How Banks can come to the rescue

To recover from a depression, which is imminent in the near future, obviously money needs to be pumped to the economy. How to effectively do it, i have a small idea. So, basically, banks have a fixed rate for deposit and loans. I want to restructure it, so that banks lend more to the industry, still keeping it safe from collapse, especially in a depression. There should be varying interest rates for deposits as well as loans, based on the following.

Deposits

1. If the deposit is low, below a lakh or 5 lakhs( calculate according to respective countries. Please bankers and fed calculate all the numbers.) , give the least interest. So that, it will encourage people to buy goods than simply put it in banks, that is i guess huge liquidity in the economy.

2. If the deposit is high, give a good interest. Because, if someone wants to put say a 10 crores in a bank for more than a month, surely he is not doing business with that money. Let bank make best use of that money, by lending it.

Loans.

First thing, difference between deposit and loan interest should be more. That means high interest for loans, since bank is taking a huge risk, in times of depression. It has to survive, not waste resources, making already rich people more and more rich.

The most important thing in this plan is we are introducing a new score, which calculates the risk factor, Banks are taking. Not based on someone else's views. But purely based on their own bank's remittances, loans, and deposits, a particular company has done with them. This should not be done by officers, as it will lead to malpractices, but by artificial intelligence and machine learning alone. Banks can share their score with other banks and legal lenders too. Every company's loan will have varied interest rates according to the score. The score will also take into account the amount they are demanding.

Least acceptable score will have a highest interest rate ( even 20% ) and high scores will have less interest rate. Fed only puts cap on lower and upper interest rates.

The most obvious thing is more money should be pumped in the economy and i guess banks are probably the best bet as of now to take. So, high interest rates for loans should not matter, for their survival.

Also, it will to some extent encourage SMEs to have their business transactions through banks, and avoid hoarding and evading tax, because, you will have less chance of getting new loans, the next time or loan at higher interest rates. Because AI is going to reward companies having higher profits, with less interest on loans. Since, it's a safe bet.

Banks should cover the whole spectrum of loans, from the least acceptable score ( high risk ) to high score ( lowest risk ). There should a new factor based on economical performance of a country. If the factor is too low in situations like recession, the least acceptable score should be increased. As the least acceptable score increases, loan's division among indutry should be more. If the least acceptable score decreases, loan's division can be flexible based on bank's wish.  

Example, if the score for loan is between 1 - 100. During normal times, we can make the least acceptable score 30 and give loan with higher interest rate, taking high risks. During recession, we can increase the least acceptable score to 50 or 60, and give loans with less interest rate, taking less risks. But , as the least acceptable score increases, loans should keep more distributed across different type of industry. Still, loans should cover from 60 to 100, not just 100. This factor ( based on least acceptable score ) should be decided by the Reserve Bank, in consultation with the government.