With climate change, human interventions, unscientific development and greed, disasters are frequently happening in the country. As Dr P. Sainath writes in the title of his famous book, “Everybody Loves a Good Drought,” everyone except those who are directly affected loves a disaster. The ruling party tries to get maximum relief, the opposition uses it as an opportunity to attack the Government, the volunteers love to help the affected and get mental satisfaction and the media loves to report more negatives than positives.
The recent disaster in Wayanad, Kerala is unprecedented. It happened in one of the mountain regions with dense forests. Though development activities taken up by both Congress and LDF governments have also affected the district, this particular landslide was unique and massive.
The Union Government as usual has not declared it a National Disaster and is playing politics.
The ruling dispensation has made many quick efforts for the future of the district and its people. Here even banks play an important role!
The leading bank in the District, Canara Bank is revising the District Credit plan. NABARD has to revise its potential linked credit plan.
Kerala Bank has to be congratulated for declaring that the loans given in the affected areas will be written off. Co-operative Banks will do the same. Surprisingly, private non-banking finance companies like Muthoot Bankers and Bajaj Finance have also said that they will be writing off the loans in the affected areas.
After their meeting, the State Level Bankers Committee announced that the individual bank boards would take a call on the write-off. The loan outstanding in the area is only Rs. 32 crores, out of which the Housing Loans and Vehicle Loans are backed by insurance. The MSME loans including MUDRA loans should have a credit guarantee which can be claimed.
It is astonishing that almost one month has passed but no Bank board has announced the write-off. The Banks may be in a dilemma that similar demand will come during other disasters too. Yes, it will come. Banks may also be waiting for the Finance Ministry’s approval as Finance Ministry and RBI representatives are on every board. The Finance Ministry may think that opposition-ruled states should not be supported.
Whichever is the case, the banks should prove that they have a commitment to the Society and that the Chairman, Managing Directors and the Board of Directors have a backbone. When banks could write off Rs. 25 lakh crore in the last 10 years, especially to the corporates, when the average haircut in National Company Law Tribunal referred cases is 67%, the banks should be generous in writing off loans of people in such disasters.
Banks should use this as an opportunity to give fresh loans to the affected people, spend their Corporate Social Responsibility funds for infrastructure funds and show that they are fulfilling their social responsibility.
Banks should also prepare an action plan for their service area or surrounding areas and provide all kinds of possible loans like SHG loans, Farmers loans, MSME loans, MUDRA loans, Vehicle loans, Business loans, housing loans, Education loans and Cash Credit for shopkeepers to revive the economy as quickly as possible. The Government, the panchayats and the departments will play their role.
It is for the banks to prove their credibility which is diminishing day by day especially due to a shortage of staff.
There is already a demand for increasing the deposit rates, which have reduced to such a level with rising inflation that the depositors earn no income from the deposits. Similarly, there is a demand for reducing interest rates on Small Credit, MSME Credit, Farm Credit, SHG Credit instead of giving inexpensive Rs.100 crore loans to the super-rich, who often default.
With the write-off and bank-involved development plan movement in Kerala, the bankers should wake up. They should recall that it is because of the poor Credit-Deposit ratio in Kerala, that the LDF decided to create a Kerala Bank which, along with Co-operative Banks, is giving tough competition to the public sector and private sector banks in Kerala. With the world gearing up for more climate disasters in the future, it is paramount that financial institutions take notice of this significant move by the Kerala Bank.
Thomas Franco is the former General Secretary of the All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University.
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