Former union energy secretary and activist EAS Sarma has brought the problem of cash crunch being faced by people Telugu states to the notice of union finance minister Arun Jaitley. He asks the Jaitley when demonetisation has brought back so much currency into the system, why is there a cash crunch everywhere. Here is the text of the letter he dashed off to union fiancé minister.
Dear Shri Jaitley,
I draw your attention to news report indicating that SBI has closed down 41.2 lakh savings accounts for not maintaining the “minimum prescribed balance”. The holders of many of those accounts perhaps belong to the lower income groups of the society. If what has been reported is factually true, the so-called Jan Dhan scheme, about which the Prime Minister himself has been proudly talking about, appears to have floundered!
When the Prime Minister announced demonetisation in November, 2016, one of the objectives stated was to shift the financial system to a “cashless” one. At that time, one was not sure as to what that statement truly implied. Today, wherever one goes, it is more likely than not to find cashless ATMs. Prior to demonetisation, while travelling, I would carry very little cash as I could always depend on an ATM to draw cash. Today, I am forced to carry as much of cash as possible, as I am not confident that I can find an ATM that dispenses cash at all. Most of them have been erratically running dry ever since demonetisation.
I enclose here a picture of an SBI ATM that was under lock and key on the national highway connecting Visakhapatnam and Srikakulam in the northern part of Andhra Pradesh. The picture was taken at around 9AM. In many towns and cities, the ATMs are without cash. If your Ministry and RBI are not aware of this hard reality, it shows that you are in a state of disconnect with the problems of the people.
When a large PSU bank like SBI has chosen to block accounts of its depositors on the flimsy ground that they have not been able to maintain the minimum prescribed balance, by way of reciprocity, should not SBI, or for that matter any other bank including the banking regulator, be penalised for not loading its ATMs with sufficient cash throughout the day? Is there one set of rules for the customers and another for the banks?
As a customer, I find the banks constantly harassing me with all kinds of demands, mostly imposed from above by RBI and the Finance Ministry, ranging from repeated KYC compliance, individually for all kinds of banking services, Aadhar linking at every step and for every service and threats to block my account on every pretence. The Bank customers are being fleeced constantly in a myriad ways. Every transaction attracts a service tax and every withdrawal from his/ her account riddled with uncertainties.
At the same time, the tax-payer is at a loss to find his money being diverted to the PSU banks in the guise of “recapitalisation” which is nothing but making up for the sins committed by the government and its banks in collusion with errant corporate loanees.
Most of the funds injected thus into the banking system seem to be getting diverted into the pockets of Nirav Modi and his likes, with Finance Ministry and RBI finding fault with one another, but unable to stop the defaulters from fleeing the country with public funds.
The promoter of a corporate house that owes more than Rs 70,000 crores and has become a dead weight to the banks is cosily moving around in the influential circles of the government, fully assured that he can always induce the government to “recast” his debt again and again, without having to pay a single rupee to the banks. He can commit any sin he wishes without having to submit himself to the rule of law.
When the banks were required to make a public disclosure of the details of the loan defaulters, by someone’s intervention, SEBI has been persuaded to delay naming and shaming those defaulters.
With a huge, formidable NPA crisis looming large, the depositors of the banks are not sure when their deposits will get appropriated under the proposed Financial Resolution and Deposit Insurance Act.
Against this background, should not your Ministry and RBI see the problem from the point of view of the customers and impose penalties on the banks for not delivering their services at the lowest cost to the customers? Who should own responsibility for the large number of cashless ATMs staring at the customers? When demonetisation has brought back so much of currency back into the banking system, why is there a cash crunch?
I enclose a copy of the “Customers Rights Policy” displayed by a bank, which I am sure applies accross the board to all banking institutions in the country. According to that policy, the customers are entitled to compensation for the failures on the part of the banks. I would request the Finance Ministry and RBI to apply their mind urgently to the way the banks are conducting their affairs and ensure that the customers are fully compensated for the banks’ failures.
E A S Sarma
Former Secretary to GOI