(Weekly Organ of the Communist Party of India (Marxist)
September 11, 2011
Donít Allow Business Houses to Run Banks
The Polit Bureau of the
Communist Party of
THE UPA government has decided to allow corporates to set up banks. By this, the policy of bank nationalisation undertaken by the Indira Gandhi government in 1969 will stand completely overturned. In the light of the global financial crisis sparked off in 2008 by the profligacy of banks and financial speculation, this is an irrational decision.
made an announcement regarding new bank licenses for private players in
2010 budget speech. Following up on that announcement the Reserve Bank
Prior to bank
the big business houses of
to own banks would allow them to corner bulk of the credit for their
businesses through connected lending. It will be impossible to assess
regulate the banking sector in such a scenario. Moreover, it will
concentration of financial power and political influence. It is for
that many countries, including the
Banks run by big business houses will increase the scope for large scale financial malpractices. The recent scams involving big business highlight the danger of financial swindles in such banks that will deprive the people who deposit in such banks of their hard-earned savings.
The public sector banks have the best record as far as meeting priority sector lending norms and branch expansion in rural and semi-urban areas are concerned. 67 per cent of bank branches of the SBI are located in the rural and semi-urban areas. Moreover, the SBI currently has reserves amounting to nearly Rs 65,000 crore. The other public sector banks also have high reserves. This huge capital lying with the public sector banks can be used to expand bank branches and ensure financial inclusion.
The draft RBI
also allow initial foreign shareholding in the new private banks upto
cent, which can be increased to 74 per cent after five years. This will
the way for the entry of more foreign banks into
The UPA government should not proceed with this measure which will have incalculable harmful consequences for the economy and the country. The Polit Bureau calls upon all political parties, trade unions, mass organisations and concerned citizens to oppose this retrograde move.