On the Crisis of Public Sector Banks and the Condition of Bank Employees

Mazdoor Ekta Lehar (MEL) interviewed Comrade Devidas R. Tuljapurkar, Joint Secretary, All India Bank Employees Association (AIBEA), on the conditions of the bank employees and the overall situation of the public sector banks.

MEL: The public sector bank workers are in the front line in the nation wide fight against corona virus. Can you tell us about the conditions under which the bank workers have to work?

 DRT:  Banking has become an essential service.  Banks are the nodal agencies in the implementation of government schemes for underprivileged sections of the society. Hence, government is continuing with banking services even during the period of the present lockdown. In metro centers, public transport is suspended but the employees have been asked to report for duty, which they are finding very difficult.  In rural and semi-urban areas, employees are facing such a huge rush at the counters that maintaining the prescribed social distancing is impossible. Thus, bank employees are required to work at risk to their own lives. Still, they have not been extended life policy coverage, as has been made available to health sector workers.

Already, the majority of banks are understaffed. The vacancies of sweepers, security guards and other subordinate staff have not been filled for several years.  This was done in in the name of reducing administrative expenses as a part of the strategy to turn around loss making banks into profit making ones, thereby compromising on basic banking services. This understaffing is burdening the existing staff, which burden is felt especially acutely in these times of crisis.

MEL: Can you explain to us the current overall situation in the banking sector?

 DRT: Banking in pre corona times was already passing through a period of deep crisis.  The crisis was mainly on account of Non Performing Assets (NPA), due to default on loan repayment by big corporate companies. About 55% of the total credit of Public Sector Banks (PSB) is to the big corporates, out of which 80% has turned into NPA. The PSB’s have written off around 6 lac crores of rupees of these NPAs in the past five years. The massive and growing NPAs have plunged the banking sector into an acute crisis of capital shortage. Government of India infused around 3.5 lakh crore rupees from the budget in the past five years. As you know, this money is obtained by taxing the people. So on the one hand, the big corporates default on their loan repayments; and on the other hand, the Government taxes the people more to recapitalize the banks and cover up the losses caused by the default by the corporates. But even with this partial recapitalization, banks are struggling due to insufficiency of regulatory capital.  To overcome this, the Central Government came out with Insolvency & Bankruptcy Act. But in the process, banks have to bear average 55% sacrifice or “haircut”!  Thus, it has put the big corporates to advantage at the cost of Public Sector Banks. Now at the end of it, virtually all banks have stopped lending and hence they are no more interested in mobilizing deposits too. Thus, almost all banks are showing negative business growth, with the exception of MUDRA loans. These loans act as support to the ruling BJP-led Government, which is governing on behalf of the ruling class, headed by the big corporate houses.

Now in the background of the corona attack, banking has virtually come to a grinding halt. Central Government has announced certain packages to the farmers and under-privileged sections of the society, in which banks will be acting as delivery points. The Rs 500 announced as disbursement to the poor through Jan Dhan accounts is woefully inadequate and cannot compensate them for their complete loss of livelihood. On the other hand, the regulator which is the Reserve Bank of India has announced certain measures enabling banks to reduce the interest rates on loans to the big corporates and also relaxation in NPA norms. This is to postpone the declaration of more corporate loans as NPA. However, such measures will yield results only if markets are revived, for which the purchasing capacity of people needs to increase. But the present crisis is leading to reduction in employment and to wage cuts, resulting in aggravating the crisis further.

Successive  governments at the centre have been shouting from the rooftops that PSB’s  must focus on profit making; and in parallel, they have been opening up the banking sector to private monopolies, both Indian and foreign. They are merging the public sector banks into mega banks, in order to be able to provide more credit to the big corporates. This happened on April 3, 2020, with the merger of 10 Public sector banks into four. In this process, a lot of branches will be closed down.   As a result, the need for banks to act as secure depositories of the people’s money and as a source of funds for the needy sections of the population will be trampled in the mud. The big corporates will be enabled to withdraw funds at cheap rates and squander the people’s money. The needy will be denied access to funds, citing lack of collateral or some other excuse.

There is a high likelihood of worldwide public upsurge over the core issues such as hunger, poverty and unemployment. As fallout of the present crisis, the public health system will be an issue on which people will rally around. In our country, the poor public health infrastructure has shown itself up as a glaring weakness. Apart from these, ecological imbalances and environment are issues on which various action groups will be active.

The corporate friendly model and the policy of privatization, globalization and liberalization followed by successive governments, whether Congress led or BJP led, has been shown to be a failure. Today, it is more than clear that it is not privatization that is the solution but social control of the means of production and banking services. That is the change which is required for the well being of all members of society, especially the working population.

Capitalism will try to postpone its eventual overthrow, with further compromises and adjustments here and there in order to prolong its life. Capitalism will try to operate through multilateral institutions such as the IMF, World Bank, IFC, WTO, etc., to control the economies of all countries. It is only the working class and peoples’ movements around the world that can prevent this.

MEL: Thank you for this informative and interesting interview.

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