For the government and regulators, financial inclusion does not mean listening to consumers
Corporation Bank is an exception among Indian banks—public, private and foreign. Its outspoken officers’ association often acts as a whistleblower and has prevented more than one chairman from destroying the bank’s finances through bad lending. The February issue of its monthly journal, Officers’ Voice, published extremely forthright views on government and banking.
While welcoming the prime minister’s (PM’s) views expressed at the Gyan Sangam at Pune, the journal makes some telling points. The retreat was supposed to brainstorm on what ails the industry, but except for CMDs (chairman & managing directors) there were no representatives of other stakeholders, especially officers and employees who are the backbone of banks. “Does it mean that wisdom is the exclusive domain of only CMDs?” asks Officers’ Voice. The editorial points out that while the media and other stakeholders were kept away from the retreat, the ‘knowledge partner’ for the Gyan Sangam was global consulting firm McKinsey & Company. It raises a pertinent question of whether ‘videshi’ gyan is the answer to the swadeshi problem of making public sector banks more effective.
Commenting on several ‘controversial’ recommendations that emanated from the deliberations, the editorial says that the proposal to issue priority sector loan certificates (PSLs) seems to be aimed at allowing private and foreign banks to meet priority sector obligations by merely investing in PSLs while the “hard and strenuous work of priority sector lending has to be done only by PSBs.”
Another revelation is the annual loss figure of Rs1,485 crore for banks on account of the PM’s Jan Dhan Yojana. This is broken up as—Rs500 crore for issue of Rupay cards, Rs780 crore for payment to banking correspondents, Rs390 crore for cost of supervision, Rs175 crore for financial literacy and advertising.
Moneylife, as the voice of savers, believes that most of these observations apply to bank customers as well. Despite being the largest stakeholder in the banking system, their voice is most feeble is not heard by anybody in the banking system or the government. Neither the Reserve Bank of India (RBI) nor the Indian Banks Association (which at least two, very respected, former deputy governors of RBI call a ‘bankers’ cartel’) has any formal process of engaging or interacting with those who represent bank customers.
If leveraging technology to improve banking efficiency were a key theme of the Gyan Sangam, then ensuring that customers use it safely and have access to a proper grievance redress mechanism would be a natural corollary. But there was no discussion about this issue at all.
Similarly, neither banks nor the regulators care about the bugs or design flaws in the use of banking technology that cause hardship to consumers. Moneylife Foundation has long been lobbying RBI over niggling issues with NEFT transactions. But, despite a personal meeting, written submission to the top brass at RBI and persistent follow up, we have no feedback on whether consumers’ concerns are likely to be addressed at all. The unfair harassment and extortion of those in financial distress by recovery agencies also falls on deaf years.
Many recent developments, including BJP’s shock defeat in Delhi, the withdrawal of ordinances issued by the government, and the controversy over the Land Acquisition Bill, have one thing in common—a sense that the government needs to communicate more effectively with various stakeholders. It is Narendra Modi’s impressive ability to communicate with one and all that swept him to power. The prime minister must ensure he does not lose that advantage, by setting up a formal system of communication with all stakeholders and ensuring that by every regulator and ministry in his government follows it.