Fifty years after banks were nationalised in India, the government is attempting to privatise Public Sector Banks through a variety of ruses. What is at stake in this fight? How is this related to the Non Performing Assets that we have been hearing about so much? In what ways does this seek to take money out of the pockets of common people, and channel them to big corporations? Devidas Tuljapurkar, Joint Secretary of the All India Bank Employees Association, and General Secretary of the Maharashtra State Bank Employees Federation, lays out his case. Mr Tuljapurkar was one of the invited speakers at a workshop on finance, titled Demanding Financial Accountability: Kiski Poonji, Kiska Vikas, organised by the Centre for Financial Accountability, at the Sambhaavnaa Institute in Palampur tehsil, Himachal Pradesh, where a member of the gX team caught up with him on 13th September, 2018.
gX: Given the kind of mobilisation that is happening around banks, and the lack of engagement with economic questions in much leftist writing today, it is great to be speaking to you, with your long experience of organising banking employees. To begin with, at an impressionistic level, anyone going to banks can see these posters all around – could you say something about what these protests are for?
D: Since 1991, when the New Economic Policy, and as it’s sequel, globalisation, privatisation, liberalisation – was brought out by the government of India as a major shift in policy, immediate changes were brought about in banking as well. One Narasimham Committee was adopted, that gave tailor-made recommendations, to be pursued by the Government of India and the Reserve Bank of India when it comes to the Indian banking industry. The essence of those recommendations was, first, that Indian public sector banks need to be privatised. Then they brought about very basic changes, such as on direct credit. They had a recommendation, that priority sector advances should be abolished. But ultimately due to political compulsions they could not do it.
gX: Could you please break-down what that means?
D: In India priority sector advances constitute advance granted to agriculture (direct as well as indirect), advance granted to small-scale industry, advance granted to cottage industry, and small transport and small business – this together is the priority sector advance. RBI had given direction to all banks, consequent upon bank nationalisation, that they should lend 40% to these sections of society. Narasimham Committee says, let the market determine, and you abolish that priority sector concept. Government could not abolish it, due to political compulsions. But the bureaucrats, in the process of redefining priority sector in agriculture, included non-priority in that priority. [Today, for instance, a big corporation showing some peripheral agricultural concern – say a Reliance, hypothetically – can get credit that should be going to farmers – gX] And ultimately they could achieve their objective.
Earlier the rate of interest used to be based on the purpose of the advance. But after 1991 they abolished it, and introduced size-wise classification of advances – based on that interest rates would be charged. So ultimately liberalisation came into operations, in the process. Then they had recommended the Cash Reserve Ratio and Statutory Liquidity Ratio – they be reduced, and pre-emption of funds should be abolished. Now in the process, SLR, which once upon a time was 35%, today is 24.5%. CRR which was 12%, today it’s 4.5%. To that extent, the money supply in the market has increased. And that money supply has gone to the corporates. [That is, liquidity in the banks has increased, and they have lent more to corporates – gX] This is how changes were being brought about.
One of the recommendations was that, in India, there was no need to have so many public sector banks. They should be merged. Then in the process, they initially merged New Bank of India and Punjab National Bank. Very recently they have merged associate banks into State Bank of India. In the process of merger, what they have done is, they have closed the branches. This is something amazing! On the one hand the government wants to implement financial inclusion – each person should have a bank account. On the other hand, they are closing branches. How can both the things go together?
Then they are resorting to an alternative business model – that is a Business Correspondent. They are employing some outsourced persons, and they are entrusting those outsourced persons to open accounts – this is how they want to penetrate into the rural areas. But worldwide it is indisputably proved that there is no alternative to branch banking. A person – if you want her to do banking activities – she needs the branch.
This is how all those changes were being brought about. We, as a union, decided to oppose such changes, since, firstly, we are against privatisation. Then we are against the consolidation, that is globalisation. We are opposed to liberalisation, that is liberalised interest rate structure. Since 1991, All India Bank Employees Association, which I represent, have conducted around 39 strikes, till 2017. Amongst those 39 strikes, only 4 were for our economic demands. All the remaining strikes were aimed against these new banking policies. This is how we have been consistently fighting. We realised, due to our resistance, the priority sector concept could not be abolished. Due to our consistent opposition, till this time, Government of India could not privatise a single public sector bank – that is the second achievement.
But now, the way the crisis has grown manifold, we apprehend that the present political dispensation will pursue this agenda more aggressively. The first reason is, in 1969, when banks were nationalised, the then Jan Sangh, of which Atal Bihari Vajpayee and Advani were the leaders, was a political party which opposed bank nationalisation. Today they are ruling, they are the government. It suits their ideology to privatise public sector banks. Secondly, privatisation is a demand mainly from the corporates. And this government is a corporate friendly government. That is the character of this government. So we apprehend that this agenda will be pursued. Very recently, the then Economic Advisor to the Prime Minister, Arvind Subramanian, made a statement after the Nirav Modi fraud was revealed, that enough is enough, how far will the government infuse capital into public sector banks! Immediately ASSOCHAM and FICCI – who represent big business – they also joined the debate and made a statement, saying yes, banks should be privatised. Arvind Subramanian is not an independent economist, at the time he spoke he represented the Government of India. It may be that Modi hasn’t made a statement so categorically, but the way his near and dear people are joining the debate, it is clear that the government has the agenda to privatise banks.
Why are we opposed to privatisation? Mainly – all those big defaulters, who have looted the public sector banks, they now want to become owners of these very public sector banks! Their greed is still unfinished and incomplete. Right now the Non-Performing Assets in Indian public sector banks is around Rs. 10 lakh crore, after writing off of around Rs. 4 lakh crore. Again, around Rs. 6 lakh crore of advances are potential NPAs. Together the figure may go to around Rs. 20 lakh crore. Amongst that 20 lakh crore, corporate or big business represents more than 80% of NPAs. So all these big corporates have looted the banks, and now – the moment privatisation takes place – they want ownership of the savings of the common public. Today Indian public sector banks have mobilised around Rs. 86 lakh crore of deposits. Out of that, savings bank deposits are around Rs. 35 lakh crores. And those 35 lakh crores are cheap deposits, at the rate of hardly 3.5% interest. Indian corporates want ownership of those deposits. We feel, we apprehend, the common person’s savings will be jeopardised if this happens.
After this new policy was pursued, government issued licenses for some of the private sector banks. One amongst them was, Global Trust Bank, it survived hardly for 3-4 years. Ultimately government had to merge it with the Oriental Bank of Commerce. After the Harshad Mehta scam unfolded, Karad bank – one of the private sector banks in Maharashtra, was merged into Bank of India. Then United Western Bank, which was in deep crisis, was merged in IDBI, another public sector bank. So the moment private sector banks fail, the government wants public sector banks to take it over. But then, why privatise?
This year marks the golden jubilee of bank nationalisation, so the organisation has given a call asking all their members to conduct a gram sabha in each village, explaining to the people why we are opposed to bank privatisation. Then in the city and metropolitan areas we will be organising jan sunwai, involving various sections of society, where we will be explaining how and why we are opposing bank privatisation. Bank employees alone cannot fight this battle. So now we are appealing to the people at large, we want them to be involved in this process.
And by and large, if we explain all this to them, people will respond. Because over these last two years, all this burden of the NPA is being shifted to the common people. RBI gave autonomy to the banks on deregulation of savings bank interest rates. None of the banks resorted to that, till 2017. But in 2017, initially State Bank of India, followed by all other public sector banks, reduced their interest rate on savings bank accounts by half a percent. Half a percent comes to 17,500 crore rupees. This is the amount they have directly taken out of the common person’s pocket. In addition, banks are charging now for everything, whether for depositing cash, getting a passbook statement, for using ATM, for mobile banking – for every service nowadays banks are charging. Why this change from the earlier policy of not charging? Mainly because the banks are in deep trouble on account of big NPAs. We are trying to explain to the public, that they are basically having to pay for the big corporate defaulters.
Also, when Arvind Subramanian made the statement about bank privatisation and ASSOCHAM and FICCI joined the debate, we issued a statement – we said ASSOCHAM and FICCI should ask their members to repay their dues. The moment they repay the dues, we won’t have to ask for a single paisa from the government. We don’t want a single paisa from the government as capital infusion, but government should give more power to the banks. Till date the government has not accepted our demand to declare the names of wilful defaulters. We are observing that all these wilful defaulters, they are all very prestigious people in this society. We say there should be a name and shame policy. Somewhere their names should be declared. RBI says that Banking Secrecy Act does not permit us – but who stops the government from amending the act? If it is in favour of people’s savings, or public sector banks – of which the owner is the government itself, they should have done it, long back. But till this time they have not done it.
Secondly, we say, that if someone steals a Rs. 500 note from your pocket, immediately you will register an FIR. But why isn’t wilful default treated as a crime? Somewhere the Indian Penal Code should be amended then? Thirdly, Debt Recovery Tribunal or Debt Appellate Tribunal or now NCLT – they need to be run properly. Adequate staff should be recruited. And somewhere a timeline should be provided. Now if a bank approaches a Debt Recovery Tribunal or court or NCLT, litigation goes on for months and years, and at the end of it, by the time a bank gets a decision in its favour, all that property loses its value. So it’s of no use! Thus banks are not in a position to recover the debts! That is how these NPAs are playing out. So our slogan for the moment is – People’s Money for People’s Welfare! Aam janta ka paisa hai, to wo janta ke hit mein use kiya jana chahiye.
The Financial Stability Report published by the Reserve Bank of India says that out of the total credit issued, 55% goes to big corporates. And they are the crux of the issue. We say that – is shatabdi ka sabse bara human tragedy agar kuch hoga, wo farmer suicide hai. But why are they committing suicide? Because they are not getting adequate credit. Why are they not getting adequate credit? The banks have not reached rural areas in the way they should. Somewhere bank branch expansion should take place. Banks have been pursuing an accounting profit – that too, an illusion one! Ultimately it is proved that it was a great illusion. We say that the role of a public sector bank is of looking at social profit. Somewhere you look at what is the need of the society – and that is what banks should cater to. Banks must act as a catalyst agent. And for that, they need to be strengthened, their expansion should take place, proper human-power should be deployed, more autonomy should be granted to public sector banks, and they should perform in a real social sense.
gX : I find it very interesting – and some of us were discussing this after your talk yesterday as well – that you were talking of democratising the banks. And making banks for the people. But on the other hand if we look at this tradition of writing, let’s say with Lenin and others on finance, there is a discussion of the integral role of banks in financialisation. And yesterday we also discussed how financialisation works to undermine democratic decision making. So how is it possible to imagine a bank that may be different, that may have a different project? Is it potentially a contradictory demand, to call for the democratisation of the banks on the one hand, and on the other hand speak of how the bank system needs to be expanded?
D: There is a need for democratisation in the context of mobilisation of resources and allocation of resources. Today the way it is taking place, when it comes to the mobilisation of resources, people at large are contributing. But when it comes to allocation, only a handful of people are cornering the banks’ money. So somewhere the credit policy needs to be revisited. As an organisation we have been demanding that there should be a national credit plan. This should decide what amounts should be allocated to which sector, and at what rate of interest. Today what takes place instead – the biggest businessman will get the loan at the lowest rate. But the lowest people will get credit at highest rate of interest. So in a democratisation process we have to segregate. We need a national credit plan. But even before that we should prepare a national banking policy. Today there is no such policy.
If you look at the implementation of Narasimham Committee recommendation one or two, it was never tabled in the Parliament. It was decided in the budgetary speech by Manmohan Singh in 1991, that such and such committee will be constituted. Then after the committee made recommendations – why were they not tabled in the Parliament? Why were they not discussed before implementation? Thus in a way all these decisions were executive decisions. Or it is a government prescription which is being implemented through RBI. We feel that somewhere the entire banking sector needs to be made accountable and answerable to the common person. What could be the modus operandi of it? First, National Banking Policy. Second, National Credit Plan.
gX: I’m just trying to understand if you think this has historically been possible, somewhere. That a bank can be for the common people. Or is a bank by definition for the expansion of capital.
D: Government needs to define the role of the bank in an economy, firstly. And in a country like India, where development is still to take place, banks need to play a developmental role, not a role to cater to a handful of capitalists.
gX: What is the role of AIBEA in these overall protests? Alongside, what other organisations are working with you?
D: Recently we organised one national banking conclave, to which we invited bankers, economists, social action groups, and we discussed the crisis and its genesis. What are the remedial measures which can and need to be implemented? Then as an ongoing process, in various fora, say in the central committee, executive committee, they go on pondering over various developments which are taking place in India. Recently LIC has taken over IDBI. It’s an important development. When we were interacting with the insurance people, they said that for them banks are non-performing investments. LIC people say you have to stage dharna before banks. I asked why? They say that whatever investment you have made in the banks, we are not getting the dividend, because you are in losses. So banks are doing insurance, insurance is doing banks! Ultimately the financial sector has become a conglomerate. So maybe we need to revisit the policy as an ongoing process, based on the developments that are taking place from time to time. We have accordingly been devising our action plan.
Recently, the FRDI bill had created an insecurity among the common people, so we resorted to an explanatory campaign. Immediately the Government had to withdraw that FRDI bill. But I suspect that they will find out some other way to pursue it. They won’t stop here. So we are organising conclaves, we are organising demonstrative actions, we have been going on strike. Maybe, by end of this year, again we will go on a strike against these policies.
gX: This will likely be nationwide?
D: Yeah, obviously.
gX: Could you say something about other specific campaigns in Maharashtra, that you or AIBEA is a part of?
D: Firstly, in Maharashtra we will be carrying out an extensive campaign, on that Gram Sabha project I earlier mentioned.
gX: When will this be?
D: Just after this puja season – now there are ten days of Ganapati festival, then others until Diwali. After that we will start this campaign. Because now people are in a different mood.
Then some other issues we are raising. One issue is the regional imbalances in money. What we observed within Maharashtra, 90% of banking is concentrated in Mumbai and Pune. And in all the 32 other districts, 10% banking activity takes places. In fact, the Credit Deposit Ratio is more than 100% in Mumbai. But Credit Deposit Ratio in Gadchiroli, an adivasi area where there are Naxalite pockets, there the credit deposit ratio is lowest. Where is there a need for disbursal of credit? Obviously, Gadchiroli. Or in Wardha, or some of the districts in Marathwada. Vidarbha, where the highest number of farmer suicides are taking place – there credit is needed. But all the resources deployed even in those areas are being diverted, to Mumbai and Pune. So we have submitted a memorandum to the Chief Minister, who is the Chairman of the state level bankers’ committee, and we will be pursuing this issue. In that way, there are some area specific issues.
Then we are adopting four villages in Maharashtra, where we will be implementing financial literacy campaign. That each person should have a bank account – that will be implemented. Then we will have some camps, and will explain to the people how they should protect their money. Initially these campaigns will be in four or five districts of Maharashtra, gradually expanding from the villages we being with.
gX: So the union is taking this up, outside of employment requirements.
D: Yes, because we have realised that we cannot fight this alone. Unless the common person supports us, we cannot pursue our actions.
gX: So in building solidarities, what other kinds of organisations do you work with? Whether it be Communist Party of India, or it be the banking officers’ union, and …
D: So all the officers’ unions, left and democratic forces, even some of the right-wing people, are supporting us. They are with their ideology at the apex level, but at the ground level they realise that whatever we speak is in the interest of the common person. They can’t afford to take a confrontationist stance against us on those issues. Because the moment they take such a stand they are aware that people will desert them. So they will also be joining in some places. But we want to expand – we will take the help of all those sections in expanding our movement.
gX: So what do you think is the space for an independent left position – that is not necessarily party affiliated, but trying to do something more broadly?
D: We won’t jump onto such formulations right now. We want to pursue it with the people. We want to create a positive environment for the left and democratic forces. Wherever possible we will be strengthening the left and democratic forces. So now when the workers go on a nationwide protest against price-rise, we join such strikes. We feel that we are part and parcel of the working class. And today unorganised sector is being attacked, or factory workers are being attacked, but tomorrow they will attack the organised work-force and even the bank employees. So we will continue to join all their strikes.
gX: AIBEA has been around since 1946, when it was formed in colonial Calcutta, and your website says that it is “the oldest and largest national Trade Union centre of bank employees in India.” Organisationally, what kind of challenges do you face today?
D: So since 1991 we have been confronting these new banking policies of the government. We represent a middle class in India. We are aware that this middle class has got a very different psyche. To retain them organised with a red flag is a very challenging task, when the external environment is against those forces. We operate on an all-India basis. There are various languages, castes, religions – all those fights, they are going on in society. Despite that to retain them united as an organisation – that in itself is a challenge. But we have withstood for all these 73 years. We will be celebrating our 75th year in 2021. Probably this is the only union in India which has consistently operated among the middle class for 75 years. This is unique in that way. Then this is the only sector where an union signs the “bipartite settlement”. In the sense, every union discusses their wage and service conditions with the management, but ultimately management issues the notification. But here, till this time, union and management will sit together – union will demand, management will disagree, they will go on discussing, if it comes to it they will resort to strike action, again there will be negotiations, and ultimately, whatever will be the outcome, will be in the form of a joint declaration. We will be signing that settlement under Section 2p of the Industrial Dispute Act. That’s very unique in the Indian working class. You won’t find it in any other industry, barring banking. And in that AIBEA has played a very crucial role.
gX: On a different note, you have been a whistle-blower yourself, against Vijay Mallya, and recently whistleblowing has been in the news a lot – in the US, here, elsewhere. And there have been stringent provisions introduced to curtail such possibilities. Do you have any comments about the role of whistleblowing in the financial sector, or the challenges faced by employees in considering it?
D: The whistle blower has a very critical and crucial role to play, but somewhere they need to be protected. The way in which the management in the banks are coming down on them, it’s very difficult. So today, each bank has a whistle blower policy. They have what they call a Chief Vigilance Commissioner. But ultimately there has to be a study as to what happened to those whistleblowers – you will find that they have been suspended or dismissed under one or the other pretext. They are made to pay the cost for calling out corruption. And when another person witnesses it, why will she dare to do the same? Ultimately she won’t. There are protections on paper, but ultimately they don’t work.
gX: Is there something else you would like to speak about?
D: Mainly my grievance is against the media. Media does not have equipped personnel to track the developments of finance. They are short of people. Extensively I have been meeting media persons, whether in Bombay or elsewhere. There are only a handful of people who understand it. It’s very difficult to explain to media people in general. And each day many important developments are taking place. If you regularly visit the Reserve Bank of India website, that in itself will give you inputs on these developments. They need to be interpreted in our own way. But what are those developments? The Ministry of Finance website also provides a lot of information. Mainly, the highest amount of information you will get from Lok Sabha and Rajya Sabha questions and answers. These Q&As are the source for all the data I share with the media, because that cannot be disputed. Government also cannot disown it. But the media doesn’t find the time or find it necessary to follow these issues in the proper way. And yet again, there are vested interests too. Lot of media accounts are NPAs, so why will they report against NPAs!
Source for cover image: https://pixabay.com/en/rupees-money-indian-currency-note-435450/