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United Forum of Bank Unions (UFBU) – the umbrella body of nine bank unions has opposed Reserve Bank of India's (RBI) move to grant new bank licences and also allowing corporate sector in banking.
In a meeting at Chennai, last week UFBU said in the name of the new economic measures, public sector banks (PSBs) have become the target and their role is being denigrated and relegated while at the same time, the private sector banks are being boosted and encouraged even though their past role had never been positive.
“UFBU regrets and condemns that efforts are afoot to liberalise the banking sector by allowing the private corporate, industrial and business houses to float their own banks in the garb of new licensing policy,” it said in a statement.
It also said that because India’s banking system largely being in the control of PSBs, country could withstand global financial crisis in last decade.
“UFBU is of the opinion that public sector banks should be further strengthened and expanded to play their pioneering role to meet the present day challenges to our economy” statement added.
“In the entire world, the mix up of business and banking had been an unsuccessful model” UFBU said in its resolution. “We are concerned that the Reserve Bank of India and the government are trying to hurry up the process of opening up the banking sector to all types of private interests including foreign direct investors” UFBU said.
India today needs strengthening of the public sector banking with further social orientation, rather than encouraging the profit oriented private sector banking according to UFBU. It also called on the government revisit the policy of banking sector liberalisation.
It asked all the bank employees to build up a national campaign against granting new bank licences under the banner of UBFU.
RBI has received 26 applications for the new banking licences and is expected to issue new licences in 2014.
RBI governor D Subbarao last week in Chennai had said, “we debated extensively on the matter and the decision to allow corporates to apply for bank licences was done in the national interest."
