Save Public Sector Banks Series

Public Meeting: Kill from Within: The New Phase of Privatisation

Date: June 5, 2018

Venue: ICSA, Egmore Chennai

Speakers:

Shri K.E. Raghunathan, AIMO

Shri D. Thomas Franco, AIBOC

Selvi Priya Dharshini, CFA

Shri C.P. Krishnan & others

A book on “Laudable Performance of Public Sector Banks = Facts and Lies 2017-18 and a booklet on “Business Correspondents” will be released in the meeting.

Significant changes are being made very silently by the government and the RBI to the Public Sector Banks (PSB). Dena Bank being restricted to assume fresh credit exposure and recruit staff reports in media of plans to sack and shift managing directors of PSBs and most importantly the appointment of non-executive Chairman to Dena Bank, Punjab and Sindh Bank and Central Bank of India. This is the second round of such appointments, the first being Shri Ravi Venkatesan – Bank of Baroda, Shri G. Padmanabhan – Bank of India, Shri T.C. Venkat Subramanian- Indian Bank, Shri T.C. A Ranganathan- IOB, Shri Sunil Mehta- PNB, Shri G. Narayanan – Vijaya Bank.  They have not been able to improve the Banks in any way.  Rather they interfere unnecessarily.

Similarly, those who came from Private Banks as MDs like, Rakesh Sharma, Canara Bank, P.S. Jayakumar, BoB, have not been able to do anything great to turn around their Banks.  Such moves come as a rude taunt when Ms.ChandaKochhar and Ms.Shikha Sharma are allowed to continue as Managing Director (MD) of ICICI and Axis bank respectively despite accusations of many scams.

There seems to be a clear favouring of the private sector banks over PSBs. The silent ploy to kill Public Sector Banks (PSU) is slowly creeping closer with every decision of this government regarding PSUs. It is important to note who are those being appointed and who is being sacked or shifted to other banks. According to AIBOC’s statement, the MD of Indian Bank who helped to improve the position of Indian Bank after being shifted from IDBI Bank, is also mentioned as one who may be asked to quit by the Government.  It is pertinent to note that out of 21 Public Sector Banks which have published their results for March 2018, Indian Bank is one of the two which has declared profit and this is primarily because of the policies pursued by its MD.Mr.CharanSingh, Ms. Anjali Bansal and Mr Tapan Ray will be appointed as non-executive chairperson of Punjab & Sind Bank, Dena Bank and Central Bank of India. Mr.Charan Singh served at IMF as senior economist and at Reserve Bank of India as director. Ms Anjali Bansal is the founder of Spencer Stuart’s India and had worked with McKinsey and Company and Mr Tapan Ray has served as Secretary in the Ministry of Corporate Affairs.

It was also reported recently, that the Prime Minister’s Office (PMO) is considering a proposal (“Continuing Reforms In PSBs for Better Performance”) to replace Banks Board Bureau (BBB) with a new body that would operate as a holding company. This is done to ease appointment of top bank officers in consultation with the Reserve Bank of India (RBI). The Economic Advisory Council (EAC) has suggested that the new body should directly report to the PMO, and not to the Finance Ministry. The decision is said to be the result of non-effectiveness of BBB due to interference from the Department of Financial Services (DFS). It is also said that this new body will bypass DFS and report directly to the PMO. Such a measure will only increase the appointment of more ‘experts’ from IMF and World Bank who would influence the policies of the board of the banks. In fact, the Gyan Sangam recommendation to form BBB clearly stated that BBB will be collapsed into a Company and GoI shares in Banks will be transferred to it.  This will pave way for privatisation as recommended by P.J. Nayak Committee.

The agenda of the World Bank Groups and IMF have been very clear when it comes to public run institutions. Such appointments in RBI have hurt the interest of the banks before and now these appointments are only going to further privatisation and claw in on employee benefits in the name of efficiency. In fact, RBI Governor Dr Urjit Patel was an employee of IMF. In other words, this is a more subtle attempt to strengthen the stranglehold of neoliberal policies and further weaken the public sector banks.

For the last 25 years, we have seen such attempts through the recommendations of various committees starting from the Narasimham committee (1992) to P J Nayak committee (2014) and recently with the introduction of the FRDI Bill. Though they all have been pushed in the name of making PSBs more efficient, their stated agenda has always been to privatise PSBs. This is reflected in the manner in which the government and the RBI is tackling the NPA problem. The much boasted IBC has become an easy means for the corporate debtors to shed their bad loans, with the lenders getting only a meagre amount of the total loan. There is a huge haircut for Banks but media is cheering it. The Corporate Buyers are getting assets at a cheap rate. The FRDI Bill, another draconian attempt to shuttle public ownership of banks also has been put on hold. Instead of recovery, both the regulator and the state has been aiming at mitigating the losses of the corporates and close down banks that are too weak to recover!

The analysis of 21 Public Sector banks performance for 2018, which has been brought out by AIBOC before RBI and IBA could publish it, shows that growth in total business 3.41% only.  Deposit growth is 2.27% against last year’s growth of 7.92%.  Credit growth is also 4.98% only.  Banks have shown the highest loss in history amounting to Rs.85369 Cr because of the highest NPA provision of Rs.270000 Crores.  The NPA position has reached to Rs.895204 Cr because of revision of Asset Classification norms by RBI.  The 4 years of NDA Govt policies alongwith the Reliance trained RBI Governors Policies are killing the Banking System and we are moving towards a major financial crisis.  Is 2008 September to US  September 2018 to India?

Since all blatant moves towards privatisation are faced with tough resistance by the unions and the civil society, the government is now trying to push through changes in the top brass and changing institutions to hallow PSBs from within. To discuss the various facets and implications of these policies on the banks and the public, AIBOC and CFA calls for public meeting “Kill from within-the new phase of privatisation”. Participate in large numbers.