Page 54 - Banking Finance May 2023

FEATURES

Apart from the depositor trauma and investor losses, bank Banks were always considered special because they play a
failures can lead to a rise in fees and interest rates as banks key role in financial intermediation. But they face the risk
would look to cross-subsidise their losses. Worse still, one of depositor runs, which are contagious. Hence, they are
bank failure could lead to a chain of failures due to domino subject to prudential regulation and have access to special
effect and even a sharp pull-back in bank lending, slowing safety nets. The original mandate of the regulators has been
down the economy. No central bank would ever welcome expanded over time from depositor protection to financial
such a banking crisis. stability in the face of systemic risks, which are heightened
by a highly interconnected financial system as was evidenced
So, what next? in the GFC.
The Silicon Valley Bank (SVB) episode has opened up many-
Thankfully, the lessons of that crisis were learnt and an
an-old discussion. Should supervision be with central banks
impressive list of enhancements of regulatory and resolution
or does that conflict with their ability to combat inflation?
policies and supervisory and enforcement practices rolled out
Should regulated entities, whether in the private or public
in record time. Yet, implementation of these reforms
sector, be represented on the board of supervisory agencies,
remains uneven across the G20 fifteen years later.
or do they impact the ability to conduct independent
supervision? Should international standards be applied to all
banking institutions and, if so, is it possible to craft The RBI has been taking a series of measures to strengthen
supervisory expectations of risk management that are Indian banks and the financial system as a whole. Depositors
proportionate to their risk profile? should repose faith in its ability to safeguard their interests.
India’s leadership of the G20 offers an opportunity to
Or, should deposit insurance be 100 per cent (that is in value reinforce the importance of the post GFC regulatory agenda.
terms and number of depositors) not just in practice but also Implicit guarantees, unfunded insurance and shotgun
in policy, with costs shared by all stakeholders (central bank, mergers may help stem the bleeding in a crisis, but in the
banks, depositors’ protection fund and government) through long term it is the full implementation of international
innovative instruments and funds? Will this increase moral standards in regulation, supervision, governance, resolution
hazard and create greater incentives for risk-taking, and if and deposit insurance that will best help convince the
so, how should this be kept in check? markets of the stability of the banking system. (Source: BL)

NPCI: 99.9% of all UPI transactions to remain free
After it introduced interchange of up to 1.1 per cent on UPI transactions above Rs. 2,000 made through prepaid
instruments, cards or wallets, the National Payments Corporation of India (NPCI) clarified that 99.9 per cent of UPI
transactions are done directly from bank account-to-account, and will not be impacted by the new norms.
"Traditionally, the most preferred method of UPI transactions is linking the bank account in any UPI-enabled app for
making payments which contributes over 99.9 per cent of total UPI transactions. These bank account-to-account
transactions continue to remain free for customers and merchants," said NPCI in a release.

SBI offers second innings to retired bank employees

SBI is hiring retired bank staff on contract basis for more than 1,000 posts. Candidates are requested to apply online.
The minimum age of candidates should be 60 and maximum 63. Grade/scale at the time of retirement: Officers
Scale II, III and IV of SBI/ e-ABS /other PSBs.

The selection process will be based on shortlisting and interview. A shortlisting committee constituted by SBI will
decide the shortlisting parameters and thereafter, adequate number of candidates will be called for interview. The
interview will carry 100 marks. The qualifying marks in interview will be set by the bank. A merit list for final selec-
tion will be prepared, subject to candidate scoring minimum qualifying marks. In case more than one candidate score
common cutoff marks, such candidates will be ranked in the merit in descending order of their age.

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