We are seeing one by one the private banks are taking people’s money and mismanaging it.In the last 30 years, 30 private banks have collapsed. Hence the All India Bank Employees Association (AIBEA) is demanding to nationalise all private banks so that people’s money is safe. The government banks are like Nilkant Mahadev and have to swallow the poison that is private sector banks. The public sector banks (PSBs) cannot swallow it, but will keep it in their throats.

When the NPA crisis at PSBs came to light, there was talk of privatising all PSBs to solve the crisis. The propaganda will continue that the public sector is inefficient and the private sector is efficient. But it is getting exposed repeatedly. Look at what happened to Global Trust bank. We also saw the problems at ICICI Bank. Now, everybody knows what the head of the bank who was given a Padma Bhushan has done. And now, Yes Bank.

It is not just the failure of the banks, it is the misuse of people’s money.

Just like the propaganda for privatisation, corporates taking loans from banks and defaulting will also continue. This will make people realise that all said and done, PSBs are far better. The Yes Bank collapse will make people to have more confidence in PSBs.

In 1960, when T T Krishnamachari was the Union finance minister, after the then AIBEA president raised the issue of private banks collapsing, Section 45 of the Banking Regulation Act was added as a special amendment so that governments can tell the RBI to close the bank and merge it with another bank. In that regard, the government’s asking the SBI to take over Yes Bank is a good decision. We fully appreciate the government interfering, and asking SBI to take over because there are about Rs 250,000 crores of deposits of common people in the bank. We are interested in the safety of the deposits of common people.

Even if the PSB loses some money while taking over Yes Bank, ultimately people and their money are important. That’s why we always say that government banks are like Nilkant Mahadev; they have to swallow the poison that is the private sector banks. They cannot swallow it, but they will keep it in their throat.

The SBI has put in around Rs 7,500 crores which is taxpayers’ money in a private bank that was reportedly mismanaged. We can’t help it. Who else will save the bank and people’s money? It is to protect people’s money that the SBI had to put in Rs 7,500 crores in a private bank that has failed miserably. It may look odd, but it is essential. Because SBI has stepped in, some other banks are also adding some money.

I am of the opinion that the government banks have the responsibility of safeguarding people’s money. That’s why we welcome the move. We will go on to say that all private banks should be nationalised. This is the appropriate time to nationalise all private banks. One by one, we are seeing these private banks taking people’s money and mismanaging it. In the last 30 years, 30 private banks have collapsed.

AIBEA feels that Indira Gandhi was right in nationalising all banks. Our demand is, nationalise all the banks in our country so that people’s money is safe. Secondly, when the economy is in a bad condition, and to revive the economy we have to create demand. There is no demand in the country right now so, there is no development. To create demand, banks should give more loans to people so that they have the money to spend.
The private banks will give loans only where they see profit. But the government can give loans where demand is possible. So, not only for safeguarding the deposits of the people, but to give more loans to revive the economy, PSBs are important. From any angle, it is very, very necessary to nationalise all private banks.

The Yes Bank collapse is a big eye-opener. The government must stop believing that the private sector is very efficient. In fact, they are trying to do much more dangerous things. All types of people are opening small finance banks. What they should do is bring in professionalism in the public banking system. Instead, they are interfering in the functioning of PSBs.

For example, the government should help PSBs to recover bad loans. Now, the emphasis has changed from recovery to resolution. With the introduction of the Insolvency Bankruptcy Code, the priority is to resolve and not recover. Banks have given money to people like Vijay Mallya and Nirav Modi and they have not given back the money. But the government says you resolve the issue. Now all the corporate defaulters are going to the tribunal, and instead of helping banks recover the money, it is getting resolved. What is the result of this resolution according to the IBC? It results in banks losing money.

Earlier, if the banks had a profit of Rs 1,000 crores and lost Rs 200 crores as bad loans, they still had Rs 800 crores. Today, the entire profit of banks is wiped out by bad loans. In March 2019, all PSBs put together made a record operating profit of Rs 150,000 crores. But because of the sacrifice and bad loans to corporates, banks had Rs 216,000 as bad loans. What does it mean? A net loss of Rs 66,000 crores.
To offset the loss, banks are increasing the minimum balance penalty charge, service charges for cards, cheque books, etc, from common people. Thus the poor are being penalized, concessions are being at the top level. Is this democratic? Banking democracy means banking services and benefit for the majority of people. What is happening is, a few people are enjoying and majority are suffering. Also, bankers who gave loans are punished for the NPA crisis and wilful defaulters go scot free. Hence today bankers do not want to take the risk in giving loans at all. Recently in Parliament, they released the list of 10,130 wilful defaulters and these people owe Rs 112,000 crores to various banks. Just 10,130 people! Instead of punishing them, you are giving them concessions.

In this way, banking cannot be continued in our country. Slowly, people will lose faith in banking. They will be scared to keep their hard-earned money in the banks. When you lose faith in the banking system, you will choose an alternative method like speculation. Indians who are known to save money, will start speculating.

Speculators like Harshad Mehta will make money in the bargain. This government is doing everything to make savings and protecting your savings difficult. Savings is the social capital of our country which the government uses for the development of the country. The government must change its policy and encourage PSBs by giving more capital.

In 2017, then finance minister Arun Jaitley announced an amount of Rs 2.11 lakh crores as recapitalisation of PSU banks. In 2019, another Rs 48,000 crores was announced. But recapitalisation has not changed anything and the NPA crisis continues. You are pouring water into a leaking tub, and water is going to another tub that is kept below the first one.You have to plug the leak before pouring water into the tub. So, you take action against the defaulters first, and then do the rest.If you take stringent action against them today, they will be afraid to cheat banks tomorrow. Instead you go on giving capital when money is going out through another channel.

When the RBI is supposed to be the watchdog with its representatives in every banking audit, the RBI and only the RBI is responsible for the crisis. The RBI has become a doctor that gives only death certificates to banks when the doctor is supposed to cure the patient. For example, Yes Bank had an illness. The RBI should have given some medicine when it was diagnosed first. Instead, they waited till it was dying, and gave medicine to revive a dying patient. This is absolutely ridiculous.

There must be a thorough probe on the functioning of the RBI. Most of the time, they are acting as the extension counter of the finance ministry. It is supposed to be an autonomous body. Instead of being the guardian of the financial system, it has become an extension counter of the finance ministry. They knew what was happening to Yes Bank and also in ICICI Bank. If the watchman is sleeping, why do you need a watchman? One must understand that merger is not a solution to the problem when the problem is NPA. Secondly, they want big banks when big banks are considered to be a risk in the entire world. If a pussy cat falls, it will get up in a minute and runs away. But when an elephant falls, it will not be able to get up fast. Big banks mean big risks. The question is, can the government play with people’s money, Rs 137 lakh crores of people’s money? It is people’s money. So, merger is a wrong policy.

It also reflects the double standard of the government. On one side they are talking about Jan Dhan Yojna and banking for all. On the other side, they are closing down small branches in the name of merger. After the State Bank, associate banks were merged with State Bank, they closed down 7,000 branches. They want to close down about 2,000 branches after the Bank of Baroda merger. By merging and closing down branches, you are creating unemployment. Recovery of NPA also will go to the back seat. Service will become poorer. So, there will be no benefit to the country or the people or the employees or the banks. They are actually making the banks bigger so that they become attractive for private people to buy them! This is just a prelude before selling them.

The Indian banking system is not in a crisis now, but if the issue remains unattended, it will lead to a crisis. The only problem we have now is bad loans. You recover the bad loans and the problem is solved.

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