The Polit Bureau of the Communist Party of India (Marxist) has issued the following statement:
Dismantling Public Sector Banks
Financial Exclusion of Crores of Indians
The Polit Bureau of the CPI(M) expresses its strong opposition to the decision of the government to merge 10 public sector banks to create four bank entities, thus, reducing the number of public sector banks from 27 to 12.
Contrary to propaganda of universal financial inclusion, this will lead to further exclusion of crores of Indians. India is already one of the most unbanked countries in the world. This move will further push the small savings in rural India into the clutches of sleazy chit fund operators and financial mercenaries.
Weakening public sector banking is meant to facilitate the privatization of the nationalized banking sector. The merger will lead to the shrinkage of the network of branches denying accessibility, particularly in rural India. After the merger of the five associate banks with State Bank of India, around 1,000 branches were closed. It is reported that the merger of Dena Bank and Vijaya Bank with Bank of Baroda will result in the closure of 800 branches.
The justification of the government for the merger of banks is that they will get strengthened and bigger banks will emerge. However, the government policy is to disinvest and lower the State’s equity in these banks and bring them down below 50 per cent. After setting up of big banks, this process of privatization is proposed to be undertaken.
The government is also covering up the reasons for the problems the public sector banks face. Huge non-performing assets have piled up because of large-scale defaults by big corporate houses and the failure on the part of the government to ensure recovery of these huge loans. NPAs have risen four fold in the past five years and at least Rs. 5.5 lakh crore of loans written off to cronies since 2014. The public sector banks are being forced to give up a substantial part of the debt through the Insolvency and Bankruptcy Code process. The merger of the banks will not solve the problem of recovery of these loan amounts.
This year marks the 50th anniversary of the nationalization of banks. Instead of strengthening the public sector banking system, in people’s interest, the Modi government is set upon dismantling it. This must be resisted by the concerted action of bank employees, the trade unions and all the democratic forces working together.