It’s Class Banking

Though india attained independence in 1947, it remained backward economically for more than one reason. Basic and broad-based economic development was the need of the hour. But unfortunately, the then Banks, which were all in private hands and many of them owned by big industrial and business houses, did not come forward to contribute in the process of development.

Agriculture sector, Rural and Cottage Industries, Small Industries and Business, which were the mainstay of India’s economy and other pivotal sectors of the economy remained neglected. Nationalisation of Banks and bringing them under Public Sector became very critical and crucial for giving impetus to country’s growth and progress.

In this background, 14 major private Banks were nationalised in 1969 and 6 more in 1980. State Bank of India, its Subsidiary Banks, as well as the Regional Rural Banks, and the nationalised banks became the sheet-anchor of national economic development. Banks started reaching out to the common masses, bank branches started to be opened in rural areas and remote villages, precious savings of the people were mobilised and brought into banking system. Hitherto neglected sectors like agriculture, employment generation productive activities, poverty alleviation programmes, rural development, health, education, exports, infrastructure, women empowerment, small scale and medium industry, tiny and micro industries, etc. became the priority sector and focused attention of Banks.

Class Banking was transformed into Mass Banking and the common man and deprived section of society could access, convenient and safe banking services. Economy got boosted and there were many large strides and achievements in the past 5 decades.

Public Sector Banks are the very vehicles of the economy’s growth and development. PSBs have become the trustees of people’s savings and the repository and depository of the people’s confidence. Public Sector Banks are the reservoirs to irrigate the economic development in the country. Public Sector Banks’ contribution to make the country’s self-sufficiency is immense as they played pivotal role in all revolutions like green, blue, dairy etc. Public sector Banks not only unshackled the farmers, landless labourers and the rural populace from the clutches of money lenders, though partially, but also provided much required credit which made rural India a strong component of country’s economy. Today’s major infrastructural development has the highest contribution from Public Sector Banks. Despite false official propaganda PSBs are earning huge operational profits.

Instead of further strengthening public sector banking, the present policies are aimed to weaken PSBs, by starving them of the required capital, human resources, through disinvestment and proposed privatisation. Weakening the public sector banks is unwarranted, unjustified and regressive step. The Bank Unions demand strengthening of Public Sector Banks, by adequate infusion of capital, human resources and strengthened statutory framework to recover of the stress assets.

The nationalisation of private banks in 1969 and 1980 are watershed events. This resulted in exponential growth of bank branches; making available much needed funds to the credit starved sectors like agriculture, small, village and cottage industries, small entrepreneurs, share croppers, deprived section of society, liberating them from the slavery to money lenders.

It is irrefutable that “privatisation” neither brings efficiency nor the safety. Around the world innumerable private banks have failed. It is a myth to believe that only “privates” are efficient. If private enterprises are epitome of efficiency, there should not have been any NPAs from large private corporate entities at all. The NPAs/stressed assets of the banking industry belong to private large corporates which incontrovertibly, unquestionably demonstrates that private enterprises do not denote efficiency.

This would incontrovertibly result in denial of easy, next door and safe banking to the populace of the country. This would also result in denial of convenient, economical banking services to the common man.

Employees have been opposing misplaced, retrograde banking reforms that were introduced in the year 1991 for the reason that these measures are aimed at privatisation of public sector banks, than enabling them to be stronger.

Privatisation is not the solution to the problems faced by the Banks; rather privatisation would further aggravate the challenges being faced by Banks.      

[Contributed]

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Frontier
Vol 54, No. 28, Jan 9 - 15, 2022