge@Wharton
Published on December 8, 2017

Manish Sabharwal is co-founder and executive chairman of TeamLease Services, one of India’s leading human resource service companies. He is also on the board of the Reserve Bank of India. He spoke with Knowledge@Wharton recently about a wide range of topics affecting India’s economic outlook, which is shaped by the complex forces of regulatory reforms, formalization of jobs (versus informal jobs), increasing technology and shifting traditions. Drawing from his education and experience, Sabharwal shared his view of where India is headed. An edited transcript of the conversation follows.

Knowledge@Wharton: Does India have a jobs problem or a wage problem? Why does that distinction matter?

Manish Sabharwal: I think the diagnosis is very important because if you think the problem is jobs, you’ll throw money from helicopters and bust the fiscal system. If you think the problem is wages, then you need to think about productivity. I don’t think India has a jobs problem. I think we have a wages problem.

Most people who want a job have a job, they just don’t have the wages they want. Our official unemployment rate of 4.9% is not a fudge. If you think the problem is jobs, you’ll do that make-work program like NREGA (India’s National Rural Employment Guarantee Act), which converted a high-growth, low-inflation economy into a low-growth, high-inflation economy between 2004 and 2014. But if you think the problem is formalization, you will recognize that a 10-year plan is not 10 one-year plans and do formalization, industrialization, urbanization, financialisation and human capital. The structural reform of the Indian economy was long overdue. We were stuck in a low-level equilibrium. So, I think the problem is wages. The only solution is productivity.

Knowledge@Wharton: The number of formal jobs in India is often underestimated. What’s a more realistic way for the formalization process?

Sabharwal: I think the number that goes around in people’s heads is India is 90% informal employment. I think it’s about 75% because if you take survey data and administrative data, you get different answers. But the most important thing is survey data is quite unreliable.

I just was part of a committee in India that looked at labor market data. A total of 27% of Indians say they work for an employer with more than nine employees. But only 1.5% of employers say they have more than nine employees. This is not a reconciliation problem. This is an existential sort of question. If you say that we have to get our survey data better, let’s look at social security, let’s look at health care insurance, let’s look at government employment, let’s look at pensions. That number is about 100 million to 125 million. So, 20% to 25% of the labor force, maybe, is in the formal sector.

Knowledge@Wharton: How does the labour market need to be reformed to keep increasing the number of formal jobs in India?

Sabharwal: I think you have to come at it from the demand side. India has 63 million enterprises. Twelve million of them don’t have an office. Twelve million work from home. Only 8.5 million pay the mandated indirect GST (Goods and Services Tax). Only 1.3 million pay the mandated social security. Most tragically, there are only 19,000 companies in India with a paid-up capital of more than $1.5 million. Sixty-three million enterprises means nothing if it translates to 19,000.

I think this sort of sense of humour about the rule of law, which has encouraged this massive informal sector that doesn’t pay the right wages, has to go. That’s why you have to look at bankruptcy laws, which have been passed in the last year; the GST, which was passed a few months ago; the demonetisation, which was done 12 months ago; the real estate law, which was passed; the ease of doing business ranking, which jumped 30 ranks recently. All of this is connected. People are not given credit for having a plan. But the only way you would formalize India is by making regulatory arbitrage difficult.

Knowledge@Wharton: You wrote an article on how demonetization was good for job creation. Can you explain your point of view?

Sabharwal: The informality of the Indian economy has been encouraged by various causes. But the excess use of cash corruption was an important part of that, and the lack of financialisation. One year after demonetisation, we have concluded that there’s $50 billion extra on a daily basis in the banking system. If you take a six multiplier, that could be $300 billion in new bank loans. We have about $50 billion of new financial assets…. Gold and real estate, which are really [ineffective] savings instruments from a political and an economic perspective, are down. The biggest upside of demonetisation has been digitisation. There were 0.1 million transactions per month on our mobile platform. Now it’s up to 73 million a month. In one year, we have gone from 0.1 million to 73 million, and we’re just getting started with that.

But I think the biggest upside for demonetisation has been ending the sense of humour about the rule of law, that you can get away with [using] cash. It doesn’t matter how the law is written, how it’s interpreted, practiced and enforced. If we increase the costs of informality and reduce the costs of formality, that will put India on that trajectory for higher productivity, higher formal jobs, higher wages, and put poverty in the museum that it belongs.

In political imagination, it’s easier to think about fiscal policy or monetary policy. But I think structural reform was so overdue in India. We’ve had a lot of disruption. This is a short-term pain, we will acknowledge. But I think it’s worth the long-term gain.

Knowledge@Wharton: When demonetisation happened, there was a piece in The Economist titled “The Dire Consequences of India’s Demonetisation Initiative.” They described it as a bad idea, badly executed. One year on, how do you and others in India feel about demonetisation? What could have been done differently?

Sabharwal: The Economist has not been not a great friend of India in the last few years. I don’t think they have found anything right about what’s going on in India. I’ve chatted with them about it. But my sense is that the Indian state’s capability of execution is quite low. Traditionally, the brain was not connected to the backbone. That has been fixed. But now the backbones are not connected to the hands and legs. The last mile of the Indian state, whether it is the taxation system or the inspectors or the banks, have human capital that has diminished so much over the last 10 years. They have so under-invested in technology. India’s scale means their processes have not kept up. If you traditionally take an operations view of any company, people, process and technology are all lacking in the Indian state.

My sense is the biggest lessons of demonetisation are we need civil service reform. We cannot have these permanent, generalist civil service. They are unspecialised. They’re not ready for India’s scale while the country is already moving faster than them. The private sector’s moving faster than them. The government has an execution deficit, the private sector has a trust deficit, and non-for-profits have a scale deficit. But the government execution deficit showed up in both the GST transition and the demonetisation, which doesn’t attack the reasons that it should be done. It just tells us that we need to move much faster on civil service reform than we thought we did.

Knowledge@Wharton: What kind of civil service reform is most urgent?

Sabharwal: Oh, just a fear of falling and a hope of rising. There is no performance management. Today, 98% of Indian civil servants are ranked outstanding. That’s mathematically impossible for everybody to be above average. I think we need punishment and reward, more specialization, younger people getting top jobs. Right now, you can’t be secretary in the government unless you’re 58 years old. Adopting the colonel threshold of the army, where if you’re not shortlisted for promotion, you retire at 50. I think a forced curve, so you can’t rank 98%, is needed. RBI is the first public institution that has now adopted a forced curve. It’s 20/20/60, so you can’t rank everybody outstanding. I think civil service reform is largely around performance management, specialization and tenure.

Knowledge@Wharton: The other thing one often hears in the context of demonetisation is the impact it has had on digital payments. How do you see the future of digital payments in India?

Sabharwal: We all have China envy, right? I think what China has done in the last 10 years is remarkable. It would have been a huge gift to India’s poor if we had figured that out. Because now there is the JAM trinity — the Jan-Dhan millions of accounts that were opened up; Aadhaar, which is India’s biometric program; and mobile penetration is now reaching almost 700 million. India is finally getting to critical mass with the plumbing for digital payments

Demonetisation was a shock to the system of cash and a huge rocket for digitisation. I think that the real time gross settlement, or the real time debit/credit, which most advanced economies don’t have, is possible because of biometrics Aadhaar and the mobile phone. I think India can skip the learning, and I think that that will happen over the next six months.

I think Visa, MasterCard and Discover will not be around five years from now in India because we are moving payments to marginal cost. The [way these] guys have built their business, their costs do not reflect the cost of a digital transaction. Given our vision that payments is a very important part of reducing poverty, financial inclusion, financial literacy and the stuff that you’re doing at Knowledge@Wharton also, it’s heavily needed in India. But the first stage of that is just bringing payments down to marginal cost.

Knowledge@Wharton: The other aspect of digital currencies that people are talking about is the rise of cryptocurrencies. From the RBI’s perspective, how does the emergence of cryptocurrencies affect the central bank’s ability to direct monetary policy? Does the RBI have a perspective on this?

Sabharwal: I think we’re still forming the view on it. It’s still early to say what the impact of Bitcoin is, especially after it was 30% down in one week. For many of the people who were so extrapolating its growth as a store of value, something that can go down 30% is not going to work. It can then be viewed as a commodity. It can be viewed as a speculative instrument. But there was a lot of marketing going on of Bitcoin as a store of value. You can’t have 30% down in a week for a store of value. So, I think it’s probably early for us.

I think all of us recognize that cryptocurrencies matter, or some form of digitisation of currencies will happen. I guess we just don’t know how right now. Central banks must be conservative institutions. The challenge is being open to innovation, competition and the upsides of that while still maintaining stability. We are experimenting, thinking about our own cryptocurrency, which may or may not be the right thing to do. But I just say it’s probably early to have big winners or losers.

Knowledge@Wharton: Are you thinking about something like what’s happening in Japan, where some of the leading Japanese banks have come together to create the J Coin?

Sabharwal: Yes. We’ve only done that in cards. We’ve RuPay, which is a competition to Visa, but it’s a purely domestic card with much lower cost of transactions. Yes, it’s the same way that Japan is thinking about it. But I think it’s early to decide whether that’s the right path to take. I think one big change in India over the last few years is we don’t have to do it ourselves. But we also recognize you don’t have to be Western to be modern. I think we can figure out some things. And technology is home turf for India. There’s a lot of fintech for the world that is coming out of India, which hopefully we can use for India.

Knowledge@Wharton: I wanted to end with a couple of questions about TeamLease. A few years ago, you said the big challenge in India was not so much unemployment as employability. How has TeamLease progressed along those lines, especially since you went public about a year ago?

Sabharwal: We’ve hired somebody every five minutes for the last five years, but we’ve only hired 5% of the kids who came to us for a job. That is not only bad business, it breaks my heart. That’s why we started the industry’s first skill university. Two years ago is when it fully went live. Now we have 40,000 students because it prays to one god, which is employers.

Only 5% of my kids are on campus. The balance are in apprenticeship or online. And only 5% do a degree. But 100% have the ability to take that three-month certificate as an opening balance for a two-year associate degree. And I think degrees matter. The option to go all the way to there. Wharton is a good place to be at. It’s a better place to be from. The fundamental value is being from Wharton. I think it’s patronizing to say vocational training is usually for other people’s children, it’s not for our children. We have to give people the option. I think India has made a lot of progress in education and skills by allowing things like TeamLease Skills University, which were not allowed a few years ago, to create the space for innovation and thinks like that.

About TeamLease as a public company, everybody had scared me. “You’ll become quarter to quarter. You’ll start thinking short term.” But so far, it’s been an interesting experience with some upsides. It’s much easier to attract talent as a listed company. It’s much easier to do mergers and acquisitions as a listed company. And most interestingly, it’s much easier to hold my internal people accountable because the market tells us what our goals are and what we’re being measured by, as opposed to, for the last 15 years, just me crowing about, “We need to do 25% growth.” Now the market tells us they want 25% growth.

I think being public has been an interesting experience. People [complain] about the problems of being a big, public company but I’ve never met a small company that doesn’t want to be big. And I’ve never met a private company that, some day, doesn’t want to be public if you want to really scale. TeamLease has a real shot at being three things. We can be India’s largest private-sector employer, India’s largest private university, and maybe even the world’s largest staffing company by number of employees. If I have 5% of India’s market, I’ll be larger than Adecco just because we have 1.3 billion people in India. I think India already has more people than China.

Knowledge@Wharton: Where do you think the biggest growth opportunities for TeamLease will come from in the next two years? And what are the biggest risks you see in following that strategy?

Sabharwal: We are a child of domestic consumption. The fastest-growing segment of India’s jobs are sales, customer service and logistics. China’s farm-to-non-farm transition happened to factories. India’s farm to non-farm is happening to sales, not even to services. Domestic consumption is reaching critical mass. India doesn’t have the same manufacturing opportunity that China had in 1978. They got a 30-year super cycle of global growth, global openness to trade and global deconstruction of manufacturing supply chains. That doesn’t mean we should give up on manufacturing. But I think services, sales and customer service is our biggest focus. The biggest risk for us is just execution. My branding constraint is not market or product, it is just not being able to keep up with growth.

You know, my favourite quote is from American politician Mario Cuomo. He says, “We politicians campaign in poetry, but we govern in prose.” For entrepreneurs, our business plan is in poetry, and we execute in prose. Our biggest planning constraint is prose. It is IT systems that scale up to handle 3,00,000 calls and emails a month, which we get. It is processes that allow huge amounts of money to come in and leave every month. Just the technology to keep up with that is going to be our challenge.

Source: Internet News papers and Anupsen articles