Bankers meet to discuss NPA resolution, improving credit offtake

‘Winning the hearts and minds of customers’, ‘Restoring pride of the banker’, ‘Drawing lessons from the last nine years of credit decisions’, and ‘Faster compromises and close follow-up’ are among 18 topics on which top public sector bankers will put their heads together this weekend at a ‘ThinkShop’ in Gurugram.

The third edition of the two-day retreat (the earlier two editions were called ‘Gyan Sangam’) is being organised under the aegis of the Finance Ministry at a time when public sector banks (PSBs) are reeling under the impact of bad loans and poor credit demand.

The meet also comes almost a year after the NDA government scrapped high-value currency — ₹500 and ₹1,000 bank notes — in a bid to fight corruption, black money, money laundering, terrorism and financing of terrorists as well as counterfeit notes.

The session on ‘Winning the hearts and minds of customers’ should be viewed in the context of falling deposit rates forcing depositors to look elsewhere, including stock markets, for higher returns, banking services becoming increasingly impersonal due to surge in digital transactions, and private sector banks and non-banking finance companies gnawing away at PSBs’ market share on the loans front.

With bankers tirelessly shouldering the task of pushing government schemes — be it Pradhan Mantri Jan Dhan Yojana (opening savings bank accounts for the unbanked) or Pradhan Mantri Mudra Yojana (to help micro entrepreneurs access credit) or the Herculean demonetisation exercise, it seems the government wants to ‘restore their pride’. In this regard, the government may seek top bankers’ views on expediting the pending industry-wide wage negotiations, ushering in employee stock option plan (ESOP) and improving human resource practices.

In the backdrop of various scams, including those relating to coal mine and spectrum allocation, lack of statutory clearances stalling large projects, and big accounts turning non-performing over the last few years, a session on “Drawing lessons from the last nine years of credit decisions” has been arranged.

This session will encompass credit decisions taken during the Congress-led UPA-II government and the BJP-led NDA government. With bankers literally putting shoulder to the wheel to resolve the NPA problem, the topic ‘Faster compromises and close follow-up’ within the broader theme ‘NPA resolution: better value and faster realisation’ will be discussed threadbare.

Legal provisions

Meanwhile, Devidas Tuljapurkar, Joint Secretary, All India Bank Employees Association, said, “It is really sad that bankers will be discussing on compromise and settlement for recovery when they should actually be focusing on what should be the legal enabling provisions for effective recovery. This means they have presupposed that banks have to sacrifice (on principal and interest) as without that recovery won’t happen. They should be discussing what should be the alternative legal framework on the basis of which effective recovery can happen wherever collateral/ assets are available. That should be their strategy.”

On the themes ‘Enhanced credit offtake’ and ‘Leveraging capitalisation for take-off’, a senior public sector bank official emphasised that the ₹2.11-lakh crore capital infusion by the government into PSBs alone will not revive credit demand. The issue of why bankers are reluctant to take credit decisions needs to be addressed.

Tuljapurkar felt that the crisis in the farm sector, especially the suicides due to crop failure and inability to repay loans, and issues relating to adequate and timely credit and the importance of crop insurance should be taken up for discussion.