Tag: Bank unions

Bank Unions Oppose Govt’s Move to Allow All Private Banks in Govt Business

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Bank officers’ unions on Thursday opposed the Centre’s decision to allow all private sector banks to participate in government business, including collection of taxes, pension payments and small savings schemes. In a tweet on Wednesday, Finance Minister Nirmala Sitharaman had said, “Embargo lifted on grant of Govt business to private banks. All banks can now participate. Private banks can now be equal partners in development of the Indian economy, furthering Govt’s social sector initiatives, and enhancing customer convenience.”

In a joint release, four bank officers’ unions said the Finance Minister has announced in ‘unambiguous terms’ that all private sector lenders would be equal partners and the government’s social sector initiatives which were hitherto open majorly to state-run banks and a few private banks. “Ironically, private banks are enjoying various exemptions such as priority sector lending norms, expansion of bank branches in rural / semi-urban areas, agricultural lending and so on, whereas banks in public sector space are required to comply with various norms relating to priority sector, agricultural loans, weaker sections set by RBI,” the release said.

The joint release was issued by the All India Bank Officers’ Confederation (AIBOC), All India Bank Officers’ Association (AIBOA), Indian National Bank Officers’ Congress (INBOC) and National Organisation Of Bank Officers (NOBO). The unions said state-run banks are required to lend to the borrowers from the priority sector at a much lower interest rate compared to their private counterparts, who are statutorily not required to play under the administered pricing regime.

“Opening up of the government business to such private players would thus enable them to garner float funds for augmenting their profits at the cost of much distress to poorer sections of our society,” the release said. It said while the Prevention of Corruption Act, 1988, the Central Vigilance Commission Act, 2003 and RTI Act are applicable to public sector banks, these provisions are not applicable in case of the private sector banks. Allowing private banks to handle government business would lead to a situation of absence of accountability on the part of the officers and personnel of such banks, the unions claimed.



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Bank Unions Oppose Centre’s Move to Allow All Private Sector Banks in Govt-related Business

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Bank unions under the umbrella body AIBEA on Wednesday opposed the government’s decision to allow all private sector lenders in government-related business, saying it was “unfair” and “to the disadvantage” of public sector banks (PSBs). The finance ministry, in a statement, said all private sector banks can now participate in government-related businesses like collection of taxes, pension payments and small savings schemes. At the moment, only few large private sector are allowed to conduct government-related business.

“It is like feeding milk to the poisonous snake,” the All India Bank Employees’ Association (AIBEA) said in a release.

This government decision to give equal treatment to private banks is unfair and to the disadvantage of public sector banks, it added. The private sector is the main contributor of banks’ huge bad loans. But there are attempts to hand over nationalised banks to these private sector players, it added. Notably, the government has proposed to privatise two more PSBs after having divested the majority stake in IDBI Bank to LIC in 2019.

AIBEA said the decision to lift embargo on private sector banks to have access to government’s business is “unfair” and needs to be withdrawn. Responding to the government’s assertion that it will allow private sector banks to become equal partners in government business, AIBEA said it is a strange move because unlike PSBs, the private banks are exempted from emphasis on rural branch expansion, rural lending, agriculture loans as well as priority sector loans. While PSBs mobilised 42 crore accounts under Jan Dhan Yojana for the poor people, the private sector banks have opened only 1.25 crore such accounts, it said.

“Why they were not equal partners in this pet scheme of the government. In giving agriculture loans, let private banks compete with public sector banks. In giving education loans to the poor students, will private banks compete. In opening rural branches, let them compete with nationalised banks,” AIBEA pointed out.

C H Venkatachalam, General Secretary, AIBEA, said public sector banks’ social banking obligations have a cost. “Lesser rate of interest on agriculture loans or education loans or MSME, etc has a cost to the banks. Government’s business to these banks helps in cross-subsidisation of the cost. “If the government will distribute their business to private banks, the ability of public sector banks to lend to weaker and priority sectors on concessional rates of interest will become difficult because the government’s business helps these banks to balance the cost,” he said.



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