March 14, 2021

Country-Wide Bank Strike on March 15-16

C P Krishnan

TILL the year 1969, all thebanks except State Bank of India and its subsidiaries were in the private hands. During this period more than 500 private banks collapsed due to bankruptcy with the result the people lost their considerable portion of their money deposited in these banks.  Remaining banks were in the hands of a few corporates who used the banks’ funds for the improvement of their own business.  These banks did nothing either to improve the economy of the nation or to improve the standard of living of the common people. That is why 14 major private banks were nationalised.  The banking system was converted to mass banking instead of class banking. Public Sector Banks (PSBs) started serving the national priorities like agriculture, small, medium and micro enterprises, employment generation etc.

Even after 1969, in the last 51 years, 38 private banks became bankrupt. Public Sector Banks only saved the majority of these banks and their depositors’ money by taking them over. But for that, the depositors of these banks would have suffered heavily. In early 1990s, with the advent of neo-liberal policies, 10 new generation private banks were opened with all pompous. But within a short period four private banks including Global Trust Bank and Times Bank became bankrupt.

When this is the scenario, the finance minister has made an announcement in the central budget presented this year that two Public Sector Banks besides IDBI bank would be privatised. Earlier in May 2020, as a part of Atmanirbhar Bharat, the finance minister has clearly spelt out that this government wants to dispense with all the Public Sector Undertakings in toto except a few in strategic sectors.  As finance is declared as one of the strategic sectors, they want to leave one or two banks or at the maximum four banks in the public sector. The remaining eight PSBs will be either merged or handed over to private sector. This time, unlike in the past, the chosen two banks and IDBI would be strategically sold to corporates withgovernment shareholding reduced to zero as reported in the media quoting prime minister’s office.

Earlier, as a prelude to this move of privatisation of the PSBs, a policy announcement was made by RBI’s Internal Working Group (IWG) on November, 20, 2020 to allow corporate industrial houses to open banks. The five-member committee of IWG consulted 10 experts out of which four experts are the former deputy governors of RBI and the remaining six experts are the heads of the private banks and other private firms.  Nine out of 10 experts clearly opined otherwise and despite that, the IWG has come out with the recommendation that corporate industrial houses can be allowed to open banks. Even in USA which is often cited as example by the ruling class of our country, the industry and commerce are not mixed and corporate industrial houses are not permitted to open banks. But, this government, unmindful of the disastrous consequences to our economy due to this policy change, is bent upon giving licence to the corporate industrial houses to open banks and then hand over the PSBs to them.

The Foreign Direct Investment (FDI) in the banking industry is allowed upto 74 per cent as of now. The share of the foreign institutions in many of the new generation private banks is more than 51 per cent.

There is rampant top-level corruption in the private banks and the Non-Banking Finance Companies (NBFC) for quite some years. Take the case of private banks like Yes Bank, ICICI Bank, Lakshmi Vilas Bank or that of private NBFCs like Dewan Housing Finance Limited (DHFL), Infrastructure Leasing and Financial Services (IL&FS). The then head of ICICI bank, Chanda Kochar is charged with misusing her position in the bank while sanctioning loan to Videocon group for a quid-pro-quo of corruption money through her husband Deepak Kochar. The co-founder of Yes bank, Rana Kapoor is charged taking bribe through shell companies promoted by his wife and daughters for the loans sanctioned in Yes bank which eventually became non-performing assets. Wadhwan brothers of DHFL are charged that 2,60,000 fictitious housing loans were sanctioned between the years 2007 and 2019 through a non-existent Bandra branch and diverting them to their accounts to the extent of Rs17,400 crores. These are some of the examples that came to light.  Many more such frauds are yet to see the limelight. The government is planning to hand over PSBs to these people who indulge in fraudulent activities.

The PSBs and Regional Rural Banks (RRB) have opened 40.63 croreout of total 41.88 crore Prime Minister Jan Dhan Yojana Accounts for the poor people and the private banks hardly opened only 1.25 crore accounts. The government banks are standing examples for rendering exemplary service to the ordinary people through agriculture loans, small, medium and micro-finance loans, education loans, women self-help group loans etc., without any guarantee or security.  This plays a vital role in improving the standard of living of these vast sections of people.  The private banks can in no way match the performance of the PSBs in this regard.  While the Non-Performing Asset (NPA) arising out of large borrowers constitutes around 90 per cent of the total NPAs, it is less than two per cent in the case of these above categorised priority sector loans.  Even today with so much expansion of PSBs and with so many co-operative and RRBsbranches in rural areas, around 40 per cent of the rural population depends on usurious money-lenders and landlords for their credit needs. 

In May 2016 the BJPgovernment enacted IBC (Insolvency and Bankruptcy Code) with a tall claim of recovering NPAs on account of large borrowers expeditiously and efficiently. In May 2020, the finance minister herself has given a graphic picture about the performance of this Act for four years.  According to the statistics given by the government, in all 221 cases have been resolved amounting to Rs4.13 lakh crores NPAs out of which Rs1.84 lakh crores (44 per cent) are only recoverable and the remaining Rs2.29 lakh crores (56 per cent) have been written off.  This amount of 1.84 lakh crores is only recoverable and not fully recovered. This is the efficacy of this law and thus it clearly manifests the lack of political will on the part of the government to recover corporate NPAs strictly.The sadder and paradoxical part is that those corporates who are the beneficiaries through written-off process of the banks including PSBs are in the forefront to take over the PSBs due to the reckless anti-people policy pursued by the present BJP government.

That is why UFBU (United Forum of Bank Unions) consistingfive unions and four officers associations representing 10 lakh bank employees and officers has given a clarion call for country-wide strike on March 15-16, 2021 demanding strengthening of the public sector banks, opposing their privatization and the anti-people banking sector reforms.

In the year 2000, during the Vajpayee government, a bill was introduced in the Lok Sabha to reduce the government holding in the PSBs to 33 per centwith intent to privatise PSBs. That sinister move was defeated through incessant struggles of the bank employees actively joined by the democratic forces and widely supported by the general public.  This time also bank employees’ movement is quite confident that this privatisation move of this government can very well be pushed back with the support of the common people.