Prabhu Sathyananda

  Dear Friends,   IIA Madras  chapter held Annual Conference on 16 and 17 july, 4 pm to 8 pm. A galaxy of eminent speakers shared their knowledge, experience, and wisdom on various relevant and current topics like Zero trust, Future of audit, Velocity of Risk, CEOs' expectations from Audit and risk professionals, entrepreneurial mindset, education, and rural development, emerging technologies. On the first day Eminent speakers and panelists  addressing the elite gathering were Mr. Sundeep Sikka, Mr. Sridhar Ramamoorthy, James H Wanserski from the USA, K S Sreedharan, Sharad Mathur, Sridharan Rangarajan, Kalpita Nassikar, Ravi veera Raghavan, Sathyananda Prabhu, Krishna Chaitanya, Sri. Sridhar Vembu   I have picked a few Gems from their presentations for your ready reference and application in life, which I am sharing here below.   An audit is not about finding issues, it is about identifying what can be done better in the area audited. ...

Observations of Shri . Uday Kotak, head of Kotak Bank,  on Indian banking system in his message to the shareholders is most relevant and apt. Following are the main points. Among the lessons from the problems in banking sector, banks should understand they are not private equity investors and recovery of money should be at the heart of lending. “Return of capital is more important than return on capital. If banks think they cannot recover money, they should not lend in the first place,” he said, while suggesting a serious overhaul of the recovery mechanism in the country. He also blamed the banks for “postponing the pain” for the last many years, saying it has had a ballooning effect on exposures. Kotak further said, “Banks were nationalised 47 years ago. One of the reasons for this was that private banks were lending disproportionately to big businesses. Access to funds from banks was not easy for the common man. “Nationalisation was supposed to change...

Sharing the names of large bank loan defaulters: Need of the hour. RBI argued the case of big defaulters in Supreme Court and put forward two pronged arguments to prevent making the names of big defaulters’ public: 1    There is more and more decentralization of the functions of the central bank and therefore it was a "herculean task" for it to get data from all banks. This should not be the reason for preventing the disclosure of names of these big defaulters, for two reasons: a.     All this data is regularly available with RBI as part of various reporting systems from banks b.     Banks themselves may me made mandatory to publish, at least their top defaulters names, as part of their financials. This can include top NPAs / SMAs above a cut off amount.       RBI is claiming confidentiality. If it is some law coming in the way of disclosure of such vital information needed, the law needs to be amended in the p...

Dear Friends, It is really very heartening to note  the observations of Hon. Supreme Court with regard to the secrecy being maintained by banks and regulator on the defaulting  and Fraudulent borrowers. Today Banks are in a very bad shape the basic reason is this secrecy  around the massive misuse /looting of public money by corporate/banker connivance or corporates bullying poor bank officials . Why public should not know the names of those who have taken the public money for running their business ? Good or Bad , let public be aware. Same way NPAs , Bad debts , write off all this should be available in the public domain. Banks must be mandated to disclose the same. If some customers have not collected the money and is lying in inoperative accounts /unclaimed , banks are required to publish full details in the web site and also they cannot use these funds and pay if claim comes. Government wants to enjoy that money in the name of customer prote...

Is Banking Meltdown on Asset quality concerns  Justified? Recent meltdown of bank stocks in Indian bourses is heavily debated as an opportunity for the long term investors to enter the segment or worse is still to come. The one most important negative is NPA and biggest positive is large Bond portfolio of banks having potential to earn huge profit for banks when interest rates start falling in line with rates in advanced countries. NPAs beyond a certain level are a cause of serious concern. High NPAs disturb recycling of lent funds affecting credit growth. NPAs also affect profitability by requiring provisioning, which means a large part of the profits needs to be kept aside as provision against bad loans. Therefore, the problem of NPAs is the concern of the lenders, borrowers, investors and the policy makers. The level of stressed asset in the banking system has crossed 13% of loan portfolio. As on 31-03-2015 , stressed assets of public sector banks alone was 7.1...

I am delighted to see RBI 's timely move in directing Sahara India Fiance to Refund the deposits accepted b y them. Time and again , innocent people out of lust got trapped in cunning moves of these Finance companies. They offer hefty commision, attractive ROI and finally lot of maoney collected and company vanishes or gets liquidated. Companies known for their reputation for quite long alos have cheated investors and robbed their hard earned savings including retirement benefit invested by senior citizens. The promoters divert funds and get scott free . Compny goes into bankruptsy,promoter becomes millionnaire. I strongly feel that - 1. NBFC or any company other than a banking company should not be allowed to accept deposits from ordinary Investors. 2. Promoters, Directors finances should be investigated and attached wherever share holder/depositors do not get their money from company 3. Every Large corporate is living on cheap funds from banks and OTS, Write off are common. Ban...

Prof Ashima Goel's article in Business line 12-Aug- 2010 " wrong Tack on Financial Oversight " brings to the fore two important ailments of India Culture Today- 1. Not learning from Others Experience - i.e Global Economic Crisis 2. Efforts of politicians to spread their tentacles wherever they smell money or threat to their manupulative power. That is what the effort is by Union Finance Minister in forming Financial stsbility and development Council ( FSDC). As author has rightly pointed out Co-Ordination Committee is what is the need of the hour. Hats off to Madam ASHIMA

ALM in Banks Enterprise Risk management: Committee of Sponsoring Organisations of the Treadway commission (COSO) issued “Enterprise Risk management- Integrated Framework” (ERM) to help Boards and Top management to understand an enterprise wide approach to Risk Management. The aim is to help organizations improve performance through better integration of Strategy, Risk Management, Control and Governance. Implementation of ERM provides the opportunity to achieve a robust and holistic top-down view of key risks facing the organization and to manage those risks strategically to increase the likelihood that organizational objectives are achieved. ERM is a process, affected by the entity’s Board of directors, management and other personnel, applied in strategy setting and across the enterprise, designed to identify potential events that may affect the entity. All Risks in Bank falls under one of the three following major Risk categories: • Credit Risk • Operational Risk • Ma...

Does the base rate really make any difference to bankers or other stake holders? Almost all banks have fixed rates between 7.5 to 8.00%. This is the minimum rate below which banks can not lend. As of now rates below this are enjoyed only by top rated corporates, who as rightly advised by SBI chairman Mr. bhat will move to other means of finance like commercial paper. The flexibility provided by RBI in deciding rate allows banks to overcome any problem in this area. They fix the Base rate and Load while charging interest. Finally , ground reality is it does not serve any purpose.

Today most of the Indian banks have adopted CBS. moved to INternet Banking, Mobile Banking, POS, CArds, ATM and lot more delivery channels making brick and mortar banking as just a back office. This brings to fore the core issue of Information security. In US , it is said billions of Dollars are lost in Cyber attacks, despite the so called sophistication and policy procedures in place. How Indian Banks,specially public sector and smaller old generation private sector banks with hardly any skiled IT security staff handle this challnge is a big question. Though Banks have started outsourcing some kind of security management, the in house expertise is very essential to get real benefit from these vendors and to select right kind of product, right deployment methodology and SLAs. This gives enormous potential for IT security professionals with domain expertise also for top slots. We need to discuss what kind of trainings / knowledge sources available for one to understand all changing an...