Penalising for poverty

Poverty is no crime because a poor man does not commit a crime by not being able to overcome his poverty. He is rather a victim of the complex socio-political system that makes him poor, keeps him so, and extracts a penalty for him not being able to overcome his poverty. The banks in India are doing precisely the same. They have raised about Rs 5,000 crores in penalties from poor account holders in the financial year ending March 31, 2018, for their failure to maintain sufficient bank balance. On the other hand, the same banks have been giving billions of rupees to the rich under the legal protection of 'action taken in good faith' that they can never get back. They seem to follow the rule: 'you will be given if you have; and if you don't have, whatever you have will be taken away'. The predicament of the poor does not end here, because there are numerous decisions of the government working against them. They are at the receiving end in almost all matters.

However, the policies of the present government have been camouflaged in such a way that they seem outwardly pro-poor but they are not such in reality. One can take another example of the Pradhan Mantri Ujjwala Yojna. It was launched in 2016 with the claim that people living below the poverty line would be given free LPG connections. But the beneficiaries of the scheme know that they are not free. The poor do not pay at the time of receiving the connection, the stove, and the first refill, but they are actually a loan made available to them by the oil marketing companies on equated monthly instalment (EMI) to be paid by the beneficiaries later. Until the poor beneficiaries return the loan amount they are not given even the 'subsidies' they are entitled to. This subsidy amount is taken by the oil marketing companies to recover the cost of giving LPG stoves and cylinders. Then, where is free LPG to the poor? There is also a third element between the cost of the LPG refill and the subsidy amount. That is tax, which is taken from the poor beneficiaries. We can cite numerous such examples of so-called pro-poor initiatives of the government, which have indirectly fooled poor people.

Now, let us come to the minimum balance penalty for those people who do not have enough money to maintain their bank balance even to the minimum benchmark arbitrarily fixed by various banks. Minimum balance requirement varies from bank to bank, ranging from Rs 1,000 to Rs 5,000, failing which penalties are imposed on the account holder. This is the case with the public sector banks. Many private banks have an even higher minimum balance benchmark. One wonders how different amounts can be justifiable, especially when they are fixed for exacting penalty for the same nature of offence. What is the legal authority they have to make 'withdrawing money from one's own saving' a punishable offence? What is the rationale for fixing a penalty amount and a minimum balance? Doesn't a person have the right to get the money that is rightfully his? Should a civilised society deny this right and make it an offence with a provision of penalty? Nevertheless, the minimum balance amounts fixed by banks and the penalties for withdrawing one's own money are arbitrarily fixed. They are not in accordance with the principles of justice.

Moreover, the policies of the government have cornered the poor, giving no option but to open an account in a bank even when he knows that he cannot maintain the minimum balance requirement. The policy of the Direct Benefit Transfer scheme is being implemented all over the country. If anyone wants to derive its benefit, he must get an account opened in a bank. In many cases, as in the Mahatma Gandhi National Rural Employment Guarantee Act 2005, the wages and payments other than subsidies are directly sent in the accounts. Scholarships to the weaker sections, old age pensions, financial support to widows and other victimised women, all sorts of compensations, reimbursement of fees in educational and other institutions, and a large number of other schemes require a bank account in the new scheme of things. A bank account is a good thing for all, especially the poor, who needs it for his financial inclusion into the new system of governance. In brief, the poor are under compulsion to have a bank account.

This compulsion must not be used against him if he is unable to maintain sufficient bank balance. They must be supported or encouraged to have a larger bank balance, but should not be penalised for failing to have a certain amount of balance. The crisis that Indian banks are suffering from is of their own making – a result of their own omission and commission. For any loss, the bank officials and staff are solely responsible. The legal protection they get by the provision of acting in 'good faith' does not mean that they should go on increasing NPAs and other losses. They should be penalised for their misconduct, and should not be allowed to recover their losses on account of intentionally giving 'bad loans' to the rich businessmen and industrialists by penalising the poor people in the name of failing to maintain the minimum balance.

Though this new practice of exacting penalty from the poor account holder has been made legal, it is, in essence, unethical and immoral, because the poor need more financial help from the system than anyone else. It's quite disheartening that through this practice the banks have raised Rs 4,988 crore in 2017-18. The top five penalty collecting banks are SBI Rs 2,434 crore, HDFC Rs 590 crore, Axis Rs 530 crore, ICICI Rs 317 crore, and PNB Rs 211 crore. After collecting such a huge penalty amount, the banks are now mischievously saying that people should open zero balance account called BSBD (Basic Saving Bank Deposit) accounts if they don't want to maintain a minimum balance. They do not care about the present saving bank account holders, and, instead, suggest that people undergo another trouble of opening new accounts.

All this is happening under the nose of the Prime Minister, Finance Minister, and the Reserve Bank of India, who are supposed to protect the interest of the people and help the poor overcome their poverty. RBI has the principal responsibility of supervising banks in the right direction as it is mandated under law. Even though terms like "financial inclusion" are not used by the Reserve Bank of India Act 1934, the Preamble explains the primary objectives which make the RBI implicitly responsible for these. It must protect account holders in general, and the poor account holders in particular from the legalised loots by banks in the name of 'penalty for not maintaining minimum balance' only for making up for their losses. Rather, RBI and the government should take strong action against bank officials and staff who in connivance with the rich give 'bad loans' and make the banks suffer huge losses.

(The views expressed are strictly personal)