Fleeting peep through the (banking) keyhole
In the current context the North has a proliferation of bank branches. It is around 250 for a population of 600,000. If the prevailing branch density of one branch per 10,000 of population is still applicable what is required may be around 60 to 70 branches or under 100. But it is fourfold. Why this phenomenon of overbanking in the war devastated area with hardly any noticeable economic activities which attract banks to branch out? May be it is brought in large numbers as a prelude to economic development.
Why this gold rush? Before venturing to surmise or even give pointers to the reasons for the overzealous branching, let us see what type of banking we have in our country.
There are indigenous as well as foreign banks. It was pointed by many a commentator that from a position of two “inefficient state banks” dominating the banking world, the situation has changed to the erosion of the near monopoly of the state banks by the advent of mostly the private sector banks especially into the Northern area. Are they also indulging in commercial lending or are they are constrained by overzealous targets set elsewhere?
The banks continue to depend on the deposit/advance matrix. They attract deposits both non-interest bearing deposits (current accounts) and low interest bearing deposits (time deposits). There is heavy dependence on deposit based income by the banks. Their advances too have veered away from risk covered commercial credit, to not so commercial credit or even political dole outs, and replication from inside recovery of advances has become a serious concern of the banks, with the banks considering the transfer of such advances to special institutions.
This is quite different from factoring it should be conceded.
When a loan degenerates from a repayment stage to the recovery stage there is something in the advance itself that has to be studied, if not probed by turning the light inwards.
Repayment implies the observation of the contract by the recipient as agreed at the granting stage. It is a question of paying back as agreed and it gets settled in due course as agreed and the story has a fairy tale ending. It may be a situation of “came, saw, and conquered” and the bank flourishes.
Defaults if any will be within permissible /manageable limits.
Recovery commences when repayment is tardy or gets delayed or even ignored by the borrower.
One reason which is normally overlooked or not looked into is the tight schedule a borrower faces. He borrows for business purposes say, that means, he envisages a return. He commits, invests, gets a return and adheres to his agreed contract of repayment. If an extraneous payment intervenes it disrupts his tight schedule and he may not be able to meet his bank commitments as agreed. An experienced banker can to a certain extent say from the residual unpaid amount the extent of the extraneous handout involved in the pre-sanction stage involving the creditor’s side. It is also claimed that this is only one of the ways to gauge the extent of non -professional handling of the credit decision that contribute to the degeneration. If fully settled without any delay, it is either a 100 per cent honest deal or the borrower has managed to gift and yet settle his commitments.
If the crystallized overdue amount increases the indication is that the borrower finds it difficult to meet the handout he has doled out. If the residue is 100 per cent then the search for the borrower must be focused into the bank, mostly in the branch itself.
This is not to cast aspersions on the majority of the staff members. Yet it is true to say that the miscreants though in a minority have a say, have a devious control, have a controlling interest in the decision making and can sway and tip the scale in their favour. The silent majority in the bank as in the society at large is waiting for the day they will have to face it face to face. They are lulled into inaction by their privileges and perks.
As Martin Niemoller, the German Theologian pointed out if you do not speak
out for others, it may be an unenviable situation of “….then they came
for me. There was no one to speak for me”.
Let there be no room for misunderstanding. Let it be known that at least until recently a substantial number in the cadre were above board (except for their minor offences or infractions, not even bordering on heinous offences deserving capital punishment) and had a clean record of service and most of them retired with their terminal benefits intact. There were offenders some deserving terminal punishment and most of them were dealt with as they should be, but in recent times the offenders appear to go scot free and the atmosphere is charged with a sense of insecurity and others are being dragged into difficulties and victimized as if they are caught in the cross fire. It is more due to laxity in enforcing the existing safety and security measures by monitoring and inspection by the decentralized administration. Glossing over the offences of favourites, though detected as provable beyond any reasonable doubt, has been observed. The vigilance that was there earlier has been replaced by ‘you scratch my back, I scratch your back’ with near fatal consequences to the bank.
It is unfortunate that offenders are both high-up in the hierarchy or those closer to them and at the same time prominent in the trade unions and thus they have a double bind that ensures their impunity. The trade unions too from being defenders of victims have become advocates for imposters and the better part of their time is spent defending and safeguarding offenders more than looking into the genuine grievances of the members generally and scapegoat victims more specifically. Victims are mostly those who are charged for offences they have either not committed or those magnified to show that there are disciplinary controls. Sprats are caught to enable the whales to swim freely in the troubled waters.
The staff should assert before their very existence gets erased and they have nothing to hold on to. The current affluence is superficial or can be swept away at any time unless the majority of the staff is alert enough to be ‘whistle blowers’ or even active resisters. The Commercial Bank staff (some years ago) set a good example in resisting a merger that was undesirable.
It is unfortunate that the trade unions have ceased to be the protectors, if not saviours, of its members. They have their own agenda and the sleeping silent majority has not asserted to safeguard their own interests. Trade unions have to reflect the genuine needs of its membership not that of their puppeteers.
It was the powerful trade unions of the workers that created its own political wing in the United Kingdom. In our country the trade unions sub- serve the political interests of those who lead the trade unions from outside. It is more under remote control than by leadership thrown from inside the trade union itself. A rare exception was the CMU under the late Bala Tampoe. As a result the genuine interests of the workers get slaughtered at the political altar. Examples are legion. The leaders in turn had their own hidden agenda away from the professed workers’ interests.
This is not a deep analysis. Attempt is made to touch the top of the submerged iceberg, where the visible portion is small and what lies underneath is beyond the scan of our naked eye that too from a distance helplessly wringing our hands.
R. Suntharalingam
Jaffna