The House reassembled after lunch

at two minutes past two of the clock,




THE VICE-CHAIRMAN (SHRI SANTOSH BAGRODIA): Shri Surendra Lath will continue his speech.

֚ : ֳ֬ , Ù כ () ײֻ, 2007 ָ ֓ օ ֓ ָ ֟ , ֜֟ ָָ ׸־ ו֮ ֮ ִ ֱ , 59.7 ָ ָָ 51 ָ ֮ ָ֕ פ ֋Ӆ ֮֮ ָָ ֮ ָ֮׿ ֳ ?

, ֮֟ Ù כ ֮ ָ֬ ֮֜ ׿ֿ , ׾ֿ ӟָ™ߵ ָ֕ Ù ֯ꌙ ִ , ㆻ ӕ ׮־ ӿ ꌙ ӕ ׮־ ־ ׾֤ ֣ ߤָ ִ ֟ ָָ ֮֮ ו֮ ׾֤ ׮ֵ ֣ ָָ ߤָ , ׾֮ߵ֟ ֮ , כײ׻֙ ֮ ? ֟ ֮֮ ־ֿ ߤ ָ ׮׿֟ ָָ ֤ ֟֋߅

, ӟָ™ߵ ßָ ָ ָָ ֜ , ߆ ֟ , ָ 2009 ׾֤ ָ ֋ ֋ , ֋ ֤ ׮׿֟ ׾֤ ֣ ןï֬ ֛߅ ֟ ֮֟ ֕ ָ ֱ ֜ , ֻ ֯ ֋ֲ , ӯע ֮ ? ָ ו֮֟ ָ ӯע ָ ״ֻ פ ֋, ׬ ӯע ֋ֲ ֻ ֮ , ָ ָ ӯע ָ ״ֻ ֋, ߮ ׬ ӯע ֋ֲ ֕ ָ ֮ Ù , ֲ ֛ , ֮ ׾ ָ , ָ Ù ֕ 84 ã֮ ָ ֟

2/ ָ


֚ (֟) : ֮ ֻ פ , ֲ ׾ ßָ ָ ןï֬ ִ֮ ֛ ָ ׻֋ ֛ , ׻֋ ָָ , ֵԯֻ ָ , ִ ֵֻ֟ ֮ ָ ָ - , ֮ ֻ פ ןï֬ י ֻ , ׻֋ ֺ ֲ ֛ ֣ ״ֻ פ ֋ ו ׾ ֛ ֣ ןï֬

, Ù ֵ ָ ֯ ֮ ֟ Ù כ 2005-06 ן ԓָ ָָ 3 ֋ , ICICI Bank ן ԓָ ָָ 9 ׬ օ ICICI Bank 2005-06 ֓ ߲ 7.69% ֮-֢ ָ ֓ , ֲ Ù כ ֠ 25.98% օ Ù כ ָ ֲ ֛ ־ԕ׮ , ӳ߸ ׾ֵ ֱ ָ֟ ָ־֙ ־ כו̙ ßָ ֟ ֱ֟ ״ֻ , ֱ ָ 1999-2000 2006-07 ֱ ָ ֱ ׮ָָ ָ־֙ և 1999-2000 99.6% ׸֛ ֳ , ֤ 2000-01 ֳ ߲ 21.8% ָ ֵօ 2001-02 ֳ 51.6% , 2002-03 27.9% , 2003-04 18.5%, 2004-05 ֡ 16.54%, 2005-06 2.3% ָ ֵ 2006-07 3.4% ֱ ֱ ֮ؓ֟֕ ãן , ָ ױÛ כו̙ ֟ ׯ֔ ׾֢ כו̙ ֡ 14.7% ֜, ֲ כ֮ ָߕ 36.4%, ׾ֵ֕ 35.7%, ׸ә ִ 27.49% ֲ֤ 23% כו̙ ֜ ָ Ù כ ֱ כו̙ ֙ ؓ֟ ׾ֵ , ãן ֲ ֲ 2003-2007 ׾֢ ֮ ָָ ֜ , 474 և ֋ ֣ ԓ׸ ܵ ֛ ֡ և , ֤ ֱ ׮ָָ ״ֻ , ֮ ֮֟, ָ ֻ֟ ׾֢ ӡ , ָ ԓ׸ ܵ ֟ פ 24 ָ և , ԟ ֮ ׯ ׻֋ ָ ֟ , ִ ָ

, ִ ָָ ־ֵ , ִ ֮ ֯ ֮ ֟ ICICI Bank ׯ֔ ָ ֻ ֮ ִ ָָ 6 ָ ֜ 16 ָ ֵ ֮ ֳ ֟ ֵ

׻֋ ֮ ֟ ִ ָָ ֙ ('2d/nb' ָ ָ)


֚ (֟) : ָ ׮֕ ִ ֮ ָָ ֜ ֱ ֲ ֮֟ ֲ ™ߵ ֵ , ܵ ָ֬ ֮ Ù , ־ԯϣִ ™ߵ ֣ ֲ ֛ ֟ ִו וִָ ֲ ׬

( ֳ֯ן ߚ߮ )

ֳ֯ן , ֳ ֮֟ ׸̾ פ ׮֤ פ , ָ ָ ֮ 40 ןֿ֟ priority sector ֮ ֣״ פ ֮ , פ ? ֣״ ֵָ ָ֟ ֵ֜ , ׮ֵԟ priority sector ֵ , ֕ ߯ ָ פ , priority sector small and medium industries ֟ , ֵָ ֱ ֜ פ ֵ ֕ small scale industries ָ 5 ӕ ׮־ ׻ֵ ֻ , ִ ִ , ߸ , , ֳ ״ֻ ָ ֳ ָ priority sector פ , ֳ ӛÙߕ, ֛ ӛÙߕ , ״ֻ ָ ֕ 40 ןֿ֟ ֳ ֻ ֕ ִ פֵ ֟ , ָ , ו֮ ֳ ״ֻ֮ , ֳ ״ֻ ׸ ָ ָ דŮ֟ , ֲֻ , ָ ׾ָ֓

ֳ֯ן , פ և ׻֋ ָָ ֋ ӟԟ ֕ ר և , ׾ֿ ֈ  ָ ו ָ ֕ ר և , ׸ִþֺ ָ֬ ׻֋ ֮ ָ ֮֮, ֮֯ ֟ և ֈ  9 ןֿ֟ ֕ ָ ֲֻ , ֕ 11-12 ָ ֵ ֕ ָ ד֟ ֋ ӳ߸ ׾ֵ ֈ  ָ ֕ ָ פ , ָ ָָ ׾ָ֓ ׬ , ֮ ֻ פ ָߵ , ׾ֿ Ù ֮ ֟ ֵֻ֟ ֮֜ , ֣-֣ ֮ ָ ֟ ר ־ֿ ֣ ׾ ßָ ָ ӟָ™ߵ ֣ ןï֨ ֛ ־ֿ ֣-֣ Ù כ ֮ ׾ßָ ֣, ֮ ִו ׵֟ ׮־ , ן ֯ ֤֮ ׾ ßָ ָ ֮ ״ ֮֜ , ָ ֮ ֵԯֻ, ֮ ןֵ ָ, Ù כ, ֣-֣ ׾ ßָ ָ ֮ ãן ָ ֋, ֵ֤ ֵ֤ օ ױ ֯ ֮־֤ , ײֻ ִ֣Ԯ ֮֮ߵ ӡ ָָ ִ֕ ׯ֔ , ֟ micro-finance ָ 2E/VNK-VP ָ ֿ:


֚ (֟) : , ֟ micro finance ָ micro finance ֟ ָ - , ו֮ - ־ֿ֋ , ָָ ן micro finance ׾׳֮ NGOs ִ֬ ֵ , 24 30 ןֿ֟ ֕ , ֕ ָ , ָָ ָ ӳ߸ ׾ָ֓ ֳ ׾ ֣ ֮ ֟ ִ֯ ֮־֤ (ִ֯)

DR. E.M. SUDARSANA NATCHIAPPAN (TAMIL NADU): Sir, I support this Bill. And, at the same time, I would like to take the opportunity to discuss about the banking system which is now developing in India. Sir, the Reserve Bank of India was a private bank as early as in 1935. But it was nationalised in 1949, and made as the Bank of the Government of India. The Imperial Bank, which started in the 19th Century, that is, 200 years before, was nationalised in 1955 as State Bank of India. Now, the Government has come forward with taking the shares of the Reserve Bank of India in the SBI so that a more people-oriented banking system can be developed.

Sir, in 1969, the nationalisation of the 14 banks started by late Smt. Indira Gandhi has revolutionised the banking system in India. The selective banking became banking for the masses. Ordinary persons could go, enter a bank and sit along with the Branch Manager, whether it was air-conditioned or non-airconditioned, and discuss about his problem and get banking facilities from the banks. That was the achievement made by Shrimati Indira Gandhi's effort.

But, Sir, certain areas of the banking system has certain chronic system failures. Sir, I got a newspaper, Business Line, dated August 12, 2007 which showed the picture of a person who is pulling the plough. His son is helping him as one bull, and his daughter-in-law is helping as another bull. This is the system that is followed even now in Kadlabad village in Bidar district of Karnataka. This picture was published in July 14, 2006 also. Afterwards, the family could get Government help from various sources. But the banking system could help them by giving them loan to the tune of Rs. 20,000. But the story of this particular newspaper says that with Rs. 20,000 it is not possible to purchase even a single bullock, and they needed two bullocks. But the system at the State level and also the system, which is followed at the district level, got certain unit costs imposed upon these agriculturists. Sir, the problem is a graver one. They are catering to the needs of the ordinary agriculturist, who has lost his old bullocks, who is in the debt trap, and they want to come out of it. But, the system which we have created for the masses is not responding to it. This is only a specimen case and I would like to show how the banking system at the lower level is to be guided at the highest level policy making.

Sir, nationalised banking is now giving more facilities. In 1969 only 64,000 people were getting one branch facility. But it is now very much reduced to 16,000 per branch according to the 2007 calculations. Sir, you know very well that in 1972 lead bank facilities were created for developing the backward areas by giving financial assistance for agriculture, small trade and also for commercial activities. And, it has helped the common man a lot. (Contd. By PK/2F)


DR. E.M. SUDARSANA NATCHIAPPAN (CONTD.): It has gone up to the level of what is commonly called Poojary's loan, where the differential rate of interest scheme was also applicable. Karnataka has become a famous place for having Shri Janardhana Poojary as the Minister of State. Now, we are having a very excellent Minister, Shri Pawan Kumar Bansal, as the Minister of State. He is very dynamic. After taking over the banking branch, he has done great things in many fields. We are proud of having an amateur politician like him, who has had a long stay in the Lok Sabha and Rajya Sabha. He knows the Members very well, even though he lives in Chandigarh which is a....

MR. DEPUTY CHAIRMAN: Do you want to make Chandigarh famous? ..(Interruptions).

DR. E.M. SUDARSANA NATCHIAPPAN: Sir, it is also a city, but surrounded by rural areas also in and around his constituency. Therefore, normal man's needs are being addressed after this has been taken over by Shri Pawan Kumar Bansal. I would like to suggest to him that he need not imitate Shri Janardhana Poojary, but we need somebody like Janardhana Poojary now. We have to go to the common man and get him the facility of the differential rate of interest scheme. Sir, I belong to a constituency wherefrom hails our Minister of Finance, that is, the Cabinet Minister. He had also started a scheme, namely, Indira Gandhi Niwas Yojna. It is a scheme fully aided by the Central Government. Under the Scheme, loan of Rs. 35,000/- to Rs.50,000, was given earlier. But now, he has launched a new system by way of giving Rs.35,000/- as outright grant and Rs.15,000/- as bank loan. Sir, I can't accept this scheme because ordinary dalit community people, Scheduled Castes and Scheduled Tribes, cannot bear the burden of Rs.15,000/-. If he gets Rs.15,000/- as loan for constructing a small house, then, afterwards, he cannot be creditworthy for any other loan. None of the branches will give ordinary consumer loan or any other loan for agricultural purposes or for any other purpose. Therefore, I request that the Government should rethink about it. Under Indira Gandhi Niwas Yojna, only outright grant should be given; it should not be a loan mela. It should not be a system where an ordinary person is burdened with a loan. Now, we are burdening even the students. I am afraid, Sir, after five years there may be instances of suicidal deaths of students just as our agriculturists are going for suicides. I am saying this because we are burdening them with loans. We are also in favour of giving loans to the students, but it is not known how much they are going to earn after finishing these professional courses for 4-5 years! The bankers, in the meantime, ask them to pay at least the interest amount and also a small portion of the principal amount. They have to bear the burden of loan alongwith the burden of studies and the burden of whether he is going to get a job or not. This is the condition of young Indians today. No doubt, it is a good and novel idea to give financial assistance when they have to pay even for educating themselves. We remember Karamveer Kamarajar for this particular purpose, who made education free at the school level. He also gave free noon-meal scheme, free clothes, books and everything. That is why we had had a very big President Dr. A.P.J. Abdul Kalam who studied in Government School at Rameswaram, a small backward district. Therefore, that was the thing which had happened. But we are now thinking in terms of commercialisation in everything. People have to professionalise themselves by way of getting proper education; that is why, we are implementing this scheme, but the scheme should not prove to be a burden for the students. When they get proper jobs, then, from their salaries it should be deducted, and not at the stage when they are pursuing their studies. Immediately, banks should not send a notice asking for payment of interest and also the principal amount. Their families will be completely burdened. Sir, in the meantime, I would like to quote our Arjun Sengupta's latest article and also his report which clearly shows that 836 million poor vulnerable aam aadmis, that is, about 83 crores, are living in India, and 210 million middle-class people are coming out of poverty and they are struggling to come up in their life.

(Contd. by PB/2G)


DR. E.M. SUDARSANA NATCHIAPPAN (CONTD.): Sir, around 44 million people belong to the higher income group. These 44 million people who belong to the higher income group, who are millionaires, are using this banking system for all purposes. During my last term of the Lok Sabha, I raised this question in the Standing Committee on Finance. Sir, when we look at the NPAs, we find that these NPAs are basically from the people who have borrowed Rs. one crore and above. They are the topmost borrowers and they are the creators of these Non-Performing Assets. Now, after the implementation of the Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, their properties may be seized. At the same time, the bankers are also happy because now they can carry over this debt to the other side and make their bank a profit-making bank. But really it is not the case. I would like to know whether we have made any effort to seize the properties of the people of this higher income group by enforcing this Act properly and whether these people who are really creating these NPAs are paying back the money. I think that can be answered only by the banking system. Sir, at the same time, we are pressurising the ordinary people who have borrowed only an amount of Rs. 10,000 and after adding all the interest and the compound interest, this loan amount has become Rs. 1 lakh. There is no wiping out. There is no one-time settlement for these people. One time settlement is only for those borrowers who have borrowed more than Rs. one crore. But the ordinary people are not getting the benefit of one-time settlement and they are forced to bear the curse of being called a 'debtor' throughout their life. Therefore, Sir, I feel that it is high time the Government thought about these matters. Sir, I feel the credit system regarding the retail credit is also to be taken into consideration. Sir, when we see the statistics, we find that India has been able to cover only about ten per cent in the retail credit system. But China with so much of population could cover more than fourteen percent. The USA and the European countries, the developed countries, are focussing on a target of fifteen per cent in the retail banking. Therefore, the retail banking is the best banking system wherein the rate of interest should be reduced and, at the same time, the ordinary persons who are ready to come forward for trading or for any other commercial enterprises, should be benefited by this.

Sir, regarding the spreading of the credit system, let us compare the system from 1972. In 1972, only about Rs. 500 crores credit was spread over to the 14 lakh account holders. In 1995, it had gone up to Rs. 25,000 crores, covering 240 lakh accounts. Now, Sir, we are very proud to have Rs. 1,72,684 crores credit, catering about 290 lakh account holders. Sir, I suggest the hon. Minister that the banks should lay more emphasis on micro credit. They are proudly saying that they are catering the self-help group to the level of 26 lakhs. But they are using it only as a consumer loan. They are not earning through that credit system. They are curtailing their own expenditure for paying the interest. But, at the same time, we have to promote them by more skill development of this group, self-help group, so that the ladies can earn some income. Out of that, they should pay back the interest and also the principal.

Sir, finally, I would like to conclude by saying that barely two years back, the housing loan in India was very famous. People were praising our Government for making the housing loan available at a minimum interest rate of just nine per cent. But now what happens? The price of cement bags nowadays is skyrocketing, but no effort is made by the Finance Ministry or the Commerce Ministry to control the rising prices of cement. The ordinary middle class people had started thinking of buying their own house. There was a feeling that when the bird and animals could have a shelter, why can't we, the middle class people, have a shelter? So, they also started buying the house by paying the Equal Monthly Instalments. But by raising the interest rate from 9 per cent to 14-18 per cent, what has happened? With their fixed monthly income, how are they going to pay the EMIs? So, now the ordinary middle class people have started cursing us. They are saying that on the one hand, the Government propagated them to go in for housing loan, and on the other hand, they raised the interest rate. The ordinary people were happy that they are holding the house. But you are now saying 'since the real estate people have borrowed huge money from the banks, therefore, we are curtailing it'. Why? (Contd. by 2h/SKC)


DR. E.M. SUDARSANA NATCHIAPPAN (CONTD.): You must curtail the real estate people and not the middle class people. Middle income people must also get the benefit of low interest rates.

Sir, even the first report of the Narasimhan Committee of 1991 and later in 1998 also, they had recommended flexible interest rates. That flexibility should be extended to the ordinary middle income group people; they should be benefited by that. This is the time when people can afford to have houses of their own. The real estate sector has grown; but, at the same time, the middle class people should have, at least, one flat of their own in their whole life.

Sir, I conclude my speech by requesting the hon. Minister to come out with more programmes for ordinary people so that the services available in the banking sector reach the ordinary people and the aam admi is benefited. This could easily be achieved in this electronic age where things could be done within a short period. (Ends)



SECRETARY-GENERAL: Sir, I have to report to the House the following message received from the Lok Sabha signed by the Secretary-General of the Lok Sabha :-

"In accordance with the provisions of Rule 96 of the Rules of Procedure and Conduct of Business in Lok Sabha, I am directed to enclose the Appropriation (No. 3) Bill, 2007, as passed by Lok Sabha at its sitting held on the 22nd August, 2007.


The Speaker has certified that this Bill is a Money Bill within the meaning of Article 110 of the Constitution.

Sir, I lay a copy of the Bill on the Table. (Ends)


SHRI TAPAN KUMAR SEN (WEST BENGAL): Sir, while participating in the deliberations on this Bill, I would like to seek certain clarifications. I would also like to convey some of the concerns about the functioning.

At the outset, I would like to understand as to what was the urgency of getting the whole process done through the Ordinance route and making it virtually a fate accompli asIf the contents of the Bill were so important that it needed to be hurried through an Ordinance. I have also gone through the deliberations on the Bill that have already taken place in the other House. I would not like to make a reference to that but still, the argument that by 30th June the whole thing has to be completed, is not clear. It is not acceptable and it does not seem logical so far as this issue is concerned. BASEL norms have also been referred to while justifying this move. I don't think the BASEL authorities had issued a any circular stating that by this date you have to certify otherwise you would lose. And I don't think the Government of India had that sort of an obligation or requirement to meet while bringing up this Bill. Another Bill on the State Bank is pending. That Bill is much bigger, covering many more issues relating to the State Bank and the financial sector of the economy. That Bill is under consideration of the Standing Committee.

Earlier, while placing the State Bank of India (Subsidiary Banks) Act, Government had stated that they would be bringing up a comprehensive Bill on that. That Bill was debated upon and passed with the assurance that another comprehensive Bill was on its way. Even in that Bill this issue did not find a place, but it was made a separate item and placed in a truncated manner in the House for its passage and that too, making it again a kind of fate accompli, through an Ordinance. I could not understand the urgency in resorting to the Ordinance route as far as this issue is concerned. If the Ordinance route is resorted through without there being an urgency in the matter, I don't think that is a very healthy practice so far as our democracy is concerned. Where there is a real national emergency kind of thing, definitely an Ordinance would be required and our Constitution lays down that provision; but that provision should not be abused. This is an abuse of that sort of an emergency provision laid down in the Constitution. I think this needs to be explained. And this raises a number of doubts. Apparently, this looks harmless because the shares at the disposal of the RBI, SBI's share, is now transferred to the Government, to the Finance Ministry.

(Contd. By 2j)


SHRI TAPAN KUMAR SEN (CONTD.): Apparently, it looks very harmless but it raises so many doubts in the minds given the general policy approach of the Government in the matter of ownership of major financial institutions in the country. At present, 59.73 per cent shares, I think, are being transferred. So far as the equity profile of the State Bank of India is concerned, about 13 per cent is with the FIIs, around 20.19 per cent is in purely private hands and 7.88 per cent in GDR and the rest with financial institutions. See the profile and, at the same time, go through the recent Press Conference by the Chairman of the SBI on 12th May where he mentioned the plan of raising resources of around Rs.15000 crores through debt and equity route. Equity route is also being referred to. If we read the statement of SBI Chairman in the Press Conference, it mentions about the plan of raising funds from the market through debt and equity route. Is it not opening a way or enabling provision for the Government after getting the share to further going in for divestment and further dilute the equity, at least, to the tune permissible? I am not sure, but this apprehension is generated by this unseemly haste on a subject which does not warrant that kind of haste. So this thing must be made clear and I hope the hon. Minister will assure us that no further dilution will take place. That is a crucial point. The second point is regarding functional autonomy. Earlier it was with RBI. A normal argument is being placed that RBI is a regulator and it cannot be an owner. That may be one kind of perception. Some RBI related bill is pending and it is under consideration with the Standing Committee. There also it is being argued that RBI is a regulator and it cannot be a service provider. For all this theory, an international standard or an international practice is being cited. I am afraid that all those citings are not factual in all the cases. There are cases in many advanced countries where RBI as a service regulator also provide service. In this Bill, that is not the main contention. But sometimes these theories, citing those international standards, always do not hold good. At the same time, all international standards need not be followed in toto. There is a room for improvisation depending upon the country-specific situation which is lying at the ground level. In this respect, the basic question which comes is the question of functional autonomy when the direct ownership is transferred to Government. On functional autonomy, there are many theories again. So far as financial sector's autonomy in our country is concerned, I am also not a subscriber of a perception that there should be 'let free' approach -- they can do anything they like -- because the financial sector affects the whole country's economy. So, there must be regulation and there must be certain guidance. There must be policy orientation and policy-related intervention by the political system and that is the country's democratic governance on the financial sector. I am not for unregulated autonomy. But I say functional autonomy is important for the efficiency of an institution and to ensure return for the entire economy as a whole. The Government intervention is important in the policy matter and it has much role to play for the rural poor and for the small-scale industries.

(Cotnd. By 2k/KSK


SHRI TAPAN KUMAR SEN (CONTD): But, in reality, so far as our grass-root level experience is concerned, in most of the cases, the political interventions in banks, or, for that matter public sector companies' functioning, does not lead to put that company on the policy track of the governance, and had that been so, so long, where the banks faltered in the matter of directed lending, the lending to the rural sector, the lending to the small-sector sector, everywhere there is a serious leakage in the target despite all the political interventions. So, I think sometimes, political intervention goes against the very policy direction, which is a declared policy, sometimes in this House of Parliament. That creates an aberration in the whole system and I think, for real efficient functioning and ensuring best return and, a true sense of functional autonomy, and, of course, at the same time, a close watch is required so that the policy is put to effect and properly implemented at the ground level by a functional autonomous management. Both these aspects should be seriously looked into. This arrangement, I am afraid, may create that kind of a possibility. So long, it was with RBI and it is now with the Ministry. There may be this problem of more interference and I again request the hon. Minister to assure this House on that count also. (Time-bell). Sir, I require a little more time.

Then, I would like to draw your attention to the other aspect of the State Bank of India functioning. I would not like to go into other details. The State Bank is the most important Bank. This is the first Bank which was under the Government control initially. It was the first nationalised bank. It is one of the very big banks having 9,000-odd branches and, I think, lakhs of customers. How does it function? If we see, in its own functional parameters, no doubt, it has improved a lot during the last three or four years in the matter of NPA. In the matter of all other functional aspects, it has improved a lot. But, there are certain areas of concern also. The return on asset is declining. Number two, a serious situation is being created by increasing outsourcing. It has now become a point of hot debate in the entire financial sector, not only in the State Bank of India, but the State Bank of India is also victim of that kind of an outsourcing. What is being outsourced? Apart from being a Member of Parliament, I am basically a trade-unionist. I have had the occasion of interaction with the concerned people. I have seen that basically, outsourcing is done where in-house capability is not available. There is no dispute on outsourcing there. But, in reality, in the name of outsourcing, they are going beyond the area for which outsourcing was agreed upon. It was agreed upon by the Bank's employees and officers together. It is crossing boundaries to an alarming level and which has got reflected in erosion of manpower. I think, from 2,30,000 in 2000, it has come down to 1,85,000. A reduction of more than 45,000 employees and officers together has been there. How much of it is for outsourcing and how much of it is for technological upgradation? It needs to be separated. A part of it may be because of the technological upgradation in the work processes. That economises the need for manpower. But, how much of it has been due to outsourcing and how much of those outsourced jobs were earlier being done by the employees departmentally and what is the economy?

MR. DEPUTY CHAIRMAN: You have to conclude now.

SHRI TAPAN KUMAR SEN: I am just concluding. This is becoming a very serious issue that needs close attention. I think that must be addressed on a war footing because it has become a serious bone of contention not only in respect of the State Bank of India but entire bank employees fraternity, workers, officers vis-a-vis the Government and the management. This led to declaring of a three-day strike, and by the kind intervention of the hon. Finance Minister, that could be averted. Some MoU was reached where it was agreed that this area of outsourcing would be mutually discussed and sorted out to the satisfaction of all concerned. (continued by 2l - gsp)


SHRI TAPAN KUMAR SEN (CONTD.): But by the end of the day, as on date, the Indian Banks Association has gone back from that understanding and creating a situation of another strike. The entire bank fraternity, the workers and the officers have already decided to go in for strike on 12th September because the Government is refusing to negotiate the issue with the IBA, to which they are agreement-bound by the MoU signed by them dated 21st March, 2007. Before the situation worsens, I request you to have a serious look into these aspects and intervene so that these things can be avoided. With this, I demand that my concerns and clarifications should be addressed by the hon. Minister in his reply. (Ends)

MR. DEPUTY CHAIRMAN: Now, Shri C. Ramachandraiah. You can take double the time allotted to your party.

SHRI C. RAMACHANDRAIAH (ANDHRA PRADESH): Mr. Deputy Chairman, Sir, I thank you for giving me the opportunity to speak on this Bill. Sir, I stand to support this Bill. It is only ratification. Already action has been initiated and it has been brought to this august House for ratification. Sir, in the newspaper, I was reading the Finance Minister's statement, which says "Already I have made a provision of Rs. 40,000 crores in the Budget. I have spent only Rs. 35,300 crores which has been paid to the RBI and I paid it on June 29th. I promised to complete the transaction by June 30th; I got it in the first week of July. So, I saved interest."

I didn't understand the line of demarcation between the RBI and the Government. In fact, the Minister needs to explain as to what exactly is the line of demarcation between the Government and the RBI. Whatever surplus is there with the RBI, it seems, it automatically belongs to the Government of India. That is what I can infer. Because the surplus has been transferred to the Government of India, where does the question of spending or saving the interest lies, I don't understand as a common man? RBI's money is your own money and the money with you is your own money. The RBI's money is transferred to you. So, where is the question of saving the interest? So, naturally, there need not be much doubt because it is a transaction between one arm of the Government and the Government itself. Sir, the shares have been valued as per the SEBI guidelines and the transaction was very smooth. I have got my own doubt. What made the Minister to go for an Ordinance and come to the House for ratification? And, as my colleague said, there was no time stipulation by the Basel Norms that it has to be done before June 30th or the first week of July. There is no stipulation. There stipulations are that you have to maintain the capital adequacy and, I think, this particular thing is in pursuance of the recommendations made by the Narasimhan Committee that a regulator cannot be an owner. Because RBI happens to be a regulator, RBI should not own it. Again, I say that there is no difference between the RBI and the Government, which itself is the biggest regulator in this country. I don't know what autonomy is being enjoyed by these so-called autonomous institutions. The Government itself is the biggest regulator. That being the case, even the Government also should not own this equity. But, however, as the Finance Minister said in the Budget speech, the transaction has been completed. We have got our own apprehensions about autonomy. I have been observing the performance of the banks for the past two decades. (Contd. by sk-1m)


SHRI C. RAMACHANDRAIAH (CONTD.): The regulator is very effective. Very good control is being extended on the banking system. Though the stipulations to the various sectors of allocations have not been achieved, overall, the people's money, the Government's money is safe. And, as far as the RBI is concerned, I should congratulate that they have been ensuring this since long time. But, Sir, I have got one doubt in my mind and that is regarding autonomy. The Finance Minister has umpteen times assured the House that he will maintain autonomy. Sir, I read in a newspaper that the Chairman of a bank wrote to the Secretary, Banking, regarding the so-called Independent Directors of the bank, nominated by the Government. The role they have played is mainly instrumental in destroying the bank. This is, in one way, eroding the autonomy of the institutions. I read it in a newspaper. I don't want to mention the name of the bank Chairman. A very upright officer from my State, he has written it. I attach credibility to Mr. R.P. Singh. He has written that five Directors, nominated by the Government, were responsible for eroding the autonomy, for malfunctioning of the bank. They have been pressurising the Chairman. I have been seeing the performance of the so-called independent nominated Directors. Everybody has got his own agenda, except a few. I had the opportunity of interacting with the bank's Chairman. Under the guise of experts, agriculture experts or commerce experts, you have been appointing all political people to provide them employment. That is not good. You should maintain autonomy. It is people's money that is there and it has to be protected.

My second point, Sir, is with regard to rate of interest. This is a very big issue which has been daunting the minds of the planners of the country. Sir, as far as my knowledge goes, there are three factors which decide the rate of interest, namely, cost of raising funds, your NPAs and your transaction cost. Generally, you don't have control over cost of raising funds. That depends on the market; at what rate you can buy and at what rate it is available. So far as NPAs are concerned, thanks to the FRBM Act and you want to maintain the deficit. Accordingly, the banks were forced to collect the amount. But my question is, in the process of reducing or achieving the targets or reducing the NPAs, how much money has been written off in the books to clean your balance sheet? I am proud to say, with all my observation, that farmers in this country are very honest. The Self-Help Groups that have been borrowing are very honest, whereas I have observed dishonesty in the big industrial groups. In the process of cleaning the balance sheet, in the process of reducing NPAs, what is the amount that has been totally written off without collecting the amount? The NPAs can be reduced in many ways. You can write off the amount; you can collect the amount; you can make a provision. So, this country has a right to know how much amount has to be written off in the books without collecting the amount from big industrial groups. Sir, there is one more problem that is cropping up. As an eminent Chartered Accountant, you will appreciate this thing. Now, asset reconstruction company has been floated and the NPAs are being sold to this company. What are the yardsticks that have to be evaluated for transferring them? Who has to fix the purchase consideration? I am a big promoter. I have promoted the company. I make the unit sick and it will be transferred to the asset reconstruction company at a price which I will decide and my benami by the company from the asset reconstruction company. That is happening, Sir. That is happening. It is a very recent phenomenon that has been promoted in our country. Kindly take care of it so that such transactions do not take place.

(Contd. by 2n)



SHRI C. RAMACHANDRAIAH (CONTD.): Sir, there is one more point that I want to raise. It is CRR. Whenever the inflation rate goes up, the blame lies with the RBI. Immediately, they will indulge in the knee-jerk reaction -- increase the CRR. The problem may be with the short supply of goods. Instead of addressing the short supply of goods, very frequently you have been resorting to increasing the CRR. And in the process of squeezing the funds from the market, liquidity, you are taking over the money to the RBI and the RBI is not paying the interest. I was told that the RBI was not paying the interest to banks. Even .5 per cent of the increase of the CRR is squeezing around Rs.15,000 crore from banks. What is the alternative the bankers have got? The lendable resources at the bank are limited, are reduced, so they will raise the rate of interest. Every bank has to show in its balance sheet good profits as they have to compete with other banks. They have to fix the targets as far as deposits are concerned, as far as advances are concerned, and as far as operating profits are concerned. So, they have Hobson's choice, except to increase the rate of interest. So the Government, on the pretext of containing the inflation by increasing the CRR, is also responsible for raising the rate of interest. (Time-bell) Sir, I would just conclude.

Sir, recently, in Hyderabad, one person was beaten to death by the agency people with whom this collection work was entrusted. I wrote a letter to the Minister. The Minister gave the reply. They do not know the reason of death. But they can vouchsafe that their people did not beat him. I can authenticate the paper also. It is true that the bank staff had beaten him or the private people who were entrusted with the collection of the amount. This is not the first case. There are five. They take the services of goondas to collect this amount. You have been equipped with very, very wide powers. You are now endowed with the SARFAESI Act. Why don't you collect the amount? Why do you entrust this work to goondas or rowdies? It came widely in the newspapers. We have interviewed them. I spoke to two people. They were all small people who borrowed the amount of Rs.5,000 or Rs.10,000. Some were artisans and some were street vendors who were beaten. So, I request you to kindly instruct the banks not to engage the services of rowdies to collect the amount.

My last question is this.


SHRI C. RAMACHANDRAIAH: There are so many banks.

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SHRI C. RAMACHANDRAIAH: Sir, my last suggestion to the Government is this. You want to have inclusive growth. It is very good. That is the slogan that has been given for the 11th Plan. Why don't you have the financial inclusion also? Day by day, the rural banks are coming down. They have been considerably reduced for the past 15 years, though the population is on the increase. When we speak to the Chairmen of the banks, they say that the RBI is not permitting. I do not know what are the guidelines that are being followed by the RBI.

(Contd. by VKK/2O)