THE NEED for the Indian banking industry going global is unwarranted as the philosophy of western banking is poles apart from that of India, said CH Venkatachalam, national general secretary of the All-India Bank Employees’ Association’s (AIBEA).
Almost echoing economics Nobel laureate Joseph E Stiglitz’s statement on the adverse impact of globalisation, Venkatachalam told the Hindustan Times on Tuesday that banks abroad — especially in Europe, the US or Japan — are more capitalistic and not deposits-oriented, and thrive more on equity. Indian banks, he said, are just the opposite.
“In the Indian context, safety of people’s money is the top priority and banks depend on retail trade, contrary to their western counterparts where profits come through shares,” said Venkatachalam, successor to trade union leader the late Tarakeshwar Chakraborti.
Stiglitz, a former senior vice president & chief economist of the World Bank, said in his book ‘Globalisation and its discontents’ that all problems stem from the way globalisation has been ‘managed’ rather than globalisation per se. “People have been betrayed,” he observed.
AIBEA and Venkatachalam too argue that the Tarapore Committee’s recommendations to increase private share in public sector banks (PSBs) to 67% and reduce government’s to 33 percent would have detrimental effect both on the banking industry and the public. “It’s all a managed affair keeping with the WTO stipulation which wants Indian banking to be totally opened up, with no public control for global competition,” Venkatachalam said.
Justifying the unions’ resistance to the move on consolidation and merger of Indian banks to compete globally, Venkatachalam said that even if all the 27 PSBs are made one, the total capital stands at $3 bn and total assets at $275 bn.
“A single international bank like Citi Bank’s capital stands at $62 bn and assets at $1400. HSBC’s assets stand at $3600 bn. This shows that competing at the global level is unwarranted and not in nation’s interest,” he said, emphasising that India’s total share in global trade is a meagre 0.75 percent.
He called for a political consensus to back the bank unions’ blueprint to prevent the globalisation move. “It’s a tug-of-war between the pro and anti- globalisation forces and trade unions; NGOs have to mobilise public opinion,” he said.
On the RBI’s proposal for outsourcing of clearing house activities to a private limited company, he said it would be a threat to security and an average of Rs 1 crore income earned per day by a clearing house would go to a private company. “Our clearing houses are doing well and they should be improved rather than handed over to private hands,” said Venkatachalam.