Congress opposes bank privatization

Stepping up the offensive against the Modi government, Congress President Sonia Gandhi called on senior party leaders to vigorously oppose bank privatization measures during the upcoming monsoon session of parliament, which begins on July 19. .

The privatization of banks must be brought before Parliament. The nationalization of banks was carried out in 1970 and 1980. The initial nationalization of banks was carried out through the Banking Companies (Acquisition and Transfer of Businesses) Act of 1970, which now needs to be amended to privatize the banks.

The bank privatization bills concerned were not in the initial list of the 17 bills proposed by the Modi government, for consideration and adoption during the monsoon session. But since the government is firm on bank privatization, it can submit bills to parliament at any time during the monsoon session.

The Modi government can either amend or repeal the Banking Companies Act (Acquisition and Transfer of Businesses), 1970 and 1980.

In the run-up to the monsoon session of Parliament, Congress President Sonia Gandhi, who is also chair of the Congress Parliamentary Party, called a meeting on July 14 to identify issues to be raised and develop party strategy. on the floor of Parliament. , in order to intensify and intensify the attack on the Modi government.

Sonia Brainstorm

The meeting called by Sonia Gandhi, which lasted over 90 minutes, shortlisted the issues the party will address in the monsoon session. These include blatant mismanagement of the Corona virus pandemic, repeated increases in fuel prices and prices for LPG cooking gas cylinders, unrest among farmers and the situation at the Sino border. -indian. Sonia Gandhi also ordered party leaders to target the Modi government on the issue of corruption in the purchase of Rafale Fighter-Aircraft.

Finally, legislation on the nationalization of banks could not be adopted in Parliament until 1971. Today, 2021 marks the golden jubilee year of the nationalization of banks.

Ironically, in this golden jubilee year for the nationalization of banks, the Modi government is pushing for the privatization of banks, which runs counter to the very objectives of the economic and social changes, for which it was brought about.

The Nationalization of Banks Ordinance was signed and promulgated by Acting President VV Giri on July 19, 1969, after which he resigned to contest the presidential election as a Congress-backed independent led by Indira Gandhi and won the election, beating the official candidate Neelam Sanjiva Reddy.

The ordinance on the nationalization of banks was challenged in the Supreme Court, which overturned it. The judiciary arresting her in her tracks, she opted for the midterm elections in 1971.

Progressive agenda

Indira Gandhi firmly believed that while democracy has indeed come to stay and has proven itself in the country, economic freedom in the form of economic self-sufficiency, as well as improving the daily life of ordinary people, does not had not yet been reached. That is why we have taken drastic measures.

It was only after her spectacular and astonishing victory in the presidential elections of March 1971 that Indira Gandhi succeeded in passing the bill on the nationalization of banks in Parliament.

At the heart of the nationalization of banks was the question of reorienting credit policies. It was primarily intended for the common good.

Nationalization was not an end in itself. It was mainly about opening the banks to the teeming millions of people. The main idea was to reduce inequalities and social and economic inequalities, in order to inaugurate an egalitarian society.

When interacting with leaders, intellectuals and young people during one of his overseas visits, they wondered aloud with Indira Gandhi that if they were unable to make changes, what course would take the story. This was also the big question put to Indira Gandhi. Amid rising public expectations, Indira Gandhi was forced to move forward with her progressive agenda.

The nationalization of the banks has also skyrocketed people’s expectations. Indira Gandhi highlighted how nationalization is an opportunity and a challenge for the banker to redefine himself in a dynamic and innovative role. Rural banking, she said, in particular, will require new techniques and methods.

Speaking to the Bankers Club in New Delhi on August 28, 1969, Indira Gandhi said: “The attitudes of conventional and conservative banks will not suffice if the banks are to foster and expand the coming agricultural revolution and benefit from the substantial income it receives. generates in rural areas. To mobilize rural savings, you will have to work hard to develop new services, which will suit our farmers and make them save more and part with their savings. On the loan side too, new ideas will be essential. You will have to innovate while respecting security requirements. Clearly, the traditional emphasis on collateral collateral or land ownership documents will be doomed to fail. “

Apparently, the 10 percent voting limit for a non-government shareholder, regardless of their stake, is an obstacle to the privatization of public sector banks. Thus, the Modi government is considering whether to repeal the laws on banking companies (acquisition and transfer of companies) of 1970 and 1980 (laws on nationalization). The 10% voting rights ceiling for a non-governmental shareholder, regardless of his participation, is one of the main constraints identified by the Modi government.

The provision of the Banking Regulation Act 1949, according to which no shareholder of a banking company – PSB or private sector bank – can exercise their voting rights above 26% is also being revised.

Contradictory visions
The Modi government has carried out extensive inter-ministerial consultations to draft the legislative changes required for the privatization of public sector banks (PSBs). The plan is to opt for amending all relevant laws at once so that the process of privatizing PSU banks is not hampered by legal obstacles.

In her budget speech to Parliament on February 1, 2021, Union Finance Minister Nirmala Sitharaman announced the Modi government’s plan to privatize two PSU banks and a general insurance company during the fiscal year In progress.

This is seen as part of a larger process to privatize more PSU banks.

What is at stake are the two opposing views. While one aims to expand and expand banking services for farmers, youth and small entrepreneurs, the other aims to make bank credit more readily available to buddy capitalists.

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