Kudos to Tamal Bandyopadhyay for "Celebrating 50 yrs of bank nationalisation" (July 15). It would not be appropriate to pass judgement on the efficacy of bank nationalisation based on the wisdom of hindsight. We need to look at the ground realities that existed in the late sixties and the vision with which the nationalisation of banks was unfurled. In the pre-nationalisation era, existing banks were more interested in “class banking” with the majority of the population outside the framework of banking. Only after the nationalisation did this “class banking” become “mass banking”. More branches were forced to be opened in the interiors of the country which enabled more people to have access to banking facilities.
Government sponsored schemes were routed through these banks' branches. The granting of credit through these government sponsored schemes to generate self-employment and income for the family was a laudable initiative. This also to a great extent freed the rural masses from being strangled by local money lenders who lent at high rates of interest. That these directed lendings later on became large-scale non-performing assets (NPAs) for the banking sector is a different story.
Nationalisation also opened up avenues for large-scale employment. An army of educated people found career opportunities. If these early employees in banks were drilled with a sense of responsibility and customer service, the story could have been far different. Job security was assured. Emoluments were the same for performers and laggards. With new generation banks coming in, customers had a choice and many moved their loyalties to these new entities. The steady loss of business to these newbies did not act as a wake-up call to the nationalised bank as job security and steady emoluments helped continue the lackadaisical approach.
With the new generation banks moving into the hinterland and judicious use of technology, the importance of nationalised banks will diminish. The government also seems to be serious in stemming the rot. One merger has happened. More are in the pipeline.
K V Premraj, Mumbai
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