Will Real Autonomy Happen For PSU Banks?Both the Prime Minister and the Finance Minister have made economically correct speeches at the first BankerÃÂ¢Ã¢âÂ¬Ã¢"Â¢s Retreat in Pune. While Arun Jaitley said that ÃÂ¢Ã¢âÂ¬Ã "banks have to be given a sufficient amount of leeway to deal with commercial issues with a commercial mindsetÃÂ¢Ã¢âÂ¬ÃÂ, Narendra Modi went a step ahead and promised no interference from the government, going as far as saying that even the PMO would not interfere in their day to day working. It remains to be seen if the PM and the FM remain true to their words.
By Sunil Garodia
For, it is seen that in India, what is economically correct is not always politically correct. Public sector banks are seen to squander national wealth in tune with the wishes of the government of the day. First, loan melas are arranged for one or other supposedly deprived class and then these loans are waived off on one pretext or the other. Capitals of most banks are eroded beyond redemption in this way. PSU banks are not allowed to function competitively. They are not allowed campus recruitment. They face political interference at all stages.
Even the current endorsement for greater autonomy from the two top guns of government comes with attached riders. The prime minister has said that there will be ÃÂ¢Ã¢âÂ¬Ã "political interference in the interest of the people.ÃÂ¢Ã¢âÂ¬ÃÂ With no clear cut definition of what constitutes ÃÂ¢Ã¢âÂ¬Ã "interest of the people,ÃÂ¢Ã¢âÂ¬ÃÂ this again puts the PSU banks at the mercy of the political class and the ruling party of the day. For, it is seen that a huge loan to Robert Vadra would have been in the ÃÂ¢Ã¢âÂ¬ÃÅinterest of the peopleÃÂ¢Ã¢âÂ¬Ã¢"Â¢ during the UPA regime and a massive loan to Adani would similarly be in ÃÂ¢Ã¢âÂ¬ÃÅthe interest of the peopleÃÂ¢Ã¢âÂ¬Ã¢"Â¢ now. Really, if politicians are allowed to put pressure on the banksÃÂ¢Ã¢âÂ¬Ã¢"Â¢ top brass for any reason whatsoever, they will bend the rules and discover hundred reasons to ask for favours for their preferred commercial interests.
In India, what we have is a system where those with assets to mortgage, a capacity to pay back the loan, wanting to add value to the GDP and having all relevant documents are charged a higher rate of interest while those supposedly deprived classes having no idea how they will use the money, no capacity for paying it back and often just a letter from the panchayat or local politician proving their bonafide, are given loans at concessional rates of interest. And then we have the gall to talk about entrepreneurial spirit.
Hence, high sounding speeches apart, the political class will have to ensure that what is economically correct should also become politically correct. Only then would some semblance of order be restored in the highly corrupt system.