PSBs badly managed! Inefficient, wasteful of customers’ time and resources!

You can’t but revamp the co-operative credit institutions if you are serious about saving the farmers! Serving the farmers’ long-term interest!

The Finance Minister must revamp a whole lot of banking and financial institutions!
The debt waiver scheme is okey but not the end of the road. It is not even the beginning of the road towards what the Indian government must be doing in order to reach out to the farmers.

The PSB banks first are not the right vehicle to help the farmers. Already their track record is not that encouraging. They never bothered to stick to any targets in priority sector lending. The Prime Minister never once in his lifetime seemed to had any interest in the agri sector. That we have to keep in mind why he ,as the Prime Minister, before that as Finance Minister and even before that as the Governor of Reserve Bank of India had done anything the country would care to remember, as far as reforming the banking sector.

Many of the great schemes and dreams have remained on paper. The creation of a National Agriculture Bank, National Agricultural Co-operative Bank. The great many veteran co-operators have all been sidelined in the new scheme of things. There is not even any mention of the role of the co-operative institutions in the agriculture credit delivery scheme or the debt waiver.

We visited one PSB bank recently and found the regional office busy with the visit of the Executive Director from Mumbai for what? To supervise the preparation of the debt waiver list!

Yes, the Finance Minister then followed the same route. The Finance Minister came to Bangalore, to visit the Vijaya Bank and the Canara Bank and what he did? He also scrutinised the debt waiver list!

Is this the job of the Finance Minister of the country? And see what the FM had understood of the way to go about implementing the debt waiver scheme.
He relies on the PSBs alone, it seems.

Already experts like Raghuram Rajan and other finance experts have expressed the view that the way the debt waiver scheme is implemented would not encourage a positive impact but would only lead to further credit default culture.


The debt waiver is a very big scheme and it is not wise to go about it in a very political manner, the PSB banks are not the right agency, it should have been left to an independent expert body and one high profile expert must be entrusted to the job so that entire country would know who is in charge.

This is not being done, the Finance Minister is always going about opening PSB branches in his constituency and the banks put the FM’s photos for their own publicity. Somehow, the Bangalore based two PSB banks are active in getting publicity for themselves!

When we went to visit a regional manager’s office, the RM had no time to talk to customers. He is only receiving and sending out calls on so many tibit personal matters, employee grievances and the RM, why even the HO scenario is not very different, no one has time, no one has any interest and no one has any powers either.
The casual visitor to the PSB offices can notice nothing happens in these places and they are as good or as bad as any pawn broker!

And we can see why the PSBs are losing share to the private banks, the foreign banks whose latest technological advancements has become now an indispensable experience of an average banking customer!

And why this criminal neglect of the co-op institutions. Even the agriculture minister Mr.Sharad Pawar also must take the blame for the way he is neglecting his duties. He knows well that it is the co-operative institutions that have given the Maharashtra sugar industry its clout. Likewise, experts know it is the milk co-operatives have given the clout to the milk industry in India.

Then, what is the expert in the Prime Minister who doesn’t see any merit or any need to entrust the debt waiver scheme to the co-operative banks and ask them to write-off as well as reschedule and further advance loans in accordance with some sound principles.

So that the agri credit system is not disrupted.
The PSBs say they are ready with the list of beneficiaries. As we have talked with banks and also the would-be beneficiaries there are already lot of heartburn in the minds of farmers. Yes, the PSB banks, regional rural banks and the co-operative institutions are involved in the preparation of the list and in some states like Orissa it is already displayed and certificates of debt waiver would be issued to the beneficiaries. But for those who are small and marginal farmers, there are disputes as to whether their loans are crop loans or term loans. This depends, say farmers, upon whether the funds were advanced to government schemes or to all schemes that were taken up independently by the farmers.

The point here is that the PSBs are not the suitable mechanism to help the farmers. First, the PSBs are inaccessible to most farmers, specially the poor farmers, in remote villages.

Wisdom demands that the job is entrusted to co-operatives, in the villages so that the public would know who is a genuine beneficiary or any other irregularities can be corrected in the public eye.

PSBs as they are now functioning are almost anti-farmers and also anti-small customers, first time entrepreneurs and their freedoms are curtailed. Should we have a PSB system with so much uselessness to the average common man?
The Nabard is another millstone!

It is better to rename it, remove the word agriculture from its name board.
It is doing something else except agriculture!

They government may talk of aam adhmi, now in election mode; the political class is more worried about their own prospects than the prospects for the aam adhmi! So, we need to give serious thought, once the elections are over, about creating new institutions, like the milk and sugar co-ops to be in touch with the aam adhmi and they go about strengthening the rural co-operative credit system.

Image Source : indianbanks.org

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