Letter to BS: Warning by IMF is major breakthrough in sordid story

This refers to “Sovereign-banks nexus a worry: IMF” (August 9). The announcement to nationalise country’s 14 major private sector banks was made by the then Prime Minister Indira Gandhi in a sensational broadcast on All India Radio on the evening of July 19, 1969. The History of Reserve Bank of India (Vol 3) has called it ‘The Defining Event’. She didn’t consult the Reserve Bank of India  Governor L K Jha before taking this decision. She had only told the then Finance Secretary I G Patel about it a day earlier, asking him to prepare her speech making the announcement. She made no secret of the fact that the decision was based on personal rather than national considerations. Despite the circumstances under which this decision was taken, it has stood unaltered for nearly half a century; actually six more banks were added to the list of nationalised banks about a decade later. Many governments under various parties, including one under Morarji Desai, came and went and quite a few of them were critical of bank nationalisation but none took any steps to reverse it. The governance of banks has been deteriorating. Their non-performing assets have been going up but denationalisation had so far not been considered a remedy.

The warning by International Monetary Fund is the first and major breakthrough in this sordid story. It is earnestly hoped that Indian authorities will pay heed to it.

R C Mody  New Delhi

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