Assumption that pvt banks rendering more efficient services wrong: TMC MP Roy

There is an erroneous assumption on the part of policy makers that private sector banks are rendering more efficient services to the economy and people, whereas the truth is otherwise, said Trinamool Congress (TMC) MP Sukhendu Sekhar Ray.

He said the TMC will support the demands of bank unions against privatisation in the interest of poor people of the country.

''Even during the past two decades, many private banks, including the new-era private banks, had collapsed due to governance and management failures.

''Prior to nationalisation, private bank failures were routine. Hence, eulogising private ownership lacked a sense of history,'' Roy said while addressing an event organised by the All India Bank Employees Association (AIBEA).

Recent examples of failure of private sector bank include Punjab & Maharashtra Co-operative Bank and Lakshmi Vilas Bank.

Expressing concern over the current frequent bank scams, Roy said, ''If you allow the corporates to loot the money and run away after taking photographs with the prime minister, then this country will not survive.'' Highlighting the importance of public sector banks (PSBs), he said only nationalisation of banks done in 1969 took banks to the people.

AIBEA, in a statement on Tuesday quoting Roy, said some of the infrastructure projects funded by PSBs during the last decade did not take off in time due to issues related to land acquisition and environmental clearances, thus choking the funds deployed and leading to stressed loans could not be a reason for blaming the PSBs.

Terming the Insolvency and Bankruptcy Code (IBC) as an organised loot, he said there are cases where 80-90 per cent haircut are being allowed, and thus this has led to poor recovery.

He asserted that the TMC will not have any hesitation to raise the red flag wherever it is required for people's rights and the betterment of Indian citizens.

The AIBEA is affiliated to the Communist Party of India (CPI).

Earlier, speaking at the AIBEA event, Prashant Bhushan, an activist lawyer, stated that banks were custodians of public money, hence the ownership of banks holding the money of common people of the country could not be left to private entities.

That was the philosophy that guided nationalisation of banks five decades ago, which has served that the cause has much relevance in contemporary times also, Bhushan said.

Unfortunately, privatisation of banks was being advocated by the policymakers, he said adding that it is only mis-adventure by the government.

''Privatisation was not a panacea at all. Fixing the problem at the root was the solution. Banks were public institutions for public benefit. Just as judiciary or police cannot be privatised, banks holding public money cannot be privatised,'' Bhushan said.

Bhushan pointed out that the wrongful appointments of the independent directors often fall under the conflict of interest.