Oppose privatisation of banks! Protect the savings of the people!

Support the 5th August Strike of over 10,00,000 bank workers!

The United Forum of Bank Unions, consisting of nine unions of employees and officers of all state-owned banks, has called a one-day strike on 5th August. The workers’ unions are fighting against intensified exploitation and attacks on their rights and working conditions. They are mounting a powerful resistance to the drive towards privatisation of banking and the single-minded pursuit of maximum profits in the name of global competitiveness. They are defending not only their own interests but also the interest of the working class as a whole, and the general interest of our society.

Real and False Reasons for Privatisation

The Central Government and the big corporate houses assert that privately owned banks are more “efficient” than public sector banks. In support of this assertion, various so-called experts present figures to show that the profits per person employed is higher in the case of privately owned banks than in the case of government-owned banks.

This is a false comparison. The government-owned banks have been assigned the task of operating rural branches, while private banks operate only in the cities and towns. The ratio of loans advanced to the number of persons employed is naturally higher for private banks. Hence their rate of profit is higher. But this does not prove that they are more efficient. Profit rate is higher only because the private banks have been exempted from the social functions that public sector banks are required to fulfil.

The real reason for the drive towards privatisation of banking has nothing to do with efficiency at all. It is motivated by the unlimited greed of the monopoly capitalists, Indian and international.

The fact is that state-owned banks in our country have a very large assets base. Their financial assets are massive and growing rapidly today, with more people preferring to deposit their savings in state-owned banks rather than the privately owned profiteers. State owned banks also own land and buildings in the centre of metros and smaller cities and towns. Their assets are far greater in value than what they owe to their depositors.

The real reason for pushing privatisation is that the global and Indian monopoly capitalists are eyeing the public sector banks today as essential assets to be grabbed. These are among the world’s most healthy banks at a time when American and European banks are facing a serious crisis and their stocks are falling.

Intensification of Exploitation in the Name of Reform

The so-called reform program to modernise banking has been debated and implemented in various forms over the past 25 years, with the single-minded aim of intensifying the exploitation of bank workers so as to raise the rate of banking profits. The offensive began within the public sector banks in the eighties, when Rajiv Gandhi launched the so-called modernisation program. Today the bank workers are fighting a new plan to escalate the capitalist offensive in line with the anti-labour recommendations of an official body called the Khandelwal Committee.

Outsourcing is one poisonous form of converting regular positions into contract work and thereby denying workers their rights. It is one arm of the offensive, which is backed by the Reserve Bank’s narrow definition of “core banking functions”. Another form is to deny “officers” the basic rights of salaried workers and designate more and more workers as officers.

The official National Accounts Statistics provides the breakdown of “value added in banking and insurance” on an annual basis – into (i) surplus value, called “operating surplus”; and (ii) the value paid to workers, called “labour income”. The numerous measures to “modernise” the public sector banks and the opening up of banking to private corporations have both contributed to the rise in this ratio. Karl Marx identified this ratio as the degree of exploitation of labour by capital.

Along with the intensification of exploitation, the drive towards privatisation and increasing concentration through mergers also means further squeeze on small and medium-scale enterprises. It means that an increasing share of bank credit will flow to the big industrial corporations, Indian and international, while interest rates to smaller borrowers will be raised in the name of covering for risk.

To have banks chasing maximum profit at all times means to increase the danger of people losing their hard earned savings. Profiteering banks resort to massive speculation so as to keep pocketing maximum profits when productive activity is down. It is precisely such speculation that led to the global crisis that broke out in 2008, causing enormous damage to the social production process and to the livelihood of millions around the world. Millions of working people lost their savings, or their homes, or both.

Alternative to the Privatisation Program

Communist Ghadar Party of India has consistently opposed the assertion of the ruling class and its spokesmen like Manmohan Singh that there is no alternative except to privatise banking and insurance, as well as wholesale and retail trade, and to orient the economy towards the global market and maximisation of GDP growth.

Communist Ghadar Party has put forward the demand that banking should protect the interests of the working class and the intermediate strata, in harmony with the general interest of society. What does this demand mean, and how can it be fulfilled?

In our society, there are numerous interests in conflict. At one end of the spectrum are the monopoly capitalist billionaries, headed by the Tatas, the two Ambani conglomerates, the Birlas and other giant industrial houses. They command a controlling share of the means of social production in our country. At the other end of the spectrum is the working class, those who own no productive assets other than their own labour power, and have to rely on monthly or weekly wages and salaries. In between, there are numerous medium-scale capitalists, millions of peasants and other small-scale family enterprises.

The monopoly capitalists are interested in preserving their domination and control over the concentrated financial resources of the country. They want to further raise the level of concentration and rate of profit in the banking sector, through more intense exploitation of bank workers and squeeze on medium and small-scale producers.

The intermediate strata are interested in improving their access to bank credit, and in softening the terms of bank loans extended to them.

The working class is interested in protecting the value of its hard-earned savings deposited in banks, and in reducing the degree of exploitation of labour in this sector that has a million-strong force of unionised workers.

In addition to these specific class interests, there is also a general interest of society, that social production must be sustained. Social production must be protected from the danger of wild financial speculation driven by the unlimited greed of monopoly capital for maximum profits.

Nationalisation of banking is an essential step but only the first step. It is necessary but not sufficient. If we are to ensure that the interests of the working class and the intermediate strata are addressed, and the general interest of society is looked after, public property cannot be left in the hands of ministers, bureaucrats and parties that are all agencies of monopoly capital.

Nationalisation of banks needs to be accompanied by, and be a part of, a program to reconstitute the political system on new foundations and to reorient the economy to provide for all. Only with the working class and vast majority of working people exercising political power can it be ensured that banking serves the general interest of society, not merely in words but in deeds that match that word.


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Defeat Privatisation    United Forum of Bank Unions    public sector bank    privatisation of banks    Nationalisation of banks    National Accounts Statistics    monopoly capitalist    Khandelwal Committee    Karl Marx    global competitiveness    banking and insurance    Aug 1-15 2011    Campaigns    Economy     Popular Movements     Rights    

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