Is it possible that in a country where cows wander with impunity in jammed streets, BCP can be taken seriously?
Those "measures", as it turns out, are as much about what banks should do to help their customers and communities recover from "natural calamities" as they are about what banks should do to prepare themselves.
It's no surprise that the central bank would be concerned about the continuity plans of India's 88 banking institutions, and particularly about the more than 50,000 retail locations of those banks, after devastating flooding in Mumbai in July 2005 and again in 2006.
But I would have advised that an "all-hazards" approach to new BCP guidelines would have better served banks, their customers, communities and the RBI, given India's parallel history of man-made calamities (bombings in Mumbai from 1993 to 2006, and in Delhi in May and October 2005).
To see why, read this story from eWeek about the recent reactions of companies that outsource back-office functions and call centers to companies in Mumbai.
RBI's new guidelines address continuity strategies that would apply to all kinds of hazards:
- "banks may operate from temporary, mobile and satellite premises"
- "banks may consider...allowing their customers to access other ATM networks"
- "restoration of ATM's...may be given due importance"
Huh? Can we suppose that RBI means that banks, if they wish, "may not" give due importance to the restoration of India's 17,000 ATMs? Or is RBI simply saying, in that inimitable British way, "you know, you really should, old man"?
RBI's new guidelines also say:
- "to satisfy customer's (sic) immediate cash requirements, banks could consider waiving the penalties for accessing accounts such as fixed deposits"
- "banks may provide loans up to Rs 10,000 (US$215) without collateral"
- "banks may consider discounting cheques...to meet customers' requirement (sic)"
- "banks may open accounts...with any evidence to the satisfaction of the ban"
These aren't really "BCP" guidelines, are they? These are more "public service" activities, in my view. Useful, laudable, plausible--but not what I think of as BCP. I mean, really: in every bank with which I am familiar, opening new accounts is way down a list of priorities in the middle of a disaster.
However, this sentence really caught my eye: "Banks whose currency chests are affected may, under intimation to the concerned Regional Office of the Reserve Bank, open repositories for a temporary period."
"Currency chests"? "under intimation"? Here are some useful facts about India's currency and the monetary system: http://www.rbi.org.in/currency/FAqs.html
These new guidelines also refer to a previous RBI directive, issued in April 2005, of which I was not aware. At that time, says RBI, "some banks were still in the process of framing a business continuity plan (BCP)". Their 2005 directive was, in fact, genuine guidance about BCP and operational risk management (ORM). Examples:
- Responsibility rests with the Board of Directors and top management
- The Board must prioritize critical functions, allocate sufficient resources, review test results
- The Board must send the approved BCP to the RBI
- "top management is responsible for executing (the) BCP, if contingency arises"
There's a full page describing an acceptable BCP methodology, too.
I confess I'm skeptical about BCP in India. I talked in the last 90 days with two companies in Mumbai that are both considering building commercial recovery sites. Both companies told me there were no commercial recovery facilities in India, that banks in India were "just discovering" BCP, that there are no full-time BCP consultants in India. That is, there are none of the indications of a contingency culture in India, yet.
For that reason, I wonder just how effectively RBI's BCP guidelines are being enforced. How can a country with eternally failing infrastructure be serious about BCP?
On the other hand, India also has the most beautiful monument to love in the entire world--the Taj Mahal--right beside the most wretched human habitation anywhere in the world.
"Incredible India!", indeed.
Author's note: "Incredible India!" is the current promo slogan of India's Ministry of Tourism. I adore India and its incredible chaos, its stew of flavors, smells and noises. My favorite novel--Shantaram by Gregory David Roberts, published in 2004 by St. Martin's Press--is set in India, too. Great for long plane rides, if you can carry it on board... at almost 1,000 pages and over 2 lbs, it's big enough to hide enough food for everyone in Economy Class. I cannot recommend it too highly.