Skip to main content

Systematical killing of public sector banks, pushing people to money sharks

By Thomas Franco* 

It was only after the nationalisation of 14 banks on July 19, 1969, that the banks reached the common people. The main changes that were done included a shift from class banking to mass banking, a shift from big industries to agriculture, the development of small, medium, and micro enterprises, a shift from urban to rural areas, and a reduction in income inequality. 
However, after 1991, the reversal began slowly and accelerated in 2014, when the NDA took over the government, with slogans like the government has no business being in business; the public sector was born to die, etc. They couldn’t privatise a public sector bank until now because of the UFBU’s strong opposition. 
But using dubious methods, they have reduced the strength of the PSBs. As per the RBI data of March 2014, 82% of the branches, 65% of the loan limit, and 75% of the loans outstanding were with public banks. 
The staff strength of PSBs (including SBI) was 844445 whereas private banks, including foreign banks, had a staff strength of only 335615 people. The share of total outstanding bank credit of PSBs as of March 2022 has come down to 54%, and the share of total deposits has come down to 60%. The staff strength in PSBs has come down to 770812, whereas for private banks it has increased to 798977.
 For the first time, private banks have more staff than public banks. Look at HDFC Bank, the top private bank. They have 6,342 branches, with only 1,147 (18%) being rural, 2,036 (32%), semi-urban, 1,312 (21%), urban, and 1843 (29%). They have 7.1 million customers. 
So the number of customers per employee is just 501. They have a staff strength of 1,41,579 employees. The total value of their business is Rs. 29,28,037 (Depth 15,59,217 + Advances 13,68,820). Now let’s look at the State Bank of India. SBI has 46.77 crore customers, 6.58 times more than HDFC Bank. It has a business of Rs. 67,855,501 crore, which is 2.31 times that of HDFC Bank. 
Its staff strength is 2,44,250, 0.5 times more than HDFC’s. Interestingly, while HDFC recruited 21,486 staff last year, SBI reduced its staff by 1402 people; the per-employee customer figure in SBI in 1680. SBI has 8,018 rural branches, 7,215 semi-urban branches, 5,253 urban branches, and 4,462 metro branches.
BOB has a total business of 18,23,093 Cr. with 8,168 branches, of which 34.82% are rural, 25.5% are semi-urban, 18.6% are urban, and 21.62% are metro. BOB has over 13 crore customers and only, 79,000 employees, which is just half of HDFC’s staff strength. The per-employee customer in BOB was 1605. If they increase the staff strength in the public sector, their business, customer service, and profits will certainly improve. PSBs also provide reservations, including those to economically weaker sections among the forward caste.
How much has the government succeeded in weakening the PSBs?
  • The government promoted and supported private banks such as ICICI, HDFC, and Axis bank with currency chests, government business, fresh currency, and so on.
  • More licences for private banks and the merger of public banks reduced the number of branches and staff of PSBs
  • PSBs were forced to open 97.3% of the Jan Dhan accounts, whereas private banks opened only 2.7% of them.
  • PSBs have opened 15675442 Atal Pension Yojana accounts (91%) as of 31/3/20 where while PVBs have opened just 1562997 A/Cs (9%).
  • PSBs have been forced to lend more to NBFCs in spite of those failing. They get loans at around 10% interest but lend at 24% or more. The business is shifting to NBFCs, as seen in the RBI Report. They depended on borrowing from and lending only to lucrative businesses. They lend little to agriculture and related activities.
  • The co-lending model is going to be a huge risk for PSBs. If we take the loans given by PSBs, PVBs, and NBFCs/MFIs, PSBs’ loan outstanding on March 22 was 49.22% (Rs. 73.33 lakh crore), private banks were 31.13% (Rs. 47.02 lakh crore), and NBFCs and MFIs were 19.65% (Rs. 29.67 lakh crore). So public bank loans are less than PVBs plus NBFCs.
  • Instead of branches, Customer Service Points are opened through National Business Correspondents. Their increase from 167,1170 in 2021 to 35,13777 in 2022 requires closer scrutiny. Where are they? How are they performing?
What has happened is alarming. Public sector banks are marginalised, and understaffed and people complain of poor service and shift to private banks and non-banking companies where the interest rate for loans is much higher. This has increased inequality to its highest level. Poor and middle-class Americans are at the mercy of modern-day loan sharks.
 Newspapers in Gujarat reported on January 9 that the police in Gujarat have launched a special drive against usurious moneylenders preying on distressed borrowers, quoting Director General of Police, Ashish Bhatia. In Surat alone, they have filed 34 cases. There have been suicides, rapes, and acts of violence, all because of private moneylenders, says a news article. Sometime back, DGP Tamil Nadu warned people about loan applications after a suicide. 
Similar incidents are happening all over the country. This can only be stopped by increasing the number of branches of public sector banks, staffing them, and issuing directives to make small loans. It’s high time for the government to conduct a quick assessment and take action. The NBFCs, MFIs, and private banks This is against the constitution and the idea of a welfare state. This has to be reversed as soon as possible.
---
*Former General Secretary of All India Bank Officers’ Confederation and a Steering Committee Member at the Global Labour University. Source: Centre for Financial Accountability

Comments

TRENDING

Abrogation of Art 370: Increasing alienation, relentless repression, simmering conflict

One year after the abrogation by the Central Government of Art. 370 in Kashmir, what is the situation in the Valley. Have the promises of peace, normalcy and development been realised? What is the current status in the Valley? Here is a detailed note by the People’s Union for Civil Liberties , “Jammu & Kashmir: One Year after Abrogation of Art. 370: Increasing Alienation, Relentless Repression, Simmering Conflict”:

Repeated failure to appoint Chief, other commissioners undermining RTI Act

By Anjali Bhardwaj, Amrita Johri* The post of the Chief Information Commissioner of the Central Information Commission (CIC) has fallen vacant with the retirement of Bimal Julka with effect from August 27, 2020. This is the fifth time in the last six years that the Commission has been rendered headless. Four posts of information commissioners are also vacant in the CIC. Currently more than 35,000 appeals and complaints are pending in the commission resulting in citizens having to wait for months, even years for their cases to be disposed, thereby frustrating peoples’ right to know. Since May 2014, not a single commissioner of the CIC has been appointed without citizens having to approach courts. The failure of the government to make timely appointments of commissioners is a flagrant violation of the directions of the Supreme Court. In its February 2019 judgment, the apex court had categorically stated that if the CIC does not have a Chief Information Commissioner or required strength

Ultimate champion in crisis, arguably best ever skipper: Created history in Aussie cricket

By Harsh Thakor  In the history of cricket few cricketers knit and propelled a cricket team or had such profound influence on the game as Ian Chappell. Ian Chappell was responsible for converting a bunch of talented individuals into a world beating side, giving a dramatic turn to Australian cricket. Few cricketers ever led such a renaissance.

BSF's unconstitutional, whimsical order violates life, livelihood of Dalits, minorities

Kirity Roy, Secretary, Banglar Manabadhikar Suraksha Mancha (MASUM), writes to the Chairman, National Human Rights Commission: *** I want to attract your attention towards the illegitimate restrictions on the life and livelihood of the villagers of Paschim Sahebganj village under Dinhata - II Block and Sahebganj police station in Cooch Behar district of West Bengal by the Border Security Force personnel attached with Dharala Border Out Post under 138 Battalion BSF. The population of Paschim Sahebganj village is around 1480, where almost 75 percent of the villagers belong from Hindu Scheduled Caste (Dalit) and 25 percent from minority Muslim backgrounds.The main occupation of the villagers is agriculture. About 260 acres of cultivable land in the village that belongs to the villagers is located outside the border fencing, which is heavily guarded by the Border Security Force (BSF). The BSF regulates the ingress and egress of the villagers to their fields through the fencing gates that a

Largest democracy in world has become weakest at hands of fascist Hindutva forces

Note on “The Nazification of India”, a report released By Justice For All: *** This report, the Nazification of India, compares how Hindutva ideology not only is inspired by Nazis and Fascists of Europe, but their treatment of the Muslim minority closely follows developments that resulted in pushing Jews to the gas chambers. Situation is indeed quite alarming. The report says that the largest democracy in the world has become the weakest at the hands of the fascist Hindutva ideology. India today is ruled not just by a political party the Bharatiya Janata Party (BJP), but its mother organization the Rashtriya Swayamsevak Sangh (RSS). Because the BJP’s government policies are linked to extra-legal enforcement by RSS paramilitary street power, this report has coined the term “The BJP-RSS regime” to reflect their intrinsic links and collaborative relationship. The Nazification of India report marks the anniversary of the Gujarat pogroms of 2002 against Muslims which propelled the BJP-RSS

Varanasi social worker who has devoted her life for the ultra-poor and the marginalized

Passion Vista and its partners profile Founder and Managing Trustee Shruti Nagvanshi as  someone whom women leaders look up to: *** Shruti Nagvanshi, a social worker and human rights activist based in Varanasi, Uttar Pradesh, has devoted her life to reaching out to the ultra-poor and marginalized communities in India. Born in Dashashwmedh, Varanasi on 2 January 1974, she married Dr Lenin Raghuvanshi on 22 February 1992 and has a son, Kabeer Karunik, a Business management Graduate who is also a national level snooker player.

An approach to lake/pond restoration by Ramveer Tanvar, Pond Man of India

By Monami Bhattacharya*, Mansee Bal Bhargava**  Lakes/ ponds are often referred to as an elixir of life, a living ecosystem that adds incremental value to the larger biota. Across the tropical landscape of the country lakes/ ponds are a common sight. Lakes/ponds have always shaped the life and livelihood of those dwelling in and around it. The dependence of the local population on these natural resources of water is noticeable since time immemorial. However, they are fading fast in both rural and urbanscapes from the popular parlance with the advance of humanity. It has been a popular notion to value land more than the waterscape and hence these nurturers of life are under stress in several areas. In many instances, these once beautiful waterscapes referred as the ‘Eye of the Earth’ are mostly now only dilapidated garbage dump yards emitting foul smell with no sign of a healthy ecosystem.

Urban crisis: Impact of erosion of democratic framework on Indian cities

By IMPRI Team  On 13th February, 2023, IMPRI Impact and Policy Research Institute, New Delhi in collaboration with ActionAid Association India arranged a book launch followed by lecture series under the title “India’s G20 Presidency & the Urban Agenda for the Developing Countries”. The event was held in Indian International Centre (IIC) Annex, New Delhi. The event began with the book inauguration session, under the honorary presence of Mr Sitaram Yechury, former Rajya Sabha member and General Secretary, CPI (M), accompanied by Mr Sandeep Chachra, executive director, ActionAid Association India. Session 1 | Book Launch: ‘Cities in Transition’ by Mr Tikender Singh Panwar The book launched was “Cities in Transition”, written by Mr Tikender Singh Panwar, former Deputy Mayor, Shimla and a Senior Fellow at IMPRI. Beginning with brief remarks on his book, Mr Panwar outlined the basic subject matter and the purpose behind writing the book, which he considers as a by-product of his experien

Panchayat funds defrauded: Roads without potholes a fundamental right but not here

Kirity Roy, Secretary Banglar Manabadhikar Suraksha Mancha (MASUM), and National Convenor (PACTI) Programme Against Custodial Torture & Impunity, writes to the chairman, National Human Rights Commission: *** Through this complaint, I want to draw your attention to the plight of the villagers of Nawdapara in the District of North 24 Parganas. The village is situated under the Bagdah Police Station, Bagdah Block and Mama Bhagina Post Office respectively. Nawdapara is a Muslim minority populated village. Indo Bangladesh Border Road (IBBR) passes through the middle of the village. There is a naka checking post of the BSF inside the village and BSF associated with Mama Bhagina Border Out Post, 68 Battalion, ‘B’ Company guard 24 hours in that check post. People have lived in this village since the independence of India. The market is about three to four kilometres away from Nawdapara village. One primary school is situated within the village but the high school is about five to six kilo

Riverscapes: mythology, iconography, folklore and origins amidst rising water problems

By Proshakha Maitra*, Mansee Bal Bhargava** Rivers are not just bodies of water and resources flowing across a landscape, but they are flows supporting a variety of cultural beliefs, values, and ways of life by linking people, places, and other forms of life (Anderson, et al., 2019). Since ancient times, rivers have been the ‘cradle of civilizations’ where the major civilizations of the world developed along the banks of the rivers. Even the earliest known urban culture of the Indian subcontinent, the Harappan (Indus Valley) Civilization developed along the banks of the Indus River that flows from the mountains of Tibet through India and Pakistan. Every river has its tales of mythology, iconography, folklore and origins which are worth knowing, especially in the current times when they are under severe distress of development. Since knowing these intangible aspects of the tangible resource/heritage is crucial to instigate emotional and spiritual connect which may in turn make people an