Call of fiscal Re-engineering in Indian Marketable Banking


Dr. Ratish Kakkad
Faculty Member
R.K. College of Business Management
Kasturbadham, Rajkot

In the vibrant bazaar fiscal system in India and abroad, triumphant competitive efforts converged towards creativity all over the place and the concept of business practice Re-engineering has also materialize there from.

For today industry is shifting very fast, flattering much more complex, competitive and challenging. It has to endlessly upgrade itself with the fast changing surroundings. To cope up with the fast expansion and changes and to have continued existence, it has to depend upon day-to-day operations and its business process. It has to see that its business processes are well defined, updated and expeditions.

The present day era is changing and thus the major forces behind reengineering are to include:

1. Changing needs and demands of clients,
2. Increased competition, and
3. Fast changing technology.

Today's clients are more vigilant have many alternative and alternatives. This requires the marketer to keep them very well informed, upgrade their knowledge and constantly maintain them. Competition has become very intense because of globalization and many players in the market. Technology is changing very fast which necessitated companies to adopt the latest technology, to be more creative and thus to survive effectively in the market. On the whole the pace of change is ever increasing and is much faster than before.

  • Conceptual framework of reengineering:
  • "Reengineering is the fundamental rethink and radical redesign of business process to achieve dramatic improvement in critical, contemporary measures of performance, such as cost, quality, services and speed"
                                                                                                              - Hammer and Champy.

    Reengineering is not simply an enhancement or improvement or modification, rather it goes to the root of things, which are non-existing. It examines work and designs how work is done. It concentrates on outcomes not on tasks or only unit functions.

    Reengineering works on some goals/principles, which can be listed as follows:

    1. Prioritize, identify and streamline the operations/process.
    2. Emphasis on outcome.
    3. To minimize the time require complete the process.
    4. Efficient information processing which produces relevant information.
    5. Process cost reduction and thus increase in revenues.
    6. Continuous quality improvement.
    7. Better co-ordination and management of fiscal interdependencies.
    8. To capture information at sources.
    9.  Upgrading employee knowledge and skill
    10. Treat geographically dispersed resources as though they were centralized.
    11. Integrating or merger of acquired operations.
    12. If possible computerized better and efficient systems.
    13. Build control into the process.
    14. Improvement in customer orientation and thus higher Customer satisfaction.
    15. Link parallel activities in the work flow instead of just Integrating their result.

  • Advantages/Benefits of reengineering:

    The drivers of the application of the concept of "Reengineering" may be briefly enumerated below:
  • 1. Reengineering helps in reducing and eliminating wastage.
    2. It empowers employees.
    3. It eliminates obsolete and inefficient processes and makes it more efficient.
    4. It reduces cost and increases revenues.
    5. It reduces processing cycle times.
    6. Aims at higher quality and better customer services and satisfaction.
    7. Helps organization to become more competitive holding top positions and become effective competitor.

  • Reengineering Steps/Process:

    Reengineering has significant influence over products, services, clients, employee, suppliers, and technology. The whole reengineering process should be well designed as to get the maximum benefits from reengineering process. The following approach can be adopted for reengineering projects.
  • 1. Identify and Define

    To identify the objectives, and define the strategy for streamlining and standardizing the process. A perfect framework should be established which will define the objective and strategies.

    2. Analyzing the processes

    This aims at analyzing all the processes, which are unnecessary, and non-value adding processes. It is important to simplify the processes and to determine better and more effective alternative for process, data management and system.

    3. Evaluating the alternative

    It calls for evaluating and selecting the most preferred course of action on the basis of cost and benefits analysis.

    4. Planning

    To implement the selected alternatives by developing the requirement, baseline impacts schedule, cost, benefits, etc; because successful implementation is one which will yield expected improvement in both productivity and quality. Unsuccessful implementations do not meet expectations in the proposed areas.

    5. Final approval and execution

    Senior management team must approve the proposed process improvement and then execute the process, data changes etc.

    The entire exercise of reengineering concept is not one shot exercise; instead it is continuous but big push approach in design and implementation.

    * Fiscal Reengineering in commercial Banks:

    Application of reengineering concept in the area of finance is fiscal reengineering.

    The reengineering concept is widely accepted in the fields of trade, industry and commerce, which aims at making the systems better, efficient and generates speed, cost cutting and customer satisfaction. Indian commercial banks have also widely accepted the concept of fiscal reengineering in their working. Major paradigm shifts are noticed in this respect. Some prominent shifts include;

    1. From traditional banking there is a shift towards technology based banking.
    2. From paper banking there is a shift towards paperless banking and
    3. Form few hours banking to 24-hours banking.

    So this way Indian banking system has witnessed the application of the concept of fiscal reengineering in the conduct of various bank related operations in the country. The full description is beyond the scope of this research paper. However an effort has been made to highlight some prominent fiscal reengineering. Points converging towards four important aspects viz,

    1. Convenience in operations.
    2. Security in managing funds.
    3. Expeditious operation with cost effective attributes.
    4. Efficient and effective cash management both for the clients as also for them.

    The details are not far to seek.

    1. Convenience in operations

    Major points of fiscal reengineering undertaken by the banking system include the following

      • Payment of BSNL bills, LIC premium, and mobile recharge through ATM.
      • Transfer of money between two accounts through ATM.
      • Transfer money to any other account with any bank through Net.
      • International use of Debit cards.
      • Prepaid cards denominated in foreign currencies.
      • Tie-up with both MasterCard and Visa.
      • Daily statement on e-mail.
      • Online shares trading.
      • Purchase of mutual funds and insurance products directly from bank.
      • Transactions available on mobile.
      • Cheques payable at par at all locations.
      • Availability of cheques in running stationery.
      • Facility of bulk Cheque printing and dispatch.
      • Online AOF, card and Cheque book tracking system
      • Special accounts for women, Senior citizen, students, and children.
      • Schemes are periodically published even on the ATM screen.
      • Availability of toll free call center facility round the clock.
      • RTGS (Real time gross settlement) services.
      • Paperless clearing.

    2. Security in managing funds

    Under this the major points cover

    • Availability of photos and embossed signature on debit cards.
    • 124 bit encryption of data transferred over the Net.
    • Password to each client in case the 4-digit PIN is forgotten.
    • Issue file based payment of at par cheques.
    • All software require two persons to operate one to enter data another to verify.
    • Availability of scanned signature at all branches.
    • Online backup of entire database at a different city.

    3. Expeditious operations

    It includes:

    * Statement on Fax.
    * Separate software for each type of transaction linkage with banking software.
    * Use of national lever courier service for direct dispatch of deliveries.
    * Delivery of all deliverables except debit card PIN in one lot by courier.
    * Convenience of not using a cheque for purchase of a DD or PO.
    * Facility to purchase DD/PO at any branch.
    * Representative offices in many overseas locations.
    * Centralized forex desks.
    * Agri-finance clusters in all locations.
    * CMS (Cash management services)
    * ECS (Electronic clearing services)

    The aforementioned description of some major steps taken by the banks are intended and also realized to cover efficient, economic and convenient customer services; cost reduction in the conduct of operations leading to improved profitability and remain competitively healthy in the vibrant market economy which is mainly guided by competitive behavior.

    The banking systems have introduced these steps and are open to incorporate changes for modification withdrawal and addition as per the experience (Both good and bad) gained.

    Therefore, the reengineering process requires the system to remain vigilant and to scan continuously and actively in the ever and fast changing surrounding environment.

    Dr. Ratish Kakkad
    Faculty Member
    R.K. College of Business Management
    Kasturbadham, Rajkot

    Source: E-mail August 12, 2006


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