Monday, 1 October 2018

The Loan waiver & the Loan recovery.

Loan waiver and loan recovery are two polar opposites. They don't have a meeting point. They cannot converge as they are divergent. The bankers' task now is, how to achieve these both ends meet. The obnoxious and oft-repeated press statements by the Chief Minister instructing police authorities to arrest the bank officers if they issue the notice of recovery of loan has set the cat among the pigeons. This is a grave and extraordinary situation in the state which is unprecedented. This has devastated their morale. The loan waiver is spereheaded by the head of the government with all the pomp and public gaze where as the recovery has to be made by a poor official at the branch level without any support or protection from his superiors. Will he be left to fend for himself, is my fear. The poor fellow has a daunting task on hand.

Loan waiver is fraught with long term implications which will breed the culture of non repayment. It is a very negative and dangerous indulgence. No Economist hitherto has advocated waiver as a remedy for the farmers'distress. Government /economists /planners can think of alternative ways of ameliorating the hardship of the farmers. Unfortunately for the political class, farm loan waiver is a low hanging fruit in vote bank politics. Indian farmer is frequently affected by the vagaries of the monsoon and uncertain market conditions. When such is the case, waiver is not the panacea. It is rubbing salt to the wound for the banks which are already saddled with unacceptable level of bad loans. At a time when banks are struggling to bring down the NPAs, the announcement of loan waiver is a big jolt to their efforts.

The top executives are also in a great dilemma. Neither they can issue any written instructions to the branch functionaries not to issue the notices to the farmers nor have the gumption to say to the Chief Minister not to issue statements like the way he is doing. If the bankers do not issue the notices, they are liable to be made accountable by the Bank for the lapse and if they issue, the situation is any body's guess. The officials are in such an unenviable position that they are damned if they do, damned if they not. Whatever may be the constraints of the management, time has come to sit up and take notice of creation of a very negative and hostile atmosphere for the grassroot level officials of the bank.

There is an urgent need to educate the the Chief Minister of the immense damage his statements cause to the safety and morale of the bankers and the long term negative impact it will have on the entire farm credit dispensation. Loan waiver is a double edged sword, it cuts both ways. While on one side, it incentivise the defaulter on the other it demotivates the honest borrower and makes him become a wilful defaulter. In short, it vitiates the repayment culture of the borrowers and make life difficult for the banker.

State Level Bankers Committee's (SLBC) role now assumes importance. It has its task cut out if at all it is serious of the situation. The present situation demands lot of education, persuation and perseverance on the part of all the stake holders - the bankers, the government and the farmers. It is just not the waiver per say that is involved in the issue but the whole perception and attitudes has to be corrected.

What can be done?

1. All the heads of the banks affected by this should meet the Chief Minister and protest his remarks in the media. Loan waiver is one thing and giving dangerous and irresponsible statements is another. (But will anybody bell the cat is a million dollar question).

2. Explain him the negative impact it is creating on the credit discipline and the potential it has to breed a culture of non repayment.

3. Arrange a discussion in the electronic media by a panel consisting of RBI representatives, bankers and raitha sangha leaders and explain the intricacies of the issue and the advantages/benefits for prompt repayer. This should be done periodically for certain periods of time.

4. Publicize in daily local vernacular press the Rinn samaadhan (OTS) its details and benefits in bold captions and in front pages.

5. Conduct townhall meeting type of gathering in Agri intensive areas and play a suitably designed / tailored videos mounted on mobile vans that inspire and instill repayment.

6. These mobile vans should tour the Agri intensive pockets.

And in all these, the ghosts of Vijay Mallya, Nirav Modi, the Essars, the Videocons etc will definitely haunt the bankers. The thousands of crores of Corporate loans written off will stare in the face of the bankers. This is something that will weigh on the spirit and drive of the banker in this marathon.

K N Krishnan,           94496 12446
Vice President, SEWA, Bangalore.

Saturday, 8 September 2018

Shades of customer service.

Just a few days ago my mother in law expired after a prolonged illness. She was terminally ill for over six months.

To complete the process of cremation an undertaker in a crematorium was identified and was entrusted the job. Entire task was entrusted to him. Our job is just to take the body to crematorium.

At the appointed time we took the body to the crematorium. He received us at the gate and directed us to place the body on a particular platform that was meant to perform the last rituals before the body was offered to funeral pyre. The moment the body was unmounted, he took over the proceedings and was in full control of the things. He had by then ensured that all the items required are in place. He was directing us to perform the rituals in a particular order. He has become an expert in the matter. He is unkempt, not shaven but appeared a little drunken ( perhaps it is quintessential to do that kind of job). While he was directing the things, another two bodies arrived. He was simultaneously directing those bodies to the other vacant platforms and asked them to be in preparedness to perform the rituals.

As soon as we finished the rituals, he asked us to lift the body to the final stage where a bed of firewood was already stacked. After the body was placed on the bed of firewood, he started stacking up another layer of firewood on the body. In the meanwhile another body arrived. He was directing them to another platform. Finally he asked each one of us to place a stick on the body. He asked the person from our family who had been identified to perform the last rites to lit the funeral pyre.

By then I took a count of the bodies already on fire. It was 13. Another three are waiting. There is also lot of rush (customers) for him. But he was managing so ably at least we had not any occasion to be in grumbling against that ugly undertaker. He gave us service which is our money's worth.

The purpose of me narrating this was just to bring out the commitment, the sincerity and the (customer) service he provided for us. (Sorry for speaking the language of banking even in the graveyard. Afterall that is the disease  we are suffering from of late and I may not be an exception). He has no threat of competition what so ever for his profession, he is the one and only destination. On top of it a continuous stream of bodies were arriving (customers rush), he had to manage the crowd. He could have been arrogant, audacious and negligent. But he was not. All along I was observing the way he handled the job. He did it ably. Never I found him perfunctory. He was cool calm and focused. He is illiterate, uneducated and people may call him uncivilized. But he executed an uncivilized job in a civilized manner. But still I found a spark of customer service in the lowliest of the profession one could imagine on the earth.

Can we juxtapose this with the circumstances in the Bank? This comparison might appear to be outlandish and outrageous but somehow it caught my attention and I am so sorry for being so uncivilized to talk something in a graveyard and a Bank simultaneously. Afterall, I am a Banker too.

Sometimes - The greatest truths are the simplest.

Sunday, 12 August 2018

Amendment to anti corruption law.

In the aftermath of unearthing of the PNB scam, I wrote an article in my blog titled - "The PNB fiasco and the credibility of the bankers". This is still available in the blog which is dated 9th February 2018.

After reading this article, one of the top executives of our Bank at Corporate center what's apped me a short story which went something like this. It may not be the exact verbatim but the message is not lost.

Quote : A Buffalo was found running helter skelter and in great consternation. It was accosted by another Buffalo. The second Buffalo asked the first as to why it is running. The first replied, the government has ordered the arrest of all the cows and therefore I am running away. But you are not the cow. True, said the first one, but if I am arrested it takes 20 years to prove that I am not a cow. On hearing this the second Buffalo also ran away along with the first one.

Unquote : I didn't understand why he send this story nor did I appreciate the import of the message inherent in the story at that point of time. When the backdrop of the recent amendment to anti corruption law was discussed, I could appreciate and relate the morale of the story. It was argued that the indiscriminate arrest of the bankers by the investigative agencies whenever a loan turned bad has a debilitating effect on the ability of the banker to take a commercial decision to lend. This fear psychosis among the bankers has slowed down the credit off take and has an adverse effect on the growth of the economy. The IBA too had expressed its concern and in fact had taken up the matter with the government. The credit for amending the law should go to the finance minister Arun Jaitely without whose initiative, the amendment would not have seen the light of the day. He being the lawyer cum finance minister could understand the need for an amendment to the act and also succeeded in getting the amendment passed in parliament. The amendment to the law now requires permission from the appropriate higher authority to arrest an officer / banker. To that extent a safeguard clause has been inserted into the law. Whether this alone will suffice to allay the fears of the lenders has to be seen with the passage of time.

Now that, the concern of the bankers and IBA has been addressed by the government, it is expected that lending business will kickstart. The amendment to the anti corruption law may not be the  panacea for the poor credit off take. The problem requires a holistic treatment of the other enabling stimulators like quick disposal of cases before NCLT and NACLT etc.

Thursday, 28 June 2018

The disenchantment

A few months back, I got an anonymous call. The person at the other end enquired me about how much salary a four years senior clerk in your Bank would draw. I asked why?  He told me that a marriage proposal has come from a boy who is working in your Bank. When I gave the information he wanted, he exclaimed! Sir, only that much? I thought it must be much more.

I just would like to juxtapose this with the statistics thrown out by the recently held clerical examination held in Bangalore. The attendance at the exam tells the story better than the words. The attendance for the first stage of examination is 40%. This is woefully low. This perhaps is the lowest so far in the history of banking recruitment. What could be the the reason / reasons for this abysmally low turnout? Is it on account of abundant job opportunities outside banking? I don't think so. The job opportunitiy outside also is not rosy either. Notwithstanding not a robust  job opportunity outside, the poor response to our banking examination is a pointer to the grim realities in the banking businesses.

Banking industry is in the news constantly for all the wrong reasons. Issues like, huge NPAs, frauds and resultant losses would have taken the sheen off from banking job. While this is the story for outsiders, the story for the insiders (staff) is no better either. The bank is grappling with acute shortage of staff. Post merger, it was thought that the problem would ease. But unfortunately it has aggravated further putting the staff under tremendous pressure. As if adding salt to the wound is frequent transfers. On top of this is not so attractive salary package viz., the other PSU counterparts. Even the state government employees draw better emoluments in similar positions, let alone PSU counterparts. All these factors would have adversely affected the psyche of the prospective candidates to take up the banking recruitment test. The poor turnout for the examination is perhaps reflective of the DISENCHANTMENT of the people about bank job which is not a positive sign. If concrete and concerted efforts are not put in place to reverse this negative perception about Bank jobs, it will be dissastrous. After all, the all important assets of a financial institution is its live assets called its employees. If these live assets are demotivated and frustrated, then the handling of dead stock assets by this human assets will not be appropriate. The result of this is left to one's imagination. Because, it is the employees who carry forward any organization.

K N Krishnan.

Saturday, 23 June 2018

NPAs and Frauds - the double whammy for Banks

A couple of days back, a what's app message and a video clip was going viral among the employees of banks. It is reportedly of an assault by the son of a woman borrower on the bank official when he visited the borrower for recovery of loan which has become NPA. It is reported that he was assaulted with iron rods. The fact that the General Manager of the network was briefing the press about the incident confirms the occurrence of the incident.

It is not a one-off incident. Such incidents happen across the length and breadth of the country but many go unnoticed or unreported. Even in Karnataka there are incidents of farmers threatening with dire consequences if the bank officials venture into their villages for recovery of loans. And there are examples of manhandling also.

What does all this indicate? Where from these borrowers get that audacity and arrogance. These are the moot questions that needs to be answered. But those who needs to be answered are burying their heads in the sand. May be it is banks top hierarchy, or the police or the political class or all who refuses to acknowledge that there is an elephant in the room.

This looking at the other way by these functionaries when they are suppose to take punitive action has emboldened the borrowers to take law into their hands. There is one more factor which has given these borrowers some semblance of moral legitimacy to their illegitimate behavior. What is that? This is what I have mentioned in my caption. The proverbial NPAs and the recent and all too sudden spurt in frauds. This is dangerous; has far reaching and widespread implications on the banks ability to lend and recover. The frauds have become a commonplace in the newspaper and is being reported with such an alarming regularity as if they are reporting weather conditions. The inability of the Banks or its supervisor the RBI or their master i.e, the government to take any action when lakhs of cores are classified as NPAs and thousands of cores are swindled through frauds, as I have already mentioned has lent some degree of acceptance of their hooliganism and outrageous acts. The worst fallout of this inability to bring to books, these economic offenders, is the growing resistance of the general and otherwise well meaning borrowers to repay the loans quoting these NPAs and Frauds. When the bank's officials go for recovery, even a man in the remotest area taunts - why you have not recovered from Vijay Mallya. And the latest addition to this is Nirav Modi. And the banker's conscience is really hurt and his morale is lowered though he may pretend otherwise. The urgent need therefore is to take punitive action on these large corporate willful defaulters and fraudsters which should be strong and demonstrative. Then only the last man in the last mile too behave. Otherwise, if it turns into a kind of movement by some ill-advised elements in the society not to pay the loans till the government recovers from the big defaulters, it will be disastrous for the banking system. Though this idea may be farfetched, but it has a distant possibility.

K N Krishnan.
Vice president, SEWA, Bangalore.

Tuesday, 20 March 2018

Political scenario post UP by elections.

The by elections in UP recently held have set in motion an interesting trend. The allies of BJP have found sudden reasons to be dissatisfied with the main partner. Perhaps they were enduring with some degree of uneasiness hitherto and waiting for some honorable exit point. The result of UP by pools came in handy for them to do what they were waiting for. For Chandrababu Naidu it is a God sent opportunity. With elections round the corner in some time in the future, he was feeling uncomfortable with BJP as there is a large chunk of Muslim vote base in his state. By continuing with BJP he would have been perceived as one who is "Running with the hare and hunting with the Hounds". This contradiction he always wanted to clear himself off much before the state assembly elections.

Nitish kumar in Bihar has started to make some noise which is discomforting to BJP. When he deserted Lallo in Mahaghatbandhan arrangement on a flimsy reason of corruption and joined BJP, he thought that BJP was a rising star and decided to sail with it. When series of setbacks started to haunt BJP in the by pools, he is realizing that BJP is now a sinking ship and some how wanted to desert that sinking ship. He has started making some noise probably an indication of the next step he may take. His whatever reasoning will warm nobody's hearts. He has already lost the credibility he once enjoyed before joining BJP. The vitriolic Shivsena as usual is blowing hot and cold and continuously criticizing BJP. LokJanShakti leader Ram Vilas Pawan is bold enough to sermonise BJP to have change in perception towards dalits. KCR has reached out to Mamata Banerjee and already dreaming of a third front.

Congress not able to do anything is rubbing hands in glee at the developments. Its position is so pathetic that after losing deposits in the two by pools, it is celebrating the victory of SP as its own.

All these developments on the horizon only suggest that the opposition parties are in great hurry to encash the anti Modi sentiment. In the process they have forgotten that Modi and Shah can bounce back with renewed vigour, learning from the mistakes and insulating the party from such mistakes in 2019. Though, no doubt, that Modi's aura of invincibility has suffered to an extent, he is only down but definitely not out. Opposition has to handle/face him with lot of foresight, careful planning and precise execution which the opposition is not familiar with or known for. Moreover the basics/fundamentals of alliance if at all they are going to stitch are to be drawn with great circumspection, caution, accommodation, and maturity. The preparation of agree all program is the toughest part and first right step in this direction. Congress even if it has bigger number of seats than other opposition parties in 2019, it will be reduced to a level of regional party as for as bargaining power is concerned. It will be regional parties that may hold the sway. Opposition has equally daunting task or even more difficult task than BJP in 2019.

K N Krishnan.      94496 12446

Wednesday, 14 March 2018

By elections in UP & Bihar: Whether BJP is ambushed?

The results of by pools in UP and Bihar have thrown up interesting food for thought and enough material for media to discuss. There is some ray of hope for non BJP parties where as there is every reason for BJP to worry about. BJP ceded two of its strong bastions, Gorakhpur and Phulpur Parliamentary constituencies to SP. Gorakhpur was the bastion of the incumbent Chief Minister Yogi Adityanath who held this constituency for five consecutive terms. The loss of this constituency is a clear loss of face for the Chief Minister. The situation in Phulpur is also no different. It was held by the incumbent Deputy Chief Minister. No body is talking of Congress's loss of deposits in both the places probably because it is not even worthy of mention. It is effaced from UP and it was only expected and therefore no excitement about this. Its position is so pathetic that it feels the victory of SP as if its own. The degeneration of the grand old party is so abysmal.

The position in Bihar too was not any comforting for BJP. The RJD won the seat Araria. This is the first Parliamentary election held after Nitish Kumar broke away from the grand alliance with Lallu's RJD and joined BJP. Also it is the first election after Lallu Prasad Yadav was sent to jail in the fodder scam. Nithish kumar too, like Yogi Adityanath suffered a severe loss of face in Bihar. Simultaneously it is thumbs up for Lallu in the jail. His charisma and mass appeal has not diminished and in fact it has improved. What does all these indicate for BJP?

One of the leaders of BJP while reacting to the results beautifully phrased it as "we were ambushed by SP and BSP coming together". It was unexpected and we were not prepared for this surprise. He is true and candid. But the outcome of the election has much more to offer beyond the SP and BSP alliance. The margin with which BJP has won the two Loksabha seats in 2014 was huge- more than 3 lakhs. This is something that should send BJP the sleepless nights than the actual defeat. There is a steep erosion in its vote share and a high percentage voter shift. Out of the 15 Parliamentary by polls held across various states since 2014, BJP could win only 2 seats. This should worry the BJP the most. The aura of invincibility built around Modi is slowly giving way and the master strategist Amit Shah can also be outsmarted. These are the two most important takeaways from the results.

More over, if the coming together of SP and BSP graduates into a well meaning alliance in UP for 2019, BJP will have tough time safeguarding the numbers it has achieved in 2014. BJP  presently wishing it away as a one off affair. But anything is possible in politics. Politics is an art of the possible. One may call it opportunistic or whatever. After all, all political parties are opportunistic. Best example is Kashmir. More so the increasing pan India spread of BJP may bring all the worried non BJP opposition parties together. Survival instinct will be a strong bond than any ideology or philosophy.

Modi has to invent some new slogans for 2019 as all the existing stuff in his armoury appears to be a spent force. His rhetoric like Gujarat model, Development (sab ka sath sab ka vikas), Achhe din , Job creation, Black money, Corruption etc., may not carry the day for him in 2019. Hoping to win 2019 with just rhetoric and sloganeering without delivery of promises made will be of very tall order and wishful. Demonetiization, GST, Digitisation, Aadhar etc., alone may not be sufficient to bring him back to his second term. Something (programmes) that really touches the lives of the common man is the best immunity from defeat.

K N Krishnan.