C. H. Venkatachalam, General Secretary, All India Bank Employees Association, says what is really required now is re-emphasis on the social objectives of PSBs and retuning their activities co-terminus with the national planning process
When India became independent in 1947, all our banks were in private sector and were handmaids of one or the other industrial house. Later, when India chartered the path of planned development with public sector playing a pivotal role in it, resources were required. However, these banks that had huge public money were reluctant to get involved.
Banks were unwilling to go to rural areas and serve the masses. They were more interested in doing business in cities and towns, and making big money in the process. Agriculture had to be developed and as such rural India needed financial help. But private banks refused to cooperate. Hence, came the necessity to convert Imperial Bank of India into State Bank of India in 1955. This was the beginning of public sector banking in India. Then came the watershed decision – the nationalisation of 14 private banks in 1969. This completely changed the Indian banking scenario.
Banks started moving to villages extending credit to priority segments which were hitherto neglected. Class banking was getting melted to mass banking. With further dose of nationalisation in 1980 and starting of regional rural banks (RRBs), public sector banks (PSBs) became a dominant force in the country controlling about 93% of the banking activity.
Bank credit started reaching agriculture sector, and for employment generation, poverty alleviation, , infrastructure, etc. Banks were finally on the right track. But with the advent of new economic policies in 1990s, banks started journeying in a different direction. Government’s equity in the banks got diluted. Provision was made to allow private capital upto 49% in PSBs. Then came the policy decision to allow new private banks, and a dozen of them came in the scene only to vanish soon.
A case in point is Global Trust Bank which was started with all fanfare and open encouragement from the Government. But what happened to that bank and how that poison had to be swallowed by a PSB – Oriental Bank of Commerce – is a history now. Now the Government wants to go in for the next generation of reforms. Recently, they managed to get some amendments approved by the Parliament in the Banking Laws – more voting rights to private investors in PSBs, from 1% to 10%. Similarly, in private sector banks the present ceiling on voting right has been relaxed to 26%. What for? The game is clear; give greedy private players more access to India’s strong banking system that deals with huge public money. The total deposits of Indian banks have today crossed Rs.60 lakh crore. It is four times the total annual budget outlay of the Central Government. In short, liberalise the regulations and allow these players to plunder public savings.
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2012 : DNA National B-School Survey 2012
Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
When India became independent in 1947, all our banks were in private sector and were handmaids of one or the other industrial house. Later, when India chartered the path of planned development with public sector playing a pivotal role in it, resources were required. However, these banks that had huge public money were reluctant to get involved.
Banks were unwilling to go to rural areas and serve the masses. They were more interested in doing business in cities and towns, and making big money in the process. Agriculture had to be developed and as such rural India needed financial help. But private banks refused to cooperate. Hence, came the necessity to convert Imperial Bank of India into State Bank of India in 1955. This was the beginning of public sector banking in India. Then came the watershed decision – the nationalisation of 14 private banks in 1969. This completely changed the Indian banking scenario.
Banks started moving to villages extending credit to priority segments which were hitherto neglected. Class banking was getting melted to mass banking. With further dose of nationalisation in 1980 and starting of regional rural banks (RRBs), public sector banks (PSBs) became a dominant force in the country controlling about 93% of the banking activity.
Bank credit started reaching agriculture sector, and for employment generation, poverty alleviation, , infrastructure, etc. Banks were finally on the right track. But with the advent of new economic policies in 1990s, banks started journeying in a different direction. Government’s equity in the banks got diluted. Provision was made to allow private capital upto 49% in PSBs. Then came the policy decision to allow new private banks, and a dozen of them came in the scene only to vanish soon.
A case in point is Global Trust Bank which was started with all fanfare and open encouragement from the Government. But what happened to that bank and how that poison had to be swallowed by a PSB – Oriental Bank of Commerce – is a history now. Now the Government wants to go in for the next generation of reforms. Recently, they managed to get some amendments approved by the Parliament in the Banking Laws – more voting rights to private investors in PSBs, from 1% to 10%. Similarly, in private sector banks the present ceiling on voting right has been relaxed to 26%. What for? The game is clear; give greedy private players more access to India’s strong banking system that deals with huge public money. The total deposits of Indian banks have today crossed Rs.60 lakh crore. It is four times the total annual budget outlay of the Central Government. In short, liberalise the regulations and allow these players to plunder public savings.
Read more......
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Ranked 1st in International Exposure (ahead of all the IIMs)
Ranked 6th Overall
Zee Business Best B-School Survey 2012
Prof. Arindam Chaudhuri’s Session at IMA Indore
IIPM IN FINANCIAL TIMES, UK. FEATURE OF THE WEEK
IIPM strong hold on Placement : 10000 Students Placed in last 5 year
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