Banking Through Micro Eyes

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The very term ‘welfare states’ speaks of the telling existence of the have’s and the have not’s. Since we call him the Father of the Nation and put his gum-revealing, ear to ear smile on each currency note of ours, it won’t be irrelevant to quote: The state is one of the means enabling people to better conditions in every department of life …. Having said that we also recognize the gulf of difference in between the haves and have nots in this country of ours. In fact, right from the days of epics there existed slaves. Allusions from Ramayana and Mahabharata are rife about the existence of slaves. Down the rigour of time the Hindu Raja’s came and go until they were replaced by the Sultan’s, thereafter by the Mughals and then by the British. Then on 14th August, 1947 midnight dawned a fine morning called Independence, but are we there to face the sun being six inches taller to say that the problems of Hasem Sheikh and Rama Kaivarto are no more! However this article doesn’t intend to portray the intensity of poverty in this country but to explore the ways to do away with this financial curse. These days we often happen to learn of so many NGOs doing something in the micro-level; again NBFCs (basically the offspring’s of MNC banks) are often found to fish in the mud-water in the name of welfare. This article of ours humbly derogates any such moves, in disguise of welfare and try to find out the ways and means where Public Sector Banks can really make a huge difference; can really uplift people from the jaws of telling poverty. For, one discoverer of India once said: The quack treatment of a deep-seated disease doesn’t yield result.  



The state represents violence in a concentrated and organized form; it can never be weaned from violence to which it owes its very existence – Mohandas Karamchand Gandhi.

Rightly so, right from the days of primitive age upto this dotcom era the Indian civilization had to pass so many dominance and exploitation that virtually delineate the history of ours with blood stained penary and frustration. Although these days positive thinking, positive way of performing do all the rounds, portrayal of penary and frustration has become almost a forbidden path. We, in this presentation of ours couldn’t help reiterating those so-called negative things only to find out the luminous domain yet to come, or in a word to attain that freedom what Rabindra Nath Tagore dreamt of as: Where the mind is without fear and the head is held high…..


From the primitive communist system where people lived in groups and used to share what they produced, collected or hunted. In course of time, to possess more saw so may inter-group clashes and even in-fighting to evolve slave system from the earlier one. In the later system, the slave lords used to exploit the so called slaves in a way that could be described in the most civilized way as barbaric and in-human. Now in a bid to acquire more and more land and more slaves to exploit the feudal system was born from the womb of slavery system. In India, we can find from the allusions of Ramayana and Mahabharata, the existence of slave system thereafter feudal system took over.



And even in this era when the Indian metros are carpeted with squeaky clean streets with streams of swanky cars, so many corporate bigwigs hovering here and there, when we are thought to be considered as one of the two power houses of economy, semi-feudal system still looms large. Land reform is to take place in a very tangible and meaningful way across this sub-continent. Again, if we are to continue like this our presentation is likely to become an agro-centric one where we hardly find any scope for industry. Oh dear, dear, dear, dear, dear! How on earth should we be able to show our IIP growth have an edge over the other. We placed the portrait of Gandhiji in every currency note of ours who himself was least likely to take a call on industry.

So far, exploitation goes Indians now the citizens (previously subjects) could hardly test the taste of freedom. Here lies the question of the existence of a welfare state. Having said that, what we intend to say that Indians could never be weaned from violence and exploitation in the name of caste, creed, religion, poverty and what not.



The late 70s saw a never before flood in West Bengal. But before flood water came through flood gates to aggravate a deluge, left front assumes the power in state politics after so many aaya-ram gaya-ram and the blood stained era of naxalite politics in early 70s. The then chairman of the left-front Late Pramod Dasgupta and the then Chief Minister of West Bengal Jyoti Basu made a very welcome change in the name of Land Reforms. There is no denying the fact, it was virtually the last nail driven to the coffin of feudal system in West Bengal. Hopes rose. Even the marginal farmer who used to toil somebody else’s land throughout the year in lieu of mere tit-bit were made now the owner’s of his own small land. Agricultural production rose. And West Bengal got back the pink of health in the space of economy. Now came the fortune seeker from every direction but the south where Bay of Bengal stands as a blue desert which cannot yield human population. A popular but hush-hush saying goes on: BANGAL KANGAL O KA DESH! However this presentation of ours is not meant to analyze or to justify this compliment. What we intend to say is that landmark land reforms rose high only to come down and pick up such above mentioned compliment. Why so? The answer could be there was no strategic bank back-up, so to carry on the production to make the smile on the grey lips of Bengal long lasting.



Right from day one of our independence the concept of attaining financial freedom took shape and series of five year plans ensued to uplift the downtrodden. Perhaps Gandhiji’s writings of SARVODAYA stood for the model to give powers to the hands of have not’s. Down the river of time those sincerities of our political system in their way of implementation found so many barriers in the form of most infectious corruption. Now corruption virtually eats out 90 percent of the allocated funds condemning the downtrodden under earth insects and endowing the have’s to soar high.



So far we understand India is a multi-ethnic, multi-lingual and multi-cultural land. The drivers of our political system in a bid to encash the growing difference in between have’s and have not’s tried to use this multi-ethnic, multi-lingual and multi-cultural texture of our country as most palatable (otherwise most unpalatable) TARKA! Once Gandhiji remarked: The greatest gift for an individual is ABHAY or fearlessness, the contrary to Father of Nations concept the drivers of our democratic system tried to infuse fear in every nook or corner of our society to form the clime in which the Muslims get scared of the Hindus and vice-versa; volumes of amendments of our constitution let a space for the Non-SC and Non-ST individuals of this country taking themselves for second class citizens.



Thanks to the age of reforms in our economic system, the SC, ST privilege of early days lost their glory, with the advent of corporate era, citizens of this country (specially the job seekers) found so many avenues to explore and their grievances against SC, ST subsided. Unfortunately, the spring of reforms could hardly penetrate the heartland of India: VILLAGES. Although villages form 75 percent of our country, so many five year plans and pre-election welfare manifestos of our political system could neither do away with the scars of cotton seed farmers, the hunger deaths of Kalahandi – Koraput. Too many villages still plunge into darkness after sunset due to absence of electricity; too many village women-folk are to tread miles to fetch a little drinking water; too many villages are yet to be brought in our national map and India ends where mantriji’s motorcade cannot access.




During the days of British Raj, Indian leaders specially Gandhiji pussed new soul into our national movement in the form of SWADESHI. This swadeshi movement stood for the tool to attain self realignment. However, during post independence era this swadeshi movement could never see another tide and virtually dimmed down. Again swadeshi movement gave the Indians a great awakening on the basis of which the then Indian leaders tried to sculpt out the form of independent India with smiling citizens, but the deformation of that sculpture probably started from that time itself. Even after 63 years of independence, our honourable government is found to segregate the population in BPL and non-BPL categories. Government is supposed to give the former categories subsidized commodities. It is high time for us to evaluate how far these efforts hold water in extricating poverty and its consequences?



So far, from the history of various ways and means undertaken by the government could not eschew deep-rooted corruption and hence they are out and out failures to eradicate the scars of poverty and its consequences. Again from the history of post independence economy the macro welfare motto can hardly come out with the least yield or impact from the micro level. Here, giving emphasis for boosting micro level economies can serve as a better alternative. As we have already discussed that this country lives in villages and even after so many years, 75 percent of Indian populations belong to villages. The demand and supply system of pre-independence era passing through innumerable changes and conditions posed a gulf of difference from the earlier one. Now to address the rural poverty the first step towards land reforms was appreciable but in the absence of proper diet to feed the isolated land constant supply of money becomes a must. Testing the attitude of PSU banks towards these marginal farmers various co-operative movements came into being. Here too, corruption left its indeliable mark. Barring a few co-operative like NDDB, most of them had been the tool to earn allocation from the government or functioned as mere banks. And majority of these co-operatives became bankrupt overnight. So far the role of NGOs goes; the ever-growing existence of them could hardly make any difference, as most of the NGOs’ sincerity lies somewhere else. These non-profit making entities, in most cases, make chunks of profit through the roads of donation (a viable way to turn black into white) both from India and overseas.



Right from mid 90’s the MNC banks like ICICI, HDFC, HSBC, etc in a bid to reach out to more people of this country formed a new portfolio called STPL (Short Term Personal Loan). These portfolio’s had been instrumental enough to absorb a portion of ever-growing unemployed regime from the city and urban sector. These STPL were supposed to be given to those who could have arranged three years ITRs, six months bank statement and personal identification, etc. And in various cases these documents were forged, masterminded by the loan executives of the company itself. Even the banks were not in winter sleep regarding this. They used to charge a sky high rate of interest in between 18 to 30 percent per annum flouted every norms of our honourable apex bank (RBI). The part of recovery could be described in a very civilized way as barbaric example of hooliganism. Thanks to our age old system of sahukar (moneylenders). These MNC banks with their suited-booted-tied men and well-dressed female executives were nothing but the masked face of our medieval sahukar. Hence the plight of rural folk worsened. Thanks to the impact of recession in our country that hit the MNC banks hard and that retail STPL givers were forced to shut down their doors overnight. It’s very interesting to find the highest payment makers had been the folks that were supposed to be the last persons to do so. These folk comprises of green grosser, retail fish and meat sellers, etc. To find out the cause behind one can hardly overlook this fact that these green grosser, meat and fish sellers, small tailors, carpenters borrow 100 to 500 bucks on the morning and pay 120 to 600 bucks in the evening and so many respected persons of a society are in this fray of begetting their money without being called as green grosser, carpenters, tailors, meat or fish seller or something like them. So it is obvious, those that are habituated to pay 20 percent more in the name of interest in a single day could find it a boon to pay 30 percent in 365 days. But what about those who for the first time tried to venture out in the field of moneymaking with next to negligible knowledge found themselves in high seas.




Now let us look into the various aspects of rural production. Here we find two or three types of moneymaking: i) agricultural, ii) non-agricultural and iii) service. Agricultural production has so many departments and they are to pass through various conditionality. Even after 63 years of India’s independence, our peasants had to depend very much on sun and shower due to lack of proper irrigation. Again the seeds they sow come to them with so many difficulties. Non-agricultural production comprises of various handicrafts that are consumed in local areas only and some delicate embroidery or ornamental works. Another face of non-agricultural production is cattle and diaries. Service sector comprises of so many welfare activities that goes round the year.

Latest data shows a huge thirst of money needed to quench various micro financial systems. But here, taking the history of deep-rooted corruption in our country into consideration, can we breathe easy that this extra chunk of money, is given, can do what it is supposed to? In the above paragraphs we tried to segregate various money making options in rural India. And each case micro financial activities can do wonder. For instance we have seen the corporate to built roads and collect their revenues through the toll payment, in the aspect of irrigation the banks can easily do the needful and collect the revenue from the users. Likewise banks can set up retail outlets through some SUV (Special Utility Vehicle) where the peasants can get the seeds and fertilizers and may get the return along with their interest either in cash or kind (make no mistake the retail chain bigwigs like Reliance Fresh, Big Bazar etc. are in it already). In the aspect of agricultural machinery the banks again can come forward with various machineries like tractors (in the aspect of Punjab it is a very successful experimentation). Apart from core agricultural productivity, non-agricultural production too could be enhanced or rejuvenated through micro financial activities.

Posted by: Soumendra Roy. in Finance | Date: 04/04/2016

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