Civil society group criticises FM for remarks on bank nationalisation

Kolkata, Nov 5 (PTI) Finance Minister Nirmala Sitharaman's recent observation that bank nationalisation did not fulfil its objectives has prompted a civil society group to contest her claim, and cautioned the government against privatising public sector banks (PSBs).

In a letter to the finance minister, the Bank Bachao Desh Bachao Manch (BBDBM), a Kolkata-based forum, said that nationalisation fundamentally reshaped India's financial system by ensuring access to institutional credit in rural and semi-urban areas, which private banks had ignored before 1969.

"The economic progress of the country since 1969 can be single-handedly attributed to public sector banks, which remain the backbone of India's financial architecture," the group claimed in the letter.

Sitharaman on Tuesday, however, allayed apprehension that privatisation of state-owned banks would hurt financial inclusion and national interest.

The civil society group said that PSBs still account for over 60 per cent of total deposits and advances, and operate more than 90 per cent of rural branches serving farmers, low-income households and small businesses.

Citing data, the BBDBM noted that PSBs were instrumental in expanding financial inclusion - opening more than 53.1 crore Jan Dhan accounts, of which over 31 crore are in rural and semi-urban areas, with 55 per cent belonging to women. They have also led government-backed insurance and loan schemes such as PMJJBY, PMSBY, Mudra and PM SVANidhi.

The forum alleged that, in contrast, corporate borrowers have enjoyed leniency, with PSBs writing off over Rs 12.08 lakh crore between FY16 and FY25, while total write-offs across scheduled commercial banks exceeded Rs 16.35 lakh crore.

Of this, more than Rs 9.26 lakh crore pertained to large corporate and service sector borrowers, it said, adding that recoveries remained "barely around 20.5 per cent." "The government appears intent on portraying nationalisation as a failure so that public sector banks may ultimately be transferred to a few favoured business conglomerates," said the letter, signed by Biswaranjan Ray and Soumya Datta, who are the Joint Convenors of the group.

They warned that privatisation would endanger financial sovereignty and restrict access to credit for the poor and rural citizens. PTI BSM NN