Tag: finance

This is from my bank days. Ours was a private one owned by 7 other banks, largest among them being a nationalized one holding majority stake. Other 6 banks were private banks. This was before 1992-93 when banking reforms were signed between bank staff associations and the central govt. I am not clear about the present day scenario as I left my service over a quarter century back. We were then seeing the last of manual banking days as ATMs were beginning to be installed. In 1993, I got my first computer training for bank employees in Bangalore to acquaint us with computerization. A huge computer department came up in my HQ. I recall the monochrome PCs and our own typewriters being replaced with electronic Brother machines in all departments. Yet we were still doing only core banking: BORROWING AND LENDING. Debit/credit cards were issued by very few banks – mostly by the international ones. Slowly we were diversifying. Took India 8 more years upto the millennium to add bill payment, car/housing loans, insurance etc., to banking, and for cards to become huge.

Most of the international banks in India have now closed down unable to compete with the Indian banks that can give any of them a run for their money – be it when it comes to quality of banking staff or operations.

But up until at least the early 90s, nationalized banks in India and even private sector banks mandatorily had to run rural branches even if at a loss. Ours ran many. Since I was attached with Advances, I got a picture of these things. Rural advances were for those like goat loans, for buying pesticides and fertilizers (for farmers) etc., and for rural artisans such as weavers for instance to procure fabrics, threads etc. The biggest among them would be a rare tractor loan or a borewell loan. Branches had limited discretion. Mostly branches dealt with them. We used to get the summary (monthly reports) only as the sums advanced were paltry. Recall this branch from near Salem in Tamil Nadu – this rural branch had only villagers coming in for goat loans etc. To fit their convenience, even the branch followed staggered timings up until evening 8. It made a total loss. It still had a manager, an accountant and a clerk! It was a total waste. So many branches worked this way all across India – many many thousands. There was never the profit motive. It was only to serve the rural population and to reach into the most inhospitable terrains. We used to tease the officers posted there for their ‘punishment transfers!’ Once in their service time, every bank officer had to mandatorily work for at least 3 years in a most backward rural branch. So many, many rural outposts with no paved roads. In some pickets, electricity would be erratic. Yet the branches functioned. They still do under nationalized banks. The motto was ‘service to rural India.’

In 1992-93, banking reforms were signed in. It is at this stage that the NPAs (the non performing assets) started getting classified. Recovery cells/departments were formed for the first time to pursue matters even legally if situation warranted. Earlier, rural loans used to be written off when monsoons failed given the dismal economic background of the small village borrowers. The borrowers were mostly marginal farmers working on leased plots. If you would press them for recovery, they would even commit suicide. They were in very bad shape. Too poor and distressed. Still from 1993, reminders would go to the rural branches strictly advising them on recovery. Once I saw a very poor farmer in dhoti and without a shirt, walking into our department asking for waiver of his goat loan. He had traveled hundreds of kilometers using what little money he had for buying his bus tickets. I am conditioned by these sights and real life stories fortunately or unfortunately. Banks, instead of writing them off, started rephrasing their loans asking them to pay up in installments. There were instances when even legal notices were served on the illiterate farmers. Goats could get seized (!) for non repayment of loans with due interests thereoff!

Whereas I was also witness to how huge, huge credits were just like that disbursed without board approval when it was ‘suitable’ for the bank. Suppose the urban branch manager had no discretion, and the limit exceeded his powers, still if the party was influential enough, the higherups in Advances would quietly sanction every loan and then apply to the board for ratification. I have seen this with my own eyes and my blood would boil. Huge credits turning into bad loans also happened. Defaulters were still trusted. And after a point, writing off also happened without board approval. What is the board for except for ratifying misuse of powers. But the rural poor were pounded for repayment. I was too young then yet I was painfully aware of this unfair system. My colleagues/friends would ask me not to get sentimental about my job – but I could hardly be like them. Its good I left my service.

When I see Doge in America and their war cry to cut govt expenses, I am still reminded of the selfless services rendered by nationalized banks of India and even our railways, running the show for just a handful of people at times in remotest corners of the country, even incurring huge losses in the process. They say India is third world, but I have come to respect more and more our values and sense of social justice. The sense of inclusion you see in India in every sphere of life can be amazing. A first world nation like America wants to curtail government expenses. What an irony of situations!

Now in this digital era, I am so elated that the same rural India has villagers with barcodes (!) and UPI payment apps in their smart phones! You can buy a plate of samosas for snacking from a hawker and the barcode could be printed just on his push cart! Once on a highway I had tender coconut stopping our car. The coconut seller was from a nearby village. He had printed his barcode on the tree under which he was selling tender coconut! Its got that much easy to transact and do business with villagers these days. Increasingly going paperless also. But I am sure rural branches of our nationalized banks continue to serve the very distant pockets of India where loans for agriculture and loans to rural artisans who practise their trades from villages are very important. We are two entirely different nations: America and India. All these social indicators point to why India is not as developed as America. India is a welfare economy that puts the interests of the masses first over anything. Private profit is still secondary to us. Indian economy is mixed economy with both private and public sector participation in equal measures.

Lastly, kudos to Indian railways whose network covers the last outpost in every nook and corner of the country. They have got every square centimeter of the national geography covered and service the loss making areas without profit motive.