Few of the Trade Union representatives from the Banking Industry met the Leader of the Opposition with certain demands on the Banking Sector. This came out on Social Media, and the Finance Minister, in a 907-word X post, raised many questions as āDonāt the people who met with the LOP tell him?āārepeated many times.
Trade unions meet political leaders when the Ministry does not sort out their genuine grievances.
As General Secretary of the All India Bank Officers Confederation, I have met Mr. Rahul Gandhi, Mr. Veerappa Moily (then Chairman of the Standing Committee on Finance), Mr. Naveen Patnaik (then Chief Minister of Odisha), Mr. Pinarayi Vijayan (Chief Minister of Kerala), Com. Sitaram Yechury (General Secretary CPIM), MPs from AIADMK, Trinamool Congress, etc., when the Government introduced the Financial Resolutions and Deposit Insurance Bill (FRDI) in 2017. The then Chairman of the Joint Parliamentary Committee, Mr. Bhupinder Singh Yadav (now Cabinet Minister), refused to give an appointment. Through our campaign, we got the Bill withdrawn from Parliament, saving the depositors of Banks. We have also met BJP MPs when they were in Opposition as well as when they were in power.
There are serious issues about which the Unions and Associations have been representing to the Department of Financial Services, and the General Secretary of AIBEA has met the Finance Minister too. The serious issues are:
- Five-day banking, which was agreed upon in the Bipartite Settlement and Joint Note on 8th March 2024.
- Shortage of staff in Banks, especially acute in the Clerical and Subordinate cadre.
- Acute pressure for the disbursal of MUDRA loans, PM Svanidhi loans, etc.
- Pressure for enrolling people in the Atal Pension Yojana.
- Pressure on executives to disburse corporate loans.
- No fixed working hours for officers.
- Imposition of heavy taxes on perquisites and fringe benefits.
- Disciplinary cases leading to dismissals due to pressure of work.
- Pressure on cross-selling third-party products, etc.
- Updation of pensions, which is done for Government staff but not for Bank staff.
- No work-life balance in Banks.
Without addressing these issues, the Finance Minister has raised questions and issued statements repeatedly broadcast by Adaniās NDTV.
Letās Analyze
FM says Public Sector Banks (PSBs) have seen a remarkable turnaround under PMO India Narendra Modi. Itās not true. This is a cycle. You write off loans, give fresh loans, banks become profitable; then Non-Performing Assets (NPA) increase; banks make losses, then write off NPAs, give fresh credit; banks perform well, and the cycle continues.
For example, SBI had a net NPA of 1.56% in 2006-07 and made a profit of ā¹4,541 crores when the business was ā¹7,72,858 crores.
In 2013-14, the net NPA rose to 2.57%, and the profit was ā¹14,224 crores with a business of ā¹28,76,819 crores.
But in 2017-18, the net NPA increased to 5.73%, and SBI made a loss of ā¹6,547 crores, though the business had increased to ā¹46,41,224 crores.
From 2005-06 to 2011-12, the net NPA was less than 2%, and the bank had good profit, but the NPA increased from that period up to 2017-18 and came down after that. Now it has come down to 0.57%, and the profit has gone up to ā¹61,077 crores, with business reaching ā¹86,83,612 crores (deposits and advances).
The same is the pattern for every bank, with few exceptions. Between 2014-15 and 2023-24, banks have written off ā¹12.3 lakh crores, which is unprecedented.
Did your secretaries not tell you this, Madam?
Did they not tell you that in 1996-97 the gross NPA was 17.8%, and the net NPA was 8.1%, which came down to 5.4% and then to 1.9% in 2004-05 and further to 2% and 1.1% in 2008-09? It reached a peak of 14.6% in 2017-18 and is now coming down. It is likely to go up again soon with the increasing corporate credits and MUDRA loans. So, the claim of a remarkable turnaround is just part of the cycle.
Did they not tell you, Madam, that the policies of the Government and the RBI lead to large credits with the closing down of Development Finance Institutions and shifting the burden to Banks, especially to provide credit to infrastructure?
This led to large NPAs like Bhushan Steel, Bhushan Power, Essar Steel, Essar Power, etc.
The largest borrowers on March 31, 2015, were:
- Reliance: ā¹1,25,000 crores
- Vedanta: ā¹1,03,000 crores
- Essar Group: ā¹1,00,000 crores
- Adani Group: ā¹96,000 crores
- Jaypee Group: ā¹75,000 crores
These are the companies your Government is supporting even today, Madam.
Madam, did they not tell you that after the Asset Quality Review initiated by Dr. Raghuram Rajan, RBI decided to put a cap on lending to corporates by all banks together at ā¹10,000 crores, with a timeline for implementation?
Your Government has not followed it, and today, Adani Group has an outstanding of ā¹1,07,985 crores from Indian banks alone.
Madam, Phone Banking is a customer service we provide and not what you presume. Bank officers are upright and do not get intimidated. Some top executives might yield to your pressure, but others stand firm. Thatās why the banking sector has survived. Today, your party members are intimidating Branch Managers to disburse MUDRA loans to ineligible people, and this may lead to a crisis. Though most bankers are resisting bad proposals, the target-driven push is leading to bad loans.
Madam, did they not tell you that the RBI Deputy Governor has warned of an increase in NPA accounts under MUDRA?
Madam, did they not tell you that the 4R strategy of Recognition, Resolution, Recapitalisation, and Reforms has only helped large corporates? The RBI Governor has stated that only 32% was the recovery in NCLT cases. The Parliamentary Standing Committee has stated that it is aiding more write-offs than recovery. Adani has purchased 12 companies through the recognition and resolution process at throwaway prices (please see the list published by AIBEA). Anil Ambaniās Reliance Company was sold to a Mukesh Ambani-related company for a paltry recovery of 0.92% of the loan outstanding. Not even 1% of the loan could be recovered. Videocon was taken over by Vedanta, paying ā¹2,962 crores against a debt of ā¹31,000 crores (link article).
Madam, the recapitalisation only helped write-offs. Instead of that, if stringent recovery measures are implemented, no capital infusion would be needed. Reform is the most abused word today. In the name of reforms, you aim for privatisation. Will you please announce that the privatisation of banks will not happen, as banks are performing excellently?
Madam, you talk about public share in dividends. Did they not tell you that it is a minuscule group of small investors who benefit, while the majority are large businesses and institutional investors?
Madam, what is citizen-centric and inclusive development? Did they not tell you that the majority of the depositors, whose money is used for giving huge loans, are small depositors?
The Savings Bank interest rate has gone down from 5% to 2.5%, and Fixed Deposit interest rates have dropped to 6.5% from a one-time high of 16%. On the contrary, farmers, SHG women, students, and SMEs are paying 11ā12% on their loans, while 449 corporate borrowers with loan limits above ā¹100 crores pay less than 5% interest on their loans! Who are the citizens you are catering to? Small borrowers are forced to go to Non-Banking Financial Institutions that charge even more than 36%. Madam, rural credit, which was 50% in 1995, has come down to 38% in 2024. Small loans, which constituted 95% of loans in 2001, have dropped to 73.3% in 2024.
Madam, 96% of the Jan Dhan accounts are opened by PSBs. 33.6% of the MUDRA loans are given by PSBs, and 90% of the PM Svanidhi loans are given by PSBs.
Madam, you claim that since 2014, PSBs have recruited 3.34 lakh staff. In the year 2014-15, PSBs had a staff strength of 8,44,414, which has come down to 7,46,679. Last year alone, the staff strength reduced by 11,154. There is no recruitment of subordinate staff, effectively killing the reservation policy. The clerical staff strength is also decreasing drastically.
Is this the punishment for increasing accounts, deposits, and credit by 200% to 300% in different parameters?
How does the vacancy go down when business increases manifold, Madam? Did they tell you this secret?
Did they not tell you that in every wage revision, there has been improvement, and this time, the āFive Day Weekā agreed upon has not been implemented and still remains a residual issue? Recruitment of staff, updation of pension, etc., are also not finalized even after nine months.
Madam, you have spoken about women MDs and CEOs. Did they not tell you that before your government came in, there had been 10 women as MDs and CEOs, including those in private banks? There was a woman Deputy Governor, RBI (within 10 years), but now there is only one lady serving as MD & CEO!
Madam, AIBOC, AIBEA, and other unions and associations are very mature. When the so-called reforms were introduced, they brought out a report by an independent commission on banking sector reforms, which stopped privatisation. When your government classified 11 banks as weak and called for a turnaround, AIBOC published Commendable Performance of Public Sector Banks, Laudable Performance of PSBs, and prepared turnaround plans for each of the 11 banks, along with a software tool for analysis, and submitted them to your ministry and individual banks. They have a right to approach elected representatives when you donāt address their grievances.
Instead of long tweets, you should invite the representatives for a meaningful discussion and address their grievances, Madam.
Thomas Franco is the former General Secretary of the All India Bank Officersā Confederation and a Steering Committee Member at the Global Labour University.
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