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`Buyback of govt. securities will help only bank privatisation'

By Our Special Correspondent

CHENNAI July 13. The recent decision of the Union Government on buyback of securities and equity of public sector banks will not only lead to privatisation but also benefit defaulters at taxpayers' expense, according to C.H.Venkatachalam, general secretary, Tamilnadu Bank Employees' Federation.

Addressing a meeting organised by the United Forum of Bank Unions yesterday, Mr. Venkatachalam said the buyback would mean that the Government would use the taxpayers' money to pay the market price for the securities, which was high because of higher interest rates they carried compared to the prevailing rates.

At the same time, the profit from the deal would have to be used to write-off dues from defaulters.

The decision to allow the banks to return the government's equity capital at par value (instead of at the high market rates which bank shares commanded at present) would mean not merely an increase in the stake (in terms of percentage) of private investors but also a fall in the dividend the Government would get from banks.

The Union Government, which announced in the budget its decision to allow 74 per cent foreign equity in banks, later removed the ceiling of ten per cent on the voting power of individual shareholders.

This again meant a tighter hold of the private sector on public sector banks, which had, in the 34 years since nationalisation, helped increase manifold savings of the public and advancing loans to neglected and vital sectors of the economy. Emphasising that dues or non-performing assets were the main problem of the public sector banks, he said a borrower of the United Western Bank, who defaulted Rs. 60 crores, settled his dues at the level of Rs 30 crores and used the rest of the bank's money to acquire 17 per cent stake in the same bank.

Thanks to the intervention by unions, the deal was stopped by the Reserve Bank, Mr. Venkatachalam said, and declared that if the bill for reducing the government ownership of the public sector banks below 51 per cent (and up to 33 per cent) was taken up for consideration in Parliament, the UBFU would immediately go on an agitation.

Peter Alphonse, Congress leader, said bank employees would not be able to save the industry unless they realised the link between the happenings in the financial sector and the politics of religious hatred and divisiveness promoted by "fascist forces", which were acting as per the dictates of the United States.

The working class, including government employees in Tamil Nadu, who were subjected to "unprecedented repressive measures" in the wake of their strike, should remember that Nazism in Germany and Fascism in Italy could establish their dictatorship only by gaining control of Parliament, the judiciary and the media.

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