Eastern Times: February 24, 2021, New Delhi: Reacting sharply to the Narendra Modi government’s decision to lift embargo on private sector banks to conduct business with the government, All India Bank Employees Association on Wednesday said, “government business being given to private banks is like feeding milk to the poisonous snake.”
Opposing the reform move announced by the Centre on Wednesday, to lift embargo on private sector banks to have access to government’s business by the finance ministry, the oldest ban employees association in the country said “it is unfair” and demanded that the decision “needs to be withdrawn.”
With farmers already demanding the repeal of three contentious farm laws, the government will now have to deal with its decision to free the private sector banks to do business with government, a domain that rested mostly with public sector banks and a few big private sector banks.
AIBEA general secretary C.H. Venkatachalam, released written statement saying, that “private banks will be equal partners… This is a strange contention of the government. If all banks are equal, then why the private banks are exempted from emphasis on rural branch expansion, rural lending, agriculture loans, priority sector loans, etc.”
He pointed out that “the government banks have mobilized 42 crores of Jan Dhan Yojana bank accounts of the poor people. Private Banks have opened only 1.25 crores of such accounts of the poor people. Why they were not equal partners in this pet scheme of the government.”
The statement said, “in giving agriculture loans, let private banks compete with public sector banks. In giving education loans to the poor students, will private banks compete. In opening rural branches, let them compete with nationalized Banks. Public sector Banks’s social banking obligations have the cost, the statement said, adding that, lesser rate of interest on agriculture loans or education loans or MSME, etc. has a cost to the Banks.”
Government’s business to these Banks helps in cross-subsidisation of the cost. If Centre will distribute their government business to private banks, the ability of public sector banks to lend to weaker and priority sectors on concessional rates of interest will become difficult because government’s business helps thee Banks to balance the cost, the banking association statement says.
This decision to give equal treatment to private banks is unfair and to the disadvantage of public sector banks.
It reminded the Centre that, “Private sector is the main contributor of Banks’ huge bad loans. But there are attempts to hand over our nationalized banks to this private sector. Now this decision is meant to boost the private banks at the cost of public sector banks.”
The statement said, “We deplore this decision and demand of the Government to review the decision.”