The fate of banks after 50 years of nationalization
Fifty years ago, on July 19, 1969, 14 major private banks were nationalized.
Contradictably, the Golden Jubilee of the event, which was an important step in the process of building a new financial structure for the country, is today not celebrated by the trade unions in the banking sector but by the government today.
The logic of nationalization of banks was simple: Since credit capital is controlled, how it is distributed in the areas, in the social groups and in all areas, determines the path of social development.
If the banks have strong social consequences for the distribution of debt, then this distribution should be subject to social control, where banks should be owned by the state on behalf of the community.
In fact, banks were nationalized shortly, when attempt was made to control social ownership without state ownership, their failure to nationalize as the only possible means of obtaining social control.
Definitely, despite all the promises, nationalization of banks meant that there was no democratization of access to credit, how can it lead to capitalist development in an economy?
But this expanded the scope of capitalist development along with the expansion of banking facilities across the country, which was providing loans to the agricultural sector which was deprived of institutional credit system till then, it made the so-called Green Revolution possible.
It also made financing subject to production requirements, rather than using it in speculative and corporate acquisition strategies.
However, from the very beginning, nationalization of banks had to face huge opposition to large capital, because it was dominated by the financial sector with its own hands. This protest got accelerated after the application of “economic liberalization”.
International financial capital, now a major power that integrates the domestic financial elite of domestic firms, was eager to operate the world without interruption; There was a financial structure in the idea of a big country like India which not only escaped its control but was also owned by the state. To a great extent, an impossible idea.
Isolation of Indian financial system from global finance, which requires state ownership, has emerged significant in the financial crisis in 2008.
For the entire Indian banking system, foreign property was only 7% of total assets. These properties were mainly owned by private sector banks.
, Such as ICICI Nationalized banks rarely have any foreign property, let alone toxic property, which leaves them unchanged due to financial crisis. But this isolation is that which annoys the international capital.
The American administration has put heavy pressure on India to privatize the banking system, at least to privatize the State Bank of India (SBI) as its “signal”.
Lawrence Summers and Timothy Gatherner, US Treasury Secretary, respectively, under the chairmanship of President Bill Clinton and Barack Obama, will visit India and emphasize the privatization of SBI.
However, the Indian government has not been able to raise enough courage to do this, because nationalization of banks has captured the imagination of the people.
Then, a new attack was carried out, that nationalized banks were not profitable, and they had comparatively profitable profitability with private sector banks. It was an ideal red rose: Nationalization of banks was done to serve a social purpose, not to earn maximum profit.
The criterion for judging them was the limit of their service for this social purpose, not the amount of profit they earned; However, this argument was shamelessly put forward to individuals and “slot machines” committees (who want to submit reports to the government) to defame nationalized banks and prepare the public.
Slowly privatize it at the end.
Finally, there has been controversy over the fact that nationalized banks are overlapped with “non-executed assets” which refer to “non-responsible” borrowing practices.
In fact, NPAs are not created for nationalized banks, because of the reasons for “non-liability”, but due to the change of government policies, and in the context of the role they are called to play, they are NPAs ( Non-executed assets and bad credit).
There are three clear changes in government policy, which means that nationalized banks have captured Cain.
The first thing is that on the one hand financial pressure imposed by the government through the provision of financial responsibility and budget management.
By reducing the size of the fiscal deficit, and by providing significant tax concessions to private sector companies on the other hand.