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Sunday, January 8, 2012

RTI Task force for transparency in Banks & Financial Sector

Dear Friends,

A number of RTI activists are fighting for transparency in the banking sector, and their regulatory bodies. Whenever they have filed RTI applications for information from the banking sector – even where a large element of public interest is involved -- many activists have found that the banks are stonewalling and evading disclosures. RTI activists have many favourable orders from Central Information Commission to support them in their fight, but it is necessary for activists to come together on this issue and pool their energies.

In recent weeks, a number of activists have discussed with me about this area of need. (By a happy coincidence, I have been asked to address a meeting on this topic by Moneylife Foundation this week.)

So I am inviting you to not only participate in but spearhead a task force for transparency in this sector. If you have some experience with RTI on banks, or you are yourself a banker, we urge you to share your knowledge and insights with us.


1. Banks play a key role in our lives. God forbid, if some major banks – or even relatively minor cooperative banks -- were to pack up tomorrow, we would be very badly hit. Therefore, their lending and investment policies are very much our concern. Banks – especially nationalized banks – cannot argue that what they do is their internal matter”, and of no concern to citizens!

2. Alarmingly, banks are increasingly acting like usurious money-lenders. Many of their loans – especially gold-loans and loans against property – are aimed at distressed borrowers who have been hit by recession and are struggling to maintain their lifestyle and business. A large proportion of such borrowers fail to repay their loans, and lose their assets. To promote borrowing in such an economic environment is exploitative:

3. Nationalized banks, private banks and cooperative banks have disproportionate clout. They are repositories of depositors’ moneys, and also retail as well as bulk lenders. Last but not least, they are investors participating in the equity markets and competing with small investors.

4. As bulk lenders and investors, they influence industrial growth. As retail lenders and savings banks, they determine consumer and investor behavior. By varying the interest rates on deposits and loans, they play a major role in determining whether the bulk of Indians invest in equity, put their money into fixed-income instruments, or use their money in buying consumer goods.

5. Banks and bankers actively shape the policies made by the Union Finance Ministry and Reserve Bank of India. The quality of their reporting to the government and regulatory bodies, and the pressures that they exert on governance, are key determinants on what happens to our nation. They actually have enough power to crash the economy singlehandedly!

6. Bad banks = costly bailouts using public moneys. Most banks are considered “too big to fail”. Government invariably steps in to rescue banks that are in trouble, using large amounts of public moneys for bailouts. This means that minding the business of banks is every citizen’s business!

7. Fuzzy lines in banking. The lines between non-banking finance companies and banks are blurred.

8. Conflicts of interest. With many banks like SBI becoming shareholders in loss-making companies like Kingfisher Airlines, and also project-finance to unscrupulous builders following bad and illegal practices, conflicts of interest are the norm rather than the exception.

I look forward to your early response.

Warm Regards,


98215 88114


1 comment:

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