First Bank of India

Street Sweepers and Members of the First Bank of India

In India, state and local governments enjoy a time-honored system of balancing their financial books with easily available no-interest loans. Among the other favorable terms are indefinite payback periods, unlimited credit lines, and year-round availability. As you might expect, such easy credit is a godsend to financially strapped governments; and those which favor this bailout vehicle use it with annual regularity.

This arrangement is not, of course, particularly remunerative for the lender, First Bank of India. But then, First Bank of India doesn’t have the same political clout that most other financial institutions enjoy.

First Bank of India is, in the finest Nehruvian tradition, a collective. It consists of the most poorly paid workers in the country – lowly government employees and the employees of government contractors.

Somewhere along the line, a bright civil service officer somewhere figured out that governments could save a lot of money each month if they simply didn’t pay the employees and contractors they hired. Not all the employees and contractors, mind you. Certainly the administrative staff within the secretariats and municipalities would have to be paid. After all, they approve the checks themselves. Indeed, it would be impractical to include any government worker with any political clout in the scheme, much as their salary contributions might assist the cause. Better to target the least paid, most disenfranchised. They are powerless to fight the government and typically cannot risk losing their much-needed jobs if they quit working during the period of non-payment; and their small salaries begin to add up to real money when added together.

The same selectivity applies to government contractors. It would be imprudent to renege on obligations to politically well-connected contractors or those paying healthy kick-backs on their arrangements. Better to target the small guys and make up in volume what their modest invoices lack in individual value.

Here in Pondicherry, it is the likes of school teachers and street sweepers who are not paid, often for months on-end. Shuddham, the remarkable NGO that is trying to pioneer a zero-garbage solution to Pondicherry’s solid waste problem, is among the contractors who are always being squeezed. And Shuddham is, perhaps squeezed harder than most, since Shuddham is the only waste collection contractor in Pondicherry which refuses to pay bribes to receive its contract. Last year Shuddham didn’t receive payment for ten months straight. Currently, the government is five months in arrears.

When the other waste collection contractors – all for-profit businesses – do not receive payment from the government, they typically do not pay their workers. “What can we do?” they plead, “We have not been paid so how can we possibly pay you?”

This is the deeply troubling part of the First Bank of India scheme. The people who bear the cost are those who can least afford it.

Consider Lakshmi: an ironically-named, middle-aged woman who sweeps the streets of Pondicherry and picks trash from the drains eight hours each day for modest pay. She lives in a small village hutment with her unemployed, frequently drunk husband. When her salary goes unpaid, she cannot simply dial her stock-broker and sell-off shares of Microsoft. The government takes a no-interest loan from Lakshmi; but she will have to take a high-interest loan from the local money-lenders, just to feed herself.

Unlike the for-profit contractors, Shuddham is run by a team of unpaid volunteers who have no interest other than the cleanliness of the town and the improvement of the quality of life in this community. And, unlike the other contractors, even when Shuddham is not paid, it always pays its workers. It is a matter of basic fairness; but the financial strain on the volunteer members to meet payroll is considerable.

Perhaps things are getting better, at least in Pondicherry. On Thursday, we met with the new Lieutenant Governor, a refreshingly wise and compassionate man named Govind Singh Gujar, to discuss ideas for extending Shuddham’s comprehensive recycling and composting scheme to a broader potion of the town. In the process, we mentioned the chronic problem of non-payment by the municipality – and even took the liberty of commenting on the gross inequity (and iniquity) of the First Bank of India scheme. Not-coincidentally, Shuddham received a call from the Department of Local Administration two-hours after the meeting, advising that the overdue sums had been approved and payments were already in-process. Other contractors, it seems, were also being paid arrearages.

In today’s sketchy economic climate, it is quite en vogue for governments to be propping up private banks. The First Bank of India is an institution that the Government of India would do well to legislate into closure if the states and localities keep overdrawing their accounts.

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4 Responses to “First Bank of India”


  1. 1 Brooks Anderson 26 October 2008 at 10:16 pm

    Thank you Mark for revealing how the government (mis)treats waste collectors — people who perform vital and essential services for the public.

    While conducting a study of municipal solid waste management services in 5 localities in Tamil Nadu, I was distressed when I observed that these local bodies all employ waste collectors through special arrangments (often with women’s self-help groups) that avoid appointing the waste collectors as government employees. Local authorities prefer such special arrangements because government employees earn an average of Rs. 6,000 per month, whereas irregular employees earn only between Rs. 1,000 and Rs. 2,400 per month.

    I regard this as an example of environmental injustice. By discounting the value of the lives and labour of these waste collectors, some of the local authorities avoid imposing a politically risky monthly “user fee” of Rs. 20 ($0.40) on house owners and residents.

    Considering that waste collectors generally come from economically disadvantaged communities, I feel that all residents who benefit from daily, house to house waste collection services should pay a monthly user fee so that the people who perform these services are adequately compensated.

    I applaud Shuddham’s commitment to paying it’s employees even when the Puducherry Government suspends or delays payment.

    Brooks Anderson

  2. 2 Puru 27 October 2008 at 12:08 pm

    Delayed Payments – Habit or Policy?

    dear mark
    most lawyers believe “justice delayed is justice denied” but unfortunately the municipality slogan or policy seems to be “better late than never”. I wish you could also try to be optimistic and see the “light at the end of the tunnel ” did’nt you notice that the government has improved its performance by 50% in a single year? This year they paid in 5 months as compared to 10 in the previous year! What a whole department consisting of a few hundred employees could not do in 150 days an old, compassionate, frail-voiced septugenarian or octogenarian does it in less than 150 minutes! This goes to prove that it is the young and healthy ones who need to probably retire or better still; take a long walk on a short pier.

    One more thing I wish to point out is that, there doesn’t seem to be a difference between a waiter and a municipality officer – both expect you to tip them. The only difference is that a waiter cleans the table and expects a tip with a smile, while the municipality officer makes you clean the town and demands a tip with a frown.

    Jokes apart; while I enjoyed your banking enthusiasm in such pitiable banking times on one hand, on the other I wish to point out that the woman who took a loan did not take it to feed herself as you mentioned but most probably to feed her usually sick children. I am yet to come across a woman in India who would eat before her child had eaten. “Welcome to the real world” as some of my friends say.

    Thanks again for enlightening the sagging spirits of Shuddhamites. Your words were like little lamps of hope in an age of garbage. Happy diwali.

    Yours ever-bankingly (financial crisis or not) Purushuddham.

    P.S: Did you notice how the municipal staff stinks much more than the garbage choked in the drains of the town? I wish there was a stink-meter to verify this scientifically.

  3. 3 saurabh somani 27 October 2008 at 1:55 pm

    nice article mark!

    btw, i think puru has got the philosphy of the govt wrong – it’s not better late than never, it’s better never than late!


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