 Hello and welcome to NewsClick. A lot has been happening in banking sector recently. Looks like the ghosts of demonetization have come back to haunt the country again. There are reports of shortage of cash in many states in this country, Andhra Pradesh, Haryana, Bihar and many other places. As well as that, there are other crises in the banking sector. For the past two years, there has been a great deal of discussion that the banking crisis is mainly a public sector problem, and that public sector banks are the root cause of this crisis because of which the public sector banks need to be privatized. But now that the ICICI bank and AXIS bank have also come out with a problem of conflict of interest, it's interesting to see what the bank employees think of this. So for this, we have with us here a CH Venkta Chalam of AIBA. Hello, sir. Welcome to NewsClick. I am good, sir. So let's begin with the problem of this cash again because all of us have thought that we have those days behind us when we had to queue up in ATMs for this cash. Now it's one and a half years since the demonetization happened. So why this problem has come back again? This government has a lack of doing things wrongly from the beginning. Now again, we have the cash crunch. Banks are short of cash. In ATM, there is no cash. In branches, there is no cash. Customers are coming and shouting, and they are rightly putting a question. When I don't have enough money in my account, then you impose a penalty or collecting charges. When I have money, but you don't have money to give me, why should I not be charged from you to the next day when it has come? But the point is that when the demonetization took place, we found 500,000. There were almost 80% of the total quantum of currency notes available. They were demonetized. While replacing that, they have now replaced it with more number of smaller denomination notes, say 50, 100, say 200. But they brought 2000. That is the most ridiculous, illogical, irrational, and it was not proper because the 1000 were demonetized. They were demonetized just to attack the hoarding of cash. And now you bring in 2000. That means you want to hoard more. That means you want to politically remove some people who are hoarding and you want to allow your own people to hoard money. That's why 2000 has come. And that is creating problem now. For example, the Reserve Bank, they are responsible for this M3, money in circulation. After the total quantum that they decide, looking to price, inflation, demand, supply, etc., and some ex-quantum of money has to be in supply. Out of that, we find that nearly 70%, 75% are in the 2000. And that is getting vanished. The moment 2000 comes immediately from market, from banks, it is vanishing. We can understand who is doing that. So the result is that smaller denomination which are very much required, they are in less quantity and so there is more demand and we are not able to make up. But the services on paper I have printed up to M3, what is required I have printed. But they are printing more of the 2000. So that is going away from the circulation. So that is creating a scarcity. So let me interrupt you here to be clear. So you are saying that the Reserve Bank is actually facilitating the hoarding of this black money by printing lot of 2000 rupee notes and whereas causing inconvenience to most of the common people by creating a shortage of this short denomination notes. Exactly. You see, the Reserve Bank has become now just an extension counter, more piece of the government. Government is a culprit. Government wanted to facilitate their own people to hoard cash so they have brought this 2000 now. So the Reserve Bank is just taking its master's voice, that's all. Government is responsible. You are right. It is to help somebody 2000 notes and they are doing that and that's why shortage. Is there a deliberate policy of creating a shortage because initially at least during the process of demonetization the Prime Minister has said that everybody has to shift away from cash to digital transactions. So is it one of the reasons why government and the RBI are deliberately creating a shortage of cash so that people can shift into or will shift into digital transactions. Yeah, you got it right. That's exactly the agenda. By creating this scarcity, people will be compelled to move to digital banking. So that's what they are trying to do. But in India, digital banking is okay but that will come later. Today predominantly it is cash oriented transaction. So override you can't switch. Where the technology for the entire country, rural area etc. even in urban for the poor people, that much of banking technology is not available for them to totally switch over to digital. But that is also another reason. But I feel there is another thing behind it for the reason that you know the FRDI bill. The government has brought the bill unwarrantedly. It is not required for India because of that bail-in clause in the FRDI bill and now people are getting afraid that one party is holding the money, marriage people, all the black money people, that is 2000. Even these ordinary people, middle class people, they are afraid of this bail-in clause. Suppose the government and this government people think they can do anything right or wrong. So they are afraid. The FRDI bill, I mean they have used my money to save the banks and there are a lot of problems in banks they perceive for this Punjab National Bank fraud. I say it's a bank fraud, Neera, Modi, Rotomac, Videocon, one by one. And so the middle class also, they are withdrawing the money and keeping it idle because tomorrow something may happen to the banks. So that means Reserve Bank on paper, they have this total money circulation. Actually so much money is not circulation. After the money printed, bulk goes in 2000 for hoarding. Remaining some money is also held up as idle cash, but the middle class thinking that something will happen, they are apprehending, the FRDI bill will come so better to keep some money. There seem to be a good deal of substance in what you are saying because according to newspaper report that I have read recently, the velocity of circulation of money has gone down. That means the money is changing hands less number of times which means that people are actually holding the money. Probably as you said because they are scared of the FRDI bill. Do you see any other evidence in support of this? Is there any reduction in deposits or the fact that people are withdrawing their deposits? Yeah, yeah, yeah, because of FRDI. Number one, you are right, velocity should be at least 70 to 20 times the money should circulate again and again. It has drastically come down now. That means money circulation has shrunk. That is not good for the country. We are neither, we are not digital, so naturally cash has to be there. See, November 2016 is a demonetization. Now 16, 17 months are over. Still many of the ATMs are not recalibrated. Recalibration is very important because now new notes have come, new designs of 100, new types of 10s, new types of 50s, new types of 200 and the old ATMs cannot hold them. So this is also creating another problem, compounding to the mess. So this government is expert in creating mess in banking department. With the result people are losing faith. One side frauds, other side these bad loans are going on, other side you are threatening the people with the FRDI bill. Now there is no cash. So what are they up to? Are they deliberately trying to kill our banks? Sir, now shifting to the other issue of the NPA crisis itself or apart from NPA crisis also various kind of scams as you said of Nira Modi, ICICI bank, Axis bank have come out in the open. So at least till before the ICICI bank the scam came up everybody was saying that it's the public sector banks that are at the root of all the banking sector crisis. So the solution is privatization of the public sector banks. But now that ICICI bank scam has been exposed where the CEO, Chanda Kochar herself has been found to have conflict of interest where loan has been given to an entity which is controlled by husband which is against the rules or practices of good banking practice. So what do you think is the solution when the crisis is all pervasive including public and private sector? Naturally by banking there is a total economic crisis with the advent of liberalization and decontrol and privatization the so-called banking or economic reforms. It's only an automatic child that is to be born only. So it was really expected but coming to the banks as you said so far they've been targeting the public sector banks. It is inefficient, service is not good, their property is not okay then the lending policy is not okay, fronts are taking place, scam is there NPA all types of targeted charges, allegations. And now it is proven, we have been saying it is not so that public sector banks because we are dealing with the total so much of quantum of banking business, naturally the fronts are more or problems are more, we are dealing much more than what they do but now as you said ICI bank has in one stroke access bank and ICI bank they expose this myth that private banking is inefficient in fact the country knows unfortunately people's memory is so poor before 1947 so many banks collapsed. After 1947 private banks collapsed. In fact the section 45 of the banking companies that came only because of repeated bank failures in Kerala, in Bengal in many other places and so from the All India Bank and the association of Denjan Satri Prabhakar was also a number of parliament he raised the issue so this amendment was made in future private banks even if they collapse then it will not be closed, it will be met with somebody else and similarly now do they have any moral right to talk of private essential banks? These 12 accounts which have now gone to this NCLT for insolvency who are the people, all the private sector people private giants corporate people, they are not public sector before NCLT not a single public sector company has gone all the things first 12, another 30, another 40 now about 770 accounts have gone before the national company lot tribunal for insolvency, all the private companies and now it's very glaring, it's a scam, it's a fraud it's cheating, ICI bank has given to Videocon because it is all established that Deepak Kochar is beneficiary so you give loan through the bank and your own family gets the benefit through the trust and whatever so absolutely the government should be very clear now the time is right to privatize ICI bank, Axis bank and all these private banks at all, there is no need public sector alone can be the real engine driving for behind taking the country to progress and development in our country whether private banks are given for education loan whether private banks are given agriculture loan whatever rural loan they are giving it's all buying already the agriculture loan done by the public sector banks they don't do all those things, everything is done by us rural branches we are opening, private banks they don't do anything and now they are all being glorified now the balloon is punctured, everything has come to know if you go into further detail some more private banks will be in the scene so that's why I am saying it is high time that public sector should be strengthened more branches will be opened more loans on congenial terms should be given to the people to take the country forward all private banks especially to begin with ICI bank and Axis bank should be immediately nationalized in country center they are dealing with 9 lakh crores of people's money it is not safe now any longer that means they will misuse nepotism, favoritism to benefit themselves Sir apart from what you are saying there was an interesting pamphlet that I have read recently which has been produced by AIBEA, your own organization that this so called private sector banks actually are not Indian private sector banks for example you said that ICICI bank is majority foreign shareholder bank that means that any profit that these private sector banks make 73% ICI is foreign capital so if it is 73% owned by foreign capital it obviously means that profits are going to foreign companies so even these private sector banks when they are making profits they are not coming in any way to Indian pockets yeah yeah very true there are two things number one they are produced and the the bank is consciously permitting more and more FDI only thing it is not held by one group so there is no foreign owner but it is spread out still nearly 70 75 it is less than 76 up to the maximum and so naturally the foreign content is more and very actively observed whatever dividend they are declaring it is all going to the foreign owners so our money is going out our people are taking loans, credit card, retail, whatever and that interest is the profit and the revenue is going into the country number one, number two is said that private bank there is no bad loan 45,000 crores is the NPA in ICI said bank which is more than the NPA of 16 government banks so how is it that they are better in giving loan access bank all banks are having this more than 120,000 crores is the bad loan only in the private bank including the bandhan bank recent one all this bank bandhan bank is a new one how come that there is bad loan so you can't blame public sector banks are the Kamadhenu, public sector banks are the Neelakanta, Mahadeva, Swaling all the poison of the corporate people their defaulters, they are cheating and then ultimately they are blaming public sector banks and they want to take over their banks no way, no way it is we are dealing with 110 lakh crores of people's money it's all precious savings we have to safeguard the banking we have to safeguard public sector banks and people's money and this one instance is enough that private banks are not efficient in our country all along we know and this is one more example and that's why government must make a decision let us see what this government will do otherwise we will intensify our campaign we have decided in May, June, July 19th July will be the Golden, July 50th year of the bank naturalization there will be more and more strike we shall confront the government it's not possible that this will continue like this they will take all the benefit of public sector banks again only great problem they will not repay the loan put the banks into trouble banks are in losses and private banks are escaping this must be reversed we shall do that the AIBA we have planned we are going to have a big campaign on that so is one of AIBAs demanded this private sector banks which are in trouble they should be nationalized? yes, very much, very much all foreign banks all foreign banks and private banks in our country must be nationalized that is our demand and now immediately immediately you know these two culprits I say it's a bank and I say it's a bank they are caught so naturally they must be nationalized then later we will say one by one our demand is all private banks and foreign banks they must be nationalized no doubt about it that is a country's syndrome that is a people's syndrome thank you sir thank you for giving us your time and we hope to get back to you soon thank you, all the best thank you very much