Banking

The Ugly Side of the Relentless Demands Made Upon India's Public Sector Banks

Full-blooded human beings are needed to run public enterprises, not dead souls who can only read out marching orders mindlessly. A grim deep dive into all that plagues India's public sector banks.

A few days back, a friend sent me a video clip in which you see two officers from a public sector bank vending their wares in a market-place in a small town somewhere in north India. One has a microphone strung around his neck and you can hear him entreating everyone to open their accounts with the bank “so as to take advantage of the Atal Bima Yojna”.

Very little in our country surprises one any more, and I would have been entitled to grin, shut off my phone and forget all about it. Except that I could not. For I happen to have known one of those two men. He worked for a bank that I also was with for a while. And two or three days after this video was shot, that man was dead.

My friend who had sent me the video told me the story. He had joined the officer at lunch in a restaurant in Delhi that afternoon. After the meal, the check arrived and was paid. Then, just as the two of them were getting up to leave, Ram (let us call him that) collapsed in a heap on the floor. He had not uttered a word. Some people helped my friend rush Ram to one of Delhi’s premier public hospitals, where he was pronounced brought dead on account of a massive heart attack. Ram was 54, with no history of a heart condition, or any other condition.

My friend told me, though, that Ram that day had looked as though he was down in the dumps. He was not talking much, which was unlike him, but had indicated that he was unable to cope with the pressure at work. His boss had been driving him, and his colleagues, very, very hard, had denied anyone any leave of absence in a while, whatever the need for leave, and thought nothing of screaming at them in public. Ram had requested a transfer out of Delhi, and told my friend that if that request was not granted, he would put in his papers at the end of May. That, of course, would no longer be necessary.

Why do I tell this story, you ask? Well, here’s why.

Some time back, I wrote a series of articles on the goings-on inside our public sector banks. I wrote them as an insider, or rather, as one who has been an insider. In one of those pieces, I had talked about ‘the epitaph’ for our public banks. Some friends later told me that I was taking an unnecessarily dim view of things, that the position was nowhere near that bad, and that, indeed, after the Punjab National Bank and other loan scams had burst into the open, things had started looking up. The public scrutiny being tougher now, I was told, and with the government and the regulators awakened to the ills (and difficulties) plaguing the system, the situation was poised to improve, and do so quickly. In point of fact, I did begin to wonder if I had got somewhat carried away in my assessment. Was I being the Cassandra when doomsday was aeons away?

Meanwhile, stung to the quick by all the bad press they were receiving, CEOs of some of the major banks were fighting back manfully. One chairman waxed eloquent about how India Inc worked endlessly to undermine these banks’ position (he was right there), and how his bank was determined to ward off all those insidious attempts (one wishes he was right here, too). There was public outpouring of support for our public banks who, most commentators seemed to agree, were more sinned against than sinning. A prominent TV anchor, who had been running a brilliant series of exposes on Indian banks for some time, possibly had reason to believe that his hard work had paid off to some extent and bank managements had sat up and taken note.

Two of the country’s largest private banks then came to hog the limelight for a while – not for very wholesome reasons, though – giving their beleaguered public sector sisters and brothers the desperately-needed pause to recover their breath.

For me, this period of calm was broken by the video –and the accompanying news. It was shattering. I had known Ram. He was enterprising, also hard-working. The spectacle of him soulfully soliciting clients for Atal Bima Yojna was less than edifying, but the fact that he was possibly pushed to his death by an employer who had no regard for Ram’s rights as an employee was extraordinary. I was prompted to make some enquiries across some banks about the general state of their affairs. My respondents, all old friends, ranged over nearly the whole hierarchy in these banks, and the responses (save and except those from the top-most rungs, for obvious reasons) were so consistent that I have no reason to believe that there is not a pattern here.

And here is the pattern. The Government of India (GoI) has made it known to these banks that they must enrol every Indian – yes, every Indian without exception – as a customer immediately, and sell to them the sundry government schemes (pension, insurance …et al). The data regarding unbanked areas, even unbanked households, are being provided by the Department of Financial Services, Ministry of Finance, and the DFS is relentlessly monitoring the ‘progress’ achieved by the banks in bridging these ‘gaps’.

Quite often, such data area plain wrong. I know of a case in Maharashtra where a village already fully enrolled by one of our largest banks shows a gap of 2700 in the DFS’s books. When the local bank authorities remonstrated, the head office told them to shut up and ‘do what is necessary’.

Bank employees shouldered some of the worst impact of demonetisation. Credit: Reuters/Amit Dave

Then, millions of the much-vaunted Jan Dhan accounts, once opened with great fanfare, abused no end during the demonetisation (aka ‘cleansing’) misadventure and hurriedly closed by the banks soon thereafter, are being opened once again. The recent Dalit unrest, which climaxed in the general strike of April 2 and triggered ugly upper-caste backlash across northern and western India (in which prominent sections of the ruling dispensation were complicit at some places), has injected a new sense of urgency to ‘reach the people’.

And who can handle this outreach programme better than the public banks who have wide networks and a relatively clean and conscientious workforce? So, everywhere bank employees are busy doing just this, without exception, regardless of their other duties. Holidays and weekends do not bring reprieve. Nobody is granted leave. Medical certificates citing illnesses – of the employees or their families – are freely distrusted, even ridiculed openly. Government of India is at the banks’ throats, and the banks at their employees’. Nothing other than a frenzied campaign to ‘reach out’ matters.

Scared and battered, whole armies of bank employees are seeking exit options. Never before has a more despondent mood ruled in our public banking space. The fact that the Indian Banks’ Association (IBA) has now offered a measly 2% salary hike in the five-yearly wage renegotiations for banks may be the last straw for many broken backs.

Bank managements are playing along with elan. Every fresh DFS directive is passed on down, amplified by several degrees. Shouting at employees and officers, humiliating them publicly, has become much the norm. Late night calls at home to check what officers have been doing are routine, as is close, WhatsApp-driven surveillance. In truth, bank managements are scrupulously living up to the image of the old-school private sector employer of the predatory variety known to have been so common in pre-1947 India.

More incredibly, the managements have continued to privilege the ‘cross selling’ business over other things even in these very trying times. Officers seem to be accountable to their seniors only on two counts then –at any rate, effectively so: selling the government’s outreach programme to a largely disinterested populace, and selling the insurance/mutual fund/card products that fatten the bosses’ wallets more noticeably than the foot-soldiers’. If ever there was something truly bizarre, then this is it.

And what is the big picture like, meanwhile? The Insolvency and Bankruptcy Code which, buttressed by the National Company Law Tribunal, was to be the panacea for the NPA epidemic, virtually remains a non-starter. Every case is being fought tooth and nail, conflict of interest stories are flying thick and fast, cases involving humongous credit defaults are being sought to be settled at ‘haircuts’ of 50 per cent or more ( even as rural debt waivers, minuscule by comparison even when aggregated, are hotly debated as ‘morally inappropriate’), and even the very basic principle of not letting errant promoters bid for delinquent assets is being sought to be undermined actively. (At least one case has been cited where major public banks have agreed to waive this common sense restriction presumably because a sitting GOI minister was perceived to have had a stake in the defaulting business.)

A bank here or another there may be making some pious noises once in a while, but the zeal with which the Centre’s directives are being dinned into hapless employees is nowhere in sight in such matters. When push comes to shove, empty talk seems to be the only recourse the bank managements are left with.

Clearly, as the general elections of 2019 come closer, the demands that GOI makes on the banks will only grow in intensity. The finance ministry, for all practical purposes without a leader for quite some time now and likely to stay so for some more in future, may continue to be driven largely by middle-level bureaucrats who have no stake in the banks’ health, nor the ability/willingness to change course. The RBI has till now shown itself to be wary only of charges of accountability being laid at its door, and of not much else. It has, in any case, made it known that it considers public sector banks nearly ungovernable within the current scheme of things.

The reconstituted Bank Boards Bureau is unlikely to make any difference anywhere, at any rate in the short term. What, then, is the outlook for India’s public sector banks in the short and medium terms?

In a few weeks, we will have entered the 50th year of the nationalisation of our public banks. The report card has been a mixed one, of course, but there is no gainsaying the positive impact that the nationalisation project has had, overall. And yet, never once during these nearly 50 years have the employees of these banks found themselves so utterly demoralised – indeed so heart-broken – as today.

This crisis did not erupt overnight, of course, and no one in his right senses would suggest that the decline started in May, 2014. It will be equally delusional to not recognise the fact that today the way forward leads only to a bleak wilderness. Given the GOI’s priorities, of which it never seeks to make a secret, as also those of the bank managements, which they make only half-hearted attempts to disclaim, our public sector banks appear sadly to have outlived their utility.

Their continuation in the same manner and on the same path as today can only bring on many more tragedies as overtook Ram. You need full-blooded human beings to run public enterprises, not dead souls who can only read out marching orders mindlessly. TV anchor Ravish Kumar may have succeeded, through his relentless questioning of powers-that- be, in getting the Swatantrata Senani Express to run on time – if only for once – or the private medical colleges in Uttarakhand or Himachal Pradesh to stop levying astronomical fees on students. But even he seems unable to breathe life into the dead souls that sit around boardroom tables in our public banks. Before more Rams are strewn across our banking space, therefore, let us lock these crumbling institutions down. No epitaph will be necessary.

Anjan Basu worked for one of India’s largest public sector banks for three decades, inside the country as well as outside it. He can be reached at [email protected]

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