 "M V Murali, United Forum of Bank Unions")
M V Murali, convenor of United Forum of Bank Unions (UFBU), an umbrella organisation of various bank unions, sees consolidation talks between lenders as not needed and done with an aim of privatisation in mind. In a telephone interview with Anup Roy, he says the Reserve Bank of India (RBI)'s asset quality review is being done at a time when the economy is in downturn and this could be to show public sector banks in a poor light so that the government can fan its demand for privatisation. Edited excerpts:
What is your view about bank consolidation talks?
It is not required. The government is creating circumstances to justify their version of consolidation. For example, under this asset quality review by RBI, even those accounts which were not NPAs (non-performing assets) are now deemed as NPAs and banks have been asked to provide for them. This is eroding capital further and banks are showing huge losses. The government is using this to justify how poor public sector banks (PSBs) are and therefore enough capital should not be given.
But RBI's asset quality review is to clean up the balance sheet...
PSBs have been forced to give loans to sectors like power, infrastructure and steel that are in doldrums now because of various external factors, including government failings. There is no need for such an exercise at this time when the economy is down and bad assets are bound to happen. The Basel-III norms are also not required for Indian banks as they are government guaranteed, unlike western banks. Western countries try to impose what is good for them and we seem to be following them blindly without realising our own unique situation. But all these are being done with an agenda. First they are talking about consolidation, but their ultimate target is privatisation.
What's wrong in privatisation?
If the government loses control of the management of banks, it also loses control of the finances of the economy. In a developing country like India, the government needs to have control over the finances of the economy. PSBs and the Life Insurance Corporation of India should not be privatised. Rather, the government should infuse more capital so that their share in banks goes up proportionally. What will happen to financial inclusion if banks are privatised? Private banks do not take much part in inclusion as it is not a profitable area. State Bank of India plans to open branches in rural areas to serve the population there; no private bank will want to do that.
So what is your solution for bank NPA and capital needs?
The economy is in doldrums. Advances given to sectors that have failed are the result of circumstances and banks should not be blamed. Rather, the government should step up its support by proportionally increasing capital in the banks.
What will be your course of action now?
We have been protesting since 1990s against any consolidation move and we will continue to do so. The bank unions will meet under the umbrella of UFBU soon, probably this month itself and we will chalk out our future course of action. Right now, different unions are formalising their own agitation programmes. We want to bring everyone together and make the agitations more organised and stronger.
