Economy Uncategorized

Arrogance of a bank

A story  of an entrepeneur.

The sundarams of the temple city in South India,are first generation of entrpeneurs.

They are a very enterprising couple, known for their integrity and dedication.

As early as 11991, they promoted a spinning mill in the outskirts of their city.

The biggest bank in India The State bank of India accepted to finance their project.

The Sundarams  were  excited. The commercial production started in mid june.

The bank had given them a term loan and promised to sanction the working limit as soon as the manufacturing process starts.

Thebank did not keep up its words.

The Sundarams were disappointed.

They in their enthusiasm to make the unit get on the wheels,had given the factory, lnd and another valuable property as colatral.

The bank ,after much persuasion ,released 10 lakhs on adhoc basis ,when the need of the hour was 38 lakhs.

The promoters  were compelled to run the show,with little funding.

After 10 months, the balance was released.

The initial set back was pinching.

unmindful of the bank’s callous attitude the company worked in full swing.

It employed nearly 100 people.

It produced weft quality yarn,which found a ready market in Ichalkaranji, Bhiwandi and malegoan.

Unfortunately, textile industry  was slowly losing its momentum. recession set in .The promoters were in a fix.

The Sundarams  wer prompt repayers so far.

After 6 years of full production, the unit falterd.

The  interest  was very high nearly 23,5%.

The management was in a deep stress and strain.

The bank refused to help them.

Thecompny became a Non performer.

To keep the pot boiling, the management pumped in its own funds.

They could not prolong further. The bank filed a case in debt recovery tribunal.Shutters were brought down.

Workers were given compensation ,

All obligations were fulfilled.

An one time settlement was rached.

The promoters borrowed money ,sold some other asset  to settle the score.

But the final payment got delayed by 3 months.

The bank accepted the payment.

it transferred the amount from no lean account tothe company’s account,

The statement showed that there was nil balance in the account.

A year and half has passed, the bank has not released the documents.

The sundarams  are desolate and writhing with anger.

They get no proper response from the officials.

The Shylockian syndrome has surfaced.

The bank is demanding more.

The bank is holding the document and the money.

Many defaulters go  free.

The genuine repayers face the brunt.

The world should know about it.



Financial Inclusion

The Indian Finance Minister has asked the poor not to go to money lenders. If they approach the private financiers, then he ,in charge of the finance portfolio is a failure.
Well said,Mr.Palaniappan Chidambaram.
Admitting one’s defeat needs courage and grit.
The Indian FM has almost accepted his shortcomings,though belatedly.
IS the honourable minister not aware of the interest charged by the private bankers?
The poor run from pillar to post seeking financial assistance.
Having been turned down by the banks, they resort to money lenders.
The loan sharks charge abnormal interest. Some even collect interest for a day.
Getting money from such people is immediate, has less procedures,and saves time.
THe Indian FM has promised financial inclusion for the poor in the banks.
They will be charged 10% interest.Even this is little high.
I recollect,Bernard Shaw’s words
Lending money for interest is second to prostitution.