Every Year 10000 New Branches

Plan to open 10,000 bank branches a year from next fiscal: FM-12.01.2014  ( Read my views below )

SIVAGANGA (TN): As part of taking banking services to rural areas, the Centre has revised its target upwards to opening 10,000 new bank branches a year, according to Union finance minister P Chidambaram. 

Earlier, there was a target to open 7,000 bank branches a year. From the coming financial year, it has been revised to open 10,000 branches a year, Chidambaram said, after handing over the financial assistance to 176 members of the Adi Dravidar and Scheduled Caste community here today. 

Through this, an additional 55,000 new jobs would be created, he said. 
The huge growth witnessed in the banking industry is one of the major achievements in the last 10 years during the UPA regime", he said, adding that the Sivaganga district would be an apt example for it.

http://timesofindia.indiatimes.com/business/india-business/Plan-to-open-10000-bank-branches-a-year-from-next-fiscal-FM/articleshow/28690049.cms


My Views are given below

Management of all public sector banks are unable to manage existing branches because they do not have enough manpower, they do not have experienced manpower who can handle the branch safely and who can book growth and profit for the bank and finally they do not have skilled manpower who can stop rise in fraud and rise in bad debts. Inspite of all existing constraints, our Finance Minister wants banks to open 10000 branches every year. 

FN can suggest any idea for political advantage but he must plan his idea in such a way which can yield fruitful results in future. But unfortunately his unplanned idea have every possibility of putting banks in greater market risk , operational loss, credit risk , reputation risk and finally force banks to shut their doors for ever. 

Finance Minister perhaps do not like to accept  that in every village there is a branch of post office which can nourish the demand of opening a bank account if is considered as prime and unavoidable necessity for the growth of poor villagers and for financial inclusion mooted by learned Finance Minister and his team.. Moreover Post office in India are in process of being completely automated and there is an idea of converting post offices of India into Post Office Bank of India.

I am unable to understand why then learned FM want to load already sick public sector banks with additional burden of opening new branches in remote villages especially when volume of fraud and bad debts are increasing quarter after quarter in existing branches of public sector banks.

It is worthwhile to mention here that India had been already using the idea of separate banks for villagers and for farmers in the shape of local Cooperative Banks and Regional Rural Banks. But clever government though elevated the status of these Rural banks and brought them in parallel with other nationalized banks so far as wages of staff and power of branch Managers are concerned. But the government completely failed to motivate them to work devotedly for poor villagers, farmers and local petty businessmen.

ALL this happened only because government never takes any decision keeping in view the agenda of real growth of the area but real growth of their political agenda. This is why these Rural banks also started functioning as loan distributor without taking required precautions and fulfilling set guidelines. And painfully government failed to maintain their health in sound conditions. 

Sometimes government thinks of merging these rural banks with sponsor banks. Finally government fails to achieve even political agenda. It is important to mention here that during last five decades, government came out with numerous poverty alleviation schemes and forced banks to implement them rightly or wrongly but failed to eradicate poverty as they desired and as they planned .It is only due to their wrong intentions behind it or due to their faulty execution of plans or due to their unwillingness to  monitor the plan to ensure availability of fruits to real and intended beneficiaries of the plan. 

Obviously it has become the fashion of the government to come with one after other plans, overlapping previous and already existing plans and finally leave their plan on the mercy of God. They never treat it necessary to ensure healthy life of these entities and to ensure that they function only to serve the desired purpose and not turn into dormant and non-functional in the same way as hundreds and thousands of departments opened by government for various functions are more or less non-functional in India and employees are being paid for no fruitful product from these departments. I do not hesitate to reiterate here an old saying about India that India is best in planning but worst in it execution.

Already existing public sector banks are sick due to increasing  load of bad debts and frauds , already staff are unhappy with low pay and retention of staff has assumed a grave problem and  already customers are running from public sector banks due to bad ambiance and poor customer service in want of permanent manpower constraints in these banks. 

Now to add fuel to fire, our wise Finance Minister wants these public sector banks  to open 10000 new branches  every year and RBI panel suggest opening of new model Payment Banks to cater to rural folks who do not have food to eat , do not have money to save and who do not school to read. 

I do not understand why government does not want to take lessons at least from the past. Banks had to suffer huge losses due to rapid expansion of branches in seventies and eighties and government were constrained to merge loss making branches with nearby branches. At least now, it should be ensured that banks do have enough quality manpower in adequate quantity in each existing branches before they open new branches.

Further, villages do not have drinking water, do not have enough pucca road linkages with nearer big villages and towns, they do not have electric power and more painfully they do not have support of any politicians in real sense. But clever FM wants every villager to have a bank account and every village to have a bank branch even if the total population of many villages is even less than 100.

I do not know how our economist FM will ensure profitability of such banks which are already on the verge of losing their capital due to high provisioning towards bad debts and increasing load of staff wages..Profit of most of these Public sector banks have faced sharp erosion during last few years and government do not have any plan to stop further erosion but they always talk of profitability and boldly deny staff wage hike as  demand by staff unions only because in their considered view banks are unable to sustain the load of wage hike.

Lastly if bank staffs are not happy, it will be foolish to imagine that plan of expansion of branches will yield any desired results in future. There is no power on earth which can stop these weak banks to collapse sooner or the later if plans formulated by government and changed from time to time are not implemented with proper planning , with addition of devoted and properly skilled  enough manpower and adequate infrastructure . Though flatterer team of top bank officials are always ready to obey the whimsical orders of FM with folded hands , these bank officials do not have will and do not have potential to ensure desired results.