By Rusiripala Tennakoon –
One of my friends, a retired senior banker, forwarded the cartoon, produced below, in a WhatsApp message to me a few days ago. This cartoon aroused my interest as it dealt with the plight and fate of the banking industry we are witnessing today. My friend, Dhamitha, who is well aware of the mutual concerns we share about this subject, may have guessed that we could dovetail the conceptual element the cartoonist has attempted to portray by complementing it with some of the realities.
When we take a look at the cartoon, we see In the center, a figure described as citizens carrying on his head the full burden and weight of the roof of a building characterized as the economy. On to one side is the sketch of a comfortably relaxing posture defined as the government and on the other side another sketch of a human figure depicting banks. This figure symbolizes the monstrosity the cartoonist has attributed to the Banks. What he has presented is a horrendous character masquerading with a joyful aura in the face engaged in an act of pick-pocketing the citizen (typically the customers). We have to appreciate the cartoonists’ skill and understanding to illustrate so beautifully an ongoing reality in all parts of the world, associated with the banking industry, encapsulated in such simplified picturesque excellence.
Banks operate under the rules and procedures laid down by the Government and are subject to supervision and monitoring as provided for in the regulatory framework in respect of matters relating to the business of banking.
The Central Bank is responsible for regulating and supervising banks, finance companies and primary dealers to promote the safety and soundness of the banking and financial system and to safeguard the interests of depositors and investors. The regulation and supervision of banks is governed by the Banking Act and the Monetary Law Act. The Central Bank is the licensing authority for banks in Sri Lanka and issues banking licences for all categories of banks, Licensed Commercial Banks as well as Licensed Specialized Banks. Among its Core Functions Central bank is responsible for Licensing, regulation and supervision of banks and selected non – bank financial institutions, i.e., Finance Companies, Specialised Leasing Companies, Primary Dealers in Government Securities, Money Brokers, Restricted Dealers (Money Changers). It is the Banker and financial adviser to the Government and also the Banker to Commercial Banks.
Accordingly, it is the Government that should bear the ultimate responsibility for the successful operation of the Banking system. What the cartoonist has symbolized and highlighted in his presentation is the passive onlookers carefree role, normally played by Governments, instead. Happily waiting in endurance, probably for the kick-backs coming through the back door, ignoring the pick pocketing, in total oblivion of the ensuing debacle to the people and to the country’s economy at large. It also conveys the idea of the agony of the man unable to bear the heavy weight he is trying to withstand with knees bent while his pocket is emptied by the masquerading renegade in the guise of watchful surveillance. The other hand of the Bank (figure) is full of bank notes which the banks COLLECT at the expense of the oppressed customer. Ironically the weight of the head of the sleeping governments too is on the knee of the citizen which is a realistic depiction of what is happening normally between the politicians and the people.
Perhaps the cartoonist is aware of the two faces banks pose. A friendly outlook but a fiendish disposition, which is the truth. Banks are double faced with one attitude to favorites and another to others. They advertise spending millions to attract poor people for Pawning (jewellery) business. Soon after one year the pawned articles are out on auction (even during Covid), with no merciful extension of terms, in contrast to the range of moratoriums granted to borrowers in millions, some-times with no tangible securities. In granting millions and billions they meet the clients at the convenience of the prospective borrower while an SME applicant will have to take a chance waiting for several days to fix an appointment to discuss a proposal. The motto is – Pawning end up in auction while defaulted millions are given several chances under extended moratoriums and interest concessions. Similarly leasing ends up in ceasing! Sometimes with deadly force used on the clients with the help of hired thugs.
The service jargon too is a misnomer. There is absolutely no service concept in the banks today. Everything is done for a fee and a charge. And the charges too are extremely costly and often refer to instances created for grabbing something even without any pre-warning. A current account with a balance going below some arbitrarily fixed minimum limit set by the individual bank gets reduced to a NIL balance in no time due to the system gradually absorbing it by applying an automatic debit every-month. The commissions fees and charges by banks for the so- called services rendered by them are really exorbitant and unprecedented.
The result is they amass huge pre-tax profits which they can freely utilize wastefully and sometimes fraudulently. Parliament COPE committees have revealed several of such expenditure which warrant legal action, recovery from and punishment to, offenders. Alas, nothing of the sort is happening and no one to follow up. Culprits who have defrauded the State, banks and the people go scot free. Facilities granted in the most insensitive, callous and apathetic manner remain in the books of the banks for very short periods figured as assets and get transferred to non-performing with no one to be held responsible. When they are written off the consequential adverse effects eventually accrue to the State Account.
His concern about the economy with a heavy unbearable weight of a roof lading on the head of the citizen is symbolic of the ever-increasing burdens thrust on them as a result of the combined effect of the Government’s role and the banks plundering of the citizens, unscrupulously. Banks are expected to play a dynamic and proactive role in the development of the economy and raising the living standards of those living below it. What is happening in reality is the mass deposit base and the grants and concessions received by banks for this purpose are all directed towards the more affluent in the society to develop their business worlds. This no doubt is an easy course for the banks to follow, instead of dealing with hundreds and thousands of small borrowers banks can make more profits by dealing with few giants. That too with kick-backs generated for their own benefits associated with these transactions decided in cool surrounds toasting glasses during the wining and dining to promote good relations between lenders and borrowers. Ironically most of the decision makers(bankers) do not last long to answer the outcome when the businesses crash. They are never categorized as bad or risky lending operations because invariably most failing Private Debts become Public Debts which eventually end up as Sovereign Debts. No evidence is needed to establish this phenomenon other than a closer examination of all big loans defaulted. Stories behind them are disgusting.
Same applies to the control and monitoring of the Industry in general. Each entity is given a free hand to spend hundreds of millions in foreign exchange to set up their own high-tech networks which many countries do unitedly in common to reduce the costs and waste of funds. Banks become so addicted to phrases and jargon associated with Digitalization both as cover up operations and justifications of billions they have spent wantonly, sometimes fraudulently.
The directional monitoring of development-oriented credit disbursements from the banking sector also remain marred due to more focus on the profit turn over than the contribution to the broad national Economy. Cartoonist has seen all these aspects in a critical manner.
World is facing an extremely important issue widely discussed about the distribution of wealth. It is a problem that has evolved over a long term. The growing inequalities in the distribution of wealth has to be addressed by the banks and all have to concentrate thinking in this direction. Banks cannot go on only making the rich richer while the poor remains exposed to becoming poorer.
Finally I wish to thank this cartoonist and my friend who helped me to invoke this line of thought.