PNB affair and after
It was in 1969 that the banks were nationalized by an ordinance by Indira Gandhi. Of course there was no public debate or even the parliament was asked! She wanted it, it got done. Funnily the reasons were that the PRIVATE banks gave money only to a select group and there would be concentration of wealth. Funnily the public sector banks gave money to Adag, Videocon, Essar,…under duress or whatever and are now unable to recover the money. Perhaps not even a part of it.
Not only do they not know how to lend, they do not even know how to recover. When the PNB problem was spotted by one man he must have told his boss. Somebody decided that a story in the press was far more important than to try and recover the money! Surely they could not have recovered Rs. 11000 crores in one day, but maybe they could have recovered in lots of Rs. 50 crores over a 4 year period…apart from the regular retirement of bills? Who knows? did we miss out that chance?
Well when a politician has access to such a big chest of funds, will he allow it to go? If Namo does not think of privatisation, who will? Not sure. Not clear.
Will privatisation solve all problems? We should know that if the OWNER does not sit at the cash counter and run the business, there is a good chance that it will run haywire. Normally in a family business only competent people are given power – well there are 3 or 4 exceptions – but largely companies which are family managed are doing well in the finance business. I know one owner who said “Subra we still own 53% of the company…one Rupee of bad debt means I personally lose 53 paise”. Noway how we can bring that mindset ever.
I have a simple solution.
Merge all the banks – other than SBI. Merge Ifci too…and make it one entity. Let them lend ONLY to the common man. Rs. 20L limit for a car loan and Rs. 100L for a home loan. Let them do nothing else.
Let them stick to Hdfc / SBI rules and regulations. No change in qualification criteria.
Slowly let the retirees go. Shut down branches. Do not let them accept new deposits unless there is a 3% NIM. No fresh recruitment.
Let people who want money to run their business go to SbI and the other private sector banks. People with more than Rs. 5000 crores working capital can and should go to the capital markets and raise debenture loans. No banking facility. Yes they can get LC, Lou, bank guarantee -but from the private sector banks or the big daddy SBI. Or maybe 3 banks could be allowed to do this – SBI, PNB and Bank of baroda. Shut down all the others.
Dynamic? revolutionary?
Well difficult situations call for radical solutions, do they not?
But like Latha Venkatesh ended her story….’Will the politician give up his pot of honey’…I am asking ‘Why the F… will he’. Nobody loves change. Change happens on its own. Like it or love it, that is YOUR problem!
CK
Crony capitalists-Corrupt Babus/Politicians-Zombies(false beneficiaries of subsidies and loan waivers) form the axis-of-evil. This should be tackled first. Giving huge loans to dual passport holders must be restricted (The list of dual passport holders taking the banks for a ride is increasing day by day)
Krish
All PSU banks staff feel averse to deal with the retail guys especially on lending front. They don’t see any benefit of giving 50K to 20L loans to retail customer. It is toomuch work for them. Finding a big businessmen and giving hundred and thousand crores is a preferred option. If you walk into any branch of PSU bank in India, would get respect if you are depositor. If you are a loan seeker, they would not treat you as human being and for them, you are worthless. PSU Banks distanced themselves from urban salaried class and forgotten about retail banking where risk of defaults and NPAs are low.
Something need to be said about the PSU staff. Most of the staff goes through tough competitive exams to get a job with PSU bank and as a result, has an aura of superiority and treating customers with disrespect. They can’t bear the sight of street vendors or small businessmen. None of the staff know what is sales and marketing and forget about making an efforts to get a good customer for lending. They are only used to people knocking on their doors seeking loans fueling arrogance over a period of time. After a decade or so, staff becomes so rigid that soliciting a customer is treated like shameful act.
Some how PNB did good PR to divert the attention and these days you would see articles only about Nirav, CBI, Raids, Directors and so on. Articles are fading about foolish act of PNB that every control in the banking went unchecked and equally responsible for this mess. Honestly PSBs are burden to country and nothing would change until they are disbanded.
Dev
Try liquidating an FD for which you have lost the FD Certificate ( for few thousands not in lakhs or crs) . Banks in general and PSB’s in particular make so much fuss to give back your own money. They have a ready list of documents to be submitted. Is there is a policy in banking that all the checklists and lending procedures are applicable only till 100L or so 🙂 Its all tax payers/citizens money 🙁
PSB staff attitude will not change. Most of them seem to be under impression that they are doing a favor to customers.Couple of years back I needed get details about one of my old account. The concerned person from bank was asking to me to take the documents from table to table. I agreed twice and took the document two times. Third time they asked to me to take it to another table, I told them that I was customer of the bank and if there is need the staff should get up themselves and walk to any desks as per need. They got irritated but did the work since it was their duty.
Hopefully number of banks will reduce.
Pradeep
Subra sir,
We are Indians.
When there is Will, We will find a way even in adverse circumstances and against all odds, to do Fraud, to cheat the employer, to cheat people, to hide it as long as possible, to escape at the end of it all, to prove in the court that nothing wrong happened.
We are Indians and greedy after all.
We will bring the world down.