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Who Benefits From The Privatisation Of PSBs?

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Late PM Indira Gandhi had two main objectives behind privatising banks:

  1. Economic discipline and protecting public savings, using funds for social purposes.
  2. Allow government schemes to reach the lowest levels of society.
PSBs are important for micro-financing.

Thus, the idea of having one “lead bank” for every state emerged. These banks were then supposed to establish branches all over the state. These banks are essential in implementing policies even at the cost of business losses.

The Jan Dhan Yojana wouldn’t have been possible without public sector banks. These banks are, thus, important for micro-financing. Will a corporate bank that takes over PSBs be ready to provide for public welfare like them? The government may earn a few million dollars by doing so, but is it in people’s interest? What happens to the idea of a welfare state?

Out of the 12 large scale nationalised banks, the central government plans to privatise seven big scale public sector banks and keep control of the remaining five. As soon as the news spread about Bank Of Maharashtra being privatised, the Mumbai Stock Exchange witnessed a rapid increase in the bank’s share purchasing.

A few years ago, the Global Trust Bank collapsed with its share value touching almost zero and the RBI announced its subsequent merger in a nationalised bank. The next day itself, GTB was merged with the Oriental Bank of Commerce. Over 20% of the NPAs of GTB also went to OBC, thereby eclipsing its functioning.

OBC was then merged by the central government into Punjab National Bank on 1 April, 2020. This pretty much explains why there was a huge uproar with bank unions going on strikes and protesting against the privatisation misadventure.

public banks
Senseless and rampant privatisation of PSBs and PSUs will negatively affect the economy.

It’s true that people have many bad experiences with the way these banks work, but we somehow seem to have misunderstood the private sector as an epitome of efficiency and good work while the government departments as old, traditional and hubs of corruption, etc. This is a very biased understanding.

Senseless and rampant privatisation of PSBs and PSUs will negatively affect the economy. When banks were nationalised way back in 1971, a common Bharatiya supported it as it was in the larger public interest. From 1970–2014 there was a rise of over 1.24 lakh bank branches all over the country, out of which 90,000 branches are of PSBs. 

This led to a rise in our economy’s public savings to almost 40%, which sadly all central governments failed to utilise optimally. High profile investors were able to infiltrate the banking system and misuse public funds. Almost 7,000 companies took loans of around ₹20 lakh crore and never returned a single penny. No doubt, these acts were supported by politicians and corrupt bank officers. 

In the last 7 years, instead of focussing on strict loan recoveries, big corporates were given one-time settlement options, loan waivers, tribunal settlements, writing off thousands of crores of corporate loans, “restructuring packages”, selling off NPAs to asset reconstruction companies and recovering small amounts to close the books. All these activities worsened the case of PSBs.

Way back in 1995, Manmohan Singh had announced that under no circumstances would the government shareholding in PSBs be reduced below 51%. The BJP, on the other hand, has reduced it below 26% in many cases while selling off their entire stakes in other banks.

Today the total savings in all nationalised banks amount to around ₹150 lakh crore. This enormous and cheap capital is obviously under the radars of foreign banks and international financial firms. Colluding with corrupt local elites, it’s very easy for them to take over at least some of these funds.

BJP’s last year budget mentioned that in the case of bank collapse, public savings up to ₹5 lakh would be safe and guaranteed by the government, but did not explain what would happen to those who have bank deposits above that limit. This is where the privatisation misadventure has created fears in people’s minds.

The government recently announced that private sector banks would be made part of social welfare schemes but mentioned nothing about the steps they would take if a private bank that has huge public deposits collapses. As happened in the case of Yes Bank, which had savings of many small banks, cooperatives and common people, it was saved at the last moment by the SBI intervening on behalf of the Centre, preventing Yes Bank from complete liquidation.

If something like this happens again, chances of which still seem bright, will a private sector bank jump in to save public money?

There’s absolutely no reason to oppose justified privatisation, but the selling of even profit-making, competitive enterprises cannot be supported. Keeping aside narrow-minded politics and corporate lobbying, it’s necessary to privatise public assets with utmost care and diligence. 

Members of The United Forum of Bank Union (UFBU) protesting
Members of the United Forum of Bank Union (UFBU) protesting.

In the garb of “minimum government and maximum governance”, important institutions have been ruined by the BJP. Flag bearers of the free economy were tight-lipped 10 years ago when world governments had to intervene to save their economies after the 2008 crisis. If it’s not the government’s business to do business, it must not be the businessman’s business to interfere in politics.

But do we see that happening in society? The LIC is the only company in the whole world that pays huge dividends to its shareholders annually out of its huge profits. This also is on the path of privatisation with two other insurance companies. The government will be selling its shareholding in LIC through the IPO process.

The LIC, as of today, has around ₹4 lakh crore as an investible surplus. It has a market share of 66% with a 12% growth rate after generating revenues of ₹3.79 lakh crore and paying over 2 lakh crore to policyholders. The government has also increased the FDI limit in the insurance sector from 26% to 74% — why?

 The LIC was formed in 1954 by merging around 245 insurance companies back then. The poor performer IDBI was intentionally tied up with LIC later on. How did free-market activists tolerate this? 

The BJP has also made false claims of not privatising strategic sectors — atomic energy, defence, railways and public transport. But we see FDI limits increasing in railways and defence, isn’t it so?

Some other sectors have been surprisingly shifted in the list of non-strategic sectors — again, no explanations given. As of 2019 — IOC, ONGC and NTPC were the top profit-generating PSUs. Their combined turnover was around ₹24 lakh crore rupees and profits showed an increase of 20%.

Minus all the expenditures, these three firms paid ₹3.68 lakh crore to the Centre as a dividend. Out of the total 348 public sector units operating right now, not all are in a bad state.

Companies like Reliance achieved market domination only after the PSU Indian Petrochemicals was sold to them at a dirt-cheap price. VSNL was sold to TATA who recovered its investment by selling VSNL properties located in Mumbai. TATA Communication closed shop soon after. 

Many such examples of unnecessary government interference can be given — no prizes for guessing why this was done and for whose benefits.

The situation seems more alarming as the common people of Bharat will be the most negatively affected and have chosen to remain silent, and so it’s appropriate to call it a scam.

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Now as an MH Fellow with YKA, she’s expanding her impressive scope of work further by launching a campaign to facilitate the process of ensuring better menstrual health and SRH services for women residing in correctional homes in West Bengal. The campaign will entail an independent study to take stalk of the present conditions of MHM in correctional homes across the state and use its findings to build public support and political will to take the necessary action.

Saurabh has been associated with YKA as a user and has consistently been writing on the issue MHM and its intersectionality with other issues in the society. Now as an MHM Fellow with YKA, he’s launched the Right to Period campaign, which aims to ensure proper execution of MHM guidelines in Delhi’s schools.

The long-term aim of the campaign is to develop an open culture where menstruation is not treated as a taboo. The campaign also seeks to hold the schools accountable for their responsibilities as an important component in the implementation of MHM policies by making adequate sanitation infrastructure and knowledge of MHM available in school premises.

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Harshita is a psychologist and works to support people with mental health issues, particularly adolescents who are survivors of violence. Associated with the Azadi Foundation in UP, Harshita became an MHM Fellow with YKA, with the aim of promoting better menstrual health.

Her campaign #MeriMarzi aims to promote menstrual health and wellness, hygiene and facilities for female sex workers in UP. She says, “Knowledge about natural body processes is a very basic human right. And for individuals whose occupation is providing sexual services, it becomes even more important.”

Meri Marzi aims to ensure sensitised, non-discriminatory health workers for the needs of female sex workers in the Suraksha Clinics under the UPSACS (Uttar Pradesh State AIDS Control Society) program by creating more dialogues and garnering public support for the cause of sex workers’ menstrual rights. The campaign will also ensure interventions with sex workers to clear misconceptions around overall hygiene management to ensure that results flow both ways.

Read more about her campaign.

MH Fellow Sabna comes with significant experience working with a range of development issues. A co-founder of Project Sakhi Saheli, which aims to combat period poverty and break menstrual taboos, Sabna has, in the past, worked on the issue of menstruation in urban slums of Delhi with women and adolescent girls. She and her team also released MenstraBook, with menstrastories and organised Menstra Tlk in the Delhi School of Social Work to create more conversations on menstruation.

With YKA MHM Fellow Vineet, Sabna launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society. As a start, the campaign aims to begin conversations on menstrual health with five hundred adolescents and youth in Delhi through offline platforms, and through this community mobilise support to create Period Friendly Institutions out of educational institutes in the city.

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A student from Delhi School of Social work, Vineet is a part of Project Sakhi Saheli, an initiative by the students of Delhi school of Social Work to create awareness on Menstrual Health and combat Period Poverty. Along with MHM Action Fellow Sabna, Vineet launched Menstratalk, a campaign that aims to put an end to period poverty and smash menstrual taboos in society.

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She says, “Bihar is ranked the lowest in India’s SDG Index 2019 for India. Hygienic and comfortable menstruation is a basic human right and sustainable development cannot be ensured if menstruators are deprived of their basic rights.” Project अल्हड़ (Alharh) aims to create a robust sensitised community in Bhagalpur to collectively spread awareness, break the taboo, debunk myths and initiate fearless conversations around menstruation. The campaign aims to reach at least 6000 adolescent girls from government and private schools in Baghalpur district in 2020.

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A psychologist and co-founder of a mental health NGO called Customize Cognition, Ritika forayed into the space of menstrual health and hygiene, sexual and reproductive healthcare and rights and gender equality as an MHM Fellow with YKA. She says, “The experience of working on MHM/SRHR and gender equality has been an enriching and eye-opening experience. I have learned what’s beneath the surface of the issue, be it awareness, lack of resources or disregard for trans men, who also menstruate.”

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A Computer Science engineer by education, Nitisha started her career in the corporate sector, before realising she wanted to work in the development and social justice space. Since then, she has worked with Teach For India and Care India and is from the founding batch of Indian School of Development Management (ISDM), a one of its kind organisation creating leaders for the development sector through its experiential learning post graduate program.

As a Youth Ki Awaaz Menstrual Health Fellow, Nitisha has started Let’s Talk Period, a campaign to mobilise young people to switch to sustainable period products. She says, “80 lakh women in Delhi use non-biodegradable sanitary products, generate 3000 tonnes of menstrual waste, that takes 500-800 years to decompose; which in turn contributes to the health issues of all menstruators, increased burden of waste management on the city and harmful living environment for all citizens.

Let’s Talk Period aims to change this by

Find out more about her campaign here.

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A former Assistant Secretary with the Ministry of Women and Child Development in West Bengal for three months, Lakshmi Bhavya has been championing the cause of menstrual hygiene in her district. By associating herself with the Lalana Campaign, a holistic menstrual hygiene awareness campaign which is conducted by the Anahat NGO, Lakshmi has been slowly breaking taboos when it comes to periods and menstrual hygiene.

A Gender Rights Activist working with the tribal and marginalized communities in india, Srilekha is a PhD scholar working on understanding body and sexuality among tribal girls, to fill the gaps in research around indigenous women and their stories. Srilekha has worked extensively at the grassroots level with community based organisations, through several advocacy initiatives around Gender, Mental Health, Menstrual Hygiene and Sexual and Reproductive Health Rights (SRHR) for the indigenous in Jharkhand, over the last 6 years.

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A Guwahati-based college student pursuing her Masters in Tata Institute of Social Sciences, Bidisha started the #BleedwithDignity campaign on the technology platform, demanding that the Government of Assam install
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campaigns, which were widely recognised. Through the #BleedwithDignity campaign; she organised and celebrated World Menstrual Hygiene Day, 2019 in Guwahati, Assam by hosting a wall mural by collaborating with local organisations. The initiative was widely covered by national and local media, and the mural was later inaugurated by the event’s chief guest Commissioner of Guwahati Municipal Corporation (GMC) Debeswar Malakar, IAS.

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