Ms. Nirmala Sitharaman while unveiling EASE 30 Public Sector Bank Reform plan stated, “Your good will is lost, personal connection is lost, assessment at the bottom level is lost… forgetting branch level connect with customers has not done us good.” She is correct but she forgets that her own Government is responsible for this. She also lamented, “How much of an extreme have we unknowingly gone from where we were at the branch level, knowing the ins and outs of the customer to blindly relying on rating agency data.”
It was due to the recommendations of the imported consultancies like Mckinsey and Boston Consulting Group (BCG) that the connectivity with customers got reduced; Rating Agencies gained importance and staff strength reduced drastically. It is this Government which brought Mckinsey to Gyan Sangam which laid a road map for banking. Mckinsey’s recommendations to SBI led to disconnect at various levels and some were reversed. BCG’s career development system for the employee’s being implemented in many banks including SBI which led to drastic reduction in staff and also spoiled the team work. Rating Agencies give rating which has a clause which says subject to change and the validity is always for a short period. So they are not dependable. Earlier Banks had system of collecting opinion report of the borrower by an officer of the bank. Now branches have become post offices forwarding loan applications to a centralised processing center. Inspection is done by outsourced agencies; sanction is done by somebody else. From the way FM has spoken repeating “I”, she knows what has happened but she does not want reversal of the mistakes. She is putting the blame on the bankers so that the public anger against the Government is turned against the bank employees. Deposits in public sector banks increased form Rs.50020 billion in 2012 to Rs.80768 billion. Loans and advances increased form Rs.38773 billion in 2012 to Rs.55572 billion in 2017. But staff strength decreased to 847395 from 867399. In SBI it came down to 264041 in 2018 from 279803 in 2017 (In one year alone) without adequate staff, how do you have customer connect?
Government, which has failed in improving the economy affected from demonetisation, GST and concessions to corporates is forcing everything on the public sector banks but also wants to privatize them. The strategy is to milk the cow as much as possible and sell it saying there is no yield.
They are crying that credit growth in January has come down from the growth of previous year. Overall growth came down to 8.5% from 13.1%. Services growth came down to 8.9% from 23.9%. Loans to shipping came down, NBFCS came down, big Industries came down, only the Retail Trade is growing, albeit, little less.
What Banks are doing?
10 banks are busy on merger which is further going to affect them but FM says, “I am on course”, between October to November they gave 4.91 lakh crore loan as per directives of the Government. They have given 29.14 crores Rupay cards to Jan Dhan accounts (Only 1.26 crores by private Banks). They are renewing all KCC accounts as FM increased target to Rs.15 lakh crores. As FM has announced withdrawal of Interest subsidy to Non KCC accounts all farm credits are converted into KCCS. In addition to giving 6.67 crore new KCCS under PM KISAN, they are busy to disburse 2.33 crore applications more. They have been asked to disburse 1.18 lakh applications under PMEGP. As housing loans are becoming NPA, RBI has revised norms and banks are busy restructuring realty loans. As MUDRA loans and MSME loans are becoming NPA, banks are asked to restructure them. But the FM is on rampage accusing bank employees while releasing. Ease 3.0 Public Sector Reform Plan prepared by Boston Consulting Group which has no experience on Banking. Their, “Dial a loan facilitation” and “Digitalized Branch experience”, will not bring back customer connect but help hardly 30% of the population. The 10% will get some crumps and corporates are eagerly waiting like vultures to eat the public sector banks.
“Public sector employees are the eyes and ears on the ground for the communities they serve”- James P. Hoffa
Thomas Franco is former General Secretary of All India Bank Officers’ Confederation.