Page 120 - A Banker Down the Rabbit Hole

36. Threat to life

Attempt of loan recovery from a bigwig
The government had embarked upon an ambitious Self-Employment
Program and development of transport infrastructure in the country.
Banks were directed to give loans to self-employed persons and the Road
Transport operators considering these loans under priority sector. Banks
were mandated to grant 40% of their total loans to priority sector as
defined by the Government. RBI gave directions to the banks as to what
would comprise the priority sector. There had been some tweaking to
Priority sector norms from time to time but generally they have remained
more or less the same. Loans to farmers for agriculture and allied
activities (like dairy, sericulture, fisheries, piggery, poultry, food
processing,) rural and urban artisans, self-employed, small businessmen,
transport operators, small scale industries were considered priority
sectors loans.

Before nationalization of banks in 1969, the banks were reluctant to lend
to the above sectors. After the nationalization of banks, to direct bank
credit to these sectors for inclusive growth, such loans and borrowers
were stated to be 'Priority Sectors' and targets were given to banks to
achieve as one of the major parameters of performance for their overall
evaluation.

The banks were vying with one and another to meet their targets of
Priority Sector loans by granting large value loans to transport operators.
Firstly, the operational cost of lending to smaller number of large value
customers was much lower as compared to larger number of small

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