The operations of national financial institutions – banking and non-banking – and the policies that influence their functioning are two of the least monitored. Their operations have serious impacts on the nation’s economy and the lives of the common people.
a study on Indian coal-fired power project’s finance between the year 2005 and 2013 reconfirmed that the share of national financial institutions in development finance is far greater than that from all international sources. This study shows only 11% finance of 125 plants above 1000 MW financed by international sources, rest 89% finance come from National Finance Institutions which includes commercial banks, both public and private banks, and non-banking institutions. While the study focuses only on one sector, recent figures of NPAs in banks reveal that such large-scale lending without due diligence has been the order of the day since 2000.
These investments are not without impacts. In many instances, the investment is blind towards the social and ecological impact of the investments. Large-scale investments have also negatively affected the commercial banks in general and public sector banks in particular, which have been leading in lending for infrastructural and other developmental projects. This is a result of changes in the lending policies over the last few decades to dovetail the neoliberal agenda and also facilitate large-scale lending through commercial banks.
Further policies like demonetisation, the introduction of GST, have adversely affected a large population of the people. Similar irreversible changes are expected if Universal Basic Income, Financial Resolution and Deposit Insurance (FRDI) Bill. What we are looking at is not just a few drastic changes that could be written off as illogical or criticised for faulty implementation. The country is made to undergo a seismic shift in its approach to finance and financial institutions to achieve “global standards”, which is not necessarily one that benefits the economy or the people of the country.
CFA attempts to look at these institutions and policies locating them within the global shifts post the global recession of 2008. We also keep the interest of the poor and marginal at the centre of our engagement with these policies. Thereby contributing at a small level to envisage an economic policy that would be sustainable and democratic.
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