Page 9 - Banking Finance December 2020

BANK UPDATE

The deadline could be extended till scheme in public sector banks will be we want to build a bank in India as a
March next year at the maximum, she based on operating profit/net profit of fintech with a banking licence. Unlike
clarified later. Sitharaman said the fi- the individual bank. It is optional for other foreign banks, we have decided
nancial inclusion story is not over and private and foreign banks. In the pre- to go the whole hog. The most difficult
banks still have inclusion to carry for- vious wage settlement, signed in May choice was the strategy we wanted to
ward. 2015 for the November 2012-October do," said Sinha, adding that the pan-

2017 period, the IBA had offered a 15 demic and lockdown have proven to be
IBA, unions settle on 15% per cent hike. a big leveller as to some extent it does
pay hike IBA initially offered a pay hike of 12 not matter how many branches and
ATMs a bank has. As part of its strat-
Over eight lakh employees from 29 per cent which was rejected by the
banks will get a wage hike of 15 per bank unions. Salary and wage revision egy, the bank is focussing on providing
cent involving an outgo of Rs 7,900 in the banking sector takes place top-of-the-line services to the affluent
crore for the banks. Both the sides through a wage revision settlement and emerging affluent in India and
agreed to implement the concept of between the workers and manage- their counterparts would be NRIs with
Performance Linked Incentive scheme ment. This wage revision agreement in relations in India.
for the first time from the current fis- the banking industry is valid for five "We are careful about the segment we
cal. years only. go to, we are not choosing the mass
The Indian Banks' Association (IBA), or the super affluent segment. We
the apex body of the banks, concluded SBM Bank to launch neo- want to work with the affluent who
the 11th bipartite wage negotiations need to be treated as a super affluent,
with bank unions and associations, banking platform but needs a lot more guidance," he
which will be effective from November SBM Bank India, which is the wholly- said. The bank has over 8,000 custom-
1, 2017. "The agreement reached to- owned subsidiary of State Bank of ers and seven bank branches and five
day, provides for 15 per cent increase Mauritius, is focussing on technology to ATMs.
in pay slip. To inculcate a sense of com- reach out to customers and is set to
petition and also to reward the perfor- launch a neo-banking platform. HDFC Bank capable of
mance, the concept of Performance
Linked Pay has been introduced for the "We are launching neo banking. We handling downside risks
first time," IBA Chief Executive Sunil have tied up with a fintech," said Standard and Poor's, global rating
Mehta said. Neeraj Sinha, Head - Retail and Con- agency said that India's largest private
sumer Bank at SBM Bank (India), add-
A detailed bipartite settlement/joint lender, HDFC Bank, has sufficient finan-
ing that the bank is looking at collabo-
note has been signed with United Fo- rative banking in other segments as cial headroom to withstand downside
rum of Bank Unions (UFBU) represent- well where companies may have access risks from tough operating conditions
ing four workmen unions and four of- in India. "HDFC Bank's result for the
ficers associations and also Bank to large number of customers but do first half of 2020-21 (the financial year
Karamchari Sena Mahasangh (BKSM) not have a banking licence. "We are that will end on March 31, 2021) are
who were parties to agreement, IBA piloting with fintech Pay Nearby. We resilient and in line with our expecta-
said. have launched a service called Nivesh, tions," S&P said in a statement.
which is a recurring deposit platform,"
Of the total wage outgo, the Rs 3,385 Sinha told. HDFC Bank has ample capital buffers,
crore wage bill hike is for non-officers, as reflected in its Tier-i capital ratio of
while the rest is for officers. The wage SBM Bank India was the first foreign 17.7 per cent as on September 30,
agreement is for the period November bank in India to obtain a banking li- 2020. The bank's S&P Global Ratings
2017 and will run till October 2022. cence from the Reserve Bank of India risk-adjusted capital ratio will be 8.5-9
However, there was no decision on to operate as a wholly-owned subsid- per cent over next two years, com-
five-day week for bank employees. iary in January 2019.
pared with 9.4 per cent as on March
The Performance Linked Incentive "The attitude we started with was that 31, 2020.

BANKING FINANCE | DECEMBER | 2020 | 9