Selling out to global finance capital in the name of reform
In November 2013, the Reserve Bank of India issued a new policy for foreign banks in India, which allows them to take over existing Indian banks if they satisfy certain conditions. Before this official announcement, RBI Governor Rajan had already declared this intention in a speech in Washington, D.C, where he invited foreign banks to increase their presence in the country by taking over some Indian banks.
Opening up the financial sector to global monopolies has been a persistent demand of the imperialist powers and the multilateral institutions of finance capital, headed by the IMF and World Bank. The new RBI governor, who was formerly Chief Economist of IMF, had authored a report on Financial Sector Reforms in 2008, when he was honorary economic adviser to Prime Minister Manmohan Singh. He has now been assigned the task of implementing the recommendations of that report. They include measures to deregulate the financial sector, expand the role of private banks, both Indian and foreign, reduce the role of state-owned banks, and free up branch licensing rules for private banks.
Foreign banks, whose branches were so far restricted in number, will now enjoy as much freedom as Indian banks to open new branches. They will be free to concentrate an increasing share of our people’s savings in their hands, and to expand and concentrate their lending business on the most profitable ventures. Like other foreign companies operating in India, they will have the freedom to take profit away to their home country.
The new policy to encourage the expansion of foreign banks is being justified as a step to better regulate their activities. The truth is the exact opposite – namely, to remove all restrictions on foreign banks stepping up their loot and plunder of the value created by Indian workers and peasants.
The aim of these policy changes is to integrate the Indian financial system even more closely with the global system. The Indian monopoly houses are collaborating in this global project to maximize the loot and plunder of our country. They are hoping to acquire banking assets at home and abroad, and ensure adequate financing of their global expansionist drive. To fulfill their narrow ambitions and imperialist dreams, the Indian rulers are subjecting the entire economy and the life-savings of crores of working people to unacceptable levels of risk.
When the global financial system sunk into deep crisis in 2008, following the collapse of major international banks, millions of people lost their life-savings in the US and elsewhere. India was not so severely affected as many other countries. The RBI at that time took credit for the tight controls on foreign banks in our country, claiming that this protectionist policy had saved India. Now the RBI has taken a 180 degree U-turn to claim that expanding the role of foreign banks is required for saving India. Truth is being turned on its head in the name of economic wisdom!
Enormous pressure is being mounted on the lakhs of workers in the branches of state-owned banks in our country. The staff in every bank branch are under pressure to start earning maximum profits or face the threat of closure or take-over by Indian or foreign monopolies. The Tatas, Ambanis and other monopoly houses are preparing to open their own banks and take over various segments of state-owned banks and benefit from the profits reaped in the globalizing business of financial swindling.
At the present stage of capitalism, control over financial resources is the key to control and steer the course of the economy and the entire society. The Indian big bourgeoisie gained control over the financial resources generated from the savings of all our people by nationalizing banks in 1969 and expanding the state-owned banks thereafter. The program being pursued in the present period is to eliminate all social obligations of state-owned banks, gear them fully towards profit maximization, and facilitate rapid expansion of private banks, Indian and foreign, through branch expansion as well as acquisitions.
All parties and organisations of the working class must rally around the struggle of the Bank workers in our country against the offensive called “financial sector reforms”. It is an anti-worker, anti-small saver and anti-national offensive.
Borrowing and lending only transfers value from one hand to another, based on a contractual agreement. While banks perform a useful function, they do not add any value to the wealth of society. To demand profits from the business of banking means to claim a share of surplus value where no additional value or surplus has been created. Hence there is no reason for the working class and people to accept that banking must be driven by the motive of profit maximization, in the name of global competitiveness.
All parties of the working class must demand and fight for all institutions involved in financial intermediation to be brought under social ownership and reoriented to serve the general interest of society. While they can charge fees for their services so as to cover their operational costs, there is no reason for banks to generate either profit or loss. Savings of the working people, deposited in the banks and other financial institutions, must be guaranteed against any risk and invested in the interest of ensuring prosperity and protection for all.