Rework PF, small savings rate, says Left

Interest rates on provident fund and small savings deposit are likely to rise and divestment of public sector banks will be halted now that the government will be formed with the support of the Left Front.

The Left Front in its election manifesto had clearly mentioned that the trend of privatising banking sector should be halted and that any profitable public sector units should not be divested. It also mentions that interest rates for Provident Funds should be restored to the previous level.

Nilotpal Basu, Rajya Sabha member of the Left Front, said the new government will have to rework interest rates on provident fund and savings deposit rates to a more acceptable level. Profit making public sector units should not be divested, which also included banks, all of which were profit making.

Analysts said that this boiled down to the fact that banks which had lined up another round of divestment would have to shelve their decision. Bank of Baroda, Allahabad Bank, and Dena Bank were among the few that had decided on another round of divestment which would bring down government's holding to less than 60 per cent.

"Banks will have to look for alternative ways of jacking up their capital adequacy "" either through surplus generation or floatation of bonds," explained Anil Jana, president, All India Bank Officers Confederation. "The process of divestment of banks were sure to get into the back seat with the development at the centre," he added.

Basu also said that the new situation meant "direct rejection of the NDA reforms process and their economic policy."

"We at the centre will have to look towards the interest of common man "" which will also require quantum government investment," he added.

Pranab Mukherjee from the Congress was also quoted recently as advocating against bank divestment and a hire and fire labour policy.