We are seeing many signs and announcements indicating that major changes are about to take place in our country’s public sector banking system. The vast population dependent on the services of public sector banks, the middle-class intelligentsia, democrats, and heads of small and medium-sized industries must understand and respond to the changing circumstances.
● The savings held in public sector banks belong to the people.
The capital of the banks has been provided from tax revenues paid by the people. Profits amounting to lakhs of crores of rupees have been earned through the labour of employees. In her 2026–27 Budget speech, Finance Minister Nirmala Sitharaman announced that a high-level committee would be constituted to study what role banks should play in achieving the ‘Viksit Bharat–2047’ that the Government of India is grandly proclaiming. Accordingly, the summit meeting of public sector banks conducted by the Ministry of Finance on August 17 and 18 discussed proposals to be submitted to that high-level committee. In addition, in his Independence Day speech, the Prime Minister expressed the hope that at least one Indian bank would be among the world’s five largest banks. All these are indications of major changes in the banking sector. What are the realities hidden behind these wonderful slogans..?? More than 60 percent of the savings (deposits) in public sector banks is money saved by ordinary people and employees for their future, their children’s education, and marriages. If this hard-earned money is kept in a savings account, the interest paid by banks is 2.5 percent to 2.7 percent. If it is a fixed deposit, it is 6.5 percent. According to government figures, inflation is close to 6 percent this year. This means that every year the value of the savings accumulated by ordinary people is declining, with no protection for the value of the rupee. People are also being subjected to financial exploitation in the matter of bank loans. The changes brought about in banking policies in the name of reforms are the reason for this. Forty percent of the total loans given by banks are supposed to be provided to priority sectors such as agriculture, handicrafts, and small and medium-sized industries. The Reserve Bank used to impose penalties on banks that did not provide these loans. But with the implementation of banking reforms, loans given to microfinance companies and non-banking finance companies (NBFCs) began to be treated as if they had been given to priority sectors. Public sector banks gave Rs.14 lakh crore, which they were supposed to lend to farmers and ordinary people, to NBFCs. The microfinance companies and NBFCs are lending this same money to ordinary people and charging 20–30 percent interest, earning profits of thousands of crores of rupees. We continue to see news every day of many families resorting to suicide because they are unable to escape the burden of these loans and the debt trap.
● ‘Banks could lend directly themselves, couldnot they’ Why are these intermediaries needed in between..??
The irony is that the ordinary person who keeps their savings in banks is, on the one hand, a borrower being exploited, while on the other hand, they are a borrower subjected to high-interest exploitation by NBFCs. Why are the Central Government and the Reserve Bank allowing these forms of exploitation..?? In addition, over the past five years, public and private banks have collected Rs.28,495 crore from account holders in the form of penalties for reasons such as not maintaining a minimum balance in the account, issuing cheques without sufficient balance, and many others. Public sector institutions established through Acts of Parliament should implement labour laws, act as ‘model employers’, and appoint permanent employees. To provide proper banking services to account holders and to match growing business, employee recruitment should be undertaken. But in public sector banks, casual, temporary, apprentice, contract, fixed-term, business correspondent and other forms of workers, far outnumbering permanent employees, are performing the very work that permanent employees should be doing. They do not have proper salaries or other facilities. At least one lakh forty thousand permanent positions are vacant in banks.
After the NDA government came to power, it announced that it would effectively recover bad debts. In that name, it enacted the ‘Insolvency and Bankruptcy Act–2016’. It also claimed to have specifically established National Company Law Tribunals, NCLTs. But banks are now writing off bad debts on a large scale in a manner that had not happened until then. For seven companies such as Reliance Communications, Videocon Industries, and Zee Network, 97 percent of the amount they owed was written off, and only 3 percent was recovered. During this government’s tenure, Rs.18 lakh crore has been classified as bad debt. The profits earned through the labour of lakhs of bank employees and the capital raised through taxes on the people have thus reached corporate companies in the form of bad debts. The laws enacted by the government have not recovered the debts, but have legalised the write-off of corporate loans. If this same money had been given as loans to ordinary people, the agricultural sector, and MSMEs, the country’s economy would have grown tremendously and employment would have increased. Is it not a fact that the unholy nexus of corporate forces, bureaucracy, and political forces has made it possible to loot so much public money..?? What else is this but robbing the crows and feeding the hawks..??
Efforts are underway to appoint people with experience in private and corporate institutions as Managing Directors, Chairpersons, and other senior officials of public sector banks, and to increase foreign investment in bank capital to 49 percent. Foreign investment comes only for profits, and if there are no profits, it will withdraw. Then banks will be exposed to financial instability, and people’s savings will be put at risk. Therefore, the United Forum of Bank Unions – the united platform of bank employees’ unions – has decided to study these circumstances and inform the general public, democratic forces, farmers’ and workers’ unions, and the country’s youth about the facts. Public sector banks are public institutions run with people’s savings. The unions are demanding that interest rates be increased so as to protect people’s savings from inflation, and that low-interest loans be provided directly, without any intermediary institutions, to the agricultural sector, rural development, small and medium-sized industries, and the infrastructure sector, which are the backbone of inclusive growth of the country’s economy. Employee unions and experts from the farmer, worker, and MSME sectors should be given adequate representation on bank boards that make policy decisions. This will increase transparency and accountability in matters such as sanctioning and recovery of loans. It is the duty of all people to protect public sector banks. This will serve as the foundation for the country’s economic self-reliance and inclusive growth.