Many of our elected representatives and politicians are upset at the way commercial banks and other financial institutions are treating them. They see the marketing personnel of almost every bank literally chasing people with attractive consumer loan offers and credit and debt card schemes. Banks, in their drive to tap the fast expanding consumer loan market, do not discriminate between the low, middle and high-income groups. As long as a prospective client is drawing a regular salary or has any other steady income, they are willing to take the risk.
However, that is not the case when banks deal with most of our politicians, including elected representatives. They have been placed on the 'negative list' along with such an interesting bunch of professionals that includes lawyers, police officials, and journalists. Barring a few exceptions here and there, most practitioners of these trades are considered unworthy for consumer loans and credit cards simply because banks find it next to impossible to recover money from them.
Bankers fear that lawyers can drag them to court and find ingenious 'legal' ways on how not to pay back the loan. As for police officials, the less said the better. Like a majority of law abiding, God-fearing Pakistanis, bankers, too, do not want to cross paths with the police, let alone try to recover any kind of loan from them. However, exceptions are made in case of CSS officers. Journalists, according to a senior banker, are on the list not simply because they are seen as 'potential trouble-makers' in case of a dispute with a bank, but also because most of them do not have a steady income.
But what's the problem with politicians? Why are they on this list? Whatever the income tax returns of a majority of them say, our politicians are not just rich enough, but apparently have all the right contacts to make a successful bid for consumer financing. After all scores of politicians managed to get huge loans during the 1980s and 1990s from state-run banks for themselves, relatives, close friends and cronies without much ado and even got them written off as their industrial and business ventures failed for one legitimate reason or another.
It is understandable that a lot of politicians find it bizarre why getting consumer financing has been made difficult for them, though here the amount is smaller compared with the billions of rupees worth industrial and commercial loans. Yes, they find it hard to swallow that when even a person earning a 'meagre' few thousand rupees can get consumer loans, why cannot they lease a new car, buy another house, or have a fun-packed holiday on loan. Why cannot they enjoy credit card and debt cards when even a 'meek-looking' middle class person can wave it in front of them? Are they not citizens of the Islamic republic with equal rights and legitimate desires to have their bit of money from the booming consumer financing from banks, which they hear are awash with liquidity.
The negative list, no doubt, is hurting the ego of our elected representatives the most. Their anger over the issue can be seen the way members of the National Assembly Standing Committee on Rules and Privileges summoned the State Bank of Pakistan Governor Shamshad Akhtar last month to list their grievances about banks and development financial institutions. The treasury and opposition members reached a rare consensus to open a joint front to demand an unbridled access to credit cards and consumer loans as their right -- and ironically in doing this underlined the very fact that most of our politicians are seen with distrust by financial institutions. The very demand of the committee members that banks should treat elected representatives with respect and at least return their telephone calls speaks volumes about their image problem -- if not before their innocent voters, at least in front of banks, which have a history of unpleasant experiences and bad loans when it comes to dealing with many politicians.
Bankers say that they do not question the ability and capacity of a majority of our politicians in making repayments, but in most cases, they do not have the willingness to do so. During the lost decades of the 1980s and 1990s Pakistan's entire banking system was brought to its knees as a result of billions of rupees worth of bad debts and loan write-offs in which our successive rulers and politicians played a leading role.
Now thanks to the financial sector reforms that started after the military takeover of October 1999, there has been a turnaround in the banking sector despite the fact that bad debt still hovers well above 175 billion rupees.
However, the prudential lending regulations introduced by the State Bank of Pakistan have placed banks in a better position to say no to those applicants whose credit history and credit worthiness is doubtful. And it is ironic that many of our politicians fall under that doubtful category, according to bankers.
Bankers fear that many politicians can easily manipulate the system and use contacts to twist even the arms of the law, which should otherwise help them in the recovery process. They doubt that there would be any help around when it is the question of recovery of a leased car or getting a mortgaged house vacated from an industrialist, feudal lord or tribal-cum politician.
The State Bank of Pakistan will certainly has to perform a high-wire balancing act between the two extremes of pacifying some of our angry parliamentarians by massaging their hurt ego as well as ensuring that its prudential lending regulations remain undiluted. Yes, the yardstick for disbursement of loans should not be lowered at any cost -- whatever some or majority of the parliamentarians would say or do. The cost of democracy should not mean corruption.
The members of the National Assembly Committee on Rules and Privileges should think more of their duties rather than privileges and work to win the trust of banks by going through the book rather than firing shots at the central bank. They might have sailed into the parliament by getting votes one way or another, but for many it is heartening that at least there is some one to show them their face in the mirror and tell their real worth.
Politicians have to work extra hard to improve their public image which judges them by their past actions that do not make people very proud of them.
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