FinMin's new measures to protect prudent commercial decision of bankers

With a view to protect prudent commercial decision of bankers, the government has taken a slew of decisions, including doing away with personal responsibilities of MD and CEOof PSBs for compliance in dealing with large value frauds committed by bank officials.
Powers have been delegated by Department of Financial Services (DFS) to the Boards of public sector lenders to put in place a suitable mechanism for ensuring compliance of the various timelines laid down in RBI and CVC circulars, an official statement said.

"Similarly, the instructions of DFS of 2015 regarding compulsory examination of fraud for all NPA accounts exceeding Rs 50 crores have been aligned with the CVC circular of January 15, 2020 whereby all such cases of suspicious fraud are to be initially referred to the Advisory Board for Banking and Financial Frauds (ABBFF) headed by former vigilance Commissioner T M Bhasin," it added.
Finance Minister Nirmala Sitharaman at several occasions assured bankers that adequate measures would be taken to protect honest commercial decisions taken by them and distinction would be made between genuine commercial failures and culpability.
There are widespread apprehension that bankers could be hauled up for their bona fide commercial decision go wrong.
To assuage concerns, the finance minister had assured the bankers that a distinction would be made between genuine commercial failures and culpability last month in a meeting with heads of the public sector banks (PSBs), which was also attended by the CBI Director.
She had also told bankers that the CBI will have discussions, and workshops with the bank officials from the level of vigilance officers, senior managers to general managers to explain and eliminate apprehension from their minds.
Considering the complexities involved in the commercial decisions of managers in public sector firms, the Central Vigilance Commission set up the Advisory Board for Banking and Financial Frauds (ABBFF) for a mandatory first level examination on suspected frauds in excess of Rs 50 crore, involving public servants equivalent in rank to GMs and above, before enquiry or investigations begin.
In order to boost staff morale and reduce scope for harassment, Sitharaman had also directed public sector bank heads to clear long pending vigilance cases against their officials for alleged malpractices.
The banks should form a panel headed by General Manager and it should either take decision to pursue the case with timeline or close the file of long pending vigilance cases, she had instructed.
In line with the decision taken in the meeting, the Finance ministry has separately directed banks on January 27 to set up a committee of senior officers to monitor progress of pending disciplinary and internal vigilance cases as procedural delay, on one hand, adversely affects morale of the employees and on the other, breeds inefficiencies in the system.
Therefore, it said, every bank must setup a Committee of Senior Officers to review pending disciplinary and internal vigilance cases and frame timelines to reduce delays in deciding such cases.
As part of this endeavour of government, Section 17A was incorporated in Prevention of Corruption Act, requiring prior permission before initiating investigation against a public servant, it said.
These measures taken will improve sentiment among bankers and help them take lending decisions to drive economy facing slowdown.

Ousted Boeing CEO to walk away with $62 mn, but lose some benefits

The Boeing CEOwho was ousted last month for the company's botched response to two crashes and the grounding of its best-selling plane will walk away with $62.2 million, the company disclosed Friday.
Boeing said, however, that Dennis Muilenburg will not get additional severance or a 2019 bonus, and will forfeit stock awards worth $14.6 million.

Muilenburg, who spent more than 30 years at Boeing, also has unexercised stock options that he has held since 2013 and that are worth more than $18.5 million at Friday's closing price.
Muilenburg was fired in late December after failing to get the company's 737 Max jetliner back in the air.
Boeing board Chairman David Calhoun will take over as CEO on Monday. He is a former General Electric and Nielsen executive with a reputation as a turnaround specialist.
Calhoun, 62, will get a base salary of $1.4 million but potentially several million more in bonuses and stock awards, including $7 million if he gets the Max back in service.
The Max was grounded last March after crashes in Indonesia and Ethiopia killed 346 people. It has taken far longer than Boeing expected to fix the plane. This month, Boeing will halt production until it is clear when changes to the plane will be approved by regulators.
Muilenberg was named CEO in 2015 and presided over a rapid rise in the Chicago-based company's stock price. The shares have dropped 26% in the last 10 months, however, as the Max's recovery stalled.
Months before Muilenburg's ouster, some lawmakers and relatives of passengers who died in the Max crashes had asked him to resign or take a cut in pay.
At a congressional hearing in October, Muilenburg parried questions about his compensation by saying it was set by Boeing's board. A few days later, he announced he would not take a bonus for 2019 that he would walk away from tens of millions of dollars as a signal that he was taking responsibility for correcting problems with the Max.

Karur Vysya Bank MD and CEO P R Seshadri resigns citing personal reasons

P R Seshadri, managing director and CEOof Karur Vysya Bank, resigned from the position citing personal reasons, the Bank informed the exchanges on Saturday. It said Seshadri submitted his resignation through a letter. The Board of Directors of the Bank accepted the resignation on the day and he will be relieved from services on March 31, based on his request. He was appointed as the MD and CEO in September, 2017.

Don't terrorise us on tax: Rafale engine manufacturer tells Rajnath Singh

India should provide an attractive business environment and not "terrorise us" with its tax and customs rules, the CEO of the French engine manufacturer behind the Rafale fighter jet told Defence Minister Rajnath Singh on Wednesday while announcing that the company plans to invest nearly $150 million in the country.
French multinational Safran, the manufacturer of the M88 state of the art engines fitted in the Rafale jets acquired by India, gave a presentation of its facility to the minister who took a tour of the assembly line of the company near the French capital.

"Visited the Engine Manufacturing Facility of Safran at Villaroche near Paris today. Safran is known for its engine making capabilities. They have also developed the engine for Rafale," Singh said in a tweet.
"Happy to meet some of the young and bright engineers of Indian origin working at the Safran manufacturing facility. Their technical knowledge and hard work is impressive and inspiring," he said.
During the presentation, CEO of the Safran Aircraft Engines Olivier Andries revealed plans for nearly $150 million investment in the country towards training and maintenance.
However, the CEO called on India for more support on its tax structure.
"India is set to become the third largest commercial market for aviation and we are keen to create a strong maintenance and repair base in India to serve customers," Andries said.
"But we need to make sure that the Indian tax and customs system is not terorrising us," he said.
The minister responded by assuring him that India was committed to providing the "right climate" for investments under the 'Make in India' initiative.
Singh also invited Safran to participate in the DefExpo in Lucknow in February next year, an invitation that was accepted by the company which designs and develops engines for civil and military aircraft at its assembly line at Villaroche in Reau, near Paris.
The minister was taken on a tour of the assembly line, where all the Rafale jet M88 engines fitted for India's 36 aircraft will be assembled.
Safran gave the minister details of its collaboration with Hindustan Aeronautics Limited (HAL) and reiterated its commitment to the 'Make in India' as well as 'Skill India' programmes.
"We have a long association with India and all Indian airlines are our customers. We are hopeful and optimistic that we will have a positive reception to our expansion plans. We are keen to share the know how and create an engine ecosystem in India," Andries said.
The company, which says it already has a $15-million investment in the country where it also trains 500 engineers annually, claims to be on course to meet its off-set commitments in India as part of the Dassault Aviation deal signed by India in September 2016.
It is now seeking the government support to set up maintenance, repair and overhaul (MRO) facilities in India, with training plans for further 500 engineers and skilled technicians.
Defence secretary Ajay Kumar, part of the ministerial delegation to France, assured the company of support and asked them to prepare a document highlighting any "pain points" they foresee in their expansion agenda, which will be taken into consideration.

ThyssenKrupp appoints Premal Desai as CEO to oversee its biz restructuring

ThyssenKrupp on Friday announced the appointment of Premal Desai as the new Chief Executive Officer (CEO) for its steel division to oversee the restructuring of its business following the collapse of a proposed joint venture with Indian steel major, Tata Steel, in Europe.
Thyssenkrupp Steel Europe and Tata Steel Europe had signed agreements on June 30, 2018, to create a 50:50 joint venture. However, the European Commission had raised concerns over high prices for electrical steel, automotive steel and packaging among others in the event of the merger going ahead.

In May 2019, the two companies announced they were scrapping the plan.
The 50-year-old Indian-origin executive, who has been Chief Financial Officer (CFO) of ThyssenKrupp Steel Europe AG since 2015, will take charge as the Chairman of the Executive Board of the company.
As a former Head of Strategy at ThyssenKrupp AG, Desai will now be in charge of formulating a "sustainable strategy" for the steel division.
"Shaping the future of steel is a challenging task. There's a lot to do," said Desai.
"We look forward to tackling this together as management team. The market environment is not easy, but we are in a strong position and have a lot of potential. We'll build on that," he said.
Further down the line, Desai is also set to take over the strategy and planning function as well as the financial function and will lead the Management Board of ThyssenKrupp Steel Europe AG.
The German steel major said Andreas Goss will resign from his position as CEO by "mutual agreement" in view of the cancellation of the proposed joint venture with the Indian steel giant Tata, indicating that the changes have been necessitated as a result of the European Union's decision to block the JV over fears that it would have led to increased prices for different types of steel in Europe.
"Our steel business is facing major challenges. We have now put together a strong team that will tackle the tasks at hand quickly and develop a sustainable strategy for steel following the cancellation of the joint venture," said Guido Kerkhoff, CEO of ThyssenKrupp AG.
Amid the major changes at the top rung of the company, Heribert Fischer will also leave the Steel Board but remain with ThyssenKrupp Steel Europe AG in an advisory capacity at the request of the company.
Bernhard Osburg, currently responsible for sales management in the steel segment, will join the Executive Board of ThyssenKrupp Steel Europe AG as Chief Commercial Officer and will be responsible for all sales and innovation activities in the steel business.
Steel producers in Europe have been hit by falling demand in the past few months, with both ThyssenKrupp and Tata Steel indicating shifts in strategy for their European operations.
The two companies had hoped to create the second-largest European steel entity behind Lakshmi N Mittal's ArcelorMittal with a merger, but the European Commission rejected the plans after an in-depth investigation concluded that the companies had failed to offer "adequate remedies" to ensure their proposed JV would not reduce competition and increase prices. Know Desai
The 50-year-old has been chief financial officer of ThyssenKrupp Steel Europe since 2015, and was a former head of strategy at ThyssenKrupp
He will be in charge of formulating a sustainable strategy for steel division
Desai to take over the strategy and planning function as well as the financial function and will lead the board of ThyssenKrupp Steel Europe

(Only the headline and picture of this report may have been reworked by the Business Standard staff; the rest of the content is auto-generated from a syndicated feed.)

UIDAI's Ajay Bhushan to replace Hasmukh Adhia as revenue secretary

Unique Identification Authority of India CEO Ajay Bhushan Pandey will succeed Hasmukh Adhia as revenue secretary. Adhia, a 1981-batch Gujarat cadre IAS officer, will retire on November 30. In August 2015, he was appointed revenue secretary and became finance secretary — the senior-most bureaucrat in the finance ministry — in November 2017.
Adhia, a 1981-batch Gujarat cadre IAS officer, moved to Delhi in November 2014 as the secretary in the Department of Financial Services after Narendra Modi became the prime minister. In August 2015, he was appointed as the revenue secretary and became finance secretary — the top most bureaucrat in the finance ministry — in November 2017.

Although Adhia was associated with a host of key government programmes such as Mudra Yojana, bank recapitalisation plan-Indradhanush, and other key social security schemes, his most important contribution is the implementation of the goods and services tax (GST), the biggest tax reform since Independence. He was associated with framing of anti-black money laws. According to sources, Adhia did not seek extension or any post-retirement job, and as a yoga enthusiast, he is keen to pursue spirituality.
Earlier in the day, Finance Minister Arun Jaitley wrote in a Facebook post that Adhia performed his job with “professionalism” and “impeccable integrity”. Wishing Adhia all the best for his post retirement life, Jaitley said “he (Adhia) had informed me earlier this year that he would not work for a single day after the 30th of November 2018”. Adhia in a series of tweets thanked Modi and Jaitley for their guidance and leadership and expressed gratitude to his officers and staff. During his four years in the finance ministry, Adhia was involved in most of the flagship programmes of the government.
While Adhia was Financial Services Secretary, besides Mudra and Indradhanush, he played a key role in formulation of Pradhan Mantri Suraksha Bima Yojana, Pradhan Mantri Jeevan Jyoti Bima Yojana and Atal Pension Scheme.
People associated with the GST’s implementation said it was because of Adhia’s perseverance that the GST Council could clear tax rates on over 1,200 items in a two-day meeting in Srinagar in May, 2017.
During his tenure in the finance ministry, Adhia was no stranger to controversies. He came under attack of BJP MP Subramanian Swamy who raised questions about the dominance of private companies in the GST Network (GSTN), the company providing the IT backbone for the GST. He was also criticised when he tried to take strict action against some powerful officers facing corruption allegations.

Think technology, learn coding: Tips to survive when robots want your job

Can’t code, or speak Bahasa? Didn’t go to school with a CEO’s son or daughter? A robot will take your trading seat. Read on if you want to save your job.
The threat from automation is in the flows part of banks’ global markets business, the most important chunk of the biggest division of investment banking. Investment banks garner 70 percent of their revenue from global markets, made up of trading stocks and bonds, as well as structuring derivatives products and financing; the remaining 30 percent comes from advisory services like shepherding M&As or helping companies raise equity and debt.

The higher-margin areas within markets — from structuring to swaps — is relationship-oriented, and therefore (relatively) safe from robot overlords. And it happens to be a big contributor to the 70 percent pie, especially in Asia, where commissions on equities and fixed-income trades are sinking fast, and language and client connections play a big role. Good news? Read on.
With the flows business comprising 51 per cent of banks’ global markets revenue of $109.8 billion last year, according to Coalition data, automation of even vanilla trades is no small threat. Besides, the 30 per cent advisory pie of investment banking revenue outside global markets only pays well when banks counsel on large cross-border transactions or underwrite big IPOs.
In Asia, the former is largely a Japanese game since China pulled the plug on deal-making by its overly ambitious conglomerates. And large share sales only happen in a few markets. India may be the second-biggest destination for cheap Xiaomi phones, but the Chinese firm’s Hong Kong IPO probably made more for banks than the entire Indian equity advisory industry will earn in fees this year, as a senior finance executive told one of us.
Go With the Flow
Desks have already shrunk, and will get smaller still. A decade from now all trading will be electronic. Last year, JPMorgan Chase & Co. Chairman Jamie Dimon famously boasted of a currency trader that made a $100 million bet via a cell phone. That’s the shape of things to come.
In contrast to the early days of the 2008 financial crisis, when tech was culled to cut costs, digital upgrades are now seen as both an operational necessity and a strategic differentiator. Tech spending in global-markets divisions of investment banks has risen to $16.5 billion at the 12 institutions Coalition canvassed, from $13.8 billion in 2013. A chunk of that is maintenance of bulky legacy systems, but Amrit Shahani, a London-based research director at Coalition, says large Wall Street and European banks are each spending around 10 per cent, or a giddy $1 billion of their annual revenue, to stay relevant.
Going Digital
Chief technology officers are pushing for even bigger budgets. Their teams are the financial coders who’ve created bespoke systems for Goldman Sachs Group Inc. and the like and who are increasingly sitting on trading floors so that precious minutes aren’t wasted talking to someone in Bangalore when a huge deal blows up. Contract workers from third-party firms like PageGroup Plc’s Michael Page and Robert Walters Plc are getting seconded for a few years to help run trading floors smoothly. Headhunters say a $155,000 salary (excluding bonuses) for someone with eight years’ experience isn’t uncommon in Hong Kong, for instance. It’s not exactly banker comp, but it’s rising much faster.
Beyond the coders are the bankers-cum-traders-cum-tech thinkers.
Nomura Holdings Inc. in February hired Jezri Mohideen, a former senior trader at Royal Bank of Scotland Group Plc and Brevan Howard Asset Management, to be its global chief digital officer for investment banking. Based in Dubai, part of his job is to set up artificial-intelligence labs and merge the old and new worlds of asset custody.
Talk to any senior banker or trader and they’ll tell you there’s a lot of soul-searching going on amid threats from fintech and blockchain. The challenges are even more pressing for consumer and private banks, as well as in some corners of corporate lending such as trade finance.
Barclays Plc’s wealth management and investment operations head in the U.K. is Dirk Klee, previously at UBS Group AG’s wealth arm in technology and digital services. Singapore’s DBS Group Holdings Ltd. CEO Piyush Gupta is using open-application-programming interfaces to blur the boundaries between payments and commerce. If he doesn’t do it, Ant Financial’s Alipay or upstarts such as ride-hailing service PT Go-Jek Indonesia surely will. In trade finance, using blockchain to retire paperwork older than Shakespeare’s “Merchant of Venice” is a project both Singapore and Hong Kong are working on.
None of this is to say that investment banking is immune. Right now, there’s a rush to hire geeks — so they can make other humans irrelevant. Most banks are struggling to recruit because they “need people who not only have the new technology backgrounds but can also see how these can disrupt financial services processes and models," says Ian Woodhouse, an associate partner at financial services consultancy Orbium.
So here’s what we think in a nutshell: If you’re trading vanilla fixed-income or cash equities, you’ll only have a job in five years if your dad owns the firm. If you’re a paan-chewing, vaping kind of investment banker (the FT’s delicious description of Rajeev Misra, who built Deutsche Bank AG’s credit derivatives business), you’ll need to impress someone like SoftBank Group Corp.’s Masayoshi Son with your structuring skills. (Robots lack chutzpah.)
If you’re somewhere in between, learn to code. Or at a minium, think tech disruption on a very large scale.