CPI opposes banking licence to industrial/business houses

The Communist Party of India (CPI) on Tuesday opposed the recommendations of Reserve Bank of India’s (RBI) working group to issue banking licence to industrial/business houses and conversion of large finance companies into banks.

“It should be recalled here that at the time of Independence of our country, all the banks in India were owned by business houses but none of them came forward to help the government in its planned economic development projects,” General Secretary D.Raja said in a statement.

“On the other hand, these private banks were mobilising savings of the people and cornered the same for their own business/vested interests. Because of this, many banks ran into problems and suffered from issues like conflict of interest,” he added.

“Further, every now and then, we hear the crisis in private banks.

“A few days ago, we have seen the fate of Lakshmi Vilas Bank. It is unfortunate that instead of learning lessons, the RBI is proposing to hand over banking licence to corporate and business houses,” Raja said.

Nationalised banks are the custodians of hard-earned savings of the common people of this country, he noted.

Arguing that the RBI’s proposal will jeopardise their interests and run counter to India’s economic development, he said that giving licence to corporate and business houses is the most retrograde step and should not be allowed.

The CPI was in the forefront in demanding nationalisation of banks and trade unions like AITUC and AIBEA had launched intense struggles on this demand.

“Our members of Parliament at that time raised this demand vehemently and enlisted the support of many political parties,” Raja said.

“Finally, in 1969, (then Prime Minister) Mrs. Indira Gandhi nationalised the major private banks. Since then, these nationalised banks have played a pivotal role in our country’s economic development and in safeguarding people’s money.

“Nationalised banks have today become the main engine of economic development, Raja said.

Congress opposes move to let corporates enter banking sector

 The Congress on Tuesday opposed the proposal to allow corporates and business houses enter the banking sector, contending that this move will leave the depositors at their mercy as it happened in the case of Yes Bank and Laxmi Vilas Bank.

Addressing a press conference, former Finance Minister P. Chidambaram said: “The Congress party condemns the proposal and demands that the government, unequivocally and forthwith, declare that it has no intention of pursuing the proposal.”

“We call upon all the people of India and all political parties and trade unions to join us in resolutely opposing the retrograde idea of allowing corporates and business houses to enter the banking sector and set up banks,” he added.

The Congress alleged that the proposal, ostensibly based on a report of an RBI Internal Working Group, has the fingerprints of the Modi government written all over it.

This proposal, along with some other recommendations, is part of a deeper game plan to control the banking industry, it said, claiming that the proposal, if implemented, will completely reverse the enormous gains made in the last 50 years of retrieving the banking sector from the clutches of business houses.

Noting that all over the world, especially in developed economies, three principles govern banking — broad-based shareholding reflecting shareholder democracy, strict separation of ownership and management with ownership with shareholders and management in professional hands, and prohibition of connected lending, Chidambaram said that all three will be thrown out of the window if corporates and business houses are allowed to set up banks.

“Bank funds belong to the depositors who are the people of this country. As a proportion of total deposits, the equity of a bank is minuscule. The total deposits in the banking industry is of the order of Rs 140 lakh crore… If business houses are allowed to own banks, they will, with a small equity investment, control very large amounts of the nation’s financial resources. This must not happen and the Congress will strive its utmost to ensure that this will not happen,” Chidambaram said.

He said that it “is shocking that such an idea should have been presented to the people as though it has the imprimatur of experts and the endorsement of the RBI”.

“Just as the RBI was the cat’s paw of the government in the saga of demonetisation, the RBI is being used by the government to push through its dangerous agenda,” he said.

New Delhi/Chennai IANS