The Hindu Business Line : Waiting for Godot?

The Union Budget is perhaps the single most awaited event every year. Presented after the Railway Budget, it provides explicit & implicit signals on various facets of the economy.

However, it has different expectations for different stakeholders, including banks, which in turn could have a domino impact on its stakeholders.

Stakeholder 1

Customers: Faced with runaway credit growth, banks are scrounging for deposits whereas customers look for investment opportunities in mutual funds and "capital protected" instruments.

It is the post-tax risk adjusted return that a discerning customer looks as a benchmark. Shall the Budget hike the threshold level for TDS on bank deposits? Will it seek to cover more investments under capital gains? Will it provide some guidelines for certain fiscal benefits to future payouts from approved pension schemes? Lastly, would there be any fiscal boosters to encourage e-commerce in order to bring down transaction costs and further enabling non-cash transactions?

Stakeholder 2

Shareholders: It is not enough any more to show consistent top line growth in revenues and assets for banks. It is the standard of corporate governance and disclosures that win those brownie points which ultimately manifest as increase in market cap. To sustain capital adequacy amidst challenges in raising resources cost effectively, would the Budget seek to provide further signals on long-term instruments which can qualify for Basel II norms? The palpable need of long-term funds for the infrastructure sector, where banks could play an important role, calls for enabling measures to address qualifying parameters for innovative financing. Will the Budget touch upon some of these areas? Will there be an inkling on the probable degree of changes to allow more participation by the market in the destiny of PSBs?

Stakeholder 3

Employees and Management: It cannot be anybody's vision not to look at the budgetary expectations of this most dynamic and yet important stakeholder of banks. Faced with the twin challenge of shortage of good talent for high-end functions like treasury, wealth management and risk management, can there be an "outsourced" model for some of the answers? Should banks be allowed to spawn its own BPOs to manage on a large scale, process similar activities and thus leverage on a certain segment of its work force? Would there be the dawn of a strong performance driven culture among PSBs ?

Budgets trigger many wish lists and even a "small but significant" fulfilment of such lists, tends to send a bullish signal among all stakeholders.

Mr Robin Roy, Principal Consultant, Banking & Financial Services, PricewaterhouseCoopers (P) Ltd, Mumbai.