Banking in India - Financing Small Traders, Self Employed Persons, SHGs

Random Thoughts by an erstwhile Bank Manager.

Banking is a big funny exercise in India.
Many a Banker do not think seriously and that is why they are still stable.
We mix Banking with being a Government Agency for implementing its program mes, and do social banking and mass banking which no foreign bank can do successfully and survive.
Hence no banker knows what he is doing exactly at a particular time.
Whether he has to act as a
1) Commercial Banker
2) a Government Agency - an extended arm of the Government
3) a social welfare organization
4) catering to a large crowd of customers in a mass banking exercise etc..

Lending is of different kinds
Big Institutional, Corporate and Commercial advances have their own rules and regulations and work under already well laid down procedures to cater to their needs.

But till date the banks have not devised a system to extend, monitor and recover credit facilities to the very small tiny traders, self employed persons like hair dressers, plumbers, electricians etc., and the SHGs.

Big Customers have exclusive staff to go to the bank daily and operate their accounts.
But these small people have no assistance or time to visit the bank regularly as expected by the Bank.

Many a time a good hardworking sincere honest person belonging to these categories prefer to go in for private money lenders than coming to a bank because he has no time or assistance to spend at these banks.

The money lender is providing easy access, operate at convenient timings and locations and very customer friendly.

The banks have to find out ways and means to compete with the private money lender if it wants to really serve the masses in India as they many claim to do so often.

Only those who have no real work, lazy and plan to loot the bank by deciding to be a defaulter from the beginning have time and inclination to visit the banks several times and submit themselves to all the formalities that the banks may demand because their intention is only to defraud the bank.

And the growing NPAs in this segment is only because of the above mentioned reasons.

Similarly the SHGs lament that once in a month they have to waste one whole day in the bank to meet their requirements.

This is not needed.

Only some intelligent thinking and planning on the parts of the planners of the various banks can easily solve these problems.

Writing off of Agricultural debts periodically.

The various Governments' schemes of writing off of Agricultural debts now and then have a very bad effect on the honest agriculturists.

Slowly they are also tempted not to repay agricultural advances in time so that they can also wait and try their luck if a writing off of agricultural advances scheme is announced by the Government.

I have all the sympathy for the agriculturists as they have the right only to work and are not sure of their produce reaching their home in right quantity and quality and reimburse them if not more atleast equal to their investment labor and expectations.

The Governments when announcing such schemes can also as a goodwill gesture reward the prompt and honest lucky persons who have repaid their loans so that they will not feel bad for having been honest, hardworking and lucky.

All the Best