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Why Blame the Arrow instead of the Shooter?

Thomas Franco
   Thursday 16 March, 2017  

There  is huge hue and cry about the proposed service charges and minimum balance to be maintained by the customers’ of State Bank of India and it is justified.  The only thing forgotten is that SBI is only an arrow and the shooter is the Central Government.

The purpose of Nationalisation was to widen the territorial and regional spread of the branch network, better mobilisation of financial savings through Bank Deposits, reorientation of credit deployment in favour of small and disadvantaged classes all along the production spectrum, removal of control by a few business houses, conferring of a professional bent to Bank Managements and providing of adequate training and reasonable terms of service to Bank Staff.  These goals were achieved to a large extent by 1990.

But after the introduction of the New Economic Policy, the orientation of Banks were totally changed.  Profit became the only motive.  40% credit to Priority Sector is not monitored. 1% loan to the weaker sections of the society at 4% interest rate is forgotten.  Decrease in rural Branches is not talked about. The Chief Economic Advisor to the Govt Dr. Aravind Subramaniam says Nationalisation was a blunder.  The Prime Minister made a statement in Gujarat on 9th of March 2017, that Nationalisation did not help the poor and only now through Jandhan A/cs he has  made the Banks to reach the poor which is not the correct assessment.  The RBI Dy. Governor’s make statements that targeted credit should stop and Banking expansion should be only with profit motive.

ICICI- a development institution then has become the biggest Private Sector Bank.  Similarly UTI became UTI Bank and then Axis Bank.  HDFC, a development institution has become a private sector HDFC Bank.  Efforts are on to make IDBI, a development Finance Institution converted into a Bank as a Private Sector Bank. 

When the owner of the Bank has changed the goal post, the Chairmen of the Banks follow the instructions.

As per News reports, Bank of Baroda, Bank of India, Punjab National Bank and Canara Bank have already increased the minimum Balance and service charges.  SBI was late but has come into focus.  But why these banks are doing this? Because they want some profit.  They have lost lot in implementing Govt’s schemes. 

Let us see the performance under Jan Dhan as on 8th march 2017.  Out of 27.97 Crore A/cs, 27.07 Cr A/cs have been opened by Public Sector banks and Regional Rural Banks sponsored by Public Sector Banks.  Only 90 lakh A/cs have been opened by Private Sector Banks.  Out of 21.84 Rupay Cards issued, 21 crore cards issued by PSBs & RRBs and only 84 Lakhs by Private Banks.  The PSBs & RRBs have 6.4 cr Zero Balance A/cs where as private banks have just 3 lakh Zero Balance A/cs.  PSBS & RRBs have done Aadhaar seeding for 17.1 crore A/cs whereas Private Banks have just done for 40 Lakh A/cs.  Out of this SBI group & its sponsored RRBs have 10.6 Cr Jandhan A/cs, issued 7.2 Crores Rupay Cards and have 3.3 cr Zero Balance A/cs and have done 6.64 Cr Aadhaar Seeding.  For this huge expenditure has been incurred but the Govt has not given any compensation.  In addition the Banks are implementing all Insurance Schemes of Govt, MGNREGA A/cs, and provide overdraft to Jandhan A/cs.  Mudra Loan target has been doubled.  Banks are happily implementing.  But what support the Govt gives?

The Govt actions show, We will not give Capital, We will not reimburse expenditure incurred in Jandhan or demonetisation, we will not help in NPA recovery by implementing the recommendations of Parliamentary Standing Committee, we will not pay the Bankers salary at par with Govt employees but Banks must make more profit.  Like a Headmaster reviewing performance of teachers, the Finance Minister reviews Banks’ Chairman’s performance every month.  But their requests and suggestions are not adhered to. There are more than 100 Directors’ Posts vacant in Public Sector Banks including officer / Employee Directors in Banks, and we talk about transparency.   

This has lead to a situation where farmers are dying for want of credit, students are not getting education loan and small credit is almost becoming NIL.  But Corporates get all the credit (11000 borrowers garnered 36.5% of total credit) and they are the ones responsible for 70% of the NPA.  Now Corporate Houses like reliance are entering Banking too.  Digital Banking is being forced on the population of which only 10% can read and write English and you need some knowledge of English to operate digital products and each transaction has a service charge. Who is responsible for all these? The service charges and minimum balance may once again throw away the small people from the Banks. Who cares?  SBI Biggest Bank for the Smallest man will care we believe.  But not the masters.


  • Look at Gyan Sangam Recommendations
  • Look at Indra Dhanush documents
  • Look at the statements of RBI
  • Look at the policies announced by Niti Ayog
  • All Points to Privatisation and Profit
  • Is it profit over people? 

Let us not miss the shooter and blame the arrow.  

* Thomas Franco (ngcfranco@gmail.com)




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