Time has come to review banking system

Source: The Hitavada      Date: 02 Nov 2018 10:09:01


By B C Bhartia,

Ease of doing banking and ease of obtaining funds for business is need of the hour today. Nowadays, a small trader can deal with Income Tax, GST, food act and other Government agencies. All these agencies have simplified their procedures and are now not consuming much of the working time of traders, except in GST issues still persists.

In contrast to this, the banks are becoming more troublesome and are consuming much of the time of traders. We have to understand whether bankers are facilitators or regulators of financial transactions. Their work is to do monitoring or policing of transactions of their borrowers. They are service providers or facilitators in ease of doing business. It is being observed that many bankers are more of hindrance then helping businessman in developing their business.

Before giving financial assistance the bankers are doing full assessment of the borrowers. They are taking more than 100 per cent of financial assistance as security. In spite of that, every month borrower have to file stock statement which, means 12 compliance in a year. In addition they are sending their auditors for verification which means one more outside agency involvement. Then in name of renewal of limits, every year they are asking to submit annual accounts, CMA data, net worth statement etc. If you don’t file they charge penal charges which in many cases exceeds penalty being levied by govt under different laws. After financials are submitted with them, then they start questioning on your finances. The borrower has to go on giving them explanations. First give at lower level, than at secondary level and then at final level.

If you are having limit beyond a certain amount they are asking you to get rating done from outside agency. Now how do you expect a businessman to go on doing all these compliance when bank is more than fully secured. Inspite of all this we see NPAs of Indian banks increasing. In many cases they are having relationship with borrower since decades.

I think now time has come to review the banking system. The procedures they are adopting. Since they are more like ‘Mahajans’, who give secured loans against gold and silver and don’t ask for anything except security and are happy with their securities. It is ease of borrowing funds. If the banking system continuous in the way they are doing now, I think a day will come when people will avoid taking financial assistance from these banks and will go to money lenders for ease of obtaining loans. It is time bankers understand their way of doing business. They should not forget NBFCs are round the corner to fund the traders.

(The author is National President of Confederation of All India Traders)