Writes Thomas Franco remembering the Bank Nationalisation Day, in Random Reflections this week.
https://www.cenfa.org/nationalisation-of-banks-was-a-historical-achievement-and-it-has-to-be-saved/
Some media articles are lauding the Modi Govt for its turnaround of the public sector banks! Credit is being given to the present government for absolute success in NPAs, profit, growth in credit and resistance to external shocks. Yet, as of March 2023, the banks have accumulated 15,324 corporate loans with outstanding above Rs. 71,12,765 crore. This is the real achievement of the Modi government!
Though the government announced two years ago that it is going to privatise two public sector banks, it could not privatise even one so far because of the strong opposition from the United Federation of Bank Unions. Yet, using dubious methods, it has succeeded in reducing the strength of PSBs.
Now the RBI has come up with its circular on compromise proposals for wilful defaulters and frauds. Will that save the banks? No! The new cycle will start, and we will see another crisis soon. That means we don’t have a banking success story, either by NDA or UPA.
Notwithstanding the above, the need of the hour is to save PSBs and their character. They have a huge opportunity due to their branch network and customer base. The depositors still have more faith in PSBs as seen from the chart. If every one of them is given a loan, there will be huge growth in advances. For that, the employee’s strength should be at least doubled and outsourcing should stop.