July 24, 2016

Country-wide Strike of Bank Employees to Protect Public Sector Banks on July 29

C P Krishnan

UNITED Forum of Bank Unions, an umbrella organisation of nine unions of workmen and officers in the banking industry has given a call for a day’s strike on July 29, 2016 opposing the moves of the government towards privatisation and merger of public sector banks and proposed anti-labour amendments to labour laws and demanding stringent action against willful defaulters towards recovery of non-performing assets. Accordingly, 10 lakh bank employees and officers working in nearly one lakh branches all over the country will observe the strike on July 29, 2016.




From 1969 onwards, for the past 47 years, the public sector banks (PSBs) have been playing a vital role in improving the standard of living of the common man. Before nationalisation, when there was dominance of private sector banks, the banks were utilised only for the benefit of the industries of the promoters of the banks. In 1960s when agriculture contributed to the extent of 44 percent of the total GDP, the quantum of loan available to the agricultural sector from the private sector banks was the meager 0.2 percent of the total quantum of loan lent by the banks. Therefore the bank employees and the Left and democratic forces conducted a sustained struggle for over a decade  demanding nationalisation of private banks. As a result, on July 19, 1969, 14 major private banks were nationalised by the then government led by Congress Party. The preamble of Nationalisation Act 1970 clearly declared that the banking industry should subserve the national priorities like infrastructure development, industrial development, generation of job opportunities etc.




Only after nationalisation of the banks, thousands of branches were opened; particularly nearly 35 percent of the bank branches were opened in rural area and nearly another 25 percent of the bank branches were opened in semi-urban centres. Out of the total quantum of loan amount, 40 percent was compulsorily earmarked for priority sector comprising agriculture, small medium and micro enterprises, education etc. Within this 40 percent loan, 18 percent was compulsorily earmarked for agriculture. The PSBs liberally lent for infrastructural development work like steel, road, rail, electricity etc. But for the PSBs, there was absolutely no scope for the development of the nation and the standard of living of the common man.




But from 1991 onwards, attempts to sabotage PSBs have started from the very owners of the bank namely the successive governments at the centre. This was done overtly and covertly. Right from the first Narasimham Committee during the period of Narasimha Rao - Manmohan Singh till the P J Nayak Committee which was accepted in toto by the Narendra Modi - Arun Jaitely government, all the committees repeatedly insisted that PSBs should be privatised. The Raghuram Rajan Committee headed by the present RBI governor which submitted its report in 2008 during the Congress led UPA government was no exception to this.

In January 2015, the chairmen of all the PSBs met in Pune in the name of Gyan Sangam. This conference was attended by the finance minister Arun Jaitely and the prime minister Narendra Modi. The base paper for this meet was prepared by the finance ministry in co-ordination with Maccency, a US based firm. In this meeting, there was a strong recommendation to form Bank Board Bureau - Bank Investment Company through which the PSBs should be privatised. Further there was a demand from the chairmen of PSBs that “PSBs should also be exempted from priority sector lending, opening of branches in rural areas and infrastructure lending” at par with the private sector banks in order to establish a level-playing field. They further demanded that they executives of PSBs should be exempted from the purview of Chief Vigilance Commission, CAG and PSBs should be exempted from Right to Information Act. They claimed that only then they would be able to take ‘bold decision’ to lend to the corporates freely and earn profit competing with the private sector banks.

The essence of the decision of this meet is “privatise PSBs immediately and till then change the character of PSBs like private sector banks in all respects”. Now, one can easily understand how the government - the owner of the PSBs and top executives of PSBs brazenly advocate privatisation of PSBs.



From 1947 to 1969, 559 private sector banks became bankrupt and thereby the savings of lakhs of common man amounting to crores of rupees were lost. The private sector banks continued to become bankrupt even after 1969. 23 private sector banks including Global Trust Bank, the new generation private bank collapsed and subsequently merged with PSBs with the loss generated by them. As a consequence of financial crisis in US in September 2008, 494 private sector banks collapsed in US alone till 2014. It is quite non-understandable that in 2015 the chairmen of PSBs demand privatisation of PSBs.




If by chance, the PSBs are privatised the credit to agriculture, education, SMEs or any other priority sector will be totally denied as prevalent during pre-nationalisation days. As of today, 43 percent of the rural credit is met only by usurious money-lenders, landlords etc. When there are 40 branches for one lakh adults in other Brics nations and in developed countries, there are only 7 branches in India. For the last 15 years more than 3 lakhs farmers committed suicide for want of institutional credit at lower interest repayable in longer term.

In this background, privatisation of PSBs is anti-national. Any government which cares a little for the welfare of its people and development of the country will not dare to privatise PSBs. Unfortunately we cannot expect such a concern for the nation and its people from the present Modi government at the centre.

The present BJP led NDA government has been taking series of steps continuously to privatise PSBs. This government is striving hard to implement the recommendations of P J Nayak Committee which in essence advocated privatisation of PSBs. In August 2015, a policy announcement in the name of Indira Dhanush was proclaimed whereby the persons from private sector are made chief of PSBs. In the same month, license for 11 payment private banks was released. In September 2015, licence for 10 small private banks was released. Two new generation private banks in the name Bandan Bank and IDFC Bank were opened at the hands of the people in power. On the one hand attempts are made to promote private banks and on the other hand, PSBs are weakened from within.




The non performing assets (NPAs) of the PSBs are alarmingly increasing during the last four-five years. The NPAs of persons/firms who borrowed Rs 1 Crore and above is to the extent of 73 percent of the total NPAs. The amount due from willful big defaulters is Rs 64,335 crores. There is no serious effort on the part of the government or PSBs to recover NPAs from big defaulters. But on the other hand education loan due from poor and middle class students is handed over by PSBs to asset reconstruction companies like Reliance who build huge pressure on the hapless unemployed youth for recovery. Due to the hectic pressure created by Reliance for total repayment of education loan with interest amounting to Rs 2.48 lakhs in one installment, an engineering student at Madurai by name K Lenin son of Kathiresan, a daily wager was forced to commit suicide on July 14, 2016.




The BJP government at the centre is extending red carpet welcome to foreign direct investment at the peril of our own countrymen. In order to facilitate the inland and foreign corporates to exploit the labour without any hindrance, the labour laws are sought to be amended against the interest of the working class. In the name of codifying 44 labour laws into 5 laws, even the small privileges that are prevalent today are sought to be wiped out. 70 percent of the labour force are going to be denied nine fundamental labour laws like Industrial Disputes Act, Payment of Wages Act, PF Act, Gratuity Act etc. The proposed amendments are going to deny the workers their fundamental right to strike in any sector. By any remote chance if these amendments are carried out by this government, the plight of workers would be taken 100 years backward.




A nationwide strike call on July 29, 2016 has been given by the UFBU against the anti-labour and anti-people stand of the Modi government. If this warning is not taken in the right perspective by the present government and if there is no policy change in favour of the common man, the bank employees and officers are determined to intensify this struggle.The unions on struggle appeal to the people of this country to extend their whole-hearted support to this patriotic nation-wide strike of the bank employees and officers on July 29, 2016.