PREVIOUS HOUR

-YSR/VKK/2O/3.00

SHRI C. RAMACHANDRAIAH (CONTD.): But, the rural banks have to be opened. You are in the process of restructuring the Grameen Banks. So, kindly ensure that bank facilities and credit reach the common man in remote areas. Only then whatever you have contemplated in the Eleventh Plan, can be achieved. Thank you. (Ends)

SHRI EKANATH K. THAKUR (MAHARASHTRA): Sir, thank you for this opportunity. Sir, I stand here to support the Bill. Sir, the RBI was created under the Reserve Bank of India Act, 1934 in the year 1935, initially as a joint stock company and was later on nationalised. Earlier to that, three major private banks -- Bank of Bombay, Bank of Bengal and Bank of Madras -- were amalgamated and the Imperial Bank of India was created. From 1950 to 1952, the Rural Credit Survey Committee surveyed the entire rural sector and amongst many recommendations, recommended that the Government of India should create a State-partnered, a State-sponsored and a State-controlled bank. This was the period of the First Five Year Plan and the Government did not have enough money to start the Plan. In fact, the available money when it was made known to Dr. Dhananjayrao Gadgil, he told Pandit Jawahar Lal Nehru that I would not call it a five-year plan, I would call it a five-year scheme. So, the Government of India was in a quandary. The Rural Credit Survey Committee wanted that the rule of moneylenders should go. Pandit Jawahar Lal Nehru also wanted that the menace of moneylenders should be controlled and the usurious ways in which they were charging interest and holding the whole population in financial bondage for ever, will end. India's freedom was not seen only as a political freedom. India's freedom was also seen by our leaders as economic freedom and they wanted to rescue the rural populace from the clutches of moneylenders.

Sir, as I stand to speak on this Bill, only yesterday, I read a report of the Reserve Bank of India which goes contrary to the vision of Pandit Jawahar Lal Nehru. It goes contrary to the vision of all the policy makers of this Government, up to Shri Rajiv Gandhi and our own Government of Shri Vajpayeeji. Sir, we always wanted moneylenders to go, but, a day before yesterday, the Reserve Bank of India gave a report where they do not want the moneylenders to go, but, they say moneylenders are here to stay; they should be mainstreamed; they should be institutionalised; and, the Moneylenders Act should be amended by the State Governments to institutionalise the moneylenders and institutional credit should be available to moneylenders. So, how far has our Government and the RBI moved? Our RBI has moved from annihilation of moneylenders to institutionalisation of moneylenders and that is when farmers are committing suicides. They are not getting adequate credit. The RBI could not control 2000-odd Urban Cooperative Banks; the Government could not control the cooperative credit societies. And now, they want to let loose several lakhs of moneylenders in the rural areas where farmers and workers live, thereby creating a free financial space for them. Sir, this very Bank, the State Bank of India, was created to annihilate the moneylenders. This was the recommendation of the Rural Credit Survey Committee. And as I stand today, I have this report of RBI where it wants to mainstream and institutionalise the moneylenders. So, what has happened to the policy of the Congress Government is something which the Congress Government has to see. Sir, the next major step after 1955 when the State Bank of India was created by converting the Imperial Bank of India into the State Bank of India was, of course, nationalisation.

(Contd. by 2P)

RSS/2P/3.05

SHRI K. EKANATH THAKUR (CONTD.): Nobody has served the banking industry more than late Shrimati Indira Gandhi. She nationalised the banks on 19th July 1969. She again nationalised 6 more banks in April 1980. She created a whole series of regional rural banks, 156 of them, and she appointed a Committee to go into the needs of regional rural banks, and it was established even by the Government which came after her that what she created was a great thing. Even today, we bow in this spirit to her because if today, people of India has some facility of banking, it is because of the vision of one person, that is, late Shrimati Indira Gandhi, who took away that class banking to mass banking, and our people could enter the portals of the bank. I am from the Opposition. But, whatever is good, is good, and please see the vision of late Shrimati Indira Gandhi in creating regional rural banks; please see the mission of this Government of mainstreaming and institutionalising money lenders because they just cannot happen to deal with that problem. Sir, a former Governor, a very esteem, a very respected Governor of the Reserve Bank of India, he is sitting here as the hon. Member of this House, in his presence, I would like to tell you that everybody is talking of inclusive banking now. The Reserve Bank of India has to explain when it was the vision of the Rural Credit Survey Committee, what was that vision? That vision was inclusive banking. To that, the outreach of banking, whether it is demography or whether it is geography, had to increase, and that was a mandate then also. But now, after 60 years of Independence, they are talking of inclusive banking. So, what is the real state of banking today in the country? If you see the number of accounts that are there in the banking industry, the Reserve Bank of India report which was released about a year ago. shows that there are nearly 33 crore accounts. Generally, a middle class person has more than one accounts, a savings bank account, a recurring account. A businessman has a current account and a savings bank account or a fixed deposit account. So, if you see 33 crore accounts, only about 20 crores people have got access to banking in a county where the population is 107 crores. That means, even after 60 years of Independence, even after a proper direction given by late Shrimati Indira Gandhi, this could not be accomplished, and if we are amending the State Bank of India Act wholesale, and now passing on the ownership of the State Bank of India from the Reserve Bank of India to the State Bank of India, then we have to go into these issues. Sir, that defining moment in the life of the State Bank of India, and I will tell you because I was personally a witness to this, was the year 1976. The State Bank of India was doing 28 per cent of nation's banking business. Today, it is doing 15 to 16 per cent of nation's banking business. It is easy to say that the other private banks have come up, and therefore, they have lost a share. It does not happen that way. It lost its vigour, it lost its vitality, it lost its culture, and more importantly, it lost the moral of the people, and that is one thing which was done again in 1976. What was it? This Parliament amended the State Bank of India Act. I can understand amendment of the State Bank of India Act today to pass on the ownership of the Reserve Bank of India to the Government of India because probably, the international banks see the regulators on the banks. Then those banks enjoy some kind of regulatory arbitrage. When I was the Director of the State Bank of India, along with me, the Governor Reddy and the former Governor, I.G.Patel used to sit as a Central Director of the State Bank of India. Therefore, if the Governor sits there, naturally the bank enjoys a regulatory arbitrage. They cannot punish as well as they should and discipline them. That may be the idea. But, Sir, in 1976, why was the State Bank of India Act amended? It was amended to remove the Chairman of the State Bank of India.

(contd. by 2q)

MKS/AKA/3.10/2Q

SHRI EKANATH K. THAKUR (CONTD.): The then Chairman, Shri R.K Talwar, the doyen among the bankers, who is being worshipped even today by the entire State Bank of India, as its glorious Chairman, worked from 1968-1976. And Sir, from there onwards, what has happened in the banking sector, not only in the State Bank of India, but in the entire banking industry is that * has become the order of the day. Talwar showed the courage to say, "I will not carry out instructions of the Government of India in the matter of Laghu Udyog." And he was victimised in broad-day light by getting the Parliament to amend the Act. You demolished one man; you thought so; the Parliament thought so. I

-------------------------------------------------------

* Expunged as ordered by the Chair.

am addressing the Minister that they demolished one man. But they demolished a whole culture. And thereafter, * is the order of the day. The chairmen of various banks, when they come to Delhi, sing and dance to the order of the Ministers. They do not stand by their convictions because they saw one man being crucified by amending the Act. To this state we went!

Sir, in the banks, thereafter, the chairmen of the... (Time Bell) Sir, I have to speak for two, three minutes.

MR. DEPUTY CHAIRMAN: Take two, three minutes, but come to the point.

SHRI EKANATH K. THAKUR: Sir, here they come and they become * When they go back to Mumbai, they become even maharajas and there is unipersonal system in the banks. Sir, the bank chairmen become maharajas and the situation in the State Bank is such that, if the Chairperson insists,.... ...(Interruptions)...

MR. DEPUTY CHAIRMAN: Mr. Ekanath Thakur, do not use the word

* . It is unparliamentary. I am reminding you.

SHRI EKANATH K. THAKUR: Sir, if facts are unparliamentary, then you may remove my words.

MR. DEPUTY CHAIRMAN: What can we do? See, we have to follow certain rules.

SHRI EKANATH K. THAKUR: * is a proper word in English. ...(Interruptions)... And I am, Sir, now telling you what do the chairmen do.

MR. DEPUTY CHAIRMAN: In what context you use is important.

SHRI EKANATH K. THAKUR: What do the chairmen do? He is Chairman. ...(Interruptions)... They come here and dance, and sing and

-------------------------------------------------------

* Expunged as ordered by the Chair.

sing and dance, and where they go, they become maharajas. And what do they do? When Mr. Janardhana Poojary was there, and when he started 'loan melas, every chairman started 'loan melas. All of them were congregated; all of them were publishing their photographs. And now, the Narsimhan Committee says, "All directed credit is tainted." So, every Chairman says, "Directed credit is tainted. There should be no directed lending. Sir, if there is no directed lending, how can the priority sector survive? Because these people would like to give loans to only industrialists. Before 1969, they were doing the same thing. So, directed lending has a place, and, Sir, if you introduce it now, the small-scale sector has become very responsible. It has contributed. It is because of the vision of a man like Talwar, who started lending to agriculture in SBI, who started lending to SSI in SBI, and you find that the priority sectors are trying to do their best in the situation that is given.

Sir, while speaking on this Bill, I recall victimisation of R.K. Talwar and appeal to the hon. Minister, through you, to name the national issue of bank management after Mr. R.K. Talwar and do a recompense to the entire system so that, at least, you would have awarded a great man.

Sir, now, the State Bank of India is holding Parivartan melas, thinking that there is something wrong with the psychology of the workers. Sir, I am also a trade unionist like my friends sitting here. I was President of 80,000 officers of the State Bank of India. I was also President of 200,000 officers of the banking industry, and let me tell you that State Bank has got the finest officers who have come through the all India competition. State Banks' clerical staff is the finest. It has come to the IBPS state. There is nothing wrong with the officers and staff of the State Bank of India. Everything is rotten at the top because there is no discipline at the top. It is the whole institution which is degenerating, and from 18 per cent, now we have come to about 15 per cent. Sir, one more thing, I have to say. State Bank, as you know, Sir, is a revolution which has taken place in India. After nationalisation, from our 9,000 branches, we have gone to 66,000 branches, and in this movement, those who participated were the State bankers because they have a different motto. Throughout India, there are more than 50,000 branches, but they also grew at a fast rate. Sir, in the seventies, every year, 12,000 employees were recruited in the bank.

(Contd. by TMV/2r)

-MKS-TMV-NB/2R/3.15

SHRI EKANATH K. THAKUR (CONTD.): That 12,000 recruitment was larger than the recruitment for the entire Australian banks abroad for the whole Australian banking. Such was the gargantuan development. In that my colleagues participated. The 55,000 pensioners of the State Bank of India are being ill-treated by the Government and, particularly, by Shri Chidambaram, who is absent here. But let me go on record by saying this that their service colleagues went on strike for 6 days and they were given an assurance. But their own pension fund is being denied to them and their demands are not being met. They have been hoodwinked after the strike.

MR. DEPUTY CHAIRMAN: Kindly conclude.

SHRI EKANATH K. THAKUR: I will take only one minute. Now, when this control is coming to the Government of India on the SBI, my prayer is that you should form a panel of important people for nominating the independent Directors. Bank after bank, as I said, the Chairmen have become maharajs. There is one lady Chairman--I should not speak against ladies--of the Central Bank of India who chose to issue charge-sheets to hundreds of people at a time. That lady has spread terror and that lady has the support of the Government of India. They think that they are not accountable to anyone. If you go to the Central Bank of India, you will find everybody is shaken, everybody is frightened. Of course, there may be performance issues and such other things. But issuing charge-sheets to hundreds and thousands is not industrial relations. This is happening because everybody is terrified of her power. Second thing is that the nominee on the Board of Directors, say, some Assistant Secretaries of the Congress Party or some Deputy Secretaries go and sit on the Board of Directors of a bank which deals with thousands and crores of rupees, without any understanding of banking. That is ruining the entire system. I would request the hon. Minister to create a proper mechanism to manage our national assets and our national banks. These are our national assets. These are our national institutions for welfare, business and commercial purposes and we must have the right talent at the helm....

MR. DEPUTY CHAIRMAN: Please conclude.

SHRI EKANATH K. THAKUR: ... and, therefore, for the nomination of Directors, the Government of India should take maximum care by creating a proper machinery so that the track record, the biodata, the background and the entire living of the people, who are nominated, are examined, and they are appointed sheerly for what they are able to contribute and for their talent. This must happen. Otherwise, as I see now--I don't want to mention names--Mr. Minister, I will tell you through the Deputy Chairman, there are lumpen elements who are coming on the Board of Directors of national banks. Take my words, lumpen elements are appointed as Directors. Thank you.

(Ends)

SHRI D. RAJA (TAMIL NADU): Thank you, Sir. At the outset, I would like to say that my party supports this Bill. Having said this, I must point out that we can't appreciate the Government resorting to the Ordinance route. As a matter of principle, we are opposed to Ordinances. The Government should have come before the Parliament on all these crucial issues through a Bill earlier. Sir, the banking has a long history. I don't intend to go into the history of our banking system or banks. Banks are really constituting the central nerve system of our economy. While analysing the emergence of finance capital, Lenin once said, "Banks constitute the central nerve system of modern economy". That shows the importance of banks and how we understand the functions of the banks. I am one of those who strongly believe that our public sector is the strength of our economy. Public sector industries, public sector banks and public sector insurance companies are the real strength of our economy. (Contd. By VK/2S)

-TMV/VK/2S/3.20

SHRI D. RAJA (CONTD): Now, in the name of finance sector liberalisation, the Government should not liquidate its equity and should not make the public sector banks vulnerable, for that matter any public sector undertaking vulnerable because there is a talk of banking reforms and we are engaging with the Government on the question of banking reforms. But there is no agreement so far. Even on the question of FDI, the entry of FDI into the banking sector, there is a problem. We are talking to the Government. We are making our point clear to the Government. Now, when we talk of banks, I agree with my previous speakers that banks have got certain social objectives, certain national objectives. If banks have to fulfil these objectives, they must have proper policy perception. They have to adopt certain proper practices. Here I come to the question of credit policy. I really think the banks will have to drastically change their credit policy. I also agree with some of my previous speakers that when people take loans, it is not the ordinary people or farmers or small and medium level industry owners or entrepreneurs who cheat the banks; it is the corporate houses, it is the big business houses which cheat the banks. It is a conscious default; it is a wilful default. That is where the question of NPAs has to be addressed. Now, some of my previous speakers have questioned as to how the NPAs are being written off and what is the amount of NPAs collected by the banks. I do not know what is the Government's response because the Government, I find, has become very immune to these NPAs. The Government takes it for granted. The Government thinks that there is no problem of NPAs because it is all connected with big business house, corporate houses. On the one hand, the Prime Minister goes on speaking about chronic capitalism and on the other hand, the Government forgets to talk about NPAs, wilful default. If some ordinary farmer does not pay back the loan on time, all his belongings are confiscated. That is what is happening. I do not know why the Government is not taking stringent measures to recover NPAs. It is very shocking that the Government is trying to legitimise private money lending also. One of my colleagues mentioned that some Experts Committee of the RBI has come out with a report. One of the recommendations of that Committee is to constitute accredited loan providers. Sir, I tried to understand the meaning of accredited loan providers. It means you can have private moneylenders or some agencies who will take money from banks and then lend that money to others. They will fix the rate of interest. They will take money from banks at one rate of interest and lend that money to others at another rate of interest. So, in-between they will make some money. I do not know what is this concept of accredited loan providers. It is nothing but legitimising private money lending and again putting the people under the clutches of moneylenders. Is it the policy of the Government? Is the Government really contemplating to appoint such accredited loan providers, as is being suggested by some Experts Committee? I do not know what is the thinking of the Government in this regard. I must say that the Government will have to change the credit policy. On the one hand, the Government claims that it will double or treble public investments in agriculture, on the other hand, the farmers are finding it difficult to get loans. One of the reasons for suicides by farmers is the problem of indebtedness. (Contd. by RG/2T)

RG/3.25/2T

SHRI D. RAJA (contd.): The farmers get loans, but they are not in a position to repay their loans, and they commit suicides. The Government should really go into the depth of this problem as to why the farmers' distress continues, why the farmers' suicide continues. It is happening because of our wrong policies, wrong credit policies of our bank. Otherwise, farmers could have been protected, and they can be protected even in the given situation. Having said this, I must say that the banks must improve their functioning. The banks must become more people-friendly. And, here comes the question of how the management functions. I know of several instances, as my previous speaker has referred to, -- in fact, I personally took up those issues concerning the Central Bank and the Punjab and Sind Bank -- how the management behaves in an autocratic and whimsical manner, how it goes heavily against the workforce, the employees. I do not want to take the names; but the Minister, who is sitting here, knows; the Cabinet Minister, Shri Chidambaram, knows. All these issues have been brought to their notice, but issues remain unsolved.

About bank's autonomy, we are not fighting with banks on that account. The banks should have autonomy, but it cannot be absolute. Autonomy cannot be an absolute one, or, that the power is in the hands of some Chairman or some Managing Director or somebody else. They should understand the meaning of autonomy in relative terms, and they must understand the meaning in terms of functioning, improvement and performance of the banks. Here, they need the co-operation of employees, and the Employees' Organisations and the management should try and work together. We are talking about the new work culture. We should talk about the new management culture as well. They should also understand that even the employees have their own organisations; they have a right to have legitimate trade unions and their functions. In such a situation, there must be some cordial relationship between management and employees and their organisations. But, in many cases, such harmony is not there, and this leads to some conflict or confrontation. In fact, the Banks' Organisations have called for a countrywide strike on 12th September. That will be a major strike by the bank employees. Unless the Government takes note of this and tries to intervene in the situation, this strike cannot be avoided. This strike is going to take place. It is going to be a major strike, and it will be a clear message to the Government that the employees cannot be cowed down, that they cannot be pressurised by the management, and the Government will have to advise the management or the Indian Bankers' Association as to how to behave with the employees and their organisations. Here I would like to make another point. When we talk of accredited loan providers, there is one more issue relating to deposit collectors. Their problem has been brought to the notice of the Ministers, Shri Chidambaram, and our respected Minister, Shri Bansal. These deposit collectors need some support. They do some odd work, and it helps us. Otherwise, you will have to go in for outsourcing of these services. I feel that this Government must have a very balanced approach to all these problems. These deposit collectors really need the support of the Government. So, when we are discussing this Bill, we will have to comprehensively discuss all these issues.

Sir, I have not dealt with all the aspects of our banking system here or, for that matter, the performance of our banks. I tried to point out only the urgent issues. The Government will have to change the credit policy. It should become more people-oriented one, and the Government should not try to legitimise the private money lending in the name of constituting or institutionalising accredited loan providers, and the Government must see that harmonious relationship is maintained between the management and the employees and their organisations. Also, these deposit collectors really need the support of the Government. (Continued by 2U)

2u/3.30/ks

SHRI D. RAJA (CONTD.): When strike is there, Government will have to intervene and it will have to somehow see to it that talks are held meaningfully. So, the message of the strike must be understood.

Having said this, Sir, my party supports this Bill. But this Ordinance route must be avoided. I do not know why in a democracy like ours, we should resort to the Ordinance route. Parliament is sovereign and our Parliament is a functioning one; we can discuss whatever may be the issue. After all, we try to do it in the best interests of our nation and Parliament is there to decide all these things. So, this Ordinance route must be avoided.

Anyway, my party conveys its support to this Bill. (Ends)

SHRI PAWAN KUMAR BANSAL: Mr. Deputy Chairman, Sir, I thank all the hon. Members, namely, Shri Surendra Lath, Shri S. Natchiappan, Shri Tapan Kumar Sen, Shri C. Ramachandraiah, Shri Eknath K. Thakur and Shri D. Raja, who participated in this debate and extended their support to the Bill.

Sir, a doubt has been raised by some of the hon. Members speaking on this Bill about the need to have brought about this amendment in the State Bank of India Act through the Ordinance and then approaching the Parliament for passing the Bill. Sir, with utmost humility, I would like to remind the hon. Members that it is not something out of the blue that the Government has brought it before the House now; it was during the Budget, Sir, that the hon. Finance Minister had made an upfront announcement about the Government's decision to acquire all the shares of the RBI in the SBI and that, as I said to begin with, when I was introducing the Bill, was based on the recommendations of the Narsimham Committee, as also on the recommendations of the RBI itself, that it would be in the fitness of things that a regulator did not really own the financial institutions over which the regulator exercised its regulatory functions. It was this recommendation of both the Narsimham Committee, as also the Reserve Bank of India, that the Government proceeded in this direction. On that basis, Sir, the announcement was made in the Budget. It was duly reflected in the Appropriation Bill that we would require an amount, approximately Rs.40,000 crores, for the purpose. The Parliament passed the Appropriation Bill on this account. Therefore, the Government needed to accumulate this requisite amount, without disturbing the normal regular borrowing systems, the borrowing programmes that the Government has, and without upsetting the market from which the borrowings have to be made. And as the hon. Members would appreciate, the Government would accumulate this money from its tax revenues, from its non-tax revenues, as also from the market borrowings. Sir, here is the pertinent point that unlike the financial year in other cases, the financial year of the RBI closes on 30th June every year. Therefore, having brought to the notice of the Parliament, having informed the hon. Members that this is what the Government intends doing, we had to have that time which we took, of three months, in mobilising the resources and then buying the shares.

Sir, the Ordinance, as you know, was brought on 26.6.2007 and on 29th June the shares were transferred to the Government strictly in accordance with the guidelines of the SEBI relating to the transfer of shares and against the approximate amount that we had then thought of, that is, Rs.40,000 crores, the actual amount according to the SBI guidelines that had to be paid, was Rs.35,530 crores. (Contd. by 2w/tdb)

TDB/2W/3.35

SHRI PAWAN KUMAR BANSAL (CONTD.): This amount was paid on 29th of June. The financial year of the Reserve Bank closed on 30th June. Thereafter, on 9th August, Sir, in the form of payment of the annual surplus to the Government, the Reserve Bank of India returned almost the whole amount, except keeping Rs.1,222 crores as the book value thereof. And, had there been the delay between the purchase of the shares and the transfer of the annual surplus amount to the Government, the Government would have had to pay much more interest thereon. And that incidentally raises...(Interruptions)... I will answer your point. ...(Interruptions)... I will answer your point.

SHRI C. RAMACHANDRAIAH: Sir, where does that interest go? It goes to the RBI. Ultimately, it will be transferred...(Interruptions)...

SHRI PAWAN KUMAR BANSAL: I will answer your point. ...(Interruptions)... I was exactly going to come to your point first, jumping others, to come to your point. And, Sir, that incidentally raises this important question which Mr. Ramachandraiah has referred to as to what is the distinction, what is the dividing line between the Government of India and the Reserve Bank. Fortunately, for me, Sir, he answered the question himself. When he spoke, he put certain onus on the Reserve Bank of India. He knows it extremely well, perhaps, better than I do, Sir, that the Reserve Bank is the Central Bank as also the regulator. The Government of India does not perform any of these two functions. It is at the end of the year, Sir, when the annual surplus is transferred to the Government of India. But, does that make this question that imperative as to why an Ordinance has been issued? It is very transparent, as I said, Sir. We made that announcement way back at the time of the presentation of the Budget. And the hon. Members passed that Budget; the hon. Members passed the Appropriation Bill. That took the form of the Act, namely, the Appropriation Act. Deriving that power from the Appropriation Act, the further subsequent proceedings have been taken. Now, for a moment, Sir, presume that the Appropriation Act had not been passed, or, we had not introduced it in the Budget, then, obviously, we could not have come today without the Supplementary Demands for Grants to tune, Rs.40,000 crores or Rs.35,000 crores. It was taking that permission from the Parliament then, that we had to take this route to avoid extending that period to one year. Well, if you were to say, 'why could you not wait for another year?' Well, one could say it. But, I have given the reasons how this time was taken earlier when the decision was taken by the Reserve Bank of India. The Reserve Bank sent to the Government as to these are the legislative changes which would be brought about, this would be the approximate amount which would be needed. And, then, subsequently, in the form of specific amendments which were to be introduced, and then the Cabinet taking that decision. As we all know, Sir, law-making is a protracted business. It is not that just today you decide and tomorrow we could have introduced the Bill. The Parliament was not in session when that 30th June period was expiring. And, if we were to wait for this, it would have to go to the next year, Sir, as I said earlier. For the sake of adding emphasis, I made that repetition.

Having said that, Sir, there are certain other very important points raised by the hon. Members which I would try to answer. There is no denying the fact that the banking system in the country has gained strengthen over the period. Our central bank, the Reserve Bank of India, is counted as one of the best central banks in the world today. But, there is a long way that we have to go. There was reference to the need to amalgamate banks, to consolidate banks. We have repeatedly said, Sir, that the Government would welcome that. But, then, we know that we work in a democracy. We are leaving it to the bank managements and to the employees to sort it out amongst themselves. The Government would like not to thrust any decision upon the banks, but to act as a facilitator. We want the banks to gain that strength for which the hon. Members have expressed their sentiments. The Members have emphasised the need to strengthen the banks so that their position is improved. Sir, there was, perhaps, some misapprehension or there was no appreciation of the facts about the performance of the State Bank of India. It is in this context that I would like to say, Sir, that the deposits of the State Bank of India stood at Rs.3,80,000 crores as on 31st March, 2006. (Contd. by 2x-kgg)

kgg/2x/3.40

SHRI PAWAN KUMAR BANSAL (contd.): This has increased to Rs.4,35,000 crores as on 31st March, 2007. Similarly, Sir, the advances of SBI increased from Rs.2,67,000 crores to Rs.3,42,000 crores.

There was a reference to the priority sector. I am sure, the hon. Members are aware of the fact that there are guidelines by the RBI making it imperative upon the banks to lend to the extent of 40 per cent to the priority sector. I would be referring to those figures also. Almost all the banks have come up to that mark. The overall performance is 40 per cent. But, if a bank lags behind, then there is a sort of penal provision, as the hon. Members know, that they have to contribute to NABARD inversely proportional to the shortage that they have in lending loans to the priority sector, in the form of Rural Infrastructure Development Fund.

SHRI C. RAMACHANDRAIAH: You should know that the lapses they have been indulging in -- they are getting interest! So, they are indulging in lazy banking. Is it a punitive action you are imposing on them?

SHRI PAWAN KUMAR BANSAL: It is not that the banks are absolved of the responsibility to lend to the extent of 40 per cent. As I said, the banking system as such has lent over 40 per cent and I will give those figures if the hon. Members wish. Sir, the total outstanding balance under the priority sector advances, as of the last reporting Friday of March, 2007 stood at Rs.5,21,180 crores, which reflects that 40 per cent.

Then, a point was made that it is the weaker sections which suffer and that the weaker sections do not get it. In that context, with a sense of full satisfaction, I would like to place before the House that it is this Government which has added emphasis on the financial inclusion. The Prime Minister has repeatedly emphasised that financial exclusion leads to social exclusion and, therefore, the banks must endeavour to ensure that every household in the country has a no-frills-banking-account. Every household in the country. To begin with, as a pilot project, the decision was that at least one district in every State shall be covered under 100 per cent financial inclusion by having this no-frills-banking-account whereby you do not have to have any balance in the account, yet the bank would open your account. And, having gone through that process, you will be entitled, without any hassles, to a loan to the extent of Rs.25,000 - 50,000, under the Kisan Credit Card, the General Credit Card, as also under the Swa-rozgar Credit Card.

Sir, I am happy to point out and to report to the House that not content with just one district, in almost all the States, the banks have taken it upon themselves to go in this programme, in a big way. The banks have shared this desire and sentiment of the Government and in three States that I know of immediately, one State has already completed 100 per cent financial inclusion. A backward State like Himachal Pradesh has completed 100 per cent financial inclusion in that State. We have to further see that if anybody says he remained untouched by this, that the banking system has bypassed him, we would still ensure that the officials from banks along with the officials of the Government, together, would go and ensure that everybody has that account. Further, the States have also taken it upon themselves and a good number of meetings that I have attended and the State-Level Bankers Committee Meetings that I have attended, in almost all the States wherever I have gone, the bankers have opted voluntarily that up to 31st March, 2008, not a long date......

SHRI EKANATH K. THAKUR: Is the Minister taking a delegation of Parliamentarians to wherever you have said a hundred per cent financial inclusion is there, like Himachal Pradesh? Can you take seven leaders of seven parties?

SHRI PAWAN KUMAR BANSAL: I immediately said that we are asking the people. It would not be very appropriate. I immediately said that along with that day, the target is fixed and it is much beyond that period. (Contd. by kls/2y)

KLS/2Y-3.45

SHRI PAWAN KUMAR BANSAL (CONTD): The target fixed is, Sir, that 50 per cent of the country has to be covered by the year of 2012 and 100 per cent, the entire country, has to be covered by 2017. If the banks if they take it upon themselves that they want to cover the entire State, they said, Sir, if they go on from house to house, if ten people, -- well, I would not say that there would not be a single case of ...(Interruptions)... If for instance, if the bank people as also the officials of the State Government approach a particular house conducting a door to door survey, somebody is not available, somebody is left out, do we then rush to pass that sweeping judgement that whatever I am saying is not correct? Does the hon. Member wish to say that? Sir, what I am saying is that we are committed to that that every person, every household in the country, particularly the rural households, would have been covered by this scheme. And at a very accelerated pace, we would cover that. Sir, when this Government took office...(Interruptions)...

SHRI S.S. AHLUWALIA: Do they need a PAN card?

SHRI PAWAN KUMAR BANSAL: For this they do not need the PAN card.

SHRI S.S. AHLUWALIA: Do they need a residential proof?

SHRI PAWAN KUMAR BANSAL: Residential proof, of course. Actually, the bankers along with the officials are visiting their houses there, and making the accounts there. ...(Interruptions)... Then the difficulty which would come, maybe, somebody you would say that there is a pavement dweller. We see as we have to cross the bridges what do we do about those matters. But what I was pointing out was that we are conscious of this need today after 60 years As Shri Eknath Thakur was referring Over the 60 years tremendous progress has been made. If we were to discuss the figures as to what was the number of accounts 30 years back, what is the number of accounts today, I do not want to go into those details. Sir, I have not gone even into the figures of the last three years. I only cited the example of 2006 and 2007. I have not even referred to the time when we took over and the progress, which has been made till this date. But in this context I would certainly like to cite at least one example. When we took over three years back, it was announced by this Government that in a period of three years, we would double the credit to agriculture, form 86,000 crores we had wanted to take it to double the amount and again we are happy to report here, Sir, that we doubled this in almost two years. In a period of little more than two years, this was doubled. And encouraged by that, encouragement by the commitment that bankers accepted in this direction, everybody joined in this with that missionary zeal. This was done in a little over two years and the figure we have for this year, Sir, that instead of from 86,500 crores three years back, disbursed in 2002, 2003 and 2004, the figures of disbursement of agricultural loan reached 2,05000 crores in the year 2006-07. For this year we fixed it 2,25,000 crores of rupees. I am confident that when I say that we will cross this limit. With that...(Interruptions)... 2,05000 crores was disbursed by the year 2006-07 and this year the target has been fixed for 2,25,000 crores. We will exceed that target. There is also another target, which we have set for ourselves, that is, every year 50 lakh new farmers have to be covered. ...(Interruptions)... 50 lakh new farmers have to be covered...(Interruptions)... That is the account, and 50 lakh new farmers means 50 lakh new accounts. It is always exceeding that during the last three years. There is a very fair proportion...(Interruptions)...

SHRI C. RAMACHANDRIAH: Sir, this is not reflected on the ground level. ...(Interruptions)...

MR. DEPUTY CHAIRMAN: How can he answer that question?...(Interruptions)... In certainty he is saying as a Minister, a responsible Minister and you are saying that it is not reflected on the ground. ...(Interruptions)... What else he can do? ...(Interruptions)...

DR. K. KESHAVA RAO: What is he talking about, if it can be really implemented, nothing like that. But there is no mechanism of which he has talked about. So, without a mechanism, we cannot go from house to house...(Interruptions)...

MR. DEPUTY CHAIRMAN: The Hon. Minister is saying with all responsibility, so you have to hear him. ...(Interruptions)...

SHRI PAWAN KUMAR BANSAL: Sir, I am not saying that these are the targets; I am not only making any wishful statements. I am also giving the figures of the achievements, what has been attained. I do not say that everything is just perfect wherever we go. Maybe, there are certain things which leave much to be desired and that is where I would say, Sir, we would seek your cooperation in that matter. If you point out something to us, for instance, the education loan...(Interruptions)... Let me complete now. ...(Interruptions)...

MR. DEPUTY CHAIRMAN: You can put your question later on.

(Followed by 2Z/NBR)

-KLS/NBR-LT/2Z/3.50.

SHRI ROBERT KHARSHIING: Sir, in Hindustan Times of 14th August, 2007, it has been reported that farmers have committed suicides in Vidarbha and the reason given was...(Interruptions)...

MR. DEPUTY CHAIRMAN: He is not assuring that there would not be any suicide.

SHRI PAWAN KUMAR BANSAL: For instance, education loan...

SHRI S.S. AHLUWALIA: Whatever figure he is quoting looks good. But...

SHRI PAWAN KUMAR BANSAL: Sir, now, there are different opinions on this. Some hon. Members have rightly expect from the Government that the banks should extend education loans at a reasonable rate to those unfortunate people who do not have the fortune of taking birth in a rich family and, therefore, are unable to afford the high cost of higher education. Therefore, they should be extended education loan. There are other hon. Members who say, 'you are burdening those people with loans.' That is what they are saying. But, it is precisely the point I want to make here. We feel that people do not have to be doled out money like charities. To make them responsible and proud citizens of the country, they should be helped. They have to be given opportunities. An environment has to be created in which they have an opportunity to really come up in life. And, in this case...

SHRI S.S. AHLUWALIA: Sir, one thing I want to know.

SHRI PAWAN KUMAR BANSAL: Sir, let me complete my reply.

SHRI S. S. AHLUWALIA: Sir, I raised this issue several times in the House. Although the policies are very clear -- they say that up to Rs. 4 lakhs or Rs. 7 lakhs no collateral guarantee is required -- but whenever a student goes to a bank for education loan, they ask for collateral guarantee! From where will they bring the collateral guarantee? If they have the capacity of giving collateral guarantee, they will not go to bank for loan...(Interruptions)...And, the hon. Finance Minister has assured in this House...(Interruptions)...

SHRI C. RAMACHANDRAIAH: Sir...(Interruptions)...

MR. DEPUTY CHAIRMAN: No, no. You can seek clarifications after the reply...(Interruptions)...I cannot allow...(Interruptions)...Let the Minister complete his reply. Later on, if hon. Members wish to seek clarifications, I will allow...(Interruptions)...How can you seek clarifications even before he completes his reply?..(Interruptions)... , ֯ ה...(־֮֬)..֯ ֤ ה..(־֮֬)..

SHRI PAWAN KUMAR BANSAL: Sir, I seek the indulgence of the House to let me complete my reply...(Interruptions)...

SHRI S.S. AHLUWALIA: Sir...(Interruptions)...

MR. DEPUTY CHAIRMAN: No, no. This is not correct...(Interruptions)... Let him complete...(Interruptions)...

SHRI PAWAN KUMAR BANSAL: I anticipated this point. This point was not raised...(Interruptions)...

MR. DEPUTY CHAIRMAN: The Minister is saying that nobody touched the point on education loan. So, he is voluntarily explaining this ...(Interruptions)...

SHRI PAWAN KUMAR BANSAL: Sir, this point was not raised. I myself raised this point to answer the query of Mr. Ramachandraiah that everything is not reflected on the ground...(Interruptions)...So, in this context, I have taken up this point...(Interruptions)...Sir, in this way I will not be able to reply...(Interruptions)...I will sit down...(Interruptions)...

SHRI S.S. AHLUWALIA: Sir, he should understand the concern of the Members...(Interruptions)...

ֳ֯ן : ֯ ה..(־֮֬)..֤ ..(־֮֬)..

SHRI PAWAN KUMAR BANSAL: Sir, in this way, I will not be able to reply...(Interruptions)...

ֳ֯ן : , ׸ױ֮ ה..(־֮֬)..֯ ך..(־֮֬).. ֤ ה..(־֮֬)..Let him complete his reply. First you listen what he wants to say.

SHRI PAWAN KUMAR BANSAL: Sir, this is very unfair...(Interruptions)...

׾ֵ֕ . : ָ, ֟ ..(־֮֬)..

ֳ֯ן : ֯ ׻֋..(־֮֬)..ߓ ә֮..(־֮֬)..He is replying. I am going to give you an opportunity. After he completes his reply, you can seek clarification.

SHRI PAWAN KUMAR BANSAL: Sir, as I was submitting, I am raising this point on education loan myself to try to answer the point which he has made that, perhaps, what we are doing is not reflected on the ground. Therefore, I said, sometimes there could be occasions for complaints. That is precisely the point why I took up the point on education loan. Let me give the facts first. Let me give that much indulgence. When we took over, the number of students obtained education loans was 3,19,337. By the end of March, 2007, the number of students rose to 9,37,379. There is a three-fold increase. The amount then was Rs. 4,00,550 crores and the amount now by the end of March, 2007, is Rs. 14,00,214 crores.

(CONTD. BY USY "3A")


-NBR-USY/3A/3.55

SHRI PAWAN KUMAR BANSAL (CONTD.): This is the figure that I am giving. Despite this, Sir, Mr. Ahluwalia said, "We keep getting these complaints from the people". But, I reiterate that we will simplify the procedure. We say that even a guardian can also be a co-guarantor, along with the student. It would be enough. If you come across cases...(Interruptions) We have asked the banks, and the banks have taken upon themselves, to go, not for the melas in that sense, and set up their temporary counters in the educational institutions and offer the students opportunities to avail of the loan then and there. (Interruptions)

SHRI S.S. AHLUWALIA: What about orphans? ...(Interruptions)...

SHRI PAWAN KUMAR BANSAL: Sir, the banks are discharging the mandate of Parliament. We must really compliment all the banks that they have taken up this task upon themselves in a big way.

(The Vice-Chairman (PROF. P.J. KURIEN) in the Chair)

But, still, if any hon. Member receives any complaint about anything, we would just want the fact, not just a sweeping statement, but would like to have those instances, and I can assure you that we will take a prompt action. There is a mechanism for that. There are various measures. So, if you write to us, we would welcome that and we would urgently address that problem.

Sir, I would, again, like to revert to financial inclusion through the Self-Help Groups. The number of Self-Help Groups functioning in the country, at the end of June 2007, is 29,25,698. This is against the figure of 10,79,091 credit-linked SHGs when we took over. ....(Interruptions)... Sir, if you were to multiply this by a figure of ten, it is about four crores of people who have benefited thereby. Though the provision is that they would get Rs. 25,000/-, a self-help group, which has matured into a small micro-enterprise, will get still more. We find that in certain cases the average of the loan extended to the Self-Help Groups -- perhaps this can be said of the deposits, but he wants to know of the credit -- is lower than what we would certainly want. In certain cases, I have come across the figures, that is, as low as, Rs. 5000 only. We would certainly want to increase it. But, then, we have to ensure that there is that absorptive capacity of the beneficiaries. It is no fun extending them loans, if they really do not know how to utilize that. We don't want to make those people indebted further. We want to extend them loans and they come up well in life and they improve the condition of life and their standard of life is improved. For that training institutes have also been set up. (Interruptions) I would certainly like to answer any...(Interruptions)... But, Sir, I would only like to seek indulgence...(Interruptions)...

THE VICE-CHAIRMAN (PROF. P.J. KURIEN): I will give you time after he finishes. (Interruptions) I will give you time after he finishes. (Interruptions) He is not yielding. (Interruptions) The Minister is not yielding. (Interruptions) Please, he is not yielding. (Interruptions) I will give you time after he finishes. (Interruptions) Ms. Rebello, please...(Interruptions)... Please don't disturb. (Interruptions)

SHRI PAWAN KUMAR BANSAL: I will answer all the points. (Interruptions) It is not fair, Sir. (Interruptions)

THE VICE-CHAIRMAN: If you want to speak, I will allow you to speak after he finishes. Please sit down. (Interruptions) Why are you disturbing? (Interruptions) Please sit down. (Interruptions)

SHRI PAWAN KUMAR BANSAL: Sir, precisely, none of these points relate to the Bill that we have before us. But I would certainly like to address the concerns of the hon. Members. None of these points really relate to the Bill that we have before us. But since this is an important subject, which we are discussing, I do not really mind responding to any query regarding the banking system, as such. And, that is, precisely, my endeavour. Otherwise, that was answered in one minute only. When I introduced the Bill, and thereafter in the first one paragraph, I answered that point. I am trying to answer these points also. When we were talking of expanding the reach of the banks, it is again they are tying up. The banks have introduced a novel system, now, on the basis of the guidelines of the Reserve Bank of India to take the banking system to the people in the country with a....... (Contd. by 3b -- VP)

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