 You go for an education loan. The bank is charging you 11 to 12 percent. But RBI report says that there are 599 corporates with loan outstanding more than 100 crores each. Their rate of interest is less than 5 percent. So you are affecting the ordinary depositors one side and the small borrowers, education loans, SME borrowers. They are being charged more to show that the income is more for the bank. Narendra Modi government has always prided itself on what it calls massive achievements of milestones in the banking sector. Now if you remember bringing back black money was an integral part of the 2014 campaign. Later after Jan Dhan accounts were introduced, the Prime Minister, many of his cabinet colleagues kept insisting how this step was a milestone. They brought many other policies over the years as well and according to them the banking sector in India is now at its best after years or maybe even decades of corruption. But is this really the case? To understand this we have with us somebody who has been studying the banking sector, who has been working in the banking sector for many, many decades. We have with us Thomas Franco, former general secretary of the all India bank offices, confederation and convenience of citizens first. Thank you so much for joining us. You recently wrote an article which in some sense seeks to bust many of these myths about a banking sector which is now different from what it was all these years. According to the government this is an efficient banking sector, this is an accessible banking sector. It is truly fulfilling the needs of the people. So before we go into some of those specifics, how would you respond to these claims? First of all, the amount of loans written off. In the last 10 years it is more than 15 lakh crores. The last 5 years alone it is more than 10 lakh crores. After writing off so much, how do you climb that the banking sector is doing well? The non-performing assets is a cycle. Now they are hiding the non-performing assets by reintroducing some of the schemes which were taken off by the Reserve Bank of India like restructuring of assets. So large number of loans are kept hidden which once again will turn up as non-performing assets soon. Secondly, in spite of so much of write off, how these banks are making profit? Huge profit. That is because of the income and from the difference between the deposits and advances. Just an example of State Bank's 2023 results. Their cost of deposit is only 3.7% and yield on advances is 7%. Now if the cost of deposit is 3.7%, what does this mean? The ordinary depositors they are getting very little interest. There was a time banks were paying even up to 14% interest on the VIXA deposits. Now it is average 6, 7%. So you are taking money from these small depositors lending it to the corporate's chief. But at the cost of the depositor who is earning very meager income. Current account there is no interest. And every NGO, every company has to compulsorily have only current account. Savings deposits, 4% interest. So actually this income should have gone to the depositors. Secondly, the cost of loans. You go for an education loan. The bank is charging you 11% to 12%. But RBI report says that there are 599 corporate's with loan outstanding more than 100 crores each. Their rate of interest is less than 5%. So you are affecting the ordinary depositors one side. And the small borrowers, education loans, SME borrowers. They are being charged more to show that the income is more for the bank. And again if you see the income of State Bank of India. A bank is supposed to collect opposites and lend. The major income should come from the loans. Now the result says that only 6% of the income is shown as other income. Maybe service charges, maybe inspection charges. Some amount invested outside. Earlier banks used to lend almost 95% of the deposits as loan. Now State Bank's credit deposit ratio is only 73%. That means you are giving this money as deposits somewhere else to end some income instead of giving more loans. And such a huge bank with 44 lakh depositors. The number of SME accounts is only 19 lakhs. Where is the 43 crore and 19 lakhs. And Modiji has climbed that we have done so much for SMEs. SMEs are suffering a lot. Then if you see the loans under the government's financial scheme. In the last 7 years 43 crore entrepreneurs have been given loan under the Mudra loans scheme. The number of households in the country is almost same. If there are so many enterprises where do you see those enterprises in the country? How many of them are surviving? They are all going to become non-performing assets. Only advantage is that now there is a credit guarantee scheme. So out of the loan given 75% if it is not a quick mortality. That is if it does not go bad quickly the banks will get some recovery from the insurance company. Not from the borrower. And the economic situation is not conducive for the growth of the small entrepreneurs. You were mentioning about the Jan Dhan account. The first year when just 10 crore new accounts were opened under the Jan Dhan scheme. The Prime Minister himself announced that 99% of the population has been already covered under the bank accounts. Now they claim that we have 50 crore Jan Dhan accounts. So where from they came? It is all just reporting. Every new account which is opened, whether the first follow has already an account or not. Or maybe in some other bank. It is all shown as Jan Dhan account. And due to minimum balance charges, number of accounts are getting closed. So this is not an achievement in the banking sector as claimed. And Mr Modi has also mentioned about scams that there were a lot of scams. Also I think the claims of returning of black money from abroad which is the biggest promise in fact. I think that is the campaign promise that resonated the most. One of the ones that resonated the most in 2014. Yes, but that is I can say it is a fraud on the FIFA. There was also a promise of giving 15 lakh per head out of the black money which will be given. 2016 monetization. Everything came back. We don't know where is that black money. And people were affected and that affected the economy. It affected the MSMEs. And many of them have not recovered back. So it is the black money demonetization has been really a fraud on the people. And nothing has been achieved out of that. So now coming back to this MSMEs and other loans. Again the corporates are getting the major portion of the credit. State bank alone. The largest banks are analyzing only that. 9.8 lakh crore has been the advance given to corporates alone. That is total advances. 30% has gone to few corporates alone. The agriculture for us. The MSMEs. Housing loan. Of course there is good. Though state bank is number one in education loan. It is number one in housing loan. It is number one in SHG loan. In spite of that there is a scope for state bank to give much more. They have a huge network. Now instead of increasing the network. Number of branches. There are 21,000 branches. Whereas there are 76,000 customer service points. Where somebody is sitting there doing some services. They cannot give loan. They cannot collect an open account. Their role is very limited. And they get a small commission. And out of that commission 30% goes to a national business correspondent. It is an exploitation of the youth. If the public sector banks were to recruit more. And also increase the number of branches. There has to have been a tremendous growth in the economy itself. Another example is per employee profit. State Bank of India in 2013-14. Per employee profit was 4 crore, 91 lakhs. Now it is 2100 crores. So it is more than 4 times. But the staff strength remains the same. It is going down. So you are not recruiting more people. Because of which the service in the public sector is under criticism. People are not happy with the public sector. And they are forced to go to the non banking financial companies. And now they have brought in a new scheme called the coal ending. In which again State Bank of India has entered into an agreement with Adani Capital. Who does not have any experience in banking. And they will hold applications for the agriculture borrowers, MSME borrowers. Which will not come back finally. So the banking system actually is under tremendous pressure. We are camouflaging things. After sometime the reality will once again be seen. Then again if a new government comes they can keep blaming that it is because of the banks. Which were lending left and right. Modiji claims that there was phone banking. So that is one of the other things. The government claims that with phone banking for instance another big step in accessibility. Now even those who may not be that literate or those who may be struggling for you know. Even everyday people have far more access. So does that tally as they say. No that is the digital banking they are talking about. See 26% of the population is still illiterate. Yes the digital banking has attracted the youth. But an injustice has been done to the banks. By opening up this sector first to the outsiders. Like you know that everywhere those state banks have an app called Yono app. People are using the GPAT or PTMR. Google does not have a banking license. But what they are doing is banking. And they have access to every account of every bank. Is it not an injustice? If this would have been given to the public sector banks. It would have been better. And GPAT in other countries they have started charging. Now it is free. So once they reach a peak they will start charging also. But another type of phone banking which Modiji is talking is that those days during the UPA. Some people from the high offices will just phone people. And banks will immediately give loan without any security. That is Humbug. Then or now banks do not follow that kind of instructions. I have seen in the banking sector for so long. We follow certain procedures. And our disciplinary proceedings are very strong. You do not follow the procedure you are sent out. So who will take that risk? So today actually what is happening is that the finance minister. She has meeting with the chairmans and managing directors almost every month. And she tells them what is to be done. The pressure on the Mudra loans and the other government schemes is put on the people. And because of that the bank services have gone down because that is not remunerative. So they achieve certain target and the rest of that they go to the corporates. So the country needs actually more loans to the farmers, more loans to the students, more loans to the MSMEs. That is not happening. Today 30% of the loans in the sector, financial sector is given by the non banking financial company. At one point of time banks were prevented from lending to others who will use it for on lending. But now on lending is happening under the compulsion of Reserve Bank of India. And also the co-lending is taking place. This is affecting the common man, which is not being talked about. The interest rates and MFI or a non banking financial company takes loan from the public sector bank or even private sector banks at 11% or 12% and they will lend up to 36% and now that ceiling has also been removed. They can lend up to more than 36% also. So what is happening? As I said the corporates are getting cheap loans. The common man is paying three times, four times of that interest rate which becomes very difficult for them and they find it difficult to repay. Then they lose every asset. So this is an injustice to the majority of the population in the country. Absolutely. And the other question I also wanted to ask is one of the other claims was regarding the efficiency because of mergers and that process that was initiated a few years ago. At this point how do you evaluate that process? See, merger was not warranted. At that time the only claim the finance minister was saying that we are going to create few global banks. That does not matter in any way actually becoming a global bank. But presently even State Bank of India is not within the top 20. In terms of assets it is 41 and among the Fortune 500 companies it is 221st position. No other bank has reached that level also. In fact what has happened is number of branches have been reduced, number of staffs have been reduced. So people are moving out. For example after the merger of State Bank of Triangle when a lot of people left the State Bank system and went to the private banks. Kerala has many private banks. So that kind of a shift has taken place and the merger has actually affected the larger number of people. Again the public sector banks which from 28 it is 12 now they are once again concentrating on the larger borrowers instead of the small borrowers. So merger has not helped the country or the people at large. And finally just also I think slightly shifting to another sector which the government really is doubting, is promoting, is claiming that its contribution to the country is the cooperative sector and it is closely connected in various ways to banking as well. So I also wanted you to sort of give us your evaluation of what is this push, or what is this push that the government is doing and whether it is successful, what is the agenda as part of that. See this government is for one nation, one language. So like that now everything under the cooperative sector also they were going to bring it under one umbrella. Now recently they have introduced the Multistate Cooperatives Bill. The cooperative sector in our country is doing quite well for long. In 1916 it started. The credit cooperatives their membership is 20 crores. So they are actually serving the downtrodden people at the grass root level. The number of primary agriculture cooperative banks is almost one lakh and their credit is as on 2018 itself they were giving 14 lakh crores which is much more than any public sector bank is. So now what they are trying to bring under control is so far these cooperatives are under the state sector. So they want to bring in an umbrella so that they can control everything. Because the outreach is too high. The number of people in the cooperative sector is quite high. The large cooperatives in the milk sector, the sugar, all of them today is not under the control of the ruling party. So there is a way they want to manipulate and bring it under their control so that they can get political gain out of it. They could not break the former's agitation. Now through the cooperatives they can directly go to the farmers. They can manipulate things. So there is a game plan. Otherwise why a home minister should be made into a minister for the cooperatives also. And we know his background. What happened in the Avadabad cooperative during demonetization and all. So there is a huge game plan which so far nobody is looking at it closely. But unless we understand that states react, already federalism is in question. States have to start reacting. See Kerala is own state where the cooperatives and cooperative banks are doing excellently well. They have created a Kerala state cooperative bank which is competing with the public sector banks. Why they started that? Because public sector banks were not giving small credit. Their credit deposit ratio was very low. In spite of they appealing in the state level affects meetings. There is a affects body which reviews every three months. In spite of that they were not doing it. So naturally they started the state cooperative bank and that is doing well. And all the state cooperative banks in Kerala are excellently doing well. District level cooperative banks, primary agriculture cooperative. So all this they want to get some control. So the states have to react. People have to react so that they are not taken over by again in some dubious way. They are brought under the control of this union government. Absolutely. Thank you so much Thomas Franco for speaking to us. I think giving us a very detailed instance by instance, issue by issue, breakdown of some of the claims that the government is putting forward. Very useful information I think for the viewers. Thank you so much for talking to us. Thank you very much. And that's all we have time for today. We will be bringing more interviews about the banking sector, about other aspects of the economy, society and politics on NewsClick. So keep watching. Visit the YouTube channel and hit that subscribe button.