 Hello and welcome to NewsClick. Today we are joined by Thomas Franco, former General Secretary of all India Bank Officers' Confederation and current Secretary General of all India Public Sector and Central Government Officers' Confederation. And today we will be discussing about the banking crisis in India, but before that we will be talking about the huge deposits that have been made into the cooperative banks post demonetization. So, according to reports, the Ahmedabad Direct Co-operative Bank collected more than 700 crores post demonetization in just five days by almost 200 customers. And I think it's important to note here that BJP's Amit Shah is a current active board member of the bank. So can you tell us about the laws surrounding the deposits in the banks and why the government is not probing into this? Thank you, Apoorva. First of all, when on November 8th the demonetization was announced, all banks including cooperative banks were allowed to collect deposits of money that is existing currency for exchange. So people were depositing and there had been huge deposits in many places which was one of the highest in Ahmedabad Central Co-operative Bank where Mr. Amit Shah was a director in the board. Now, after five days the Reserve Bank of India suddenly changed the law. They issued a circular that cooperative banks cannot accept these old notes. Their argument later was that there were huge deposits in the farmers' accounts. Somebody else was using the account which might have been true in many cases but this particular account, this has been a huge amount. There has to be a prob. So far nobody has come out with any clear statement. What exactly happened? And RBA has also not come up with any data to prove later on that there were so many people who had deposited this much amount in these accounts in the cooperative banks. In fact, RBI harmed the farmers and ordinary people by changing the law. See, the common man has access to cooperative banks more. There are at least more than three crore accounts in cooperative banks where the ordinary farmers who go on deposit went. In addition to that, there are crores of accounts with the primary agriculture cooperative societies which are not tammed exactly as bank but they collect the deposit, they give loans. They were also capable of collecting this old currency and exchange. So what happened was the ordinary person could not have access to these banks so they had to go to a bigger bank where they had to stand in queue for hours and hours together and they could not exchange all the notes. Even now there are people who are holding old currency, not the rich people. The ordinary people, women, I meet quite a lot of women from the SHGs. They come and say that, see, we kept some money under the rice in the pot and suddenly now only I realize that there is some money here. Please exchange it. There is no way to exchange it. But here what is important is that, one, the ordinary people were deprived of depositing the money in the cooperative bank. Number two, so far the RBI has not provided any data to show that it was huge deposit which was misused. They had sent quite a lot of notice but till now they have not come out with any clear data that these are the people who had exchanged money. Number three, Mr. Amit Shah's role. Whether he had some role that has to be propped, that has not been propped. In fact, during the demonetization time, my colleagues from Ahmedabad had shared with me that Mr. Amit Shah's son was exchanging currency, huge amounts. But that has not been brought to the limelight. I don't know, it may be a rumor also. But when there is a rumor, you have a reason to probe. That probe has not taken place. Just one question here that you talked about the common people going to cooperative banks, but according to the RTI that was revealed, it said that only 200 customers had actually deposited an amount that was more than 700 crores. So common people cannot really deposit so much of money into one bank. You have to look at it in two sides. One, this particular case, if it is just 200 people, who are those 200 people from where they got so much of souls of funds? See in this country, agriculture income is exempted from tax. So any farmers' account, you can deposit any amount and you can claim that it is my agriculture income. So that has been misused. But the other part what I said was that ordinary agriculture laborer and farmers who had accounts with the cooperative banks, they were not given that facility after five days so they were deprived. Now here I would like to make a specific point. Just after 10 days of demonetization, Mr. P. Chidambaram, who was former finance minister, former home minister, made a public statement in a meeting that he had doubts that some money has directly gone from the RBI printing press to certain individuals. Neither the government nor the finance ministry nor the RBI has so far refuted that accusation. It requires a probe. And I had been demanding that time itself that RBI should publish data and how much note was printed. From the printing press where it went, it has to go directly to a bank. So to which bank it went? Once that data is made public, any investing agency could trace that note. Now we had published a data which had been in the newspapers, 158 specific cases where huge amount of new currency was seized from individuals. Not one or two, 158 cases. Till date, the government is not coming, it is going to be three years. They are not coming out with any detail to say that yes, this money came from this source. If RBI would have disclosed this information because the note with prefix and number, they have all the data in the computer. So it is not very difficult to probe. If they would have shared that information, the investing agency could straight away go to that particular bank and ask, from your currency chest, did this money go? Then if it had gone from this currency chest to which branch it went. So from that particular branch, you can get the data who exactly took that money. So there is a serious doubt that some money might have gone directly from the currency printing press to certain individuals because we are seeing that nowadays in every elections which are taking place, huge amount of currencies available from where it came. That question nobody is asking. And income tax authorities are saying that anybody who can give data or information about who is holding currency, we will keep it confidential, we will reward them. Then what for you did, demonetization at all? All that exercise it was supposed to be for bringing out the black money and where is that black money? The Prime Minister has to answer, the Finance Minister has to answer, where is that black money? We have absolutely no information. The government is not giving us information, the institutes are not giving us information. Until unless we file an RTI, then after a lot of struggle we get some information as to where is the money, where is our money gone. With that I would like you to talk about the current crisis that is going on in the banking industry and where do you see the banking sectors or the public sector going in India. Even under RTI, RBI normally gives a simple reply that this cannot be disclosed. So we don't get the real data which we want. Some vague replies they give, some data they provide which is not sufficient for us to understand exactly what happened. But now the banking crisis, I will call it a manmade crisis. In fact the Prime Minister of the country in his reply to the parliament, he talked about misuse of banking services. He used a time called phone banking as if every bank was giving money to Tom Dick and Harry when you get a phone call, which never happens. There might be exceptions. But banks follow certain rules, norms. See it is because of quite a lot of money which came in after the 2008 financial crisis and from the 2000s due to the neoliberal policies. India opened up the market and there was a lot of money for an institutional investors who are investing in our country and that money got flown into the banks. When banks had the money they cannot keep fit just like that. They had to lend and government was also encouraging lending to the infrastructure sector. It was within an idea that the fiscal deficit should not increase beyond 3.5% of the GDP. So they started cutting down capital expenditure. That was being forced on the banks that you give loans to the road, infrastructure sector, you give for the ports, you give for telecom, you give for power. These are long-term loans which were supposed to be given by development financial institutions. Many of them have been closed by these governments during these 25 years. So these banks were forced to lend to the infrastructure as a policy. It was not that for political reasons somebody called up and said that you give this much loan to Tata's or M1's today. We are saying that M1's and Adhan's, Agarwal's, they get any amount of loans, they are getting license to start even bank. The reason for the crisis is this huge amount of loans which were given. See the parliament standing committee itself has brought out a report, the standing committee on finance. It has stated that these sectors where the huge NPA has come is the infrastructure including power, telecom, port for which the banker cannot be held accountable. They did not go for reckless lending. It is the policy decision. So now it is the government which has to come to the rescue to see how these loans can be recovered. Instead of that what they are doing, they brought in the IBC, Insolvency and Bankruptcy Court and the National Company Law Tribunal. What is exactly happening? Today's newspaper says that on an average in the NCLT settled cases banks got 50% actually. So you have given 10,000 crores and you get 5,000 crores and you are blowing the trumpet that yes, we have recovered. Alok Industries is sold by NCLT through to Ambani, Mukesh Ambani Group. 18% is the amount the banks have got back. 15,000 crores is return off and you call it a big recovery. Similarly Bhushan Steel. All the cases if you see the what Bhushan Steel at least as Tata entered the field they got a higher recovery. But in many of the cases we are seeing there is a poor recovery in the large advances. In the small advances it is further worse. See this big accounts at least the units are existing so somebody is willing to take over the assets and run it. They are benefited. The seller is also benefited who cheated the bank or maybe failed in the business where the banks could have gone in for helping to do a restructuring. Suddenly the Reserve Bank of India decided that no more restructuring. So all those fellows who had really got into a crisis for valid reasons also are affected. Because the moment you are declared that you are an insolvent you are absolved of all your liabilities. So you are safe. You will start a new company and start borrowing again and do whatever you want. The fellow who is taking over he is getting huge assets in a throwaway price. So both ways the corporates are getting benefited. The banks are at risk. But the blame is put on the bank that you have not been able to recover. You gave so much of loan so the huge amount of NPA has come. See last four years alone the amount written off for the corporates is 450,000 crores. Neither the Reserve Bank of India nor the Finance Ministry is willing to disclose the name of those borrowers. What is wrong? At least see when the account is running maybe you can say that no we should not disclose the identity of the borrowers because that is a secrecy. You have already written off. And even now you are not telling the names of those borrowers. That means you are safeguarding those fellows who have looted the banks. This is which duration, which time, in which how many time periods? Past three, four years. Four years from 2014 onwards. This is data given to the parliament. Raghuram Rajan himself has proposed that there should be a ceiling on lending to a particular corporate. Similarly a ceiling on lending to a particular individual. That has not been implemented so far. Nobody is talking about it. So if the banking sector has to be brought out of the crisis there are a lot of policy changes needed. What we had been demanding from the banking sector is that first the willful default has published their names. Take criminal action against them. Seize their personal assets also. Because those assets were also accumulated from the bank loans only. Then change the policies. Today the policies which have been changed after the 1991 globalisation, liberalisation, privatisation era. The entire lending has shifted towards larger loans. It was through the policies. Small loans have come down. And it is in the large loans where we have default more. 83% of the default rates are corporates. So there is a need for policy change. There is a need for bringing in once again development financial institution which can go for long term loans. Then RBI came up with a new idea, prompt corrective action. Which is not at all prompt. They are restricting the banks to lend. See banking basically is what? Collecting deposits and lending money. That is what we have studied as economic students, commerce students. But now you see the case of Denabank. Last four months they have been put a restriction that they should not lend. Other than staff loans there is no loan given there. Without giving a loan how do you run the bank? How do you increase your income? In the case of the prompt corrective action, they are saying that no further recruitment. Staff should not increase. Overhead expenses should not increase. Number of branches should not increase. So when you put that restriction and large loans should not be given, you have deposit with you. You cannot search for crores of small for ways to take all that loan. And when you want to give more of retail loan in smaller scale, you require more staff. But you are putting a restriction that no recruitment, no increase in staff. So how do the bank manage? So this is one issue we have been taking up up to the level of the finance minister, finance secretary, RBI that immediately review this PCA, prompt corrective action. That has not happened so far. So the present crisis in the banking industry is a man-made crisis created by the policies of the government on the RBI. So they have to wake up. They have to review where they have gone wrong. So all this pressure and burden of getting the money, will it be coming on the common man? See common man is affected directly in one way. All the banks have increased the service charges. Crores of money is collected every quarter from the poor customers who could not maintain a minimum balance. Minimum balance level was increased. Earlier RBI had the control. Even now they have the power. They can tell the bank that you cannot increase your minimum balance beyond this. You cannot collect service charges beyond this. But they keep quiet. They are closing their eyes. And banks are collecting huge amount which is affecting the common depositors. They have not been even told what is the minimum balance they are supposed to keep and how many ATM transactions they can have. Once it was the banks which went to every customer told that you are opening an account you have to take an ATM card. It's free. So people also took this free. It is like the old story. When T was not available, people were not taking T. The T company started giving free T and when people started liking it, they started charging for that. The same way banks gave free ATM cards. Now they have started charging for the transactions. But there should be at least a threshold limit. You charge more for the bigger customers. There are transactions in which we transfer huge amount of money for which the charges are very low. But for the minimum balance, for number of transactions, you are charging more affecting the common one. When we ask the banks what they are saying, see we are making huge loss. We had to handle demonetization. We lost a lot of money. We had to recalibrate all the ATMs. We have lost quite a lot of money. We have opened crores of Chandan accounts. We have not been given any compensation. And we are being targeted that your profit has gone down. You are running it a lot. So somehow, somewhere we have to recover the money. So whatever available opportunity we are collecting. Common man is affected. Even after the Nirao Modi scam, Chokshi scam, Vijay Malaya scam, all that, there is no run on the bank. And in banks are making loss. Still people are depositing money in those banks because there is a faith in our public mind, the customer's mind that public sector, banks are safe. We will get back our money. So that confidence is what is important. Is there any concluding points that you would like to make? Well, I would once again like to thank NewsClick for the effort you had taken in the issue of the FRDI bill. In the similar way, you have been covering also the agitation from Nasik to Mumbai. The former agitation was brought to focus again through NewsClick. And we will be continuing to give that kind of support to the movements which are fighting for the larger causes of the country. But I would like to tell the public in the country, the customers and the larger public that a need has come that we have to come together. The policies which are followed in the last 27 years, they have destroyed this country. The income inequality is dramatically increasing. In 1940, 1% of the population was having 20% of the wealth of this country. Today, they own 53% of the wealth. This is not the purpose for which we got independence. The constitution was created to provide equal opportunity for all. That has not happened. But today in the name of liberalisation, the policy pursued by the governments, not only this government, the previous government also. At least now the previous party which was in power, now it has started talking about alternatives. They have started talking about new policies which should look at the larger majority. At least they have understood that they were also responsible for the mess which has been created. But this government is not at all bothered about the people. They are more oriented towards the corporates and the policies, every policy which they are bringing in, the labour reforms, the banking sector reforms, the will on higher education, the wage code will. All these wills are trying to dilute things. See the labour reforms are going to take away the rights of the labour working class. Just yesterday ILO has published a data that the minimum wage is not practiced in most of the states in this country. And people are, the labourers are living in a miserable condition. But you want to bring in more change in the name of ease of doing business which will support the employer than the employee. Similarly the higher education bill, the higher education is going to be totally privatized if the higher education bill is going to be passed. People have to stand against it. Already school education is mostly privatized. It is one of the biggest failures of this country is that we have not provided quality education for all our citizens. Which has been done by many developing countries, all the developed countries where even now the education for their citizens up to the school level at least is free. Especially the elementary level should be accessible. Up to higher education, most of the countries it is free. But here it is commercialized. Even for LKG you have to pay donation to get a seat and the fees is so high. So education is one area where school education as well as higher education has to remain in public sector. Similarly the way we are trying to privatize the public sector. Public sector was created to provide services to the larger majority of the people. And they have done a human service to the society. Take the railways, take the telecom sector, take the power sector. It is they who created all this infrastructure. This government is on a spree to privatize everything. Then what for you require a government? The government is taking taxes from us. Now with the GST, a middle class income holder pays almost 56% of his income as tax. What do you provide in return? Should you not provide education? Should you not provide healthcare? Should you not provide public transportation? If these things are provided then people will be happy. And the government's role is to provide these kind of services to the people. Instead of that if you think that you will hand over everything to the private sector which is going to only make profit. Private sector's motto is single. Make profit, make profit, more profit. So these policies are affecting the country so there is a need for people to come together. This is happening across the world in different places. I was in Brazil attending a conference on future of work where I met trade union leaders from different countries. Most of the places now that rethinking has started that we should not fight alone, we should fight together, we should join together. And unless there are policy changes, small relief or some getting a better wage is not going to solve your problem. The larger problems are policy related. So for that I would like to appeal to the people that we come together and have struggles to strengthen the public system, strengthen the government which will take care of the largest section of the society, the majority of the country instead of supporting the miniscule minority. And that way we will see a new India. Thank you so much sir for joining us. Thank you for watching NewsClick.