By C H Venkatachalam
In any country, banking sector plays a vital role in shaping up the economy. Especially in poor, underdeveloped and developing countries, banks have a crucial role to play. Our country is no exception.
Prior to independence, all our banks were in private hands, some of them in foreign hands and some of them owned by Indian private people. When India became free in 1947, it was highly backward because of the exploitation of our economy for nearly two hundred years by the British. Thus, these problems were staring at our country. When in 1950s, India decided to move forward through economic development, the task was huge and involved huge resources.
But the banks which were in private sector at that time did not come forward to help the government. Agriculture and rural economy were in distress. Industrial development was also a challenge. Rural Economic Survey revealed that rural poverty was rampant but banks did not come to their rescue.
Hence, the government was compelled to convert Imperial Bank of India into State Bank of India in 1955 with a view to open rural branches and help the people. But this one bank alone could not address the problem. Hence arose the demand that all the private banks should be nationalised. AIBEA spearheaded this struggle. AIBEA could mobilize political support also. Com Prabhat Kar, the then general secretary of AIBEA was at that time a member of Parliament. He raised this demand in the Parliament many times. Outside, AIBEA was carrying on a sustained struggle by the bank employees.
In this background, due to the then prevailing favourable political scenario, in 1969, major private banks were nationalised in India. In the last 53 years, these nationalised banks have immensely contributed for the economic development of our country. Thousands of branches have been opened, particularly in the rural areas to serve the common people. Loans are being given to agriculture, small and medium industries, education, major industries, rural development, infrastructure sector, etc, in a big way. Savings of the masses have been mobilised by these banks to provide safety for their savings.
Prior to nationalisation and even after 1969, many private banks have collapsed due to mismanagement and people have lost their savings. Nationalised banks are protecting the savings of the people. Nationalised banks alone are giving loans to priority sector. The expansion of banks under public sector is phenomenal. Right now, there are more than one lakh bank branches as against 8,000 in 1969. During this period, the total deposits have gone up from Rs. 5,000 crore to Rs. 180 lakh crore and total loans and advances from Rs. 3500 crore to 135 lakh crore.
Only after nationalisation, banks have started to move out to reach the common people. Large number of rural branches has been opened to serve the village economy. Hitherto neglected sectors became the priority sectors. Agriculture, employment generation, poverty reduction, women empowerment, rural development, health, education, small and medium industry, etc, became eligible to avail loans from the banks. This resulted in a big boost to our economy. White revolution, green revolution, etc, are only due to nationalisation of banks.
Bank jobs were also confined to people known to the owners of the banks. But after nationalisation, jobs were thrown open to everyone. All young educated people could get jobs in the banks in a big number. Reservation policy for SC/ ST candidates became possible only because of nationalisation.
But, in 1990, the government decided to open our economy for privatisation, liberalization and globalization. Banks also became the target. To begin with government amended the policy by permitting entry of private capital up to 49 per cent. Then, they have been trying to fully privatise our banks.
These nationalised banks have to be further strengthened to serve the people. But the government has announced that nationalised banks will be privatised. If banks are privatised, rural banking will be affected. Private banks will not encourage rural banking. They will be interested in more profits only. Slowly only rich people will be encouraged to have accounts. If banks are sold out, only very rich people can buy the banks and they will become the owners of the banks. Hence AIBEA is opposing the decision to privatise the banks.
We are undertaking a national campaign to educate the people to support our demand. We are collecting signatures from the people to submit a mass petition to Prime Minister.
AIBEA Demands Recovery of Bad Loans from Big Companies: The only major problem in the banks today is the increasing bad loans because of the default by big corporate companies. We have been demanding action against them to recover the loans. But the government is giving them more and more concession.
For the past six years, bad loan accounts are referred to tribunals under Insolvency and Bankruptcy Code (IBC). Instead of loan recovery, these loans are being sold to some other companies for cheap rate and banks have made huge losses. IBC has become a method to loot public money because banks incur huge haircuts and sacrifice in these deals. Defaulters escape without any penal action on them. Another corporate company is taking over these loans at cheap rates.
Where the Profits Go: As on March, 2022, Public Sector Banks’ total Gross Operating Profit: 208,654 crores, Provisions for bad loans, etc: 1,41,918 crores, Net Profit after provisions: 66,736 crores. Thus, the bulk of the profits (68 per cent of the profits) earned by the banks goes for provisions for bad loans and write off of bad loans. Thus people’s money is being looted by the corporates.
Closure of Branches: When government talks of inclusive growth and taking service to all people, in reality, the number of branches is coming down year after year. We demand that more new branches should be opened especially in the unbanked areas.
We Oppose Panagaria Report on Privatisation of Banks: On July 13, 2022, Arvind Panagaria, former vice chairman of NITI Aayog and Poonam Gupta of National Council of Applied Economic Research have submitted a report suggesting privatisation of all banks because private banks are more efficient. It is a vindictive and revengeful report against public sector banks.
They have completely forgotten that in our country so many private banks have collapsed due to in efficiency and government banks had to merge and rescue them. They have forgotten that 90 per cent of bad loans are due from the big private corporate companies. They have forgotten that 98 per cent of the Jan Dhan Yojana accounts have been opened by government banks and not by private banks.
They have forgotten that loans to agriculture, employment generation, poverty reduction, rural development, education, health, women empowerment, etc, are given only by government banks and not private banks. They have forgotten that only PSBs have opened branches in remote rural villages and not the private banks. Even today there is a lot of hidden mess in private banks. Past track record of private banks has been no good at all. We demand rejection of this report.
Fight Back to Stop Privatisation of Banks: AIBEA is a glorious organisation which fought for nationalisation of banks in the larger interest of the country. That is why it is reputed trade union in country. Today, the challenge is privatisation of banks and handing over the huge money and precious savings of the people to the greedy private corporate hands. It is our duty today to defend public sector banks and defeat the attempts of privatisation.
Can we allow the clock to be reversed? The question is before us. The answer is in our hands. If we fight we can stop the danger. (IPA Service)