A Patriot’s stance on how to strengthen the economy
The writer a retired banker could certainly make a few suggestions as a true patriotic to enable the President to instruct the related authorities to strengthen the economy.
The main reason the interest rates of depositors to be slashed by 4 % in two phases in the recent past was purely to facilitate the banks to lend at relatively lower borrowing rates to boost and encourage the small and medium scale entrepreneur thereby for them to contribute in some way to strengthen our economy.
As a retired banker domiciled ‘down under’, a true patriot reads all newspapers, news bulletins first thing in the morning.In addition is in contact with bank colleagues almost daily via the face book and telephone.It is a very pity to hear from them that standards in banks have been lowered radically .One aspirant borrower had in anger yelled “only the horoscope is not requested” The majority of the present day credit officers of banks unlike those in the yesteryear do not have an empathetic friendly disposition towards the clientele though they are very well paid with
other perks than those employed two decades ago. It is learned that they have a negative approach predominately interested in finding a minor clause to decline the credit proposal of the clients despite given training on “SMI” lending locally and overseas. Some over emphasize the controversy on collateral security, repayment capacity etc. In short they are more bent on declining the proposal than approving Another issue is about the seniority the proposed borrower,how he had transacted business at the particular bank.This clause of ‘old customer only’ should be dispensed forthwith as even a new customer should be allowed to apply for a loan. The credit officers should be asked to take normal sureties sans requesting for tax payers only. Nowadays many figure in “CRIB” are debarred from signing as sureties .The above factors are the two major barriers the aspirant borrowers are faced with.
Of course on the integrity of the borrowers is a concern for the credit officers and approving authority. This could be resolved when the loan is disbursed. The banks could directly pay directly for the needs of the borrower to the related parties for raw materials etc instead of giving them a free hand for handling of cash.
At each end of month, quarterly. half yearly the statistics of loans granted, repayments made etc need to be sent to the regional offices of banks and to Central Bank authorities for perusal. Obviously these statistics would reveal the performances of each bank branch in respect of facilities approved thereby to gauge to what levels the economy of the country could be raised.
It needs to be emphasized that the reduction of fixed deposit interest by 4 % from 11.5% to 7.5% by the Central Bank authorities have been solely imposed in order to facilitate and encourage banks to lend to small and medium scale entrepreneurs which hitherto to some extent have proved disastrous, non viable and unfruitful, where neither the entrepreneur or the depositor has benefited.However this has paved way for the banks to inflate their annual profits at the cost of depositors. It needs to be emphasized that there is intense competition among colleagues of bank branches for climbing up grades on performances.
The above stance need to be altered by bringing in relaxed acceptable eligibility criteria for borrowers who are entrepreneurs
of small and medium scale industries.The credit proposals of the prospective borrowers need to be appraised more leniently with normal sureties as many tax payer guarantors figure in the “CRIB”.
Unless stringent measures are taken by the President in connivance with the authorities of banks, our economy is positive to remain at a standstill. All banks should be instructed to inform the Central Bank authorities how many had applied for small and medium scale industry loans, how many approved, if rejected the reasons.In this backdrop the banks who address this issue by granting such loans be commended.
The above is somewhat of a simply way to help strengthen our economy.
Sunil Thenabadu A retired Banker in Brisbane