 Hello and welcome to NewsClick. Last week in various segments, Finance Minister Nirmala Sitaraman announced the details of the Rs 20 lakh crore package that the Prime Minister had initially mentioned, which is the Atmanir Barbarath package. Now there has been a lot of criticism over the package, especially around the fact that the actual budgetary allocation by the centre is going to be very, very less. But another key aspect has to do with the banks. And as far as the Finance Minister's plans are concerned, the front lines of this package, especially in terms of financing a lot of these schemes, providing credits and issues like that. So to discuss more about this, especially the situation of the banks, we have with us Thomas Franco. He is a former General Secretary of the All India Bank Offices Confederation. Thank you so much for joining us. So could we first start by talking about what the current position of the banks is, especially considering the fact that right now, as far as the Finance Minister's concern, banks seem to be the organizations which are going to execute a large part of this package. If we see the banks positions in March, banks were already having quite a lot of surplus funds and they were not in a position to lend it because as I said, the economy was not growing. They say that the banking is a reflection of the economy as a whole. So when the economy was not picking up, the banks were reluctant to lend and they were not finding adequate opportunity to lend. So what they were doing was that they were depositing that money in the securities, in bonds, or with the investor bank. Now the position has become worse. And that economy has come to a standstill. The banks still have deposits but they are not finding the correct opportunity to lend that is gone far. So what they have been doing is that now the Reserve Bank wants more money as they want to lend to this government. So 8.5 lakh crores is deposited by the banks in the Reserve Bank of India at the reverse rapport rate of just 3.75%. The state governments are asking for giving that to state governments which the RBI or the government is not permitted. Even they will be willing to pay even little more but that is not being permitted. So that is one side. Secondly, the recent announcements, most of these announcements of Reserve Bank of India is also treated as an announcement by the finance minister. There is a fiscal package, there is a monetary package. Monetary package is done by Reserve Bank of India which is supposed to be an autonomous institution and all over the world we are seeing that the central banks are devising schemes to support the customers which is on a very large scale than what we have done in our country. But apart from that the governments are giving huge fiscal packages. We have seen it all over the world and even in small developing countries like Thailand we see huge package given by the government of Thailand. But here now everybody agrees almost different rating agencies have also given up their figures. The actual fiscal stimulus is around only 1% of the GDP though the government claims that it is 10% of the GDP. Now the problem for the banks will be that unless you stimulate the economy through fiscal packages just giving loans alone will not be able to uplift the economy. That is a problem. Now the government of India has said that okay there is a liquidity crunch and we have given 8,100 crores which the RBI has said that the banks have utilized. But on the contrary more than that they have deposited in the Reserve Bank of India itself. So it is only giving through the left hand and taking back to the right hand. So that actually is not increasing the liquidity is one. Number two they have announced various schemes under which you are going to lend that the banks have been asked to lend 8,70,000 crores. Number one that itself is part of the packages already announced. For example now they have announced 2 lakh crores of Kisan credit cards. This was already announced in the budget itself that the agriculture credit should be increased to 15 lakh crores which is 11.5 crores as on marks. So 3.5 lakh crores was supposed to be induced by the banks mostly through Kisan credit cards. So that part of it is being announced now. Now if you look at another figure as on marks the banks were having a loan portfolio 112 lakh crores. Now on average there is a growth in advances of 10% annually. So naturally this year there will be a growth of at least 11.5 lakh crores. So what you are announcing is only part of that 8.7 lakh crores. There is nothing new and this only difference is that you are giving some direction towards the credit and that direction also is favoring the rich. For example the criteria for the micro small and medium enterprises has been changed. So now even a enterprise which has 1 lakh crores of investment it is considered as a micro enterprises. When we normally think of a micro enterprises it is small fetish of people, street vendors and dog. But here the micro enterprises is with 1 lakh investment and 5 crores turnover is considered as micro. So what banks will do is that instead of giving small credit they will find it easier to give larger credit. So once again it is going to benefit the richer section of the society. Now on the package which they have announced for the micro small and medium enterprises the Reserve Bank had already announced three months moratorium on this own repayment. Now today they are saying that they might be extending it by another three months. Once you are extending for that period the person has to pay, the company has to pay interest. Who is going to meet that interest? They have been demanding that you please give some interest concession or interest waiver which most of the countries have done. But only for certain enterprises they have said that they will give a 2% interest subvention which is not adequate. So the enterprises which are already into crisis they will be getting into more crisis with the moratorium because after six months you have to pay more along with the interest. Similarly for the working capital you have to immediately pay the interest portion. Otherwise the account becomes NPA. So these are constraints for the industry itself and the industry's demand is also not fulfilled and the banks are going to be put into deep crisis. And the other aspect also has to do with NPAs for instance. So how does the finance minister's package actually affect the situation regarding NPAs? There are a few different announcements Madam has made. Once he says that you cannot declare any of the loans for this period as NPA because this is COVID period. Now as I told you there is 112 lakh crores loan already given to the commercial credit. This is apart from the credit given to the governments. Now if you cannot declare it as NPA even if reprimand is not coming. It has to be declared maybe after a year. This is only for one year. So after one year you are going to get into a bigger crisis. Secondly she has announced that this mechanism of going through the insolvency and bankruptcy code using the national company law tribunal. For one year no cases will be taken up new. The existing cases itself they are pending after that 12 major cases itself. Till five cases are pending though they said within 270 days it will be concluded. But even two years it is not getting settled. Huge amount is blocked. So that is going to affect the banks further. Already there is an existing NPA of around 10 lakh crores. So you are not going to recover that. There will not be any recovery mechanism and in addition you are going to add new loans more. So that will lead to further crisis of the banking industry. So what we are seeing is a situation where on the one hand people are not going to really end up with much money in their hands. And on the other hand the actual number of bad loans the SOPs to the private sector are going to increase and all the finance ministers of course also announced measures for massive privatization as well. So in this context what is the situation faced by the bank employees especially those who have been working relentlessly over the past few days they are some of the employees who have not really got a chance to stay at home or work from home or do anything of that sort. So what is the situation right now? One is this privatization announcement is going to be very bad for the economy and for the banks also and especially for the enterprise. See when you have to use some stimulus all along the public sector was used. You buy the production of the cottage industry, you buy the from the car, you buy from the micro small enterprises. So huge enterprises like the railways, the oil sector, the telecom sector all of them were buying. Now Mr. Mithin Katkari had even announced in the last session of the parliament that 5 lakh crores is what is due from government and public sector undertakings to the MSMEs. Now they have said they will release it within 45 days. We have to wait and see whether it is really given. Now once you privatize that condition you cannot put. So these enterprises themselves are going to get into crisis. Now coming to the part of the banks The banks are working under severe strain. Number one is the acute shortage of manpower. In the last 5-6 years the recruitments have been curtailed in such a way that you are not recruiting even the number of employees who are retiring. They had been wanting to give push towards this digital for which they have put a curtailment on the recruitment. So the banks are understaffed and because of that banks were concentrating on larger credits which was easy. Now time has come you have to concentrate on the retail credit. For example you are saying that you give this 45 lakh industries loans which requires huge manpower and another 50 lakh people you have to give this 10,000 rupees loan for the traders that is the street vendor. In my opinion that should have been simply as a package free to those people. They are the poorest. After all 5000 crores the government can afford. They should reconsider otherwise you are making them to run to the banks for number of days putting strain on the bank also and the banks the present strain apart from the stop shortages. See when the whole country was under lockdown banks were working full. Transportation was problem. They had to travel in their own vehicles. I have seen girls driving their scooter 60 kilometers 70 kilometers to attend to their office. So there is naturally a mental fatigue. Secondly the government announced a package of 50 lakh insurances for who the people especially in the health workers that 50 lakhs will be the insurance coverage for them in case of covid this is but same is not extended to the bank as already for my own information I know of four cases of deaths due to covid among the bank. So there the individual banks are deciding 10 lakhs 15 lakhs 20 lakhs maximum is going to be like somebody has been announced by state bank. So that is also people are very unhappy. Number three for one year they have put a hold on transfers. Now everybody wants to go back to their hometown whatever is the difficulty including the migrant labor. But that is also put on hold. So that is another unhappy. Then the wage revision now it is overdue by 930 days the stocks also have come to a standstill. So that also people are very unhappy. So the morale has been totally down. So the government has to take action on boosting the morale of the bank staff. Otherwise even if they announce whatever schemes banks also find their own way out to fulfill the target. An interesting example I would like to tell you. The government was pushing stand-up India scheme. I have seen a lot of bankers contacting their existing customers doctors who actually do not require credit. Tell them that okay sir we have a new scheme take 10 lakh loan buy some equipment. They were also buying happily. They were charging their customers that is the sick people were being forced to pay more. Similarly mudra loan when there was a pressure the bankers were pointing it easy to find some known fellow around their house or around the branch fulfill that 25 number target. So actual needy person may not get this loan. Exactly. You give a moral boost to the bankers that is my suggestion. And finally the key in certain in a few concrete points could you talk about what would be the recommendations from your side, from the side of the unions that are thinking about these issues. What are the key recommendations to the government right now? Number one I would suggest that there should be a massive recruitment. That might take time for that. There is a readymade solution over there. There is a huge number of business correspondents who are sitting in villages with a customer service point. They were not given much of benefit though they were handling this direct benefit transfer of 500 rupees and all. Most of it was handled by them. They were given just one transaction two rupee more and their insurance cover is just unlike if they die of Covid also they get only contract. So these business correspondents whose number is more than lakhs they can be as per an award report it is almost 25 lakhs. So they can be absorbed as regular employees and these customer service points can be converted into branches small branches. So that will create a bigger change in the economy as of now. Secondly their life and death issue is naturally the wage issue that has to be looked into it has to be addressed immediately. Then you have to increase the fiscal stimulus. Unless you flow in more money into the economy whatever loans you are giving that will also go back. Now you remember during the budget and little before that in the speech the prime minister also announced that we are going to work towards a five trillion economy and the concrete announcement made by the finance minister was that within five years 103 lakh crores will be spent for infrastructure. Now you divide it. So for this year they should be spending at least 20 lakh crores. Let them spend that. That will create a lot of employment opportunities and infrastructure is what is going to build up the economy. Similarly the existing loans restructuring schemes have to be announced because once you say you cannot classify it as NPA earlier Reserve Bank had permitted the restructuring which was stopped and now it is allowed only for MSMEs. It might be requiring for the housing sector also the other people. Here one thing as people at large we should worry about is that the focus now from the Reserve Bank as well as the government is that okay instead of expanding the bank branches and staff you learn to the non-banking financial. Non-banking financial companies many of them again corporate. Reliance as its own we know in south is Muthur, Manapuram and Bajaj finance. We have seen the Devan housing what has happened to it. We have seen the ILF. These companies are going to be given more loans which can later on go back more than that they will be taking loan at 10 or 11 percent from the bank and they will be lending it at 24 percent they are permitted to do that and some of them in addition to this they charge something called service charge also. So this is going to be very bad for the customers as well as for the banks. So this has to be rethought similarly an interest subvention scheme just to put one example of Thailand. Thailand average interest rate is 15 percent but they have announced three different loan schemes for the poorest of poor 0.1 percent interest. Another section it is 0.35 percent interest and for the MSMEs it is 2 percent to 3 percent interest. So that kind of interest subvention has to be done then only this economy can see enterprises have to survive. As I said they are going to have a big constraint in the manpower. We have treated the people in such a bad way people will be willing to die in their native place and they won't want to go back as migrant laborers once again. Then you have problem of raw material. So at that time the government has to give this incentive of interest concession. Similarly what they have announced is 100 percent credit guarantee that is not 100 percent. The credit cover which is today available is for certain loan cities only 350 percent. Some loan cities 75 percent and maximum is 85 percent and there is something called a quick mortality. If the loan goes bad soon then the guarantee cover will not apply. So the overall changing of the credit guarantee scheme is required. If you are really saying 100 percent it should be made 100 percent. So these kinds of efforts if it is taken then it will definitely bring a change in the economy. Thank you so much sir for talking to us. Thank you. That is all we have time for today. Keep watching. Just click.