For Immediate Release
Strengthen Public Sector Banks!
Bring Focus Back to Mass Banking!
July 20, 2019: On the golden jubilee year of nationalisation of the banks, Financial Accountability Network India commends the Public Sector Banks (PSBs) for their service for the past five decades. The role of the nationalised banks in contributing to the economy, to the budget as non-tax revenue, making banking services available to rural areas, introduction of priority sector lending and the poor cannot be ignored.
The public sector banks still enjoy the trust of the public, even at a time when they are facing one of the most severe crises. The principle of mass banking and catering to the poor and the vulnerable, which is enshrined in the principles of nationalisation, has been the strength of PSBs. It is this strength and socially progressive ideals that are under attack for the past twenty-five years under the neoliberal rule. In multiple ways, there has been attempts to privatise banking sector under the dictates of the global capital.
One of the primary causes for the banking crisis is the deviation of the banking sector from ideals of nationalisation. From banking being a service to the common people the banks were forced to lend recklessly to the corporate sector. When the corporate sector accumulated NPAs, the government and the RBI did not ensure proper recovery mechanisms. Through restructuring they tried to bandage the problems, Insolvency and Bankruptcy Code (IBC), which was introduced as a panacea to solve the NPA crisis, only forced the banks to take loss, in some cases as high as 85 per cent, in the name of ‘haircuts’. Through Prompt Corrective Actions (PCA), banks’ lending was restricted, and banks are today forced to write off crores of public money in order to clear the books. Consequently, due to the mounting losses, the banks are forced to increase service charges making every single banking transaction a paid one.
While RBI maintains a calculated silence on the other charges, it has intervened and eliminated the NEFT and RTGS charges, which cater only to a particular class of society. Such tactics are to hit at the strength of the PSB, alienating them from the public. The policy of bank mergers, IBC, charges on various services that were free until recently are only different ways to push the agenda of privatisation. There has not been a proper solution for the NPA crisis so far as the government and the RBI are keener on just clearing than actually strengthening the banks.
Hence on the Golden Jubilee year, let us stand by the PSB and ensure that:
- The principles of mass banking are brought bank to the focus.
- Strong measures to recover the NPAs of corporates are put in place
- Willful default is declared as a criminal offence
- Bank Charges are withdrawn.
Financial Accountability Network India (FAN India) a collective of civil society organisations, unions, people’s movements and concerned citizens to raise the issue of accountability and transparency of the national financial institutions. It also looks critically at the economic and financial policies that have an adverse impact on the people.
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