 Hello and welcome to NewsClick. As you know, banking sector has been recently in news, much in news, be it demonetization or the NPAs or the whole debate about privatization. Today we have with us in our studio Mr. Thomas Franco, General Secretary of IBOC, All India Bank Offices Confederation. Welcome to NewsClick, Mr. Thomas Franco. So let us begin with demonetization, which still may be not a fresh topic but still showing its impact. For example, the government made a lot of claims during demonetization. It said that three to four lakhs of black money will be exposed and that can be spent on people. But so far government has not come out with any accounts. It hasn't told us how much of the money has come back and how much of the money has been revealed to be black money. So what do you think of this whole thing? What do you think of the figures that are not being shown? What do you think of the impact of demonetization on the economy? First of all, as you rightly pointed out, there were projections saying that at least three to four lakh crores will not come back and that will become the money which can be used, the RBI can transfer it to the government of India and people were even talking about giving a credit of 15,000 rupees for every Jandan account which is 28 crore accounts. Even today, the Reserve Bank of India is not in a position to tell us the data. I don't know where is the difficulty for them. It is so unfortunate that the Reserve Bank governor tells a volume on committee that we are still counting the notes. We in the bank, we know what has happened. We have already collected, we have given the report on the 31st of December. RBI has the data on how much money has been collected. So ultimately what is going to come back as black money or tax income is questionable. There has been little more improvement in the income tax collection. More people have filed returns and more people have paid little more tax. It can be because of the natural growth also but to some extent tax collection has slightly improved. Counterfeit currency, people have now started printing 2000 rupees note. It is coming to the banks. Terrorism, it has increased. Nowhere it has stopped. Corruption, it is, corruption does not stop in one place in one day. The root cause of the corruption if it is not arrested. And in my assumption, the root cause of the corruption is the large corporates who bribe the people at the top. Finally, if we look at the balance sheet of demonetization, we do not see that any of the objectives have been achieved. Even in the longer run, it may not really help the economy. In the banking sector, there seem to be a crisis at the moment. The NPAs of the whole banking sector probably standard rupees 7.2 or 3 lakh crore. And out of which the NPAs of public sectors are the majority. About 5 lakh crores of the NPAs actually belong to the public sector. So, how did these NPAs accumulate because it is a huge amount and how is it going to affect the banking sector, particularly the public sector banks? Even today's public sector banks are dealing with 72% of the deposit and the advances. So, naturally the NPA in the public sector will be more than private sector when you compare the amount. Recently reports have come that ICICI, AXIS, Yes Bank, they have hidden their NPAs to show that they are getting more profit, they have been hiding and now investigations are going on. If you see the data after nationalization up to 91-92, banks were giving quite a number of small loans, medium sized loans. So, even if some of the accounts become non-performing assets, it was not affecting the balance sheet much. Earlier we had a norm of RBI called the Credit Authorization Scheme in which even a loan above 1 crore, you had to get an approval of Reserve Bank of India. All this was removed. So, there was no question of having even a maximum limit to a borrower or a corporate. So, this has led to a situation today. Only 0.5% of the loans given as on March 30, 2015 has gone to small people which is less than 25,000 loans. Naturally, more loans have been given to few individuals which are huge loans as per the data published by Business World. Reliance Group has an outstanding in all companies taken together. It comes to more than 175,000 crores. Out of that, Reliance has two groups. One is Mukesh and Anil Ambani's Group. Anil Ambani's Group now was to be declared as NPA. They are the banks, RBI, everybody is taking a different stand that you restructure it. Reliance's defense which is an NPA has been converted into a long-time finance, 20 years repayment so that it is not declared as NPA and he can compete in the defense deals. Similarly, they relate communications more than 40,000 crores. So, the norms which are there itself is not applied properly to all. Favoritism is visible. Parliamentary Standing Committee's recommendations have not been implemented. What was the role of the RBI director in the board? What was the role of the Finance Ministry's representatives in the board of these banks? What action has been taken against them? What actions have been taken against the board of directors and MDs who took these decisions? And why you cannot convert this long infrastructure loans into a long-term loan and give it to industrial finance corporation? Easily, these accounts will become performing assets. We have done an analysis. They called 10 banks as weak banks and they asked us to sign one memorandum of understanding to prepare a turnaround plan. We started an analysis. All these banks, it is all consortium-ledding and if we address just 20 to 30 corporate advances, we don't require additional capital and the NPA will come down. Parliament itself, they have said that 86% of the NPA is to the corporates. A firm himself has said that it is just 20 to 30 accounts, is in the hands of the government to take a decision. They are talking about people are not able to take decisions because they are afraid of CBA enquiry. They are afraid of vigilance enquiry. Our question is, what is wrong in the vigilance enquiry or CBA enquiry against people like Anjali Bhargava? Who was responsible for giving lot of loans to corporates in a short time frame in United Bank of India? Mr. Yogesh Agarwal in IDBI, he violated all the norms and gave money to Kingfisher Airlines when Kingfisher was already declared as an NPA. What is wrong in investigating? Other than that, we don't come across so many investigations against senior executives. The investigations are all at the lower level of people who give small loans. These big loans are handled by the EDs, the committees which are sitting at the top. So if the government and RBI are really serious, one, they have to implement these recommendations of the parliamentary standing committee. Two, they have to put a ceiling on credit limit to a corporate. And these groups like Kambani, Sadani, who are getting large loans at very cheap interest rates and not able to repair the loans. The reality is that some of these loans, if you declared as NPA, the banks themselves will collapse. Now if Kambani group you declare as such NPA, the entire banking sector which has financed through consortium advances, they will become a bank itself become non-performing. So this ceiling has to be brought in and the credit orientation has to change. We have to reorient the lending policies to help the larger majority of the country. The farmers you go and talk to them, they say that we are not getting adequate credit, especially small and marginal farmers. Traders, they are saying that we are not getting credit. Women, they are saying that we are not even getting loan under the SHG lending. Students are saying that we are not getting education loan. Entrepreneurs are saying that we are not getting cheap credit. So this dichotomy has to be addressed. Once you reorient the lending policies and lend to larger number of people and smaller advances, naturally the NPA will come down. And immediate steps are needed to get back what has been given to this large corporate. There is no way to say that the bankers have done something wrong. They have perfectly followed the policies of the government and RBA. In the background of these NPAs, there is a lot of talk of privatization. Deputy Governor, RBA's Deputy Governor Viral Lacharya has at times commented that the only way out is reprivatization of some of the banks and the divestment of stake in some of the bigger banks. With the Governor, Urjit Patel, at certain points they have indicated that privatization needs to be done. And again, France minister Arun Jaitley also has said that privatization of the banks is called for right now. So how does it impact the economy and the credit outflow to a lot of sectors that depend on public sector banks? The Prime Minister in an economy conclave made a statement very clearly that government has no business to be in business. He also made a statement that public sector was warned to die. The chief economic advisor to the government says that nationalization was a blunder. The RBI governor goes abroad and makes a speech in which he says that some of these banks will not survive. We should allow it to die. Now we have seen during the 2008 financial crisis that Indian banking system was not affected much because of the public sector banks. Why we ready has been appreciated that the central bank was playing a crucial role in safeguarding the banks. Now if you see the achievements of the public sector banks which people are not talking about. Between 69 and 1991 tremendous achievement has been done as per the goals given to them. And you should also recollect that before 1969 there were a lot of private sector banks which could not cater to the economy. The purpose of nationalization was not creating profit for the banks and giving to the government. It was a social objective of reaching credit to the common man, reaching banking services to the rural interiors. And enough of studies are there to show that all these goals have been achieved. Day by day the services were improving but then suddenly we decided to go on a different track. We had Narasimhamta committee, then we had Anil Kandelwal committee, we had Raghuram Rajan committee which all started talking about privatizing the public sector. The corporates were looking at it like this. Earlier we did not have that kind of an expertise to run banks. Today these public sector banks are doing well so let us start owning them. So we do not have to go and borrow. We can use the same money for our own industries. That is exactly what was happening before 1969 which has come out in very different studies. R.K. Ghazari report is there. All India rural credit survey report is there. How skewed growth in advances were taking place. Out of the 28 crore Jandan accounts were opened. 95% of the accounts are opened by public sector banks, not the private sector banks. Whereas private sector banks control 28% of the banking business. Will they give this loan called the Mudra loan or the Stand Up India loan or Start Up India loan, agriculture loan, education loan. They will give for corporates. They will give for education loan for going abroad where they can take security. So the access to credit will become a big question when privatization takes place. So time has come that we should bring people of the country. The farmers, the traders, the students, the youth, the women, the entrepreneurs, small manufacturers, small and tiny and micro enterprises. They should come together and demand that we require these public sector banks to be in public. Because if privatization takes place they all are going to be affected. Will ICICA access our standard charter or city bank, go and lend to these people who are marginalized. They will never do that. So privatization is not the solution. More of public services, more of public sector banks are the need of the other.