This is a very common issue in any broking house, and not only the client is involved in such cases, along with the client branch personnel is also involved in such cases. RMS and Funds team need to track such delayed payment cheques and the frequency, count branch wise. Caution Branch Staff this sort of issues will be effecting their incentive or salary.
Once people come to know that some one is watching their moments then things will be coming to control.
Re: MY SUGGESTIONS
by ramakrishna kopalle on Dec 23, 2011 03:45 PM Permalink
you need to device a procedure that after 'n' working days, if the credit is not received then the entry will be reversed.
To tackle this problem 1. cheque collection should be done by person who will report to head office only, not to branch manager. 2. on every level there should be watchdog or slipper who will always cross-check other'work i.e. criss cros responsibility and should be nicely rewarded when he alerts HO. 2 there should be telephonic transfer from client A/c to company A/c to minimise cheque delay and miusing the loopholes.
Solutions:- Mr. Mehta can look at implementing the below beyond what%u2019s has being suggested:- 1) Allow online transfer of money by EOD on T 1 day for client dealing through the Branch office/ Franchisees. 2) For online trading, Trustworthy Securities can tie-up with a bank/banks and client be given an account with this bank. The bank account would be debit/credit on any transaction. 3) Upfront Margins should be collected from clients on any %u201COpen Position%u201D at the end of trading day as per the bye laws of exchange. 4) Appraisal System for managers should be redesign:- a) It should be on the basis of Profit earned (profit should account for the interest payment on the defaulting client) b) Incentives for branches adhering to the Rules and Byelaws (for a short term). 5) Surprise and schedule auditing of the Branch office and franchisees 6) Role of %u201CRemisers%u201D:- a) They should be made aware of the company policy/byelaws and sign the same to abide by it. Incase of found guilty of violation can be penalized monetarily/suspension from trading with Trustworthy. On subsequent violation be levied heavy penalty or debarred from trading with trustworthy or legally prosecuted. b) They should be made aware of the implication/consequences of their action. c) They shouldn%u2019t be allowed to trade on behalf of their clients without acquiring permission d) Can%u2019t promise any fixed returns to client as this against the laws of SEBI. 7) Branch/franchisee manager warned against being liberal with %u201Cremisers%u201D. 8) Enhance the system to check if the cheque number enter is correct or not. 9) Train the staff on the use of system. 10) Top-10 defaulting Branch office/franchisee and client be kept under surveillance for three months.
Some of the solutions given by Crack Team are reactive in nature. What we need are proactive measures, which will not allow this situation to happen at all.
Some of the solutions which I propose: 1. %u201CCollection%u201D should be one of the key performance measures for the Branch Managers and Franchisee 2. Software application used for entering the cheque numbers (and other details) needs to be strengthened to add the verification of correct cheque numbers. They can also add a scanner to scan the cheque number, which will be automatically added to the system, instead of manually entering the number. This is applicable for all the amounts (even if it is as small as Rs 10000). Overall the software system needs to be strengthened for adding verification points and avoiding manipulation of data. 3. The data entered by the low skilled labor needs to be audited on periodic basis. 4. The software should show the status of check as %u201Creceived%u201D only when it is actually realized. (This system needs to be integrated). If the check is not realized, we should have an authority to sell any other stock from client%u2019s demat account. 5. Create awareness amongst all stakeholders (including remisers) in AHM regarding the problems of incorrect information. (This is not a preventive measure, but will surely help in removing mis-understanding if any).
I agree with following solutions from Crack Team: %u2022 Imposing heavy penalties on branch managers or franchisees who give misinformation %u2022 Creating a back office alert system where cheque receipt is delayed, or where actual cheque details are incorrect from the data on the system %u2022 Cheque image upload while punching information %u2022 Charging higher interest for the late payments %u2022 New and innovative payment mechanisms, such as cheque truncation %u2022 Training of branch staff to familiarize them with head office RMS %u2022 Written permission from clients for any trading by remisers %u2022 Incentivising junior employees to be whistle blowers
..Branch manager should take the responsibility for all the default caused at their branch.So introduce both penalty and appreciation letter(in case good job done) for them. ..Cash rewards should be promoted for the branch staff for good workdone. ..Clients with good record should be given different facilities like low transaction fee etc. ..The branches with bad track record should be under Surveillance for good performance and no default case. ..We can go for knowledge enhancement programme both for support staff and Client. ..The clients should be contacted on behalf of the manager for any transaction to be taken.
the case seemed to be quite realistic to me as the sitution described is exactly what is happening with few broking and trading companies.brokers and traders at the operational level are responsible for doing fraudulent business for which the customer and the top management has to pay.
in this case the penalty imposed is one of the correct measure to reduce this malpractice for the time being.but for the long run the strategic team should decide to bring in latest technology which will not only give pop-up aerts at the back office but will also help in tracking the devils in disguise.
Re: PARTICIPANTS PLEASE NOTE
by ramakrishna kopalle on Dec 23, 2011 03:49 PM Permalink
#1 you device a rule that any cheque reported deposited and credit is not received in 3 days, pass a reverse entry, with a penalty of Rs 350. Keep that Client in Black list, in future he will not get instant credit, untill it is cleared in the bank. #2. Advise RMS and Funds to monitor such cases Branch wise,communicate to the Branch wise number of instances to each branch and put penalty on the staff member.
Please e-mail your responses to:rkvenil@rediffmail.com or Call us on 04023448989/9845906584/9848781122 Thanking all participants in advance and wish you the best of luck. Details of Winners will be posted on Rediff. Watch this space for details..
RE:PARTICIPANTS PLEASE NOTE
by akhil kansal on Mar 15, 2007 08:12 PM Permalink
WELL I HAVE MAILED THE SOLUTION TO THE ABOVE MENTIONED E-MAIL ID BUT IT IS NOT BEING ACCEPTED...PLEASE LOOK INTO THE MATTER.THEREFORE I M PASTING THE SOLUTION HERE AS WELL:
TCS SMART BUSINESS CASE STUDY CONTEST:
In the above case, the recommendations given by crack team are quite valuable to handle the situation at Trustworthy Securities. The immediate imposition of penalty has been able to show a decline in the no of fraudulent cases.
But to find a solution, which can help solve this problem in the long run, it is important for the top management team to sit together and formulate certain strategies that can prove to be cost effective Some of the strategies, which I propose in this regard, are:
? DON%u2019T INNOVATE, EMULATE:
It is essential for trust worthy securities to upgrade its software system as per the requirements to be met at the back office. Whether it is creating a back office alert system or a pop up alert for wrong information, it is pertinent to bring in an information technology, which can not only speed up the transactions but also bring accuracy and convenience. At the same time cost will be reduced of a typical service call in the long run.
The saved cost can be utilized further in providing training and development of the employees to brace them up with new technology.
? STRICT SURVEILLANCE OF BRANCHES AND FRANCHISES:
Unscheduled visits of top mangers to the various branches and franchises will create an environment of spontaneity among the employees along with bringing a sense of responsibility among them, which will further reduce the fraudulent mannerism prevalent among them. They will check themselves and will become self disciplined. This will act as a positive reinforcement to motivate the employees to stop the wrong practices.
? REWARD AND RECOGNITION:
Reward and recognition to branches, which start taking the things seriously and start improving, this will set an example for other branches as well
? REVISION OF POLICIES IN ORGANIZATION:
It is time to bring certain changes in the organization by changing certain policies such as------- written permission from clients for any trading by remisers, reducing the exposure limit and also specifying the penalty and fine imposed if any employee and branch found to be involving in illegal ways.
These were some of my suggestions to the crack team, which will be helpful in the long run.
The crack team%u2019s recommendation is brilliant. The following are some additions which I recommend:
Cheque image upload while punching information will help in reducing the number of false cheque numbers. The branch needs to check daily for the realization of the Cheque and follow-up the ones which is duplicate.
The performance appraisal of a branch manager must not only be linked to the amount of the revenue he generates for Trustworthy, but also maintaining the branch outstanding amount to a minimum amount %u2013 say zero. Branch Manager%u2019s must be given some kind of trainings in order to handle the client pressure.
Remisers need to get written permission from the clients for any trading and remisers must not be allowed to trade using their client's ID. RMS department need to create a special team to closely watch the remiser%u2019s transactions to avoid any malpractice.
RMS needs to treat all the amounts (even those less than Rs10000) in a meticulously manner.
RMS needs to give proper training to all the low-skilled labors to use the sophisticated software systems in order to avoid the manipulation by the remisers. Also the software system needs to be upgraded so that the cheque number validation must be in place i.e. a 6-digit number and not a 1-digit number.
Top 10-20 retail outlets must be closely monitored on a regular basis in order to avoid future complications. RMS department must create a team which will be in regular contact with top 20 outlets to monitor their progress.
Trustworthy Securities Ltd needs to introduce a new or renewed system (after a considerable time of research) for processing the clients%u2019 stock broking and trading request which will be in synchronization with all branches across the country in order to bring more clarity in functioning of the branches.
This is a classic case of how people interact with technology to overcome the operational issues. Let us first understand the relationship between %u201Cpeople%u201D, %u201Cprocess%u201D and %u201Ctechnology%u201D factors to deal with operations.
It is the %u201Cpeople%u201D factor, which directly deals with operations. The %u201Cprocess%u201D factor deals with %u201Cplanning%u201D part and the %u201Ctechnology/system%u201D factor deals with compliance and auditing measures.
In this case each factor has got some gaps to fill in. Lets start with the %u201Cpeople%u201D factor and try to understand the following questions:
1) What motivates people to mislead systems? 2) Why they are motivated? 3) How they are motivated? People mislead systems (in this case by giving false cheque information) when they find organizational strategy is not directly linked with operational shortcomings. %u201CThe ability to do late payments%u201D is an operational shortcoming, which is not directly linked to the incentive system for a branch. There is an interesting point in the case, which states %u201CNon-collection was not as important a performance measure as revenue targets%u201D. If the non-collection becomes a parameter in the appraisal process, people will be de-motivated to take it further. An enterprise incentive system must track these issues and link it with the growth of a branch. Another point to highlight here is a gap in organization communication. The pressure on %u201Cworking capital%u201D because of late payments should be properly communicated to all branches of Trustworthy Securities Ltd. A well-communicated plan on penalty as well as rewards linked to this cause should be part of the agreement clause between the company and its different subsidiaries. Coming to the %u201Cprocess%u201D factor the penalty as well the reward system need to be well laid out. This system should be measurable and be directly proportional to the pressure on the working capital from %u201Cadditional interest%u201D point of view. If the branch is accountable for 10% of total late payments, the penalty will be to reduce the branch%u2019s exposure limits by the same percentage i.e. by 10%. The additional interest that the organization will have to bear to fund this 10% of late payment should be treated as an additional fine to be charged directly to a branch. In the same lines, those branches, which do not contribute to the late payments, need to be rewarded in terms of additional exposure limits and bonuses to the team responsible for the collections. Now discussing on the %u201Ctechnology%u201D side, systems should cross-validate the various input points. An interesting point highlighted here is %u201C people used to upload the cheque details, without having cheques in hand%u201D. The tool should make it mandatory that the authorized user who is specifying the cheque details should also have to upload a scanned copy of the cheque at that instant (tracking the branch id). For those deposits of another cheque (with a different cheque number) an alert should be sent to the branch manager as well as the head office. From the entry of the cheque to its deposit, the cheque number should be validated and tracked to its origin. The system should consolidate a report on these non-matching cheques and the late payments branch wise and send on every fortnight to the headquarters as well as a copy to the respective branch. So a combined approach on these three fronts will give a long-term solution for mitigating risk at Trustworthy Securities Ltd. -sabyasachee_panda@yahoo.com
