BM Suspended For Not Sanctining Loan---Bad Days Are Bankers

Farmer kills self after loan refusal, bank manager booked-15th June 2015
( Read my Observation submitted below)

Farmer kills self after loan refusal, bank manager booked

For the first time in the history of the agrarian crisis in the Vidarbha region, a criminal case for harassment has been registered against a bank manager. Despite instructions from the state government, the manager denied fresh crop loans to a farmer, who then committed suicide. Additionally, five more farmers committed suicide within the last 48 hours taking the death toll to 687 since January 2015.

Santosh Kumar, the manager of Bank of Maharashtra, Morshi branch denied a fresh crop loan to the debt-ridden farmer Sudhir Vamanrao Gawande (42) of Nashirgpur village in Amravati on Friday. Sudhir went on to commit suicide on the same day at his home.
After intervention by Amravati collector Kiran Gitte, the Morshi police has filed an FIR against Santosh Kumar for allegedly abetting the suicide. Mr Kumar was suspended from his post on Saturday.

Sharad Ingale, in charge of Morshi police station said, “Mr Kumar is absconding from Friday and we suspect that he may have left for Bihar, his home state.”

Prashant, Sudhir’s physically challenged elder brother, said that the deceased had gone to the bank on Friday and urged for the loan. “However, the bank manager denied it and said that Sudhir did not have the capacity to repay the loan. Sudhir was very disturbed after manager’s refusal and at 3.30 pm he committed suicide at home left behind his wife and four-month-old son,” said Prashant.

According to Prashant, the Gawande family owns an 18-acre-land. Sudhir had a debt of Rs 29,700 from the Morshi District Cooperative Bank in 2008. He could not repay it and the amount had increased to Rs 48,000 including interest on the principal amount. The Gawande family had also taken a loan of Rs 2,15,555 from Bank of Maharashtra under the name of their father Vamanrao.

Chief minister Devendra Fadnavis in a meeting regarding the kharif season had instructed bankers to approve fresh crop loans and has warned that not a single application should be rejected.

However, activists maintain that nationalised banks are refusing farmers’ applications for crop loans. “The applications are piling up in nationalised banks and the bank officials are showing extreme reluctance to clear the loan proposals,” said Kishor Tiwari, activist and chief on Vidarbha Janandolan Samiti.

Mr Tiwari pointed out that the ground reality was so bad that farmers are in no position to meet basic stipulations like clearing part of the last three years’ restructured accumulated loans. “The only solution now to save farmers is granting total loan waiver of all old dues. Otherwise, we may find the distress levels spiralling and farmer suicides rising to unprecedented levels,” said Mr Tiwari.

Radhakrishna Vikhe-Patil, leader of Opposition in state Assembly too demanded complete waiver of loans. “Complete waiver of loans and financial support for the new season is the only solution to stop farmers from committing suicide,” said Mr Vikhe-Patil
Vasudev Khasale, Suresh Shinde and Kailas Jadhav from Yeotmal, Suresh Subhash Raut from Lakhanpur in Bhandara and Sudhir Gawande from Morshi in Amravati were the other farmers who committed suicide in the last 48 hours.

Click Here To Get Link of Newspaper Asian Age

My Observation is as follows

In the history of bank, I think it will be the first time that a Bank Manager is suspended only because he did not sanction a loan as per wishes of politician, and that too at the instance of a government official.

This incident is not a small one, it should be treated as alarm bell not only for bank officials but for survival of banks too. And this incident is not also unanticipated and unexpected. Government of Maharashtra has already issued warning in the last month that if bankers do not sanction crop loan , FIR will be lodged in police station against them. Trade Union leaders thought it better to keep mum and they did not react at all.

 In olden days Minister like Janardan Pujari used to build pressure on Banks to organise Loan Melas and disburse loan to farmers, traders and others as per sweet will of Block officials and district administration. Bank officials who remained behind target for loan under government scheme or who did not want to sanction loan as per will of politicians used to be transferred to different places and used to be punished in promotion processes.Transfer powers are used in banks as well as in government offices as weapon to kill an officer who do not follow top officials blindly. Trade Union leaders joined hands with corrupt top officials and allowed exploitation of their members .

As a result of this undue pressure on lending , bank officials willingly or unwillingly learnt to oblige politicians and government officials even at the cost of quality of loan . Because it was after all a question of safety of service with respect and do called dignity. Some of officials while working in cooperation with government officials also learnt how to earn bribe and commission in sanctioning of loans under government schemes. This is called  "To kill two birds in one stone". In villages, it is called as "Aam Ka Aam Ghutli Ka Dam' Bank officers thought it better to earn money for self by obliging top bosses .

Not only this , in second phase politicians like Devi Lal and VP Singh built pressure on banks to write off of loans. As a result , it became easier for corrupt bankers and corrupt government officials to sanction loan blindly to serve their dual but evil motive of earning bribe and achieving set targets. This is because , they became sure that even if they sanction loans to bad persons or fake persons, they or their colleagues in next few years will get an opportunity to write off such loans . IN this way , all proofs of bad lending will be finished for ever. Borrowers too are well aware of this culture. They know the art of taking loan from bank and then the art of  building  pressure through local leaders for writing off of loans.

Then came Minister like Chidambram who was not a small player but a big and giant player. He was well aware that political leaders of his party used to build pressure on bank officials to sanction loans to farmers, traders and industrialist. He was right in thinking that  he can earn vote bank by forcing bankers to sanction smaller loans to villagers and by writing off small loan he can further make his future brighter , He took a step forward by forcing banks to lend to big corporate houses in hundreds and thousands of crores of rupees so that not only  he himself can earn huge money as gift from these corporate houses , but his party can also get political fund from corporate houses as a award. He thought to become invincible and he had a dream that his party will win the heart of not only small borrowers but also corporate borrowers and thus his party too will also become  invincible in election.

In this way , Mr. Minister created ground for final collapse of public sector banks. He used to keep all CMDs and EDs in his grip . He knew how to earn money by selling the post of CMD and EDs. He was least bothered of health of banks. He rather helped private banks to prosper and grow by leaps and bounds. He promoted the culture of selling of Government fund . Private banks could offer black money or illegal money to buy thousands of crores of rupees in form of deposits for their banks whereas top officials remained behind in this mad rush for deposits. Actually officials of PSBs are satisfied with undue promotion they used to get from ministers and also patronage they used to get from ministers when their evil works and corruption in lending got exposed .

As a consequence , bad loan started rising in almost all banks. Then ministers of old government used to guide bankers how to hide bad loans or how to rephase and restructure bad loan   to reduce bad loan ratio. IN this way , officers in banks learnt to inflate profits by concealing bad loans through manipulation and by reducing provisions.

Ministers used to tell  bankers that they should compromise with bad borrowers and sacrifice bank's good money for bad borrowers . To add fuel to fire , Congress Government sacrificed Rs.75000 crore by preaching write off of bank loan in the year 2008 so that victory in election of 2009 could be guaranteed.

Now the government has changed. Now Technology called as Core Banking Solution (CBS) has already been introduced in all banks. Now it has become a little bit difficult for bankers , not impossible to hide bad loans. As such banks are now planning how to hide bad loans and how much to declare bad loan in a particular quarter or year so that their old sins are not exposed overnight.

Anyway , whatever may be the historic reasons behind accumulation of bad loans in the books of banks , it is now open secret that NPA ratio and ratio of stressed assets in Public sector banks has gone beyond control . Government is constrained to provide additional capital to these banks for survival and for compliance with Basel norms.

In modern era, government has taken a jumping step forward to gain political advantage though in the name of growth and  giving a boost to credit growth. They are aspiring   to win the heart of farmers, industrialists and all. They have directly putting pressure on banks for sanctioning of loan or to face the punishment like suspension. IN this way it has become clear now that bank officials has to prepare themselves to sanction loan strictly as per whims and fancies of government officials or to remain ready for facing the punitive suspension and humiliation in public domain.

If bank unions chose to function as brothers of top officials and are busy in flattery and bribery like top officials, common bankers should be ready to face the music of ministers, politicians and local government officials . it is no more easy for them to safeguard their service and to protect their respect in society. So far as future and health of banks is concerned , it is sure to move from bad to worse and government will continue to infuse capital to save banks from disaster.

Officers who are clever , will sail their boat in the direction of current of the river and those who will go against the current will either sink or leave the bank. Let us see what happens. But the incident of aforesaid suspension will trigger a new disturbance in banking, it is sure. Here it is not a question whether the act of suspension is justified or not, it s a question of freedom of officers in taking prudent and wise decision while sanctioning a loan.

It is not a question whether the loan amount is small or big. It is a question of culture of lending which is being imbibed in bankers by clever politicians and then denying wage hike telling the burden of bad loans and lesser profitability as reason. When bankers can succumb to pressure for small loans, they freely sanction bigger value loans too without taking into account the risk factor but only considering the whims and fancies of politicians. They thus add to the basket of bad loans without any fear and repercussion.

Some clever officers of bank and politicians argue that  small loans are small piece of total bad assets of banks and banks are supposed to fulfil social welfare motive. Ok It is true . But when top 200 borrowers are said to be constituting 99 percent of bad loans, they say that loan to big corporates are necessary to fulfil national objective for  creating enough infrastructure and for adequate growth in GDP.


When media talk of recovery from bad borrowers who are high profile business houses or take punitive action against erring bank officials and politicians, they argue that such action will be a disincentive to bank officials and it will cause erosion in credit growth and force bank officials to stop sanctioning loans.



It means only evil ways are ways for success. It is better to say that success cannot be achieved by honest and good ways and means.



There is obviously no way to aspire for good lending and recovery from bad borrowers and bad bankers. If Small loan turn bad, it is in large numbers with small values and causes a slow poison to kill bank. When big loans like that of Kingfishers and Zoom Developers go bad, it is like Potassium Cyanide for banks and bank staff.

After all bankers are also human being and when survival is at stake, they think ,as their counterpart in government offices and department think, it better to swim and sink in the direction of river . When protections like Trade Union Leaders become role player of management, it will be unwise for any practical bankers to stick to principles of banking or to follow strictly the rules and laws of lending.

Maharashtra to file FIR against banks that deny crop loans-Economic Times-28 May 2015
MUMBAI: The state government of Maharashtra, which faces the highest farm distress due to more than 30% shortfall in rains last year, has asked its machinery to file FIR against those commercial banks, that do not fulfil the target of crop loan distribution.

The revenue department officials alleged that the commercial banks protect each other when it comes to distribution of crop loan. "Take strict action against the commercial banks that do not give crop loan to farmers. File FIR and approach the RBI," asked Maharashtra chief minister Devendra Fadanvis to all the district collectors in the state while addressing the kharif review meeting.

In the backdrop of a worst year for its agriculture, the state government has the challenge of changing the rate of growth of agriculture from negative to positive. The state government's expenditure on relief distribution due to natural calamities has increased 4.5 times in last five years.
"We are concerned about the crop loan distribution in Marathwada, Vidarbha and North Maharashtra region. The farmers from these regions get less loan due to various reasons. In addition to that, if 40% of them do not get any loan, then it will definitely impact the productivity in those regions," he said. The state plans to increase crop loan distribution during kharif 2015 to Rs 41,000 crore from Rs 34,000 crore distributed last year.

Fadanvis said his government plans to do taluka level monitoring of loan distribution. "This year, we will not consider only the quantum of loan distribution but also the number of farmers they cover. The commercial banks tend to lend only to the big customers to fulfil their target," he said.
The co-operative banks in the state shoulder the main responsibility of crop loan distribution in Maharashtra. However, these banks are weak in Marathwada and Vidarbha. The District Credit Co-operative (DCC) banks in Wardha, Buldhana and Nagpur are defunct, making the situation worse. To alleviate the farm distress, state government has decided to reschedule the loans for five years of those farmers who had defaulted.

Now, the defaulter farmer will not have to pay any interest on his existing loan in the first year. In the next year, that is in June 2016, he will have to pay only 6% interest, while the state government is yet to decide about the rate of interest he pays during the remaining three years of the loan. Fadanvis asked the officials to reach out to every farmer through an election like campaign, to tell them that they are eligible to get fresh loan despite being defaulters.

http://articles.economictimes.indiatimes.com/2015-05-28/news/62765532_1_fresh-loan-state-government-district-credit-co-operative

Announce Loan Waivers for Distressed Farmers: Maharashtra Congress Chief Ashok Chavan-NDTV- 15th June 2015

Mumbai:  Maharashtra Pradesh Congress Committee (MPCC) today announced to launch a state-wide agitation to demand loan waiver for farmers hit by natural calamities.

MPCC president Ashok Chavan made this announcement while talking to reporters in Nanded after chairing a meeting of party office-bearers and leaders from the district.
"We give the government eight days to announce loan waiver to farmers, who have been distressed by a spate of natural calamities. Else, we will not allow the state legislature to function during the monsoon session beginning July 13," he said.

The senior Congress leader lashed out at the BJP-led government in the state over its "failure" in addressing grievances of farmers despite rise in suicides.
http://www.ndtv.com/india-news/announce-loan-waivers-for-distressed-farmers-maharashtra-congress-chief-ashok-chavan-771632
Loan waiver, MNREGA, food security, Niyamgiri: Yes, Rahul Gandhi is back - First Post

Nearly two months of “introspection” later, Rahul Gandhi returned to the stage on Sunday with an old narrative and older theme. The Ramlila Maidan rally here was billed as Rahul’s big re-launch moment. He was aggressive, topical and attacked Prime Minister Narendra Modi repeatedly. But if the “leave of absence” was to think of a new way ahead post electoral drubbing, he didn’t offer any to the massive crowd that the Congress had managed to gather.

See more at: http://indianexpress.com/article/india/india-others/live-congress-all-set-to-play-its-farmer-card-at-kisan-rally/#sthash.n0QPMq3l.dpuf

Loan waivers: Andhra, Telangana farmers should wake up to see the trap laid by politicians
Reserve Bank of India (RBI) governor, Raghuram Rajan has yet again flagged caution about the effectiveness and real character of farm loan waivers — a tool time and again used by politicians to appease the poor farmers on the pretext of helping them.
The fresh caution has come in the backdrop of the latest round of debt waivers in the southern states of Andhra Pradesh and Telangana. Andhra Pradesh has promised waive of Rs 1.5 lakh per family, while Telangana too working on a similar scheme by waiving off loans upto Rs 1 lakh per farmer.