PSBs lag behind MNCs, pvt banks in employee-revenue ratio

What is more interesting is that none of the domestic banks, including the private sector one comes in the top three list of higher revenue generation ratio as the No 2 in the BCG list is StanChart India, followed by HSBC India, says the report by the Boston Consulting Group India.

The data refer to the FY10 period, the report added.Among the 22 banks covered in the BCG study, the State Bank, which leads the domestic banking space on every count, be it in terms of profit, asset base, market capitalisation or market share is ranked a poor 17th slot.

The banking behemoth SBI as over 2 lakh employees as of last fiscal, while the best performer Citi India has just about 7,500, and the best private sector player ICICI has about 35,000 (as of FY09).

According to the BCG report released recently, among the domestic banks, the new generation private sector lender Axis Bank is the second best performer with its per-employee revenue standing at Rs 41 lakh.

However, the state-run IDBI Bank, which is the youngest amongst the public sector lenders, tops among the PSBs with its average revenue generated per employee coming at Rs a good 38 lakh.

Among the old-generation PSBs, Oriental Bank of Commerce fares much better than its larger counterpart with an average revenue per employee of Rs 27 lakh.As for the minimum capital requirement of new banks, the industry chambers and banks were in favour of a high start up capital of Rs 1,000 crore, which would be further raised to Rs 1,500-2,000 crore over a period of time.

However, MFIs and NBFCs preferred a lower start up capital ranging from Rs 300-500 crore. "With this capital requirement, it has been argued that 30 to 40 banks could be licenced within a period of next 5-10 years with dedicated focus on financial inclusion," the statement said.

In August, the central bank came out with a discussion paper on entry of new banks in private sector in which it listed the pros and cons of keeping the minimum capital requirement at a low level of over Rs 300 crore, a middle level of Rs 500 crore and a high level of Rs 1,000 crore.

While a low minimum capital requirement may lead to an optimum level of utilisation of resources from the beginning, it may result in non-serious players coming into the field, the RBI had said.

On promoter shareholding in new banks, while the industry associations suggested a range of 40-51 per cent, NBFC and MFI sector preferred a lower range of 30-40 per cent.
On the issue of foreign shareholding in new banks, the RBI said that the suggestions received in this regard ranged from capping the shareholdings at 50 per cent to have no restrictions at all.

Among the industry chambers, while some of them advocated putting a cap at 50 per cent, others have suggested continuing with the existing norm of 74 per cent or not having any restriction for the initial period of 10 years.

The NBFC and MFIs were in favour of retaining the existing norm of 74 per cent or not putting any restriction at all.

On permitting conversion of NBFC into banks or promoting new banks, while some industry associations were of the view that conversion of NBFC should not be permitted due to difficulty in aligning its business model. Other industry associations were generally in favour of conversion or promotion of new banks by NBFCs.

Banks were in favour of allowing only standalone NBFCs to promote banks and at the same time debarring NBFCs sponsored by industrial houses.