Giving banking licenses to corporate houses retrograde: CPI

The Communist Party of India (CPI) Tuesday hit out the government over an RBI proposal to give banking licenses to corporate houses, terming it a "retrograde" step and demanding it not be allowed.

The Communist Party of India (CPI) Tuesday hit out the government over an RBI proposal to give banking licenses to corporate houses, terming it a "retrograde" step and demanding it not be allowed. Earlier this week, the Reserve Bank of India’s internal working group (IWG) reviewing corporate structure of private sector banks suggested sweeping changes in bank ownership in its report, including allowing large corporate and industrial houses to own banks by amending the Banking Regulation Act, 1949.

“Giving banking licence to corporate houses is retrograde. This is in continuation of the pro-corporate neo-liberal economic trajectory of the Modi government,” CPI general secretary D Raja said in a statement. He alleged that at the time of independence all the banks in the country were owned by business houses, but none of them came forward to help the government in its planned economic development projects. “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,” Raja said. 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, he said. “Our members of Parliament at that time raised this demand vehemently and enlisted the support of many political parties. Finally, in 1969, 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,” he said. Nationalised banks have today become the main engine of economic development, the Left leader added.

He also highlighted the cases of crisis in private banks and said that it is “unfortunate that instead of learning lessons, the RBI is proposing to hand over banking licence to corporate and business houses". “Nationalised banks are the custodians of hard-earned savings of the common people of this country. The RBI’s proposal will jeopardize their interests and runs counter to India’s economic development. Giving licence to corporate and business houses is the most retrograde step and should not be allowed,” he said.