Don't gift PSBs to very same class that has defaulted nation, staff tell Govt
New Delhi: Bank employees and officers undertook a massive march to Parliament on Friday to protest against the Union Government's "conspiracy" to privatise public sector banks. Opposing the Centre's anti-people banking reforms, the United Forum of Bank Unions (UFBU) said, "In a developing country like India, banks have an important role to play in national economic development. Ever since the nationalisation of banks in 1969, public sector banks have contributed immensely to the Indian economy. These banks have been able to mobilise the savings of the people — the total deposits of all banks has galloped from Rs 5,000 crore in 1969 to nearly Rs 110 lakh crore today."
"Total loans given by these banks have gone up from Rs 3,500 crore in 1969 to 75 lakh crore, including loans for needy priority sectors. The number of branches, too, has gone up from 8,200 in 1969 to 85,000 today. Hence, there has been phenomenal growth of banks under the public sector."
"During these four decades, on the other hand, many private banks have collapsed due mismanagement by owners and their inefficiency," UFBU pointed out. "So there is a need to further strengthen our
public sector banks and open more and more branches to serve the people."
"Privatising our banks will result in handing over the country's huge, precious public savings to private hands," the bank employees' organisation observed, adding that "the track record of private banks in our country is known to all. In the last 30 years, as many as 30 private banks have collapsed due to mismanagement by private owners. Thus, to ensure the safety of people's money in the banks, public sector banks have to be strengthened — not privatised.
UFBU also pointed out that only public sector banks cater to the credit needs of priority sectors like agriculture, employment generation, poverty alleviation, women's empowerment, rural development, education and health and give loans to these sectors at concessional interest rates. But if these banks are privatised, their only motive will be to earn higher profits, interest rates will be higher and priority sectors will be neglected, all combining to have an adverse impact on our economy.
Besides, the banking density in India is still very low compared to most countries, UFBU observed. "So we need expansion of banks, not consolidation. There are thousands of villages without access to banking facilities. More branches are required to be opened in these areas."
Referring to the Government's contention that mergers will make our banks of global size, the bank staff body noted that global experience has shown big banks to be extremely risky. "We cannot take such risks because banks deal with the savings of common and poor people."
Describing bad loans as the "main problem", UFBU stated, "Today the banks' bad loans are nearly Rs 15 lakh crore, the bulk being due from private companies, business houses and corporates. What is required today is recovery of these bad loans from these private companies and not handing over of these banks to the very same private sector."
Due to these bad loans not fetching any interests, public sector banks are suffering an interest income loss of Rs 1,50,000 crore. Their profits get depressed due to this revenue loss. In addition, the public sector banks are writing off huge sums from their profits. Hence, some banks are in loss. Therefore, the recovery of bad loans is the only task now, the bank staff body contended.