India’s big bank must standardise agri credit lending practices

State Bank of India (SBI) is a great bank. Its pedigree is very impressive, almost as old as the start of the East India Company. It was born on March 27, 1806. Started as the Bank of Calcutta for the company officials. One legend is that it didn’t honour one cheque of Warren Hastings himself, poor man, for “insufficient funds”!
Now, the current Chairman Mr.A.K.Purwar, who took over in November, 2002, seems to be doing a great job, he has pushed up retail lending in a big way. Thus, new professional groups, doctors, lawyers, teachers. The Gateway branch of the SBI is now a show case in single-window operations. Fine, fine! We really congratulate Mr.Purwar for all his uniquely positioned great leadership qualities.

Record ATMs, for SBI has 5,OOO ATMs, there are certain blunt truths to be confronted. SBI’s IT backbone is weak. This, the chairman knows well. Bank’s implementation of the core banking platform hasn’t put the bank as a model, if we can say so!
In one instance, in Coimbatore main branch where we visited, it is a real pain in the neck for a depositor, to put the money in a deposit and get out. It took nearly the whole half a day and much exhaustion too!

We wondered: if this is the position for the giant bank what about the poor cousins? The common man who wants to save money in bank deposits is still put to so much harrassment. So too to withdraw money!

This is just the elementary bank job.

Now, come to SBI’s social lending. What about agricultural lending?

The banks have no sense about agriculture as a season-bound activity, SBI officials waste too much time on paper work. In this time of fast growth, we are sure the chairman also knows the truths at the ground level! Our 10th Plan is limping for so many factors. One critical factor is our agri sector is limping.

The Prime Minister and his deputy in the Planning Commission knows well and they also mainly admit that agriculture alone in the 10th plan needs Rs.90,000 crore funding and this funding is not forthcoming. The point is that our entire planned growth is not to be realised. We at Vadamalai Media at the other end of the spectrum are battling with some really tough choices. How to bring a new life, a new growth model in agriculture at the grassroots level. Thus, our field of specialisation or expertise is the agri sector. We have dealt with the banking sector for years and our experience with the PSBs is rather mixed. Yes, there are some really great bankers who had shown vision and dynamism for funding the socially priority areas. The late T.A.Pai of the Syndicate Bank is the rare example of such a role model.

Now, we have to say this much, with much caution. The SBI’s agri lending is not standardised. We find from our interactions, the banking officials need first some really hands on training in agri sector. First, they don’t seem to know what is really happening in the agri sector. They give us the impression that all they know is to go by some routine existing bureaucratic sources of information, say Nabard or the agri universities based information that is ,in our view, theoretical and out of context.
It is not surprising that priority sector lending of SBI that was at 43 per cent in 1989 – 90 had been steadily going down to 38.69 per cent in 2003-04 and now to a shameful 12.79 per cent of the net bank credit! Well below the supposed official commitment of 18 per cent. SBI, in spite of its size is quite a vulnerable bank as shown by its involvement with Harshad Mehta scam. 881 surely must set standards in agri lending, lending to the weaker sections.

So, when we as media people or Consultancy experts approach bankers, they, the bank officials, including the agri officials talk in ignorance! They even employ impolite language with educated clients. So, this unguarded impolite language with clients, more so with agri clients puts off the relationship that needs in the first place with a core sector like agriculture. We found to our surprise they don’t even read the agri journals nor they know there is a revolution in the Internet access to agriculture. Obviously none displayed an indication they access Google! Not to speak of the many agri portals!
So, we find from our experience, the SBI (at least in one zonal office) that the branch manager, some 300 km off take a decision and proceeds to sanction the crop loans. After two months time lapse the zonal office says they would not approve of what the branch manager had done! In the zonal office itself we found there are four layers of decision making.

Yes, our PM and his team has talked so much when they assumed power a year ago. But the promised agri credit targets are not reached. So, farmers suicides continue! This, one year after Dr.Manmohan Singh took over! If this is not unfortunate, what else is?
Our interaction with the SBI offices is that we still are living in the colonial days when time was plenty and everyone took his own sweet time. There is no computerisation, no speed in decision making. Rains are so uncertain. So, in a situation how much time a branch should take to process and sanction the loans? The SBI experts must come out with a definite solution to the time limit to agri credit dispersals.


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