Public Sector
Should Corporates Own Banks? Should Corporates Own Banks? – Centre for Financial Accountability (cenfa.org) By Thomas Franco | March 4, 2022
“It would be difficult to undertake credit planning unless the linked control of Industry and Banks in the hands is snapped by Nationalisation of Banks,” said R K Hazari in the R K Hazari Committee’s report on Industrial Planning and Licencing Policy in 1966.
In 1993 with the liberalization policy and the conditions implemented by the World Bank & IMF, banking was extended to private players.
In 2013, Tata Sons, Bajaj Fin serve, Aditya Birla Nuvo, Reliance Capital were among 26 applicants along with India Bulls, and SREI Infra which are now in the NPA mess.
After 2014, things have further changed. The Corporates have found an easy entry into banking through Non-Banking Financial Companies.
As per the Banking Regulation Act, before granting any licence, the RBI requires to be satisfied that the following conditions are fulfilled.
that the company is or will be in a position to pay its present or future depositors in full as their claims accrue;
that the affairs of the company are not being, or are not likely to be, conducted in a manner detrimental to the interests of its present or future depositors;
that the general character of the proposed management of the proposed bank will not be prejudicial to the public interest or the interest of its depositors;
that the company has adequate capital structure and earning prospects;
that having regard to the banking facilities available in the proposed principal area of operations of the company, the potential scope for expansion of banks already in existence in the area and other relevant factors, the grant of the licence would not be prejudicial to the operation and consolidation of the banking system consistent with monetary stability and economic growth.
In November 2020, the Reserve Bank of India released a report of its Internal Working Group (IWG), which recommended that large corporate/industrial houses be permitted to promote banks,
Put together, the recommendations make way for corporate entry into banking, which has not been possible since the bank nationalisation of 1969
The risks mentioned in the IWG report such as misallocation of credit, conflicts of interest, extensive anticompetitive practices, risks relating to intra-group transactions, connected lending, circular lending, moral hazard risks, and the risk of contagion will come true.
In the meanwhile, the poor, low-income, and middle-income customers, who constitute the majority, will have to depend on NBFCs, the new Shylocks who will charge huge interest for loans. Income inequality will further increase. The oligopolies will not only control the financial system, but also the political system. Democracy will perish!
The government's selling spree is on full swing with the LIC IPO being doled out soon, and to ensure its success the Govt has even tweaked some part of the FDI policy
https://www.moneycontrol.com/news/business/ipo/lic-ipo-drhp-likely-this-month-20-fdi-cap-being-proposed-7936841.html JANUARY 14, 2022 To facilitate disinvestment of the country’s largest insurer, the commerce and industry ministry has introduced some changes in the foreign direct investment (FDI) policy
"The clearance for foreign stakes in the mega offering would not just permit global funds to participate, but also allow them to buy more after the exchange listing. Regulators made other moves late last month, including tightening rules governing share sales by anchor investors." The success of the public issue is crucial for the government to inch closer to its Rs 1.75-lakh-crore divestment target for the fiscal 2021-22. So far, only Rs 9,330 crore has been mopped up through PSU stake sale.
(comment in Finance Matters, cenfa.org.. the question remains, does India need to sell its golden goose? There are several lessons to be learnt from the previous roll-out of National Monetization Policy. At the same time, huge funds continue to be pumped into various schemes, the latest being the ADB's 350 million loan to AMRUT 2.0. It is high time we prioritise what the country really needs, see beyond the rhetoric and listen to the demands of its huge young population facing massive nemployment, inflation and rapidly being pushed to poverty
Selling the Golden Goose for a Pittance – Does our FM know what LIC is? By Thomas Franco | January 15, 2022 LIC is a golden goose which is giving golden eggs regularly to the economy, development projects and providing social security to the majority of the marginalised people of this country. Almost one third of the GDP is connected to LIC and almost one third of the budget of the GOI is financed by LIC. The FM has stated that the listing would bring discipline while giving retail investors an opportunity in wealth creation. She doesn’t say where the indiscipline is. It is her Ministry which is overseeing LIC and her Secretary is on the board of LIC. The so called retail investors in India are not even 3% to whom she wants to give wealth.
There is so much talk of efficiency of the private sector. The IRDAI Annual Report for 2020-21 has shown that the operating expense of LIC is 8.68% of the total premium income. The same for private sector is 11.72%. LIC has been serving larger number of policies at an economical cost.
All this will go away with privatisation. Shareholders will only insist on more profit ignoring the social security needed for the larger majority.
<https://www.downtoearth.org.in/blog/governance/covid-19-a-generation-interrupted-80945>
Modi Sarkar Bank Privatisation Bill पर Youth Leader Anupam ने खोली पोल Dec 5, 2021 Hindustan Live https://www.youtube.com/watch?v=f33yNrHtdes
The Modi government is going to bring a new bill to clear the way for privatisation in banks, for which youth leader Anupam targeted the Modi government. Anupam said that the Modi government is going to nationalize the loss making banks and privatize the profitable banks.
Legislation to Privatise Two Public Sector Banks? https://www.youtube.com/watch?v=YaPAkIY1oy8 Nov 27, 2021 NewsClickin
This Winter Session, the government is going on a disinvestment spree at the cost of people. Finance Minister Nirmala Sitharaman said in the 2021-'22 Union Budget that two public sector banks will be privatised by amending the Companies Act and Banking Regulation Act.
Newsclick's Pragya Singh speaks with Thomas Franco of People First about the disastrous consequences of privatisation. The former general secretary, AIBOC, says disinvestment could increase the already wide credit gap in the country. Public banks are an article of faith, as corporate banks will deprive people, MSMEs, students and rural India of access to credit. Ever since demonetisation, the banking sector has taken a hit, both financially and in the eyes of the people. The solution is for unions and the public to agitate and resist the corporatisation of banks.
19th July Call of the Day is “Defend Bank Nationalisation: – Defeat Bank Privatisation” https://www.cenfa.org/national-financial-institutions/19thjuly/
By Devidas Tuljapurakar | July 15, 2020
In 1969 total bank branches were 8,262 of which in rural 1833 and semi urban 3342, which today are total 1,46,904 while rural 52,098 and semi urban 41,738. In 1969 per branch population was 64000 today is 9269. In 1969 deposits of all scheduled commercial banks were 4646 Cr, while advances 3509 Cr which today are deposits 139 lakh Cr rupees while advances 102 lakh Cr of which in 1969 priority sector advances where 504 Cr which today are 25 lakh Cr. The growth of banking in India consequent upon nationalisation is unparallel and unmatched. This enabled common man to put their savings in the banking which became source of economic development for the government.
The role of the government is to give direction to the banking but consequent upon nationalisation governments started using banking to sub serve their own political interests. Loan Mela were organised thereby to distribute hundreds of crore to nurture their own constituencies to serve narrow political interests. This was followed by repetitive debt relief announcements which vitiated the environment of recovery in the banking. At the same time big business by using their political clout got the sanctions of big amount which also became overdue and were written off in due course of time. Thus today banking is in deep crisis on account of mounting Non Performing Assets (NPAs).
- BMC scraps 1.8k vacant posts, hundreds of contract staff hit
- Medha Patkar on Current Economic Policy
- The Shadow Government Plundering the Public Purse
- And how common citizens are paying the price for bad Monopolies
- Employees of Mahavitaran Jalgaon zone against privatization.
- Issues with Privatisation of Essential Services and Free Speech Institutions
- SC Dismisses Kerala Govt's Plea Against Adani Group's Takeover of Thiruvananthapuram Airport
- Understanding Deregulation, Privatisation & Economic Reforms
- Pawan Hans Sale: Cayman Firm in Winning Bid Flayed By NCLT
- the biggest privatisation scam in India
- Welcome Kerala Legislative Assembly’s resolution opposing disinvestment of the LIC
- Where has all the silver gone?
- LIC IPO- Gross injustice to the smaller LIC policy holders, especially those belonging to the SCs/STs/OBCs
- How to kill LIC -story behind IPO
- The political economy of CPSE disinvestmen
- Companies Bought & Sold by different Prime Ministers
- Public Private Partnerships – Subsidy and Impunity for Private Corporations
- CEL Sale
- On Trend for Privatisation: Kanhaiya Kumar
- Privatisation of CEL
- Privatisation: What Does It Really Mean?
- Dayanidhi Maran Shows Mirror To Govt On NPA Write-off and Haircut To Corporates
- virtually extending the lease in perpetuity
- World Bank offers to help National Rail Plan B
- Privatising power distribution: A hoax
- Modi’s Monetisation Worse than Demonetisation.
- Economics of Monetisation of Assets
- Monetisation: Designed To Create 2-3 Monopolies
- Privatised Infrastructure by Adani Group
- To BEST: Why are we waiting for hours?