Raise Voice against Attack on PSBs
C P Krishnan
INDIAN banking industry was predominantly in private sector for close to two centuries till 1969. Large number of private sector banks failed during this period causing deep misery in the lives of lakhs of depositors whose money was siphoned off to offset the huge negative net worth of these banks when they were wound up. The private banks were largely used for funding their family business houses and were cruelly apathetic to the needs of the peasants, micro and small enterprises etc. Public became unrest since thousands of people lost a huge portion of their deposits. There were widespread protests by the Left and other democratic forces against the loot and plunder of these private sector banks which led to nationalisation of 14 major private banks on July 19, 1969. Till then, only State Bank of India and its associate banks were in public sector. Subsequently six more private sector banks were nationalised in the year 1980.Fifty years have passed since the major step of nationalisation of the banks was taken and the golden jubilee of bank nationalisation is widely observed by the bank employees and officers throughout the country.
GAINS OF NATIONALISATION
The stated objective of the bank nationalisation was to ensure “development of agriculture, small trade, employment generation, export, reduction of regional imbalance and in essence mass banking instead of class banking”. Nationalised banks grew leaps and bounds in terms of business mix, small and marginal loans and geographical spread particularly to the rural areas for the next 22 years since 1969till 1991.People’s savings became safe. There was no failure of any of the Public Sector Banks (PSBs) after bank nationalisation. In fact, since 1969, the failed private sector banks were merged with the PSBs saving the depositors’ money in those banks and in the process forcing PSBs to bear the net losses of these failed private banks. Credit to the poor and marginal formers was extended to a great extent. Crores of youth became self-employed through liberal bank credit. Thus, the nationalisation of the banks helped to improve the standard of living of common man substantially.
Reversing the gains of nationalisation
In India post-Soviet Union collapse in Russia, the successive governments –right from Narasimha Rao government in the year 1991 to second Narendra Modi government, which got elected recently, have also come out brazenly in support of the corporates by following neo-liberal policies prescribed by IMF-World Bank-WTO.
Scores of committees were formed in these 28 years to prescribe recommendations, which suited their class interest. Narasimham Committee I & II, Leeladhar Committee, Verma Committee, Tarapur Committee I & II, Melagam Committee, Raghuram RajanCommittee, P J Nayak Committee were some of the committees which in essence advocated privatisation of PSBs, sale of PSBs to inland or foreign corporates, change of the bank boards with more power to outside shareholders, abolition of priority sector lending to the underprivileged people, reduction of rural presence, removal of government control and RBI control, removal of accountability to CVC and parliament, merger/amalgamation of PSBs, capital account convertibility, increase of rate of interest on small loans and reduction of rate of interest on big ticket loans etc. All these were recommended in the name of increasing profitability, viability, efficiency etc. But in reality the aim of these governments has been to “re-privatise PSBs or to sell them to corporates and till such time when a suitable atmosphere would be created for this, the boards of the banks to be altered in such a way, thus leading to the dominance of private corporates”. Through these steps, the governments have been striving to reverse the gains of nationalisation which helped to improve the standard of living of lakhs and crores of ordinary people.
Whenever the governments at the centre started implementing these anti-people recommendations of the various committees, the entire bank employees and the officers along with the working class of this country could push the governments back and force them to shelve their attempts through their collective resistance and struggles.
In the year 2000, there was an attempt to privatise PSBs, as recommended by Narasimham committee-II, through introduction of a bill in the Lok Sabha to reduce the government holding in PSBs to 33 per cent during the Vajpayee government. This anti-people move was successfully thwarted by the bank employees and officers through various struggles including two days’ strike at a short span of time, supported by the Left and other democratic forces. Attempts were made by the governments in power to bring capital account convertibility, as recommended by Tarapore Committee. Had that been allowed, disastrous consequences would have been caused to our economy during the global crisis (2008) and India would have become another country like Greece which faced sovereign debt crisis. The stiff resistance of the working class only prevented that.
Continuous attempts are made to weaken the PSBs. The posts of workman and officer director have not been filled up by the Modi government and as of today there is no representative of the workforce in any of the PSBs boards.
Recently Modi government-I sold the government share-holding to the extent of 51 per cent in the public sector Industrial Development Bank of India(IDBI) to the Life Insurance Corporation (LIC) through executive order and categorized IDBI as a private bank.
DRACONIAN FRDI BILL
Another infamous move of the Modi government was to bring FRDI (Financial Resolution and Deposit Insurance) Bill-2017 to destabilise the PSBs, regional rural banks, co-operative banks, LIC, and public sector general insurance corporations at one stroke. There was a bail-in clause in that bill which provided to adjust the deposit money of the depositors towards the loss of a particular bank. There were also clauses in that bill to wind up PSBs and public sector insurance companies. Due to the sustained combined resistance of the bank employees and officers through a joint strike in August 2017 and the massive campaign unleashed in the social media and main stream media, ably supported by the Left parties, the government had to withdraw the bill.
PRO-CORPORATE LENDING AND RECOVERY POLICY
Over a period of time the PSBs have been weakened through various measures by the successive governments at the centre. The lending policy has been drastically changed facilitating corporate sector to get loans without any collateral security or with least collateral security whereas more than 100 per cent collateral security has become mandatory for loans beyond Rs3 lakhs in agriculture sector and beyond Rs7.5 lakhs in education sector. Hence the SARFAESI Act is effective for recovery of only small loans backed by security; whereas the same act has become ineffective in the case of large loans as they are not backed by collateral security. The much-touted Insolvency Bankruptcy Code (IBC) Act 2016 has only facilitated deep haircuts while recovering the non-performing assets (NPAs) of the large borrowers. Thus, thousands of crores of rupees are written-off to the benefit of defaulters out of the hard-earned profits of the PSBs. This has seriously weakened the PSBs. The fact that Modi government strongly defends the IBC Act clearly reveals its class bias towards the corporate.
PRIORITY SECTOR LOANS DILUTED
The Modi government has forced the PSBs to follow new generation private banks and foreign banks on many aspects. Agriculture is neglected. All the jewel loans up to Rs 1 lakh are not required to be supported by any land document but are categorised as agriculture loan to fabricate the record. All the SME (Small, Micro and Medium Enterprises) loans are re-named as MUDRA loans to hoodwink the public. Agriculture loans, MUDRA loans and education loans without collateral security, mandated by the priority sector lending, are discouraged by the PSBs. Private banks never gave these types of loans. At the same time PSBs lend liberally to the large borrowers who constitute 88 per cent of the total NPAs. While the rate of interest on loans for the large borrowers is pegged down between 10 and 11 per cent per annum, the rate of interest for the small loans like agriculture loan beyond Rs3 lakhs, education loan, vehicle loan range from 12 per cent to 14 per cent per annum.
SMALL DEPOSITORS ARE BURDENED
The service charges for the ordinary customers have increased steeply. The charges for not maintaining minimum balance, ATM withdrawal charges beyond 3/5 times in a month, cash deposit charges, cash withdrawal charges, cheque book charges, cheque return charges for both the parties, duplicate pass book charges, signature verification charges – all with 18 per cent GST are some of the charges which severely affect the ordinary account holders. This is an attempt to drive them away from PSBs.
LET US RAISE OUR VOICE
With the return of Modi government at the centre with a larger mandate, the banking reforms will be hastened. Merger of PSBs, privatisation of PSBs, weakening RRBs and co-operative banks, encouragement to private banks and foreign banks may be some of the priority agendas of this government. There is a proven record that whenever there was stiff resistance through continuous struggles and campaigns, the bank employees and officers along with the rest of the working class could push the government at the centre back on its reform agenda. Bank employees and officers have greater responsibility not only to protect the PSBs but also their public sector character in the larger interest of the public and the nation. Let us raise our voice collectively against any attempt of this government to weaken the PSBs, co-operative banks as well as regional rural banks on the eve of the golden jubilee of bank nationalisation.