With the unfolding of the fraud in PNB, there is a strident demand from some quarters that the PSU Banks be dismantled and the whole banking system be privatised. This is nothing new or unexpected. Personally, due to my association with banking for a long period, majority of the friends and acquaintances that I have acquired in my adult life are from the financial circles. And I find that a large number of them are amenable to the idea that nationalisation of the banks be reversed and banking should be treated like any other business based on the market forces of “Risk and Reward”, “Demand and Supply”, “Growth or Perish”, “Survival of the Fittest” and many such ideas that form the core of the capitalist doctrine. I fully agree to their contention about treating banking as a business but I am surprised with their stance on the privatisation of the nationalised banks.
Most of the PSU bank employees who have done well in life seem to be have suddenly become ardent supporters of the privatisation of the nationalised banks. From my personal analysis, I feel that one reason for such views may be totally selfish, though most would deny it in public. . These high performers within the PSU banks are under a notion that privatisation of banks will bring them higher salaries, bonuses and incentives at par with their counterparts in the private banks. I again do not have any issues with such line of thought. But can’t understand why should the nationalised banks be privatised to bring them material gains on a platter? If they want good money and higher standards of life, why don’t they break out of their safety net to join the private banks, compete and rise? Who stops them from doing this? This is the first lesson of the high pedestal of “Risk and Reward” which they should practice before they preach. If they are not leaving the PSU banks themselves, then why should they join the chorus for privatisation of PSU Banks? That is sheer laziness, I say, to expect that the rules will be changed in your favour just because you think that you deserve it. And if, they have tried and not got a suitable job in the private sector in spite of their efforts, they should clearly understand the bitter truth that they are not fit for the private sector and their interests are best served in the PSU setup itself.
Now let us take the people in the private banks that are supporting privatisation. By association, they should be expected to be against nationalised banks and champion of the free economy under the best traditions of capitalistic traditions. For all the glitch, glamour and high sounding words, for them this is actually nothing more than copying ideas from the USA and other developed economies, recycle them and try to get the best arbitrage from the information gap existing in a financially illiterate society at large. But I do not grudge them for this. They are entitled to their views, pursuit of hedonistic life and support for privatisation. As long as, they perform their job within the laws of the land. As long as, they do not ask for support from the government to bail them out by deploying the tax payer’s money. As long as, they do not expect government policies to be bent to suit their needs. And all this can be done by strengthening their own institutions. There is no need for privatisation of the nationalised banks for this. Why are they insecure about the PSU banks if they are efficient? The “Demand and Supply” theory should definitely take care of their needs. If people feel confident enough to put their deposits with them, they will surely have access to funds. Do I sound illogical here? Correct me if I do.
Then there are the other category of people who due to their political affiliations, antipathy to socialism, warped world view, ignorance or plain dumb stupidity lend their high pitch and shrill voice to the chorus of “Privatise the banks to stop frauds and scams “. If a frank anonymous survey is taken then it will be found that most of these people also blame women wearing short dresses and moving with their boyfriends in public as the major reason for rapes happening. These people will never go deep into the malaise that afflicts the PSU banks, the raison d’être of their existence and the relevance of their continuation for a country like India. A major reason for the views expressed by them is because it is shaped by a constant brainwashing by the purveyors of neo liberal capitalism since the last few decades. Sadly, this section of people will see no logic and wallow in their perverse obsession of dismantling the PSU structure totally just because they hate a particular person or a family, who they believe (wrongly and foolishly) for the sole reason of all the woes. So there is no reason to waste energy by rebutting these people with logic or rationale.
Before getting carried away with the orchestrated chorus of “Down with PSU Banks” let us understand why the Banks were nationalised in the first place and what has been the achievement since then. The prime objective behind the Nationalization of Banks was to ensure money supply to the economy for equitable and inclusive growth cutting across sections of the society irrespective of geography. It freed the rural population from the clutches of moneylenders, provided security to depositors, ensured distribution of wealth, facilitated easier access of credit and most importantly freed the banking system from the hold of feudal class. The rapid spread of banking to the remotest part of the country which serves as the backbone for the financial infrastructure that we presently use and take for granted would never have been possible without the nationalisation of the Banks. That the whole financial system has been able to withstand major crises is a testimony to the efficacy of the system. Job creation and livelihood sustenance for the poor, marginalised and differentiated segments of the society has been a major achievement of the nationalisation of banks. One may try as much they want to but it can never be denied that nationalised banks have been the base and its employees have also been at the forefront of the war that has liberated millions of Indians from the clutches of hunger, penury and joblessness.
That the Indian society is still mired in a feudal mindset and the usurious money lenders have not been eliminated completely from the system is not a sign of weakness but rather points out to the relevance of the of Nationalised banks. Chit fund scams that regularly happen are a reminder to what could have happened if the PSU banking system were not in place.
The problem that besets the PSU banking system, as I see it is because the basics have been ignored, both of nationalisation and privatisation. Both the PSU banks and the Private Banks can co exist in the system which is large enough to accommodate them. The only thing is that they should not work at cross purpose. Let the nationalised banks garner deposits from the people of the country, keep it safe and lend it to the Agiculture, SME, PSU corporate and State funded schemes. Why should the nationalised banks lend to the Private sector and put the common people’s money at risk. The private sector can borrow from the private banks or raise capital by selling shares or the debt market. There is no need to support them with the PSU funds. Will that be acceptable to the great supporters of free market? How many Indian companies can run for fifteen days without the Cash credit loans granted to them by the PSU banks? This is actually the crux of the problem. Crony capitalists and their supporters basically want to access cheap funds and take advantage of the PSU setup to divert, siphon and loot through corruption and malpractices. Can someone explain why PSU banks should fund activities like diamond business, Entertainment, realty etc. And why should they venture into merchant banking activities at all? The private banks can take risks and reap the rewards. Why should the PSU banks take risks which are not aligned to the basic objectives or raison d’être of their existence? Why should the PSU resources be used to be squandered away and utilised to increase the wealth of the 10% of the population?
We are all aware about how the PSU Banks have been abused by the political class. We all know how corruption prevails in the setup. But that doesn’t serve as logic to conclude that the panacea for all this malaise is to dismantle the PSU banks. If somebody has a headache, do we cut off the head? Then by the same logic, why do we hold over Kashmir? I know, the anti-nationalisation brigade will start the chant of “anti-national” at me now, saying indignantly (faked) - how can both issues be even linked. But then logic and rationale were never the strong points of those who believe in hype and propaganda.
I would rather suggest everyone to beware of these people who are talking about the dismantling of PSU banks and privatization of the Nationalised banks because these are the fifth columnists, the Trojan horses of the global capitalist system which wants to destroy the framework of public expenditure in this country by their machinations. Most of these people who are advocating for the dismantling of the PSU system either have a half-baked idea about economics or they are plainly stupid enough not to realise that in a country like India It will only bring in chaos and give total control of the economy to oligarchs.
Most of the PSU bank employees who have done well in life seem to be have suddenly become ardent supporters of the privatisation of the nationalised banks. From my personal analysis, I feel that one reason for such views may be totally selfish, though most would deny it in public. . These high performers within the PSU banks are under a notion that privatisation of banks will bring them higher salaries, bonuses and incentives at par with their counterparts in the private banks. I again do not have any issues with such line of thought. But can’t understand why should the nationalised banks be privatised to bring them material gains on a platter? If they want good money and higher standards of life, why don’t they break out of their safety net to join the private banks, compete and rise? Who stops them from doing this? This is the first lesson of the high pedestal of “Risk and Reward” which they should practice before they preach. If they are not leaving the PSU banks themselves, then why should they join the chorus for privatisation of PSU Banks? That is sheer laziness, I say, to expect that the rules will be changed in your favour just because you think that you deserve it. And if, they have tried and not got a suitable job in the private sector in spite of their efforts, they should clearly understand the bitter truth that they are not fit for the private sector and their interests are best served in the PSU setup itself.
Now let us take the people in the private banks that are supporting privatisation. By association, they should be expected to be against nationalised banks and champion of the free economy under the best traditions of capitalistic traditions. For all the glitch, glamour and high sounding words, for them this is actually nothing more than copying ideas from the USA and other developed economies, recycle them and try to get the best arbitrage from the information gap existing in a financially illiterate society at large. But I do not grudge them for this. They are entitled to their views, pursuit of hedonistic life and support for privatisation. As long as, they perform their job within the laws of the land. As long as, they do not ask for support from the government to bail them out by deploying the tax payer’s money. As long as, they do not expect government policies to be bent to suit their needs. And all this can be done by strengthening their own institutions. There is no need for privatisation of the nationalised banks for this. Why are they insecure about the PSU banks if they are efficient? The “Demand and Supply” theory should definitely take care of their needs. If people feel confident enough to put their deposits with them, they will surely have access to funds. Do I sound illogical here? Correct me if I do.
Then there are the other category of people who due to their political affiliations, antipathy to socialism, warped world view, ignorance or plain dumb stupidity lend their high pitch and shrill voice to the chorus of “Privatise the banks to stop frauds and scams “. If a frank anonymous survey is taken then it will be found that most of these people also blame women wearing short dresses and moving with their boyfriends in public as the major reason for rapes happening. These people will never go deep into the malaise that afflicts the PSU banks, the raison d’être of their existence and the relevance of their continuation for a country like India. A major reason for the views expressed by them is because it is shaped by a constant brainwashing by the purveyors of neo liberal capitalism since the last few decades. Sadly, this section of people will see no logic and wallow in their perverse obsession of dismantling the PSU structure totally just because they hate a particular person or a family, who they believe (wrongly and foolishly) for the sole reason of all the woes. So there is no reason to waste energy by rebutting these people with logic or rationale.
Before getting carried away with the orchestrated chorus of “Down with PSU Banks” let us understand why the Banks were nationalised in the first place and what has been the achievement since then. The prime objective behind the Nationalization of Banks was to ensure money supply to the economy for equitable and inclusive growth cutting across sections of the society irrespective of geography. It freed the rural population from the clutches of moneylenders, provided security to depositors, ensured distribution of wealth, facilitated easier access of credit and most importantly freed the banking system from the hold of feudal class. The rapid spread of banking to the remotest part of the country which serves as the backbone for the financial infrastructure that we presently use and take for granted would never have been possible without the nationalisation of the Banks. That the whole financial system has been able to withstand major crises is a testimony to the efficacy of the system. Job creation and livelihood sustenance for the poor, marginalised and differentiated segments of the society has been a major achievement of the nationalisation of banks. One may try as much they want to but it can never be denied that nationalised banks have been the base and its employees have also been at the forefront of the war that has liberated millions of Indians from the clutches of hunger, penury and joblessness.
That the Indian society is still mired in a feudal mindset and the usurious money lenders have not been eliminated completely from the system is not a sign of weakness but rather points out to the relevance of the of Nationalised banks. Chit fund scams that regularly happen are a reminder to what could have happened if the PSU banking system were not in place.
The problem that besets the PSU banking system, as I see it is because the basics have been ignored, both of nationalisation and privatisation. Both the PSU banks and the Private Banks can co exist in the system which is large enough to accommodate them. The only thing is that they should not work at cross purpose. Let the nationalised banks garner deposits from the people of the country, keep it safe and lend it to the Agiculture, SME, PSU corporate and State funded schemes. Why should the nationalised banks lend to the Private sector and put the common people’s money at risk. The private sector can borrow from the private banks or raise capital by selling shares or the debt market. There is no need to support them with the PSU funds. Will that be acceptable to the great supporters of free market? How many Indian companies can run for fifteen days without the Cash credit loans granted to them by the PSU banks? This is actually the crux of the problem. Crony capitalists and their supporters basically want to access cheap funds and take advantage of the PSU setup to divert, siphon and loot through corruption and malpractices. Can someone explain why PSU banks should fund activities like diamond business, Entertainment, realty etc. And why should they venture into merchant banking activities at all? The private banks can take risks and reap the rewards. Why should the PSU banks take risks which are not aligned to the basic objectives or raison d’être of their existence? Why should the PSU resources be used to be squandered away and utilised to increase the wealth of the 10% of the population?
We are all aware about how the PSU Banks have been abused by the political class. We all know how corruption prevails in the setup. But that doesn’t serve as logic to conclude that the panacea for all this malaise is to dismantle the PSU banks. If somebody has a headache, do we cut off the head? Then by the same logic, why do we hold over Kashmir? I know, the anti-nationalisation brigade will start the chant of “anti-national” at me now, saying indignantly (faked) - how can both issues be even linked. But then logic and rationale were never the strong points of those who believe in hype and propaganda.
I would rather suggest everyone to beware of these people who are talking about the dismantling of PSU banks and privatization of the Nationalised banks because these are the fifth columnists, the Trojan horses of the global capitalist system which wants to destroy the framework of public expenditure in this country by their machinations. Most of these people who are advocating for the dismantling of the PSU system either have a half-baked idea about economics or they are plainly stupid enough not to realise that in a country like India It will only bring in chaos and give total control of the economy to oligarchs.
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