FINWIZ 2012 Awards
The FINWIZ 2012 awards for the best bankers in India were presented at a function in New Delhi on August 20, 2012, at ITC Maurya, New Delhi
- In my lifetime, I want to see India as the workshop of the world: Anand Sharma, Union Minister for Commerce & Industry
- Too much regulation can impede financial innovation: Dr C Rangarajan, Chairman of Prime Minister’s Economic Advisory Council
Rating and Ranking India’s Best Bankers: How it was done
By Sumita Kale and Laveesh Bhandari
Banks have been expanding, growing, venturing into new geographies and areas, experimenting, supporting innovation and contributing to the overall dynamism of the Indian economy much more actively than they were able to do in the pre-reform Indian economy. At the same time our expectations from the Banks has also increased. Not only are they supposed to facilitate the workings of the economy, but they are expected to contribute to its growth and dynamic by nurturing entrepreneurs and innovation. They are expected to help the poor benefit from the many opportunities thrown up due to new technology and greater economic freedom. They are expected to show the path for good employee relations. They are of course expected to generate profitable returns for their stakeholders. And in all of this the CEO is the key.
Both nationally and internationally there are many ongoing efforts that attempt to recognize and award banks on the basis of their overall performance. Each of these has evolved their own methodologies using a range of criteria, measures and methods. However ratings typically attempt to rate banks and not the people behind their better performance. A different, and better, way of recognizing good performance of banks is to look into what the banker has given to the bank, capturing the performance of the bank as an outcome and management practices as inputs.
The CEOs of all 78 Scheduled Commercial Banks operating in India were considered for the rating, and the analysis was to capture the improvements that have occurred over the latest year for which data are available for quantitative parameters, while the qualitative indicators were captured from a confidential primary survey of senior employees of the banks conducted in March and April 2012.
The variables in the quantitative and qualitative spheres were chosen to cover four different aspects of bank operations:
- sustainable growth,
- sustained profitability,
- a good work environment and lastly,
- contribution to inclusive and broad based growth of the economy.
Forty-four quantitative variables were chosen after intensive discussions with bankers, regulators, academia and banking experts. Each of the 44 quantitative variables (whose data came from RBI and IBA) was normalized into ratios. In most cases, the bank-wise data are published normalized for comparability, e.g. the Gross NPA is adjusted for the size of the bank and its operations by dividing it by Gross Advances to form the Gross NPA/Gross Advances ratio. Such normalization gives a correct picture of the performance of the bank, rather than absolute variables.
The variables were divided into the four above categories, such that each measure was included in only one of the four categories. Sustainable growth included variables such as growth in Capital Adequacy Ratio under Basel 1 and 2 norms that would point to the stability of the banking operations; sustained profitability included variables such as change in profit per employee that shows value added; a good work environment included the number of complaints made per branch to show that a conducive operational space leads to more efficient service and finally the contribution to inclusive and broad-based growth of the economy included variables such as growth in rural branches and growth in priority sector advances etc. as measures of the bank’s reach to the weaker sections of the economy.
First a category index was created by using a well used range normalized method with same weights for all the variables. This ensured that there was no researcher bias that crept into the rating process. Each of the four indices was then aggregated to form the comprehensive index for the Best Bank.
The data from the qualitative survey were not used in the final rating. A total of 22 questions were asked, again reflecting the broad categories above and included queries on the management style, leadership qualities, communication, delegation and vision of the CEO. This information was invaluable in understanding the story behind the aggregate numbers and was used as a validation and verification of the final results of the rating and ranking methodology.
Since performance depends so crucially on the size of the bank, banks have been classified as Large, Medium and Small for the awards: Assets more than Rs. 75000 crore in March 2011 are Large Banks, assets less than Rs. 15000 crore in March 2011 are Small Banks, those with assets between Rs. 15000 crores and Rs. 75000 crores are Mid-sized Banks.
While all 78 banks were surveyed and rated, foreign banks have been rated only within their overall category as their business operations are significantly different from Indian banks. Analysis of the data for small banks threw up some very surprising numbers – this was because of the small size of the bank sometimes minor actions were showing up as a very major impact. It was therefore decided that the smaller banks would not be assigned a rank and therefore would not be awarded.
The final list of awards comprises 12 categories, with best banks being awarded size-wise (medium and large) in each category.
- Best Indian Banker
- Best Public Sector Banker
- Best Private sector Banker
- Best Foreign Banker
- Best Banker in Priority Sector
- Best Banker in Agriculture Credit
- Best SME Banker in the Public Sector
- Safest Banker
- Best Banker In Financial Inclusion
- Best Banker in terms of Customer Friendliness
- Best Banker – Growth and Expansion
- Best Banker –Efficiency and Profitability
About the Awards
There are many ongoing attempts to recognize and award banks, both nationally and internationally. But all these look at only the organizations and not the people driving it.
The Sunday Standard, which is part of the Chennai-based The New Indian Express Group, decided to take a different route and honour India’s Best Bankers. The bankers were identified after a stringent survey of the CEOs of all 78 Scheduled Commercial Banks operating in India. The survey was conducted for us by Indicus Analytics, India’s premier economic research agency.
The surveyors used quantitative and qualitative indicators as well as published data to arrive at the results. They also did primary surveys to ensure that there were no oversights or information gaps.
The awards were presented at a function in New Delhi on August 20, 2012.