Govt weakening PSBs to promote pvt sector lenders: Bank unions

Govt weakening PSBs to promote pvt sector lenders: Bank unions Mumbai, Jul 18(PTI)On the eve of bank nationalization, unions, mostly representing public sector lenders, Thursday accused the government of marginalizing and weakening them to promote private sector players. Late Indira Gandhi, when she was the prime minster, in a controversial move-driven by the growing schism in the Congress and the eventual split--nationalised as many as 14 largest banks through an Ordinance on July 19, 1969. It also led her finance minister Morarji Desai to quit in protest.

These 14 banks then accounted for 80-85 percent of bank deposits in the country. Years later in 1980, she also nationalised six more private banks in 1980. The All-India Bank Employees Association, an umbrella body of bank unions, said during the past 50 years public sector banks have played a critical role in nation's building.

"Despite their contribution have been commendable and laudable, instead of further expanding and strengthening them, for the past 28 years, from 1991 to be precise, the successive governments have been pursuing a policy of reforms which only aimed at weakening and diluting the role of public sector banks," the union claimed. The governments' real objective has been and is to privatise and hand over banks to corporates, business houses and capitalists, it charged.

"Orchestrated attempts are being made to marginalise the public sector banks. The government is allowing free entry of corporates and private business houses to start their own banks with a view to encourage private sector banking and to weaken the public sector ones," unions alleged. The union also alleged that bankruptcy code has become the best tool for defaulting corporates to escape accountability instead of helping resolve the NPA problem.

"Large corporate defaulters are being given a velvet treatment at the cost of transferring burden of losses onto the shoulders of the poor bank customers," they said..