The owners of public sector banks in the country are the “nation and its people” and the elected government acts only as a “caretaker,” argued a bank employees’ federation on Thursday as it flayed the Narendra Modi-led Central Government's aggressive push towards privatisation.
We are totally opposed to the idea of privatisation of two public sector banks as proposed by Union Finance Minister Nirmala Sitharaman during her 2021-22 budget presentation, said Bank Employees Federation of India (BEFI) in a press statement on Thursday.
In her budget speech this year, Sitharaman had announced the privatisation of two PSBs (in addition to IDBI Bank) and one general insurance company in the 2021-22 fiscal year. She had also reiterated the Centre’s commitment to initiate the partial Initial Public Offering (IPO) of Life Insurance Corporation (LIC) – all in a bid to achieve the disinvestment target of Rs. 1.75 lakh crore for the current fiscal.
On March 15, against this very move, nearly 10 lakh employees of PSBs and older private banks went on strike for two days. The bank employees were joined by the staff of the General Insurance Corporation (GIC) and LIC, who abstained from their duties for a day too.
The national media was recently flooded with news reports of NITI Aayog – the government think tank – suggesting names of to-be-privatised public banks to the Core Group of Secretaries on Disinvestment. It was what prompted the bank employees’ federation to reiterate its position on the matter.
“The history of private banks is replete with bank failures, when bank after bank used to close down, putting the employees and its depositors into great misery,” the BEFI’s press statement noted. The federation is referring to the pre-nationalisation era of banking in the country. As many as 14 large banks, which were operational in the country then, were nationalised in 1969.
The country has come a long way since then with a “glorious role” played by public banks for the country’s “economic development” and its “sovereignty,” said BEFI.
Recommendations to reduce the number of public banks have been floated by several committees formed since 1991 with the advent of a new national economic policy that had opened Indian markets for global players.
The same recommendations have now been aggressively pushed by the Modi regime. It has so far resulted in the reduction of public sector banks to 12 from 27 in 2014. It was the same year when the Bharatiya Janata Party (BJP)–led National Democratic Alliance (NDA) took over at the Centre.
“The owners of the PSBs are the nation and its people. We firmly consider that an elected Govt is only a caretaker having no rights to sell its properties. Privatization of PSBs is part of the bigger agenda of the Govt. which announced wholesale privatization of the public sector enterprises of our great nation (sic),” BEFI said on Thursday.
“The bank employees have been opposed to idea of privatisation of banks since 1991 itself. It will hurt the public – the bank's customers – as much as it will demoralise the bank workforce,” Debasish Basu Chaudhary, general secretary, BEFI told Newsclick on Friday.
He claimed that all the PSBs make “huge” operating profits every year. However, he said, they showed a “net loss” mainly due to the “huge provisioning towards bad debts and NPAs (Non-performing assets).”
Moreover, according to Basu, it is not as if the private banking sector was immune to the problem of growing NPAs in the country. “Bad debts of the private banks are also increasing and many such large banks are penalised for under-reporting NPAs. The top executives of some of the largest private banks are accused of gross irregularities,” Basu said.
Asked whether the Centre has attempted to take the bank employees into confidence before privatising the banks, Basu said that “no meeting on the policy decisions has yet been taken between the Centre and the bank employees' union.”
The United Forum of Bank Unions, an umbrella body of which BEFI is a part, will convene a meeting soon and will decide on a further course of action, Basu added.