, 57, 251 2, 70, 426 59, 374 3, 54, 532 2003 – 04 7, 52, 627 2, 97, 903 81, 120 3, 17, 308 2006 – 07 7, 28, 878 3, 81, 449 1, 37, 284 3, 83, 439 2007 – 08 7, 15, 408 4, 00, 611 1, 58, 823 4, 47, 920 2008 – 09 7, 31, 524 4, 72, 493 1, 76, 339 4, 83, 501 2009 – 10 7, 39, 646 5, 55, 874 1, 82, 520 5, 16, 491 2010 – 11 7, 57, 535 7, 15, 914 2, 18, 679 5, 63, 154 the above table suggests that public sector banks are no longer the major employment provider in the financial market and also that their per employee expenses have gone above that of private sector banks. the staff strength of public sector banks have gone down between 1998 – 99 and 2010 – 11 but that of private sector banks have gone up significantly. the per employee expenses of public sector banks have gone above that of private sector banks and today, is more than 150 % higher than that of private sector banks. this is bis central bankers ’ speeches despite the fact that pension expenses of psu banks are not fully reflected in their staff expenses. one thing is, thus, loud and clear – the competitive advantage in terms of staff costs that we always thought the public sector banks had is no longer there. the absence of the cost advantage coupled with the problem of lower productivity underscore the critical need for urgent hr transformation in public sector banks. hence, time has come for us to pay attention to this critical aspect on which our ability to compete finally hinges on. we can no longer postpone this issue. conclusion the public sector banking system in india is standing at an important cross road. there are critical choices to be made and initiatives to be taken. the time is ripe for leaving the old baggage and taking bold measures. these measures would determine the future path of public sector banks and whether they would continue to retain their position of preeminence in the banking space or would they yield to the pressure from their peers in the private sector. considering the importance that banks have in the nation building process, the choices made now could have a bearing on the economic future of

##sbir singh ) has been constituted by dicgc and has submitted its report yesterday. we hope that introduction of risk based premium system will make ground for considering raising the insurance cover from the present ceiling of ₹ 1 lakh. structure of differentiated banks and consumer protection 19. you have noticed that we have recently granted “ in principle ” licenses to 11 entities to form payments banks in the country ; and several of you nurture a vague feeling about how these differentiated banks will subserve consumers interests. i want to explain to you how we have carefully structured the regulatory arrangements of these banks from the perspective of consumer protection. 20. as you will recall, consequent to the discussion paper called “ banking structure in india – the way forward ”, brought out by the reserve bank in august 2013, and the recommendations of the committee headed by shri nachiket mor, on comprehensive financial services for small businesses and low - income households to look into the issues relating to financial inclusion, in november 2014 we announced our intention to grant licenses to two types of differentiated banks viz., the payments banks and the small finance banks. 21. the objective of setting up of payments banks will be to further financial inclusion ; the strategies will be by providing ( i ) small savings accounts and ( ii ) payments / remittance services to migrant labour workforce, low income households, small businesses, other unorganised sector entities and other users. the scope of the activities permitted for the payment banks included a. acceptance of demand deposits. payments bank will initially be restricted to holding a maximum balance of ₹ 1 lakh per individual customer, b. issuance of atm / debit cards c. payments and remittance services through various channels and some ancillary activities. bis central bankers ’ speeches 22. the deposits collected by them can be only in current or savings account ; they cannot accept fixed deposits. the payments banks are prohibited from lending activity. they can deploy the deposits largely in government securities only ; a small portion, up to 25 % of their deposits, can be held in deposits with other banks. 23. the consumer protection aspects of the design are as follows : the public deposits in the payments banks will be covered by the deposit insurance of the dicgc. as the deposit ceiling is ₹ 1 lakh and the deposit insurance ceiling is also ₹ 1 lakh, it means that the depositors of the payments banks will be fully insured. actually, there were arguments why payments banks should be