Ease of Doing Business? Don’t Bank on it.

By Jyotsna Narang

I was much excited when Modi came in power with the motto of ‘minimum government, maximum governance’. The pathetic state of public sector banks, schools and hospitals, the corruption, red-tapism and the babu culture that had seeped in deep into the system had affected each and every middle class individual of this country. It was his slogan about maximum governance that reposed my faith back in the system.

I have a small business, a retail outlet in Delhi which needs to be renovated on an urgent basis. Like other businesses in India that fall deficient of working capital, we too did not have ample funds to pump into the renovation process. A month back we started approaching public sector banks. I was quite confident that it will now no longer be the same long tiring cumbersome process, reading the newspaper reports about a single widow clearance system being upheld by various ministries. With great cibil score and impressive turnover, I had no reason to anticipate ‘No’ from any bank.

But much to my surprise, none of the public sector banks agreed. On one hand were the private banks queued up desperately to give a loan and on the other hand were PSBs that had endless number of schemes in the name of women entrepreneurs, MSMEs, small-scale entrepreneurs but all to no avail. Some of them gave clear indication of a bribe while some asked for collateral. If one had to give collateral, then what is the need for the government to initiate schemes for small traders? I was also approached by many brokers who promised a low-interest loan in SBI by paying some extra processing fees. We visited nearly all the possible public sector banks and this is what we got:

• State Bank of India: We visited four branches of SBI. One was a personal banking branch; the other was a personal loan branch and then finally two SME branches. The person had no knowledge or slightest idea about trade loan. He took the contact saying he will take two days to inform us about the details. He was in-charge of the loan department in that particular branch. Never got back! Then, we headed to another branch of SBI. The manager showed interest on the promise that we open current account in his branch and shared contact of a lady in the SME district branch. When we showed up in that branch with some hopes, we were out rightly rejected. The lady loaded with gold ornaments could not find any fault with the papers, but they want collateral and the rate of interest would be 13.5%! That’s as good as any private lender. This is what India’s biggest bank with branches all over is like!
• Bank of Baroda: Day one, the manager was very keen and extremely polite. He immediately sent the concerned officer along to see the store. But the next day, we were rejected since they don’t provide trade loan to a senior citizen. Strangest of all. No where it was mentioned about this age clause. No other bank has age as a factor. Are senior citizens only to apply for health loan or pensions?
• Dena Bank, UCO Bank, Canara Bank, Indian Bank, Allahabad Bank, Corporation Bank, Union Bank of India, Vijaya bank, Central Bank of India wanted nothing less than a collateral.
• Then finally we got in touch with Bhartiya Mahila Bank. A special bank to encourage women entrepreneurs. With lot of hope, I called up the branch. The person had no clue about the loans and mentioned that only the manager handles the loans section and she is on training for a week. So patiently we waited for a week and then visited with all the papers to the branch. The manager with another staff member visited the store. Sorted out and finalized that we meet them with other needed documents in 3–4 days. After we went with all the documents, we were handed over another long list of documents still required and informed that it is compulsory to get the MSME registration done. Again another long process!

Well, I was all so impressed by the rhetoric around ease of doing business and Mudra bank. But where is it all heading to? I guess it’s time the government broke the shackles of these age-old brokerage systems and make it a transparent and accountable system. If an honest common man can’t get loans from public sector banks, then better privatize them rather than increasing non-productive assets further burdening tax payers.

Jyotsna Narang, is a young entrepreneur, managing her family business, a retail store and currently amidst of second try in registration of MSME.