The Public Sector Banks have been facing challenges since 1991 with the so-called reform process. Starting from the Narasimhan Committee to P.J. Nayak Committee has recommended reducing Government share. They want banks to be government managed without government control. It is privatisation by reducing shareholding. The present government has announced the sale of two Public Sector Banks. Now RBI Committees are paving way for corporate control of Banks while also diluting every control.
Let us analyse what was the situation before and how the need for Nationalisation arose.
- All India Rural Credit Survey (1954) reported only 9% of credit needs were met by formal institutions and the rest by money lenders.
- 1955- Imperial Bank of India was Nationalised to form SBI.
- 1955-RBI set up two Agriculture credit Funds.
- 1955-Industrial Investment Corporation of India (ICICI) was formed.
- 1957-Industrial Finance Dept. of RBI was set up.
- 1958-Refinance Corporation came up.
- 1960-Credit Guarantee Scheme for SSI was started.
- 1964-IDBI & UTI came into existence
- 1965-National Industrial Credit Fund was set up by RBI.
- 1960- Dr. P.C. Mahalanobis Committee stated that 10% of the population cornered 40% of income in the country which needed to be corrected.
- 1967-R.K. Hazari Committee said, “So long as many of the major credit Institutions are under Direct control / and or on influence of big Industry and the linked control of the Industry and bank in the same hands is snapped, by Nationalisation of Banks, reducing concentration of economic power with a few was not possible”.
This was the background for nationalisation of 14 banks on 19th July 1969 and later 6 more in 1980. In 1969, the nationalisation of banks was opposed and challenged in the Supreme Court but the government succeeded in passing it. There was a detailed discussion in the Parliament, where Jan Sangh, the earlier avatar of BJP opposed the nationalisation of banks.
Maduli Mayee, a member of Parliament from the Socialist group moved an amendment to have employee participation through a representative of Award Staff Union as well as one representative from Officers Association. It was accepted by Mrs. Indira Gandhi. This paved way for an employee director as well as an officer director in all Nationalised Banks including SBI. They played the role of a watchdog and also through their presence in the Board monitored the growth of the bank. They were part of policy making. This also paved the way for improving service conditions of employees and officers. The Management respected the Unions and Associations and considered them partners in progress. There were no complaints against any of the directors representing employees. But after 2014, the NDA government stopped the appointments of Employee Director and the Officer Director. AIBOC filed a case in Delhi High Court in 2017 and the court directed the government to fill up the vacancies under High Court monitoring. Till now, no one has been appointed. The Prime Minister’s Office has declined the recommendations from the Department of Finance. They don’t care for the laws of the land.
This single step has made the boards play havoc. Corporate loans have increased. There is no accountability. There is no transparency and public sector banks have been made to function like private banks. But the impact of nationalisation was enormous. As of 1991, 58% of all branches were in rural areas; the number of semi urban branches also increased. The Credit Deposit Ratio in BIMARU States & North East also increased. Priority Sector lending was at 9%. Interest was available for farmers, small traders, artisans, small industries etc, constituting 40% of the total loans. Lead Bank Scheme was responsible for development of every district in the country. IRDF and Self Employment Schemes came up. Integrated Rural Development Programme was one of the biggest poverty alleviation programmes.
There were so many achievements, the most significant were:
- Small Credits: 93% of the loans were less than Rs.10,000/- This helped the bottom 50% of the population.
- Reduction in income inequality: The earnings of the top 1% of the population came down from 21% in 1940 to 6% in 1990. The income of the bottom 51% grew at a faster rate. Then the reforms began in the eighties under the Rajiv Gandhi government, speeding up in 1991 .
In the year 1991, came the beginning of the destruction. As in the story of Dr. Faustus, where a scientist becomes a slave of the Devil for temptations, the IMF & WB loans with conditions called ‘Structural Adjustment Programme’ ruined the economy. We are still slaves of the IMF and World Bank. A campaign is going on – World without World Bank. The WB has 10 commandments – most important of them is privatisation. It is based on a theory that the Private Sector is more efficient than the public sector- Chicago School of Thoughts or Milton Friedman School of thoughts. The government has no business to be in business.
Heard it recently? Yes, it was our Prime Minister and Finance Minister who said that. Why? They borrow more and more from the WB and IMF, all the conditions of borrowing are not revealed to us and in the end they sing the same tune as the World Bank. The worst thing is, here we have a Prime Minister, who lies whenever he speaks, and does not even require a Goebelles like Hitler did.
Sample these:
➢ Two Lakh jobs every year
➢ During demonetisation- Give me 50 days to recover black money
➢ Rs.15 lakhs will be credited to everyone’s account
➢ GST will change everyone’s life
➢ During the Covid-19 crisis- Mahabharat was won in 14 days- Corona will be won in 21 days
➢ Public Sector was born to die – Same day, same year or in few years
Now that they are not dying, he wants to privatise oil, coal, railways, LIC, banks, everything.
In the USSR after the 2nd World War in which the Nazi Army was defeated by the Red Army, journalists gathered at Moscow; they found huge banks of Germplasm (seeds) and many people dying of hunger. They asked a group of students going around the seed Banks, “Why are the people dying? They could have eaten these grains!”
“We will never eat our seeds; the germplasm is not for our living. It’s for our future generations,” said a young boy. The Public Sector is our Seed Bank. They are needed today and they are needed for the future.
We could stop privatisation for 30 years. We can stop it now too! We know that the private sector is only for profit. Only the big corporates like Ambani and Adani will take over everything. Privatisation will end small credit. Yes, people will get small credits from NBFCs- the modern money lenders at 24% interest or more. We will go back to the conditions which existed before 1969.
Unfortunately a lot of people are not happy with the bankers. They think that the bankers allowed Vijay Mallya, Nirav Modi and others to fly away. They think that the bankers are responsible for the huge NPAs, and for the poor service. They believe that the bank charges are increased for the salary increment of the employees, and the employees are paid well and live very comfortable lives. They think that it’s not easy to get a loan from a Public Sector Bank.
How do we explain to them that it was this government that made the defaulters fly away? How do we explain to them that 82% of the NPAs belong to the corporates? How do we explain though the business has increased manifold and staff strength has reduced drastically? How do we explain that bankers are paid less than the babus in the government? How do we make available small credits to them?
The dialogues with people of the country are extremely important. Public Sector Banks have more than 80 crore customers. They have to be informed of the conditions after privatisation. Rs.150 lakh crore deposits of the public, the major share of which is from household deposits and pensioners, will not be safe.
What can we do?
Bank Unions and Associations can form branch level customer unions and association welfare committees. They can have periodic meetings where they listen to the people, explain to the people and help them to understand the issues.
They can form branch level Whatsapp groups and share information through short and sharp videos. We have seen some of the best videos during the strike preparation. It has to continue. UFBU Programme is well planned. It has to be implemented. We got the FRDI bill withdrawn by the same government with the support of civil society and people. So have faith and we can stop privatisation.
Some of our people think that privatisation is good. It would bring better salary & perks and better atmosphere for customers. But they don’t know the reality! When BOM was taken over by ICICI not a single staff could continue for long. New Generation Private Banks have a minimum balance requirement of Rs.10000 in savings bank accounts. In short, they cater to the rich.
With privatisation there will be no trade unions. There will not be education loans, agri loans, MSME loans and housing loans at reasonable rates. Some think SBI will not be privatised. But the truth is even if we allow one bank to be privatised, it will be privatised too. The likes of Ambani are waiting to take over.
The ideology has to be fought!
In a speech on June 8, 1942, M.S. Golwalkar had said, “It is futile to blame the strong for the injustice done to the weak. Sangh does not want to waste its valuable time in abusing or criticising others. If we know that large fish eat smaller ones, it is outright madness to blame the big fish. The Law of Nature, whether good or bad, is true all the time. This rule does not change by terming it unjust.”
This is the ideology of the present rulers. That’s why they support the rich corporates. They don’t question the injustice. Facism has always been supported by Rich. It comes in through democratic movements. The One Nation, One Religion, One Language, One election, One Bank is their ideology. They don’t respect diversity. India is a country of many religions, many languages, naturally, many banks are needed here.
Recall the speech of Swami Vivekananda at Chicago at the World Congress of Religions on Sept 11, 1893. “I am proud to belong to a religion which has taught the world both tolerance and universal acceptance. We believe not only in Universal toleration but we accept all religions as one.”
Public Sector Banks are in real danger of privatization. It is an ideological battle which can be won by standing with the alternate ideology based on the welfare of a larger humanity. The idea of a welfare state, idea of equality and equity, idea of small becoming powerful, idea of majority of the population, idea of 90% versus 10%.
The challenge before Public sector banks is rooted in the ideology of the Sangh, Corporates and the World Bank. So, the battle also has to be on ideological grounds. This can be done only by people and trade unions coming together. Farmers, women, youth, students, civil society and people’s movements have to come together to meet the challenges. It’s not for the workers alone to fight this battle.
The changes are visible at the borders of Delhi. They are visible in the state elections. They are visible among the youth and women of the country. We just need to stand with them.