Nationalisation of the Bank :: “ TWIGGIE-BIGGIE’S ” PUB-BAR, IMPOVERISH’S DEATH TRAP





The Banking system in India was started way back by the Britishers and in 1935 they formed the Imperial Bank of India with about 93% of the stake of the British Empire and seven percent of the stake of the Indian Businessman then . The focal point of the system was to keep a thorough check of the flow of the unaacounted money that the Indians were and would exchange while engaged in their business
                    
The Britishers by then had brought in a lot of reforms after Lord Curzon and thereafter Lord Cormwallis ruled Indian. So many of them like the Land reform, the taxes from it, the agriculture reforms, the taxes from it, the  taxes implied on the small medium and the big business and the regulation of the flow of the money from it and there were many other reforms and the system of the tax implied on  the same was introduced

It was agreed on principal that the Banking system ought to be started in the country where the money could be pooled in one place and it could be used for the welfare of the people and thus the moot point of starting the banks at India did take place.



The British India Central Bank was the first to have been floated which later became the Reserve Bank of India .Thereafter two more Bank came into prominence.The first ewas the Punjab National Bank and then the Imperial  Bank of India which was known as the State Bank of India



Once the State bank of India came into the picture after Independence, the modality was changed. It  had the stake value of 93% of the people and only 7% of the stake of the Union Government then . Slowly the other Banks started coming into the force.

India achieves her Independence:: The Princeley State’s Bank takes shapes

On August 14th 1947 at 11.47PM India secured her Independence and it was Pandit Jawaharlal Nehru who announced that India is an Independent country now. The next day the charge of this nation was given to Mr Chakravarti Rajgopalachari. It was he who first floated the take the entire charge of the Banks that were started at the regime of the Britishers and take the stock of the account. When the charge were taken he was surprised to know that there were NO and NOTHING in terms of CONCRETE and TANGIBLE that could be seen at the Bank.  

The Britishers before then and that in a calculated manner had shifted all their  and the assets from there to London to the  “ Queen’s Park ” where the Queen of England was breathing with peace and tranquility.All the asset of Indian by then was transferred to Great Britain and places where the YOUR HIGHNESS had maintained his personal account . It was then the idea was mooted for the people to contribute to the banks which remained at India and it was that moment that the riches at India had pooled their money and had put into the accounts of the survived banks at India. It was found out that the people who had pooled their money and had put their earned liquid cash at the Bank plus the Gold as well contributed to about 93% of the booty. Hence the Government contributed about 7% to complete the formalities and thus the Imperial bank of India started functioning and the Imperial Bank of India later was to become the state Bank of India. Side by side the Punjab National Bank was also formed and was put into operation under the Infian Banking regulation act



BANK’s :: HONEY HIVES FOR THE PRIVELEGED

Though the banking system did start the benefeciaries were the privileged section of the society .It was NOT AT ALL possible for the common man and the very ordinary man to approach the Bank to get anything out of it .The rates of the interest too varied. Those who had put their money to start these kind of bank which the Government then was running they would be paid a high rate of Interest then by the Bank.However those who did not and had approached the bank they would have to pay a very high rate of interest to the Bank to repay their loans etc taken by them from the Bank . This made the operation of the Bank a bit un - orchestrated and demotivated as a point of functionality to the suppressed . This was noted in a large manner

It was noticed that the banks even getting and drawing the best of the business facilities and the oppressive benefits from the Government were not able to perform the way the Government wanted .Hence the Government took a decision to completely read the operation and the functionalities of the Bank .

PRINCELY STATE OPENS THEIR BANK

In 1956 after the reorganization of the State, somehow the states which enjoyed the privilege of PRIVY-PURSE till then could visualize that there was a danger to their amassed assets and that at any point of a time the Government could sieze their asssets like the manner their states were seized by the Union Government then




Sensing this danger, the princely states which were enjoying the privy purse, together came in and formed their Bank. To cite an example we had the Travancore National Bank, the Hyderabad National Bank, The Baroda Bank, the  Jaipur National Bank to name a few. These Banks were the one’s who were the Maharaja’s under the British rule. These Rajas and Maharajas then to keep their money safe took the permission from the Reserve Bank of India and floated their Banks. However these Banks were an eye wash.To the people it appeared that these were for the purpose of regulating the transactions of the bank as accordance to the need and the policies of the Government but in reality these were the places where the assets of those Rajas and the Maharajas wer kept safe with the security provided by the Government of India. These Banks for the sake of the name were following the rules of the Reserve Bank of India but were running their business according to the whims of the of Maharajas and the rajas whose Bank that it belonged.

These Banks had the liquid asset and the inmovable asset mauch mauch larger and more than the Indfian Government could hold or have.Mrs Indira Gandhi visualized that and slowly started making a move to grab the propriety of these Banks slowly but surely.

BANK NATIONALISATION IN 1969

Studying the structure of these Banks and internally taking a decision that these banks ought to be nationalized, Madam Indira Gandhi plotted a long drawn national policy and secretly laid down a principal of nationalizing these Banks and it was July 19th 1969 that she announced on the All India Raio that all the private banks and the banks that belonged to the Maharajas and the Rajas of India has been NATIONALISED and thereafter it would b the Government with the RESERVE BANK OF INDIA which



would regulate and control these banks and thus the Banks at India at that point of a time was nationalized

TITANIC APPROACH , TETONIC SHIFT :: BANKING MADE EASY

The Indian financial sector underwent a tectonic shift 50 years ago this week, when the Indira Gandhi government nationalized the 14 biggest commercial lenders on 20 July 1969 after announcing about it and declaring the nationalization of these Banks on the All India Radio on December 19th 1969. The second volume of the official history of the Reserve Bank of India describes bank nationalization as the single-most important economic policy decision taken by any government after 1947. Central bank historians say that in terms of the impact, even the economic reforms of 1991  was pale in comparison.



The landmark decision came at the end of a troubled decade. India was buffeted by economic as well as political shocks.

There were reasons and there were the plots to take this steps.The REHABILITATION and the CONSTRUCTION of INDIA after the THREE wars that it fought in 1948 and 1965 against Pakistan and 1962 against China, especially the aggression that India had to face and incur against the Dragon Red Army—that put immense pressure on public finances. Two successive years in 1968 and in 1969,  of drought had not only led to food shortages, but also compromised national security because of the dependence on American food shipments to keep hunger at bay. Fiscal retrenchment through a three-year plan holiday had hurt aggregate demand as public investment was cut.




INDIAN MONEY DEVALUATION :: THE NATION GOES ON THE KNEES

The 1966 devaluation of the rupee was an economic success, but also a lightning rod for political anger. The Congress party had already suffered electoral setbacks in the 1967 elections. It was headed for a split. The Naxalites were growing in strength. However, the devaluation had helped improve the balance of payments while the Green Revolution began to ease the food constraints.

India was at a crossroads. Many other countries in Asia had switched to more market-oriented policies in the preceding years, even within the overall industrial policy framework. Their growth would accelerate over the next two decades. In India, there had been some tentative moves in that direction during the short tenure of Lal Bahadur Shastri. However, Indira Gandhi swung the other way with the support of the Left. Bank nationalization was one of her responses to the economic and political challenges of the time.


The impact of bank nationalization can be thought about in terms of three core areas: deposits, lending and interest rates. The one positive impact of bank nationalization was that financial savings rose as lenders opened new branches in areas that were unbanked. Gross domestic savings almost doubled as a percentage of national income in the 1970s. A growing part of this was sucked up by the government itself through increases in the statutory liquidity ratio. P.N. Dhar writes in his memoirs that V.K. Krishna Menon made the startling claim in a private meeting with top officials before nationalization that the government would not have to worry about mobilizing funds once banks were nationalized.




OBLIGATIONS ON THE BANKS :: REFUSAL SEES THE NATIONALISATION
 It was that the Government of the day through and under Mrs Gandhi then, started directing the Banks to be approaches and flexile to the call of the Government anytime and everytime about the sectors where they would ask the bank to divert their fund for using those for the development of those sectors.The Government then had earmarked the  small and the medium scale industries, the agricultural sector, the husbandaries and the milk sector as well as the defence sector.

 Banks were asked to push funds towards sectors that the government wanted to target for growth. Indira Gandhi told the Lok Sabha on 29 July 1969 that the “purpose of nationalization is to promote rapid growth in agriculture, small industries and export, to encourage new entrepreneurs and to develop all backward areas". This was part of the overall political strategy to squeeze big business houses that backed her opponents, as well as build a new political base.

Credit planning also meant that the interest rate structure became incredibly complex. There were different rates of interest for different types of loans. The Indian central bank eventually ended up managing hundreds of interest rates. This mind- boggling structure was brought down only after the 1991 reforms, with the central bank managing the pivotal repo rate, while commercial lending rates were to be decided by banks themselves.


The subsequent political economy was perverse. Indira Gandhi said in a Lok Sabha debate on bank nationalization: “We have no intention to set up a monolithic agency to run all these banks. While we must strengthen the machinery at the Centre, there will be autonomy for each bank and the boards will have well-
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defined powers. We will give directions but these will be on policy and general issues, not on specific loans to specific parties. We shall be vigilant about the dangers of too much interference—whether it is motivated by political or other considerations."

PROMISE IN FUTILE


There are no prizes for guessing how long that promise held. The legendary R.K. Talwar would resign as chairman of State Bank of India in 1976 rather than bend under political pressure. The political control of bank lending continued even after the 1991 reforms—and the bad loan mess that has weighed down on the Indian economy since 2012 is at least partly explained by the credit bubble that grew under political patronage from New Delhi.

The fact that successive governments continue to maintain a tight grip on the banking sector shows the political importance of having control over the credit spigots in the economy.


Bank nationalization was the pivot of a broader political economy strategy followed in the 1970s—a decade when economic growth barely outpaced population growth. Average incomes stagnated. It was a lost decade for India. There is no doubt that exogenous shocks, such as rising energy prices or failed monsoons, played a part in the stagnation, but economic policy also hurt. Bank nationalization succeeded in specific areas such as financial deepening because of the rapid spread of branches, but it eventually did more harm than good.

Let us come back to the subject and I reproduce my lines-::




The fact that successive governments continue to maintain a tight grip on the banking sector shows the political importance of having control over the credit spigots in the economy

UPA::ONE AND UPA ::2 : The Banking Sector LOOTED by the interference of the political niggles

The worst in this sector came between the period between  2006 to 2013 when the severe and continuous interference of the political whims especially under the Ministry ship of Mr P C Chidambaram saw the sector completely uprooted off the feet .It is actually from the start of the period that the businessman started approaching the banks to reapply loans after loans for their self interest. Mr Pranab Mukherjee was the then Finance Minister. He vehemently refused to comply to the dictatorial orders of the one’s who would force him to bow down and budge to the unwarranted whims of the above to sanction loans to the very high and very renowned businessman

Finding Mr Pranab Mukherjee a very HARD rock to pierce and break the UPA-II under the Prime Ministership of Mr Manmohan Singh  changed the Ministry and put Mr Chidambaram on the seat of the Finance Minister of India. It was here that loans, reloads and successive loans started taking place at the banks and the directions and the directives of the politicians above became a EVERY-DAY-TOOL for these  Banks to comply with the order to comply with the directions to lend money in a huge and voluminous way to the so called HYBRID-AND-FLUID-BUSINESSMAN. Thr loan taken from the first sanction would not be paid but the loans from the second and thereafter successive loans completely whipped the Banks and it completely emptied the coffers to the stage where most of the Banks just did not have any money to find itself to bear the grind.



The prominent of such banks were the Punjab National Bank, and some bank like the United Commercial bank, the United Western bank,  the Central Bank of India , the bank that were the Co-operative Banks, the State Co-operative Banks etc to name a few.




The HARD-BOILED loot were in the so called the Co-operative bank and the State Co-operative banks and the Banks which were specially made for helping the agriculturist and the farmers. Here at this Banks the so called the MLA’s and the MP’s who controlled these MLA’s would apply to these Banks immediately after the election at the States and the local elections, in the guise of all fictitious names that would be farmers and would transfer the loans into their accounts which were all fugitive and fraud .This went on and on for so many a years and this even continues now. This money that has gone out of the account of the Bank to the one’s who had robbed that and the misfortunes that the farmers always carried for whom the national outcry- WAIVE THE LOANS OF THE FARMERS took the Bank’s to the bed of the DEATH and it became the DEATH KNELL of the same This is how the banks did go off and to the air and from there to the OBLIVION.

The result is- ALL  THE CO-OPERATIVE BANKS THAT WERE SPONSORED BY THE BIG NAMES OF THE NATIONALISED BANKS WERE OFF AND IT HAD A TERRIFIC REPERCUSSIONS ON THE MAIN NATIONALISED BANK

RESERVE BANK OF INDIA :: IT’S ROLE, IT’S DIRECTIVE BLOWN OFF

Looking into all these things the MAIN CONTROLLING BANK, ie THE RESERVE BANK OF INDIA did come up with their rearguard action and had advised the Government ruling the nation twice, the first in 2005 and the next in 2011 about the loots and the illegle way the money were siphoned from these so called the FARMER’S HELPING BANK and the Co-Operative Banks but this was not taken in a serious manner . Thereafter when the repeated loans were taken by the BIG-CONGLOMERATES  successively, it reduced the holding stock of the money in the bank. Finding no action that were taken by the Union Government and the Ministry of Finance then, the  RESERVE BANK had to cut off the lending amount to it’s Banks that were under them .This again had another impact .The CASH-RESERVE ratio that the Reserve Bank implies on the Banks under it, was altered and the implication of the Reserves that the Nationalised Bank had to keep under them put a brake on the loans that were sanctioned and the rates of the interest for the loans got higher and the lending rates of the interest were reduced. This affected the entire business. This is how the Banks were given and served a big blow by the last Government which ran the country .





Modi Government 2.0 a SUCCOUR to the Banking process

It is the Modi Government which in the year 2019 took the stock of all the bank’s .The first VERY EXCELLENT STEP that they did was to CUSHION and CONCISE the Branch that the  bank had. In all they were 27 nationalised Banks. Thse have been CUSHIONED to 13 with TWO BANKS amalgamated with one . For example the Vijaya Bank is amalgamated with Bank of Baroda which infact is one of the richest Bank and the process of banking of the bank of Baroda  would be implied upon the Vijaya bank for it’s operation . In this way the Modi Government 2.0 has given a FIILIP to ONE LOSS MAKING BANK to amalgamate with the other huge profit making and to rework for them to stand on it’s leg.

The Modi Government then did start taking the stock of those who took oceans of loans from the bank not to repay that. The offenders were then searched and trapped to repay the loans back. Some have fled the country and some have changed their nationality by escaping through their escaping route. The Government have sealed their assets  and properties and are at the hunt for them who are at large. The Mallaya’s and the Modi’s fall into this bracket  These are the big fish. There are many hiding under the curtain and the skins of the big fishes that the Modi Government has trapped and they are all big TWIGGIES in the Ministries that lost in the race for power in 2014 and are still roaming free with their head held high. They need to be told- PAY IT BACK OR FACE THE CONSEQUENCES. No matter who it would be. Those who have LOOTED the bank with their associates have to either return the money back or will have to make the amends. In that case their properties and the assets have to be taken by the Government, sell those to get the money back and the defaulters will have to serve the priosn as the prisoner. Nothing less than that awaits it’s fortune who so ever it may be. That has to be the finality of anything that relates with the penalty.

The reorganization of the Banks, the business created by it’s branches, the number of the branches that each Bank holds their business and it’s PROFIT MARGIN RATIO, the HUMAN RESOURCES & it’s RATIO, the OPERATIONAL RATIO and parameters as such has to be reworked and the proper marketing palns for all thse Banks has to be set.That is the order of the day

The MARKETING ought to be completely TIME-BOUND-OPERATIONAL-PROFIT PROCESS .New types of long term, medium term and short term deposit ought to be brought into foreplay and attractive interest has to be fixed so that more and more people come to the bank. The credit policies, the policies on the vcarious loans, the inteset that it could pay and ABOVE ALL- THE REPAYMENT WITHIN THE SCHEDULE that ought to be time bound has to be the order of the day and ORDER FOR ALL THE TRANSACTION THAT RELATES TO THE BUSINESS.

This is how the Banking system even now can be restricted to make it a profitable venture for the business. YES THE OFFENDERS AND THE GUILTIES OUGHT TO BE SEND TO THE JAIL FOR “LOOTING” THE BANKS- WHOSOEVER IT COULD BE


Regards

Shyamal Bhattacharjee


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