0:00 Hello and welcome to the news minute. Last week in public interest, we brought you a story about how crude oil prices are going down globally but uh the benefits are not being transferred to the public and hence uh the public is paying through the roof. Uh and this week we have shifted our focus towards the banks. The RBI has issued a guidelines for ATM transactions. To talk about this I have with me Thomas Franco. He is uh the former general secretary of all India banker bank officers confederation and someone who knows uh the banking system very well. Sir thank you so much for talking to us. Before I go across to him here is a quick reminder. Newsm minute newsminut Tamil and newsre we are a complete ad-ree platform. We are not dependent on government ads or ads from political parties or corporate houses. We are
0:45 dependent on you the viewer. So if you like our work, if you want us to continue doing this, do become a paid subscriber of the news minute and support independent journalism. Sir, uh the RBI guidelines, what kind of impact it is going to have uh on the general public because this is concerning the ATM transactions. See the ATMs when it was introduced, we told the customers that it is a free service. You can take money anytime 24 hours. So don't come to the bank. You collect money from there. It's easy. And note extra charges. But
1:32 subsequently this ATM transaction charges have been introduced. The ATM charges are like this for the US customers to know. I would like to explain this in detail. It says that if you are transacting in your own bank's ATM in a month you can have maximum five transactions and if you are transacting in a other bank ATM if it is in the cities it is three transactions and if it is in the outside city areas up to five transaction. Here two clarifications are needed. Number
2:17 one, you cannot have five transactions in your own bank ATM and another and three or five in another bank. Totally it is only five. Number two, they classify as finance transaction and non- finance transaction. Most of the public don't know the difference. Finance transaction is for taking out cash. Non financial transaction is encquiring your balance. So even if you check your balance, that will be considered as a transaction. Yes. And that's all the limit is done. Once you are taking out the money, the ATM itself is asking you a question. Do you want to see your
3:05 balance? Happily, you just click yes. that is counted as another transaction. So if you are doing three withdrawals and every time you check your balance it becomes six transaction. So automatically from the sixth transaction onwards you have to pay 23,000 23 rupees plus GST of 18%. Yeah. Plus taxes. Yes. Huh. Now some people might think that what what is this just 21 rupees to 23 rupees what is the difference? What will be the impact is that once you are keeping on increasing the faith in the system
3:50 goes people especially in rural semi-urban areas who were taking money only for small amounts because they don't want to carry cash 500 rupees 300 rupees 1,000 rupees. Now because of this restriction they will have to take more cash and keep at home which is again a security risk. Secondly because this restriction is coming they will now decide that okay let me go to the bank and transact my business. All the banks especially the public sector banks are understaffed and one reason for
4:36 understaffing was that oh you have so many digital facilities including ATM why have so many staff at the counter so now we are living in digital India so you don't need staffs yes it can be done uh you know through digital that's the idea that fault has been propagated for so long and staff strength has been reduced. So then the pressure mounts on the staff that people have to go there. Now if it is a little more amount they are keeping say 5,000 10,000 rupees they would like to have a checkbook so that every time you don't have to go and stand with write down the withdrawal and take money by yourself
5:22 alone checkbook you can send through a bearer he can go and transact. So if you are taking a checkbook of say 10 leaves you have to pay 40 rupees. If it is a checkbook of 25 leaves you have to pay 75 rupees. So there again your expenditure is going going up. And though this 21 to 23 2 rupees increase seems small as per the 2023 report. Every day there are 6 billion transactions in the ATMs. In India there are 2 lak 55,000
6:07 ATMs. 6 billion is 600 cr transactions per day and the amount transacted is rupees 32.9 trillion that is 32 lakh crores of money is transacted there. Now you are putting that restriction naturally people have to rush to the branches for taking out the money. That is one problem. Secondly when the transactions there is a projection that by 2027 it should go up by 8 billion 800 transactions per day. So though the 2 rupee increase may appear small when you count as the
6:55 number of transaction it's a huge amount which the banks are going to make. So what what are the other uh charges that the banks have service charge and other charges that are levied on uh uh each and every transaction. See 2023 figure again I am quoting on ATM transaction charges alone 8,000 crores has been collected but then you have something called minimum average balance. So in the minimum average balance charges banks have collected 21,000 crores in 2023 alone. Though this was introduced only I think in 2019 in almost all banks
7:41 previous to that there was very small amount sometimes collected and for very small accounts people don't charge at all 2020 because of huge uh appraisal from public that you are charging so much for a common man state bank of India alone withdrew these charges in 2000 and they have not reintroduced but all the other banks public sector private sector this minimum balance charge is one major area you put some,000 rupees they keep collecting some money say 50 rupees every month one fine day you go to the bank and find that you find your money
8:27 has come down to 500 rupees you tell the bank that okay I'm fed up you close account they charge 500 rupees for as closing charges. Okay. So who is affected in all this is common man who are lower middle class upper middle class who are the actual owners of the bank. I will say if you see the balance sheet of banks, banks are run on the deposit of the people. They don't have capital. They are taking your deposit, giving us loan and they are making profit out of it.
9:13 So a person who has just deposited some money in his savings bank account you give only 2% or 2.5% as interest and he doesn't keep minimum balance you again charge. If the number of transaction goes up you have some charge called transaction charges. Number of check leaves increase then you have again check charges. This is an injustice I feel. As per the one of the RBA reports, 83% of the deposits are small household deposits. And for those people, if you keep charging so much, they will once again switch over to other
10:01 avenues. Maybe keep it in a box, maybe keep it with relatives. Why should they put their money here and keep paying charges for that? This will be an impact on the banking system as a whole. It may not take place overnight but over a period of time we have seen that the faith in the system has started going down after demonetization. Now you keep increasing these charges all kind there are so many other kind of charges safe custody charges you keep your fixed deposit there or LIC policy there safe custody charge that it's all for safe custody safe deposit locker
10:48 it's okay but then you have some transactions getting increased again transaction charges you are giving whether deposit or withdrawal number of transaction Like they only said that you go to bank business correspondent don't come to the bank those hers are sitting with the board customer service point no regular salary some incentive they can transact up to only 30,000 again there if your transaction is going up for more than three transaction you have to pay extra 15,000 for 15 rupees per transaction. So in all possible ways these people who are actually the owners of the bank they are being
11:34 fleeced. This is the contra this is not the purpose for which nationalization of the banks took place. So RBA has to have a reook. So how how how are the uh rich getting benefited out of these and why why should you know people who trust in the banking system who want to have their savings get punished because they're like putting their money in the banks. See number one those who are rich they transfer money from bank to bank using a system called RTGS or NEFT. In this the transaction charges are so low but for small depositors you
12:21 are charging so high. and how the rich are getting benefited. This is something not being talked about much. You go through the Reserve Bank of India website, there is a uh report quarterly published called the basic statistical returns. In that last year's report when I had a look 449 corporate borrowers who have taken loans above 100 crores they are being given loan at 4% interest. You take an education loan you
13:08 have to pay 11% 12% 13%. For home loan it's for home loan 7.5 7.8 in it because it is secured by the uh house building. So that is there but for a microenterprise small enterprise banks charge 12% 13%. Whereas corporate having loan above 100 crores you see such a for that you give at 4%. So all these charges and small interest paid to the fixed deposits and savings bank deposit that is to benefit few corporates 449 less than 5%. If I see less than
13:57 7%. Which is lesser than the housing loan interest also there are some 9,000 people per benefit. So whom are we banking banking for? Whom are we banking for? Yeah. To support only these corporates who are a minuscule minority. They get all benefits and it is they who do not repay. You go to the NCT the loans are written off. So this is the tragedy of this country in the last many years which the reserve bank should really look at. No bank advertises that we are giving loan at 4%. But it came up in all the newspapers that Tatas the forest in this country
14:44 they get 10,000 crores by for buying Air India at 4% interest rate. This is a contradiction. What we need is the farmers to get cheaper credit. The MSMES who are the major employers employment generation is done there. they should get lesser but them we are charging high and we are charging less for the corporates who don't create much of employment also. So you talked about uh you know it may sound as a very you know minor hike you know 2 rupees or something like that or even the interest charges but how does it affect a a common man like in this entire system because of the system. See
15:31 the common man as I said they are in the savings bank deposit and current account deposit is one of the major portion of the money banks are almost 40 to 45% is called the kasa deposits current account and savings bank deposits savings account deposit current account banks does not pay any interest at all okay that is for rich we can say even For trusts they are char asking to have only current accounts. But savings bank they charge give you interest on the minimum balance between the last 10 working days by the
16:19 time whatever saving you might have withdrawn. So even if you had kept money for 29 days 30th you are withdrawing you don't get any interest at all. So that way the people are getting affected number one. Secondly the people who have to get cheaper credit they are not getting cheaper credit that is affecting the whole economy. See the rich they get a big loan they may not spend immediately but a MSM borrower farm loan borrower he will immediately spend that and it has an impact on the economy. There is a multiplier effect
17:05 which will not happen if they keep on doing this and people will switch over to other there are nidis available there are cheat funds available there are mutual funds available so people will switch over there so that will finally affect the banking system and that is the danger RVI should foresee which They are not saying and the borrower especially the MSME and the farmers where are they getting the credit now they are going to the non-banking financial companies for which the reserve bank has said that there is no need for any
17:50 interest ceiling earlier there was an interest ceiling of 36%. Last year they have removed that and there are studies which are saying that there are people paying 50% interest 60% interest. So that's because they have gone to the non-banking uh yeah because you are not making small credit available. You have reduced the staff which has made it impossible for banks to cater to small borrowers. They concentrate on the larger borrowers and people are sent to the non-banking financial companies. Earlier non-banking financial companies could not get credit from the banking system. Now RBI is monitoring. You give more fund more fund to non-banking
18:35 financial. Earier we had a very simple principle. You cannot give loan for giving another loan. But that is exactly what is happening. So there is a correation between all this. There is a vicious cycle. So reserve bank has to come out with alternatives. Encourage small depositors with higher interest rate, small fixer deposits with higher interest rate and this service charges at least for the small depositors. It should be waved. You only told them to go digital and when they go digital then you there are some changes that have they have brought in UPI also UPI transactions because they said after demonetization people prefer uh you know
19:22 um doing transactions via UPI cardless cashless transactions and all that. Now they have started charging for the UPA transactions and so far this GPA and all we are not paying any charges very soon I am anticipating it to come because in some other countries they have already Google has char started charging it is always like this now you attract saying free free free come come and once you get used to it you cannot avoid that and then they start charging So this transactions and all when you give so much of concessions to the corporates the new rich 10% of the
20:07 population in this country has all kind of comforts for them you give every concession but to the 90% you charge all this this is something has to stop. So what has happened in the banking system in the past 10 years because we have seen dramatic changes that have taken place is it because uh uh the policies that are being brought by the union government or it's the RBI that is taking independent decisions what today RBI is no more independent it is dependent on the government 2016 when large borrowers were not repaying they serve bank came with this declaration of 12 large creditors
20:54 uh borrowers who have not repaid published that after that they issued a circular saying that the bank should not lend to a particular corporate above 10,000 crores all banks together in a consortium till date it has not been implemented who has to oversee it is the RBA RBA has taken out the circular from its website. So they are encouraging the corporate credit more. They said by going to the national company law tribunal under the insolveny bankruptcy code you will get money recovered very quickly. But there what is happening only in the name of haircut
21:40 write off right off right off. Anil Amani has an outstanding of 46,000 crores. The company is taken over by MKkesh Amani paying only 2% of the amount just 450 crores instead of 45 46,000 cr. So this is all happening because of the government RVA collaboration. Again the deposit rate I was saying there was a time 18% interest we were paying for the fixer deposits senior citiz 17%. At time also banks were making profit but now you have brought it down to 6.5% 7%. Now it is further
22:28 going down. So the some small depositors are getting affected. It is furly because of the government's policies collaborated by the Reserve Bank of India. Again to the credits why can't RBI say that for the education loan borrowers especially small loans four lakhs, five lakhs, two lakh give it at a conventional rate of interest. Earlier there was a condition which it still operates but it is not implemented. 1% of the total credit in the bank should go to the weaker section of the society at 4% simple rate of interest that RVA is not monitoring. So most of the banks are not doing
23:14 that. So you are deviating from the purpose of nationalization and the goals of the constitution bringing down the inequality that is not happening today. And one side you are forcing banks not to increase the staff. Another side you are saying give more mudra loan more PM Swani loan. I welcome we should give for but those loans are not being given to the right type of people. So it's not being repaid. Most of the loans are not getting repaid. So banks depend on the credit guarantee scheme and get some money. So the policies of the government in simple term what I would say is that it
23:59 has to change instead of supporting a minuscule minority support the majority reverse the policies accordingly then only this company country can prosper the constitutional goals can be achieved right sir thank you so much for uh joining us and uh giving your views on uh an important issue that people may not even realize that it's affecting them. So, thank you so much for talking to us. Thank you very much.
