Tomorrow marks the start of the golden jubilee year of bank nationalisation in the country. In light of the troubles that public sector banks have gone through in the past few years, it may strike some as a decision that, in retrospect, may have been inappropriate. But there are others who are strong votaries of the decision and maintain that it was the right thing to do at that time, never mind what happened later.

Devidas Tuljapurkar, Joint Secretary, All India Bank Employees Association (AIBEA), is among those who strongly defend then Prime Minister Indira Gandhi’s decision to go nationalise banks in July 1969.

He argued that the first three five-year plans – while they had strengthened agriculture and industrial base of the country – did not completely meet the needs of India because there was no market, and buying power among people was limited. With capital in the hands of a few, and a wide cross-section of people and sectors, such as agriculture and small scale industries, totally cut off from access to formal channels of finance, which was in private hands, the only way to revive the then moribund economy was to nationalise banks and allow them to expand their clientele.

Citing figures, Tuljapurkar points out how the number of branches have expanded from just about 8,187 then to 1.40 lakh now. Deposits have grown from ₹4,822 crore to ₹114.79 lakh crore, while loans have grown from ₹3,467 crore to ₹86.82 lakh crore during the same period.

In the years immediately following nationalisation, access to agriculture finance, too, improved – a particularly poignant detail because India was at that time importing American wheat to avoid mass starvation. Successive years of drought and the loss of morale following two wars had created a very difficult situation for the government then.

What about the mess then, that public sector banks are in right now? Tuljapurkar contends that the fault is with the owner – the government, which doesn’t seem to care about its offspring. He points out that about half a dozen public sector banks (including Allahabad Bank, Syndicate Bank, Dena Bank and Andhra Bank) have been headless for months.

Second, even in other public sector banks, the board of directors don’t wear a full and complete look. There are no representatives for depositors, agricultural sector, SSIs or even workmen and officers in many banks.

Third, top management officers belonging to Scale VI and VII ( Deputy General Managers and General Managers) are much below sanctioned strength in many banks. So, management strength is also inadequate.

Scientific recruitment

Fourth, many banks have diluted the standards – whether in appraisal marks or relaxing minimum eligibility criteria for promotion to higher scales – since no recruitment took place for many years. And there is a huge gap of management capacity in many banks.

Fifth, even among banks, there is an unevenness in promotions. In some banks, officers have risen from Scale I to Scale IV in just five years – often without adequate exposure to various skills. No scientific recruitment has taken place and nor has there been a proper attempt to improve the training infrastructure while retaining distinct cultural attributes of each bank, said Tuljapurkar.

Pointing out that public sector banks played the main role in helping the economy and the common man post-demonetisation as well as in opening Jan Dhan accounts, he asked the government to be clear about whether it wanted accounting profit or social profit.

He called upon the owner (government) to show seriousness and conviction in the viability of public sector banks by addressing the shortcomings with a sense of urgency.

Despite public sector banks posting losses of about ₹80,000 crore last fiscal, the fact that the general public continue to deposit money with them till now, is an indication of their inherent strength, Tuljapurkar highlighted.

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