Saturday, December 27, 2014

Message For Bank Employees For Early Wage Hike

As you (Bank employees ) are aware  a retreat of all stake holders in banking industry named GYAN SANGAM is being scheduled on 2nd and 3rd January 2015 to prepare a blue print of reform action plan for Banking Sector. In my view , any reform in banking is possible only when  employees of all these banks are given due respect, recognition and adequate pay package so that they become devoted ,loyal , honest an sincere performer for the best of health of banks.

As long as staff are unhappy, all efforts made for reformation will fail as it failed during last two decades of reformation. In the name of reformation, politicians, government officials, bank officials , loan takers , regulators have all exploited public sector banks or looted in crude term. This is why year after year and quarter after quarter , health of public sector banks have deteriorated whereas under same circumstances banks under private sector have grown by leaps and bound.

Root cause of this heaven and hell difference in the performance of private and public sector banks is that in former , employees work for the organisation whereas in public sector banks have to become willingly or unwillingly yesman and flatterer of their boss, they have to earn bribe and share with their boss, they have to apply various unethical tools  to get promotion or good posting, they have to sanction loan or write off loan to please their immediate bosses, they have to keep loan seeker happy and to sacrifice the interest of banks , they have to face the posting at the most critical place or face frequent transfers if they do not blindly follow the oral instructions of higher bosses even if they are intended to cause e loss to bank, they have to sanction loan to right or wrong persons to please local political or social Mafias, dons and musclemen to keep their families safe and tension-free, they have to face loss of hike in their salary , stagnation , denial of promotion if they do not perform as per sweet will of their bosses etc.

Now new government is trying to bring about real change, real improvement in the health of ailing public sector banks. They perhaps do not believe and specially RBI Governor do not believe in lame excuses submitted by clever gang of top officials to hide and to conceal their corruption, and to hide the inefficiency of administrative , judicial and police officials who fail to recover the dues from defaulters despite having all legal powers and all infrastructure to deal with defaulters, not only wilful or non-cooperative defaulters but all types of evil doers.

It is clever gang of top officials like ED and CMD of banks who always say that banks are suffering due to economic recession, global crisis, high rate regime or due to some or the other natural calamity. They always try to put blame on extraneous factors which are of little significance in health of banks. When ,before the era of reformation , interest rate used to be much higher , credit growth and GDP growth used to remain much better than what is today. In the era of reformation these bankers started  sanction high value loans at sub-prime lending rate and start buying high value deposits at much higher rates.

Only a few years ago , that is before introduction of base rate by RBI, top officials of majority of banks used to offer from 11 to 20 per cent interest rate and spend considerable amount of money in payment of bribe to officials of various departments to attract high value deposits. And on the contrary same top officials used to sanction loans to big corporates at interest rate much below 10 per cent .Still they were booking profit by fabricating their accounts and by avoiding provisions on bad loans and on staff terminal benefits like pension, gratuity etc.  

When they were exposed and when Core Banking Solution was put in place sometime from the year 2008  RBI introduced the system of base rate so that fundamentals of banks is not disturbed and minimum profit factor is maintained. But again clever banks started playing with the system of Base rate strictly as per their whims and fancies just to please their mentor ministers. And undoubtedly it is CMD and ED of these public sector banks who sanctioned hundreds and thousands of crore or rupees as loan to high profile borrowers at lower rate of interest sacrificing future of banks and its profit.

I have no doubt that even if one or two per cent hike in interest rates is permitted in loans , there will be no harm to good industrialists and on the contrary a similar rise in deposit rates will increase the savings rate and increase investment opportunity in the country.

It is ironical that now same brand of clever top officials are shedding crocodiles tears when new government ask them why bad debts are rising, why profit is getting eroded, These top officials holding post in Indian Bank Association deny wage hike to bank staff on the ground of high rising bad debts and falling profit. Officers and politicians who caused great loss to banks to serve their self interest are now punishing bank staff who sincerely , devotedly and honestly followed their instructions, who performed day and night and on working days and holidays. without taking care of even their families.

Banks may sacrifice lacs of crores of rupees in write off of loans and compromise settlement. Banks may absorb and hide losses arising out of blocking of ten lacs of crores of rupees in stressed assets. Bank smay absorb and silently digest the loss caused in thousands of crores of rupees due to frauds every year. But they cannot afford a few thousand of crores of rupees towards wage load for bank staff who labour hard for welfare and growth of poor people, priority sector and to execute all socially useful schemes launched by Government of India.

It is top bank officials, politicians, top businessmen who are defaulters and judicial, administrative  and police  officials , Chartered Accountants, Valuers, advocates who jointly and severally damaged the fundamentals of banks and it is painful that bank staff are denied respectable wage hike .. It means criminals are awarded and victims are punished.

As such I would like to reiterate here that as long as bank staff are unhappy , as long as process of sanctioning of loan is not done by honest, sincere and professional bankers and as long as regulating agencies are blind and silent spectators of all evil practices  carried out by all above mentioned evil persons , one cannot dream of any reform in public sector banks.

I therefore make an appeal to all right thinking individuals and all well
wishers of bank staff and banks to make through testing of banks, carry out all possible  pathological tests, and then act honestly on all reports precipitating out of such honest investigational exercise.

I request bank staff who consider them real fighters for bank staff and who want respectable wage hike to collect all information on Bad debts, staff wage structure, corruption causing rise in Non Performing assets and submit to all who participate in above Bankers Retreat. I request bank unions to collect all important letters , get them printed in glossy papers and distribute among all participants and public in PUNE where the Bankers Retreat likely to take place on 2nd and 3rd of January next year. Please do not waste time and spread the news related to  demand for justice for bank staff in PUNE

Danendra Jain

Do farm loan waivers help, asks Rajan-Hindu Business Line-28.12.2014

Write-off hampers fresh loans to farmers: RBI chief

Questioning the effectiveness of the government’s farm debt waiver programmes, RBI Governor Raghuram Rajan on Saturday said that such schemes had constrained credit flow to farmers.

“In some States, on certain occasions, we have had debt waivers. How effective have these debt waivers been? In fact, the studies that we have… show that they have been ineffective. In fact, they have constrained the credit flow, post waiver, to farmers,” he said at the annual conference of the Indian Economic Association.

On farmers’ suicide, he said there was a need to study this important and sensitive issue. “One question is how else we should deal with over-indebtedness in the farm sector. Also worth examining is the very important issue of farmers’ suicide. How much they are caused by indebtedness, especially to the formal [banking] system, how much does the formal system alleviate indebtedness....,” he said.

The Andhra Pradesh and Telangana governments had announced loan waivers for farmers affected by Cyclone Phailin last year.

While the Telangana government has given the mandated 25 per cent of the written-off loan to banks, Andhra Pradesh has not done it so far. Banks have a Rs. 1.3-lakh crore exposure to the farm sector in these States.

RBI can't flip-flop on interest rate: Rajan-Business Standard-28.12.2014

'But what happens to inflation? Because we haven't fully solved the supply-side problem, people will get more inflation over time
Facing persistent calls for interest rate cuts from the government and industry, Governor Raghuram Rajan on Friday said the Reserve Bank of India could not “flip-flop” on rates with every rise or fall in inflation and would rather wait for a stable, low-price scenario
“The message I have been sending is that we don’t want to flip-flop back and forth. This month inflation was two per cent, therefore, I will cut this much. Oh! It went up to five per cent, maybe I should increase it. That’s not how a central bank operates,” he said.

“It [RBI] takes a view and unless things change dramatically from that view, it proceeds on a process of either accommodation or tightening and that is what I would like to see have happened,” Rajan told NDTV.

The Wholesale Price Index (WPI)-based inflation is on a decline and in November dropped to zero, the lowest in about five and a half years. Retail inflation, too, fell for the fifth straight month in November. Rajan, who has kept the key policy rate at eight per cent since January, said India had not fully solved the supply-side problems and, hence, people would get more inflation over time.  

“It’s not that RBI is against growth, it is for sustainable growth ... our horizon is sometimes longer than those who want us to cut. They are seeing next quarter profits. Let us look at the next year and year after, just down the line how profitable you are,” he said.

Rajan further said the government wanted low inflation and the best way RBI could aid growth over the medium term was by keeping inflation low. 

“What we have to do is, once we are sure that the disinflationary process is well under the way, we will have the ability to be more accommodative in the sustainable way,” he said. Explaining his point, Rajan said RBI could cut interest rates by 500 basis points today and there would be a boom in consumption and investment.  

“But what happens to inflation? Because we haven’t fully solved the supply-side problem, people will get more inflation over time. But essentially what I have said to anybody is that let’s do it in a sustainable way,” he said. The governor also said RBI was not focusing on falling oil prices as it was not known “how long it’s going to stay low”. Referring to the Uber (taxi aggregator) controversy, Rajan said the company was using a way of bypassing regulations. “No matter who you are, [you] can’t violate regulations,” he said, adding new technology also needed some adjustments in terms of regulations.

Answering questions on bitcoins, a virtual currency that has security concerns, he said down the line the nation would be moving to "cashless currency" and virtual currencies would become much safer in future.    For better functioning, he also supported segregation of the posts of chairman and managing director in public sector banks.

Answering queries on 'Make In India', Rajan said there was a need to create the conditions for promoting domestic manufacturing.

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