Our Money, Our Right

Towards a Transparent and Accountable Financial and Banking System

Appeal to political parties by people’s movements, civil society organisations, trade unions and concerned citizens on finance and banking, with a request to include these in your election campaign for 2019, including in the election manifesto.

The finance and banking sector have never been as precarious as it is today. The mounting NPAs, demonetisation, proposed bank mergers, weakening of RBI, crippling the economy by introduction of GST, charging the customers for basic banking services taxing them and pending Wage Revision for Bank Employees are only a few amongst the various ways in which the policy changes manifested, affecting not just the citizens, but the economy of the country, shaking the foundations of our financial system and Public Sector Banks.

The upcoming general elections in 2019 will be crucial in many ways, particularly for the financial and banking sector. It will be an opportunity for political parties to commit to correct the past mistakes and take proactive initiatives to put systems in place for strengthening the sector and making it transparent and accountable.

It is in this context that this appeal to you. We hope that you will include the points raised here in your manifesto, as well as in your election campaign.

Should you prefer a meeting, an opportunity for us to present the key aspects of this note, some amongst us would be happy to meet you and further discuss these.

Whitepaper on Demonetisation

Demonetisation, which rendered 86% of the currency at the time of its announcement invalid. The stated objectives were, unearthing black-money, stopping terror funding, abolishing corruption and checking counterfeit currencies, has imposed unaccountable miseries on people. With more currency in circulation than at the time of demonetisation, with over 99.3% demonetised currency returning to banks, with increased cases of counterfeit currencies, corruption and terror activities there is no evidence that the purpose of demonetisation was ever met. Yet, the unorganised (informal) sector which constitutes country’s 83% of the workforce was shattered. More than 100 people died due to hardships imposed due to demonetisation, over 100 cases were filed against people holding a huge amount of fresh currency and few bankers (especially in private banks) of aiding hoarding of new currency. The only sector, which benefited from it seems to be the Fintech companies. The Parliamentary Standing Committee on Finance could not complete its enquiry because BJP MPs stalled the process.

After two years, it is very clear that demonetisation did nothing to achieve its stated aim, but on the contrary, has destroyed a major part of the economy, that was a source of livelihood for the poor, lower and middle class.

We demand a whitepaper on demonetisation, capturing the economic and social costs and benefits of it. The purpose, objectives and the outcome of demonetisation require public scrutiny, which we expect to happen through the whitepaper on it and its presentation in the Parliament.

Addressing NPA crisis

The central problem of the Indian banking industry is the piling of Non Performing Assets (NPAs) worth over Rs. 10 lakh crore, which have accumulated on account of faulty lending practices, which favoured Corporates. The RBI and the government chose to not intervene between 2008 and 2014 but rolled out a series of restructuring and readjustment policies, Prompt Corrective Action (PCA) that was not prompt, all of which contributed to intensifying the crisis. Instead of timely and stringent actions on the defaulters, the RBI and the government policies focused on tightening the banks. From the restructuring policies, introducing Insolvency and Bankruptcy Code (IBC) that resulted in huge haircuts, the merger of banks, and attempts to privatise banks have only been detrimental to the banks and helped the defaulters. This shows the lack of political will to address the issue of NPAs in a fundamental way. Even the recommendations made by the Parliament Standing Committee in Feb 2016 are ignored.

We demand publication of defaulter lists, transparent recovery measures, assets recovery procedures including attaching of properties and sale, along with a moratorium on wilful defaulters, companies and their offshoots, from accessing any fresh loan or restructuring.

We demand strict action against defaulters. Commercial banks should keep away from high-risk lending and instead let a new development bank take the role of long term, high-risk lending, as recommended by Standing Committee on Finance, in its report on the Banking Sector in India – Issues, Challenges and the Way Forward(May 2018), a comprehensive social and environmental safeguard policy to ensure the risks related to litigations and delays due to negative impacts on people and environment are mitigated are essential to fundamentally address the NPA crisis.

Strict Action Against Wilful Defaulters

More than 82 per cent of the NPAs are due to corporate defaulters.  One-third of that belongs to just 40 Corporates. The government and the RBI have not released the name of the wilful defaulters, nor has there been any actions against them.  Even the list of written off accounts are not made public allowing them to cheat another bank. The PSBs should be empowered to take strict action against wilful defaulters, thereby recovering the bad loans and setting deterrence to the potential violators of loan terms in future. We demand that the names of the top 500 wilful defaulters should be made public. There has to be criminal procedures against the wilful defaulters.

Strengthening RBI

The destructive interference in the operations of key institutions was the hallmark of this government and the case of Reserve Bank of India was no different, jeopardising its independence. Using its Board as a rubber stamp to legitimise demonetisation was just one of them. Appointment of RSS ideologues at its Board only confirms the fear of turning critical institutions such as RBI as pawns of the government. Attempts to dig deep into RBI’s reserves to bolster its capital requirement to announce sops with elections round the corner exposes the myopic vision of systems and structures for economic stability. We demand complete political non-interference in the functioning of RBI and instead should take steps to strengthen its independence. Appointments to its Board should be made more stringent and transparent, based on experience and expertise rather than ideological leanings.  Accountability should be fixed on RBI with a stronger reporting system to Parliament and better transparency.

Political Interference in PSBs

The political interference in the functioning of public sector banks (PSBs) has promoted crony capitalism and corruption. This has resulted in mounting non-performing assets (NPAs) and the political patronage for certain corporations crippled banks’ will to recover money from the defaulters. We demand complete political non-interference in the operations of PSBs and incentivise prudent recovery of bad loans. Instead, Accountability should be fixed on the Chairman, MD and Board of Directors.

Depositor Rights

In the history of Indian Banking, depositors of PSB have never been under such tremendous pressure like the last four years. With policies like demonetisation that resulted in country-wide chaos, the FRDI Bill that sent panic that depositors might lose their savings, the increased and huge charges on banking transaction and the imminent threat of bank privatisation has all contributed to many even closing accounts with PSBs.

As attempted in the failed FRDI Bill, depositors are now being made to be stakeholders for the losses of the banks. Hence, we demand that depositors should be empowered with full disclosure by the bank about investments of their deposits and the risks involved and mitigation plans. Depositor should have the right to assert not to invest in certain sectors, which are proven to be detrimental to humans and nature. Depositors should be provided with policies, which guide the investments of their bank. Banks should not impose charges on depositors for basic banking services.

Bank Charges

Service charges on banking services have increased drastically in the previous few years. Primarily, banks are in the loss due to increased non-performing assets and provisions needed for them. The loss has been caused by corporate defaulters but the burden of this loss has been shifted to common people in the form of increased bank charges despite the fact that these charges amount to merely 1% of the total amount of bad loans. Depositors are being charged for almost every banking service such as cash transaction at branches, ATM transactions, change in ATM pin code, change of mobile number or address, SMS alerts, changes in KYC related documents etc. The Government along with the RBI must come up with clear guidelines for banks to stop charging customers for each and every banking service and take actions against real culprits who have caused the loss to banks.

Strengthening rural and agricultural credits

Agriculture is the backbone of our economy.  Keeping this in mind, in the nationalisation era, PSBs had taken efforts to improve agricultural credit by having mandatory priority sector lending. Further, the direct credit within the priority sector also aided in the credit needs of farmers. But changes in such policies and including agro-based industries for priority sector lending has severely affected credit flow to the farmers.

After nearly three decades of economic liberalisation, farmers are worse off and indebted. There’s an alarming rise of debt in the farm sector. Banks having nearly withdrawn from rural and small agricultural credit, farmers were forced to approach informal credit sources, consequences of which was unfolding the past many years in the form of suicides of thousands of farmers.

We demand that farm loans of small, marginal and subsistence farmers should be written off. And banks should step in to support the sector by providing credits. Crop Insurance should be done by Public Sector Insurance Companies and not by private companies like Reliance.

Strengthen the devastated unorganised sector and small businesses

Demonetisation had the maximum impact on the unorganised sector and small businesses. GST has made it only worse. They, being the largest workforce in the country, contribute more than half of our GDP, priority should be given to the sector to rebuild and restore it. They require seed money for start-ups, Equity Support, Loans, marketing support and common support services.

Transparency and Accountability

‘Sunlight is the best disinfectant’. The absence of transparency and accountability at all levels of appointments and decision making has been fundamental to the cancer of crony capitalism, corruption, underperformance, loss-making and the monumental social and environmental costs, which the irresponsible investments are causing. We demand mandatory policies pertaining to transparency and accountability for all banks, including RBI, NABARD, SIDBI and Private Banks.

Banking Activities without Banking Licence

There are many Fintech companies, which are into lending which is a banking activity.  There are no supervisory mechanism or Licence.  They charge huge interest.  They have to be immediately brought under RBI supervision.

Social and Environment safeguard policies

Large-scale development projects have been seen as imperative for the economic and social growth of the country. But, such projects have had adverse effects on the lives of people in project areas and also have done irreversible damage to the environment. The civil society movements have raised these issues with financial institutions funding such projects. Coming under the pressure of such movements major multi-lateral development organisations had included social and environmental safeguards to their investments. These remain one of the tools of holding these institutions accountable.

National financial institutions especially the public sector banks are today primary lenders for such developmental projects in India. But PSBs do not have any mandatory guidelines to ensure that their investments do not cause harm to the common people of the country and destroy the environment. This coupled with lack of due diligence and reckless lending have also caused a severe crisis within the Indian banking sector. Hence there is a need to develop robust safeguard policies.

Appointment of Employee Director / Officer Director

The board of the banks is where decisions, inter alia, of the large scale loans are decided. Unfortunately, the posts of the employee director at the PSBs have been left vacant for far too long and thus preventing their voices at the Board has been a strategy of this government.

As crucial stakeholders of the decisions of the banks, employees have to be a part of this decision making. We demand the immediate appointment of employee director in all PSBs and policies to ensure that such appointments are not delayed in future.

Bank Merger

The government says its plan to merge one weak bank with two stronger banks will help to mitigate the burden of bad loans and further increase the lending capacity of the amalgamated entity. The merger may help clean up bad loans of the weak bank, but it would also necessitate more provisions by the new bank. Further, the new bank lending to the same large borrowers, without recovering existing bad loans will only result in more loss for the bank. Not just commercially unviable, but a three-way merger among banks with different administration will only result in administrative chaos.

Mergers cannot resolve or clean up the balance sheets; rather the NPAs of the three merged entities would simply add up. The improvement in certain ratios, if any, would amount to mere financial engineering, without resolving the actual problem. Should learn from the mistakes of merging SBI with Associate Banks.

Privatisation

Public Sector Banks have been the driving factor of the Indian economy since the nationalisation of banks in 1969. While private banks are confined to urban areas, with no branches or nearly no services in rural areas, PSBs serve one and all. Policy changes and political interference in recent years have weakened and made them vulnerable, mounted the burden of non-performing assets and ended up charging for their services, hitting the poor the most. These are weakening the PSBs and steps like bank mergers are steps towards privatisation of PSBs and it should be vehemently opposed. Going forward, the PSBs must be strengthened, help them recover the bad loans from wilful defaulters and remove the bank charges introduced in the recent past and ensure its independence without political interference. We request you to give all assurance that “ Public Sector Banks will be strengthened and No Privatisation of PSBs”

GST

1. There should be greater relaxation for MSMEs for GST compliance, as the GST system invariably discriminates against MSMEs vis-a-vis large companies, as a large amount of working capital of MSMEs has to be devoted towards GST compliance.
2. There should be a lower tax rate for mass consumption goods, which should be compensated by levying a higher tax rate for luxury consumption goods.
3. The tax collection targets of the Government should come more through a progressive direct tax system, with higher tax rates for individuals in the high-income category. GST or any such indirect tax is regressive as it puts more burden on people from economically weaker sections.
4. States should have a higher representation in GST council for determining the tax rates, on the lines of federal cooperation, which would also lead to offsetting the higher amount of control with the central government through a mechanism like GST.

Development Financial Institutions

Development Financial Institutions were established with the purpose of financing the mid and long-term large development projects and they have played a paramount role by contributing to the industrial growth and overall growth of the nation. During India’s economic liberalisation, these banks were slowly eliminated or transformed into commercial banks. With the dismantling of development banks, the scheduled commercial banks were forced to engage in long term lending, which parked the considerable part of banks’ capital and led to a shortage of capital for other banking activities. Additionally, banks adopted aggressive lending practices and issued big loans without due diligence increasing the non-performing assets to an unprecedented level. The Standing Committee on Finance, in its report on the Banking Sector in India – Issues, Challenges and the Way Forward(May 2018) also made the recommendation to go back to the previous model of development banks for medium and long-term lending. The government should make sure that there are adequate development banks to provide long term lending for development projects so that commercial banks can focus on short term lending and other economic activities.

Parliamentary Oversight on IFIs

While their lending has been minimal, the influence of the International Financial Institutions (IFIs) on our economy and our policies have been disproportionate to the lending volume, facilitating and augmenting changing the fundamental structure of the public sector, many of them privatised at throw-away prices. Yet, Parliament does not have a role when negotiations are underway with the IFIs. The highest law-making institution of the country is handed down a decision made by the IFIs and bureaucrats, without a thorough deliberation on its impacts on people and the economy. We demand a Parliamentary oversight of all IFIs at all stages of negotiations, decision, monitoring and post evaluation of lending, to ensure that the country’s interests are not compromised.

Ease of Doing Business Ranking

In a hurry to jump ahead in the Ease of Doing Business rankings, the government has reportedly taken 10,000 steps, most of it amending policies, as acknowledged by the Prime Minister. These policies are related to labour and environment standards, eliminating public hearing from the approval process for certain projects and diluting forest and land use policies. Considering the devastating impacts this could have on people and economy, we demand that the amendments are made to only strengthen the policies and wherever it has diluted or weakened it, it should be reversed.

Strengthen Co-operative Banks and Co-operatives

Co-operative Banks and Co-operatives like primary Agriculture Co-operatives are the ones catering to the poorer sections of the societies. They are neglected and there is an effort to privatise urban co-operative Banks.  They have to be strengthened through NABARD and not allowed to dilute their goals.

Support RRBs and Stop Efforts to Merge Them

Regional Rural Banks are doing a yeomen service in rural areas. From 198 their number has been reduced to 56. There is another attempt to merge them state wise.  This will defeat the purpose for which they were initiated.  They have done well and they should be strengthened.

FRDI Bill                                         

Because of people’s relentless campaign, the Financial Regulation and Deposit Insurance (FRDI) Bill was withdrawn by the government, which otherwise would have risked depositors savings and would have jeopardised the existence of PSBs. However, the government is trying to bring in elements of FRDI Bill through different legislation.

We demand that such a move is reversed and resist the attempts of the Financial Stability Board to meddle with our banking system.

Corporate tax wave off

The government should end the practice of waving off corporate tax year after year. The average corporate tax waiver the past few years have been more than Rs. 5 lakh crore per year – which is nearly one-fifth of the Union budget of past years.

Parliamentary Standing Committee Proceedings

Proceedings of Parliamentary Standing Committee on Finance should be made public and aired live to the citizens enabling them to watch and follow them, like in many other democratic countries. Such transparency would not only enhance accountability amongst and members and parties involved but also ensure active and responsible citizenry.

Accountability of Regulators

The Regulatory Bodies should be accountable to the Parliament – submitting regular reports, which in turn is made available to the public. The Regulatory Bodies should engage with and consult investors, depositors, policyholders, pensioners or borrowers regularly to take feedback and in fine-tuning the policies of regulation. The appointment and/or extension of tenure of the Chairpersons should be decided by a Parliamentary body, not just the Finance Minister and/or Finance Secretary as it is practised now.

Endorsed by:

1. Medha Patkar, Narmada Bachao Andolan
2. H. Venkatachalam, All India Bank Employees Association (AIBEA)
3. Thomas Franco, Former Gen. Secretary, All India Bank Officers’ Confederation (AIBOC)
4. Sucheta Dalal,MoneyLife Foundation, Mumbai
5. Madhuresh Kumar, National Alliance of People’s Movements, New Delhi
6. Leo Saldanha, Environment Support Group, Bangalore
7. Peter, National Fishworkers Forum
8. Soumya Dutta, Bharat Jan Vigyan Jatha
9. Ulka Mahajan,Sarvahara Jan Andolan, Maharashtra
10. Financial Accountability Network, India
11. R. Bhatt, Former Chairman Corporation Bank Officers’ Organisation
12. Beyond Copenhagen Collective/MAUSAM, India
13. Working Group on International Financial Institutions (WGonIFIs)
14. Dunu Roy, New Delhi
15. Sreedhar Ramamurthy, Environics Trust, New Delhi
16. Centre for Financial Accountability, New Delhi
17. Bharat Patel, Machimar Adhikaar Sangharsh Sangathan, Gujarat
18. Wilfred D’Costa, Indian Social Action Forum (INSAF), New Delhi
19. K. Agarwal, General Secretary, Union Bank Retiree’s Association, Uttar Pradesh
20. Krishnakant Chauhan,National Convenor, National Alliance of People’s Movements, Gujarat
21. Kalyani Menon-Sen, Feminist Learning Partnerships
22. Rajendra Ravi,People’s Resource Center, New Delhi
23. Ram Wangkheirakpam, Indigenous Perspectives, Manipur
24. Sanjeev Kumar Danda, Delhi Solidarity Group, New Delhi
25. Shripad Dharmadhikary, Manthan Adhyayan Kendra, Pune
26. Vimal Bhai, Matu Jan Sangathan, Uttarakhand
27. Anil T. Varghese, Delhi Forum, New Delhi
28. Xavier Dias, Former Editor, Khan, Khanij aur Adhikaar, Ranchi
29. Awadhesh Kumar, Srijan Lokhit Samiti, Madhya Pradesh
30. Magline Philomin, Teeradesa Vanita Federation, Kerala
31. Himdhara Collective, Himachal Pradesh
32. Suhas Kolhekar, Pune (Maharashtra), Convener, National Alliance of People’s Movements
33. Sunita Rani Minj, Domestic Workers’ Union, New Delhi
34. Chutka Parmanu Virodhi Sangharsh Samiti, Madhya Pradesh
35. IOC Virudha Samara Samiti, Kerala
36. Bargi Baandh Visthapit Avam Prabhavit Sangh, Madhya Pradesh
37. Mahendra Yadav, Kosi Navnirman Manch, Bihar
38. Intercultural Resources, New Delhi
39. Equations, Bangalore
40. Odisha Chas Parivesh Surekhsa Parishad, Odisha
41. Karamuttil Samara Samiti, Kerala
42. Karimanikal Youth Movement, Kerala
43. Sagara Ayal Koottam, Kerala
44. Secretary, Andhra Pradesh Bank Employees’ Federation
45. Secretary, Gujarat Bank Workers’ Union
46. Secretary, Bihar Provincial Bank Employees’ Association
47. Secretary, Bengal Provincial Bank Employees’ Association
48. Secretary, All Kerala Bank Employees’ Federation
49. Secretary, Delhi State Bank Employees’ Federation
50. Secretary, Karnataka Pradesh Bank Employees’ Federation
51. Secretary, Maharashtra State Bank Employees’ Federation
52. Secretary, Madhya Pradesh Bank Employees’ Association
53. Secretary, All Orissa Bank Employees Association
54. Secretary, Punjab Bank Employees Federation
55. Secretary, Rajasthan Provincial Bank Employees’ Union
56. Secretary, UP Bank Employees’ Union
57. Secretary, Haryana Bank Employees Federation
58. Secretary, Tamil Nadu Bank Employees’ Federation
59. Secretary, Jammu Provincial Bank Employees’ Federation
60. Secretary, All Manipur Bank Employees’ Association
61. Secretary, Meghalaya Bank Employees Association
62. Secretary, Himachal Pradesh Bank Employees’ Federation
63. Secretary, Eastern Maharashtra Bank Employees Association
64. Secretary, Jharkhand Pradesh Bank Employees Association
65. Secretary, All India Allahabad Bank Employees Co-ordination Committee
66. Secretary, All India Andhra Bank Award Employees’ Union
67. Secretary, Federation of Bank of India Staff Unions
68. Secretary, All India Bank of Maharashtra Employees Federation
69. Secretary, All India Bank of Baroda Employees’ Co-ordination Committee
70. Secretary, Canara Bank Employees Union
71. Secretary, All India Central Bank Employees Federation
72. Secretary, Corporation Bank Employees’ Union
73. Secretary, All India Dena Bank Employees’ Co-ordination Committee
74. Secretary, Federation of Indian Bank Employees Union
75. Secretary, All India Oriental Bank Employees Federation
76. Secretary, All India PNB Employees’ Federation
77. Secretary, All India Punjab & Sind Bank Staff Organisation
78. Secretary, Syndicate Bank Employees’ Union
79. Secretary, All India UCO Bank Employees Federation
80. Secretary, All India Union Bank Employees’ Association
81. Secretary, United Bank of India Employees’ Association, Central Federation
82. Secretary, Vijaya Bank Workers’ Organisation
83. Secretary, All India State Bank of India Employees’ Association
84. Secretary, Indian Overseas Bank Employees Trade Union
85. Secretary, Tamil Nadu Mercantile Bank Employees’ Union
86. Secretary, Kotak Mahindra Bank Employees’ Union
87. Secretary, The Catholic Syrian Bank Staff Association
88. Secretary, Dhanalakshmi Bank Employees’ Union
89. Secretary, Federal Bank Employees’ Union
90. Secretary, All India Karnataka Bank Employees’ Association
91. Secretary, Karur Vysya Bank Employees’ Unions
92. Secretary, HDFC Bank Employees’ Union
93. Secretary, Ratnakar Bank Employees’ Union
94. Secretary, Nainital Bank Staff Association
95. Secretary, All India Citi Bank Staff Federation
96. Secretary, All India Bank of Tokyo Employees’ Association
97. Secretary, Bank of America Staff Union
98. Secretary, All India French Bank Employees’ Coordination Committee
99. Secretary, Sonali Bank Employees’ Association
100. Secretary, All India Standard Bank Grindlays Bank Employees’ Association
101. Secretary, All India Standard Chartered Bank Employees’ Federation
102. Secretary, General Bank of Netherlands Employees’ Union
103. Nityanand Jayaraman, Writer and Social Activist, Chennai
104. Ashish Kothari, Pune
105. Vijayan MJ, New Delhi
106. Samir Mehta, Mumbai
107. Ramnarayan, Uttarakhand
108. Gen. Sudhir G. Vombatkere, Mysore
109. Afsar Jafri, New Delhi
110. Jacob John, Bhopal
111. Prasad Chacko, Social Worker, Ahmedabad
112. Paul Diwakar, New Delhi
113. M. K. Sukumaran, Gudalur
114. Mukta Srivastava, Mumbai
115. Arun Kumar Singh, New Delhi
116. Virendra Jain, Kanpur
117. Tara Murli, Chennai
118. Aruna Rodrigues, Madhya Pradesh
119. Rajesh Singh, New Delhi
120. Kurien John, Bangalore
121. Poguri Chennaiah