Centre urged to open morebank branches in rural banks

The National Confederation of Bank Employees (NCBE) has demanded that the Central government increase the number of branches of nationalised banks in rural areas to free the people from the clutches of Micro Finance Institutions (MFIs).

Addressing a press conference here on Saturday on the eve of the triennial national general council meeting, NCBE general secretary M.V. Murali referred to the recent spate of suicides reported from across Andhra Pradesh, which occurred allegedly due to the harassment by some of the MFIs. Finding fault with the lending and recovery methods being followed by the MFIs, he asserted that such practices had forced the defaulters to commit suicide. There was a need to take the services of nationalised banks to the doorsteps of the people by extending loans to the rural poor through the self-help groups. Lending by banks would help the people invest on income generating programmes, which was not the case with the lending by the MFIs, he opined.

Mr. Murali said the nationalised banks will not lend money to the people without taking into consideration the purpose for which the loan was being taken. “The MFIs are doing business by extending loans to the people without taking into consideration their repayment capacity and the end use of the loan. This has led to total collapse of the system,” he observed.

Mr. Murali favoured nationalised banks opening their branches in villages and reaching out to the people through the SHGs, which would help further strengthen the rural economy. “With the available technology, we can open branches even with two or three people.”

He opposed the appointment of business correspondents by some of the banks and the allowing of industrial houses to open banks. He wanted the Government to withdraw the business correspondents system, which was being used by some of the banks to monitor lending and recovery. “We welcome technology in banking sector, but there should be adequate checks and balances to prevent frauds,” he said.

Foreign banks opposed

Mr. Murali wanted the Government to recruit employees, who could be used to reach out to the people. He also opposed the entry of foreign banks and merger of nationalised banks. However, the NCBE would welcome merger of private banks with the nationalised banks.

NCBE president L. Subramanian said the triennial national general council on Sunday would discuss the issues concerning the banking sector. The NCBE would make certain recommendations to the Government on the policies and reforms proposed in the banking sector.