By Dr. Gyan Pathak
The review of the Union Government’s decision to privatise the public sector banks has become all the more important because several experts have found the policy to be against ‘national interest’ in the real sense of the term. Even former RBI governor Raghuram Rajan has said that selling PSU banks to corporates would be a ‘colossal mistake’.
Modi’s moves to privatise public sector banks have now met with stiff opposition by bank employees and officers. The Union government has labelled it as much-needed banking reforms, while agitators sense some foul play just to hand over the public sector banks to “crony capitalists”. The same story is being replayed, as we have seen regarding farm sector reforms, labour reforms, and insurance sector reforms – agitators alleging them to be pro-corporate and demanding their rollback. With repeal of the infamous three farm laws, agitators are emboldened, and India may well expect a series of agitations if the Union government does not review its approach to privatisation of public sector banks.
The review of the Union Government’s decision to privatise the public sector banks has become all the more important because several experts have found the policy to be against ‘national interest’ in the real sense of the term. Even former RBI governor Raghuram Rajan has said that selling PSU banks to corporates would be a ‘colossal mistake’. adding that it will also not be politically feasible to sell any decent-sized bank to foreign banks.
The two-day bank strike on December 16 and 17 has been called by the United Forum of Bank Unions (UFBU), an umbrella organization of bank unions. All India Bank Officers Confederation (AIBOC) has said if the Union government does not give up the idea of privatisation, they will launch a series of agitation programmes after the two-day strike. On the other hand, the Union government is going to privatise at least two public sector banks during the current fiscal 2021-22 itself, as Finance Minister Nirmala Sitharaman had announced in her budget speech in February 2021.
India has already been undergoing a great banking crisis with unprecedented level of non performing assets (NPAs), large number of banking frauds, and very poor performance of banks providing only a limited access to financial resources to MSMEs and other needy people despite the so-called financial packages of several lakh crores announced by the government after the COVID-19 crisis made them shut down their operations. At a time when the country is just recovering from the shock, the privatisation move and the agitations signal more troubles for the country.
Sanjay Das, the General Secretary of AIBOC, has said that the move to privatise PSBs would hurt the priority sectors of the economy and also credit flow to self-help groups and to the rural economy. Moreover, the proposed privatisation move is not based on sound economic logic but is purely a political decision to hand over the banks to “crony capitalists”. He also said that 70 per cent of the country’s total deposits are with the public sector banks and handing them over to private capital will put the common man’s money deposited with these banks in jeopardy.
Such allegations and fears for the economic well being of individuals, MSMEs, and small businesses cannot be easily brushed aside because it is well known that they have always been suffering from much difficulty in accessing finance through even public sector banks on low costs. Privatisation would certainly push up the cost of getting loans, and also may suffer favouritism or bias against them due to narrow interests of the private banks. Public sector’s social responsibility cannot be found in the private sector.
C H Venkatachalam, the general secretary of All India Bank Employees Association (AIBEA), has said that they have served the strike notice to both the IBA and the Union government, and the two-day strike would also be stronger than all earlier agitations. In a developing country like India, where banks deal with huge public savings and they have to play a leading role to ensure broad-based economic development, public sector banking with social orientation is the most appropriate and imperative need, he emphasized.
The protest is against the expectation that the government would table bill for privatization of banks in the current winter session of Parliament, though the bill is yet to get official approval by the Union Cabinet.
The agitation against privatisation of banks is not new. UFBU had organized a two-day bank strike on March 15-16, 2021, just after the announcement of privatisation of banks by the Union Finance Minister in her budget speech. It was a success in terms of expanded participation of bank employees and officers.
UFBU’s meeting on November 29-30 had decided to start a sit-in (dharna) on December 3 which is going on in several places across the country, and on December 4, protest demonstrations will be organized in all the state’s capitals. A twitter campaign has been planned for December 10, and online petitions would be submitted to the Prime Minister Narendra Modi on December 14. On the day of introduction of the Bill for privatisation, there will be a demonstration before Parliament.
It should be noted that the Union government has already sold its majority stake in the IDBI Bank to LIC in 2019, and merged 14 public sector banks in the past four years as part of banking sector reforms. (IPA Service)