The All India Bank Employees Association will stage a protest on September 15 against the Union government’s move to set up local area small banks and payment banks in private sector. Protest meetings will be held at various locations on the day to oppose the initiative, according to the representatives of the organisation.
The Reserve Bank of India (RBI) had recently released guidelines on opening of the small banks and payment banks. Accordingly, the small banks will function under Companies Act, 2013. They can accept deposits and extend loans to small business units, small farmers, and micro industries. The permission for starting small banks is to be granted to individuals, professionals, non-banking financial companies (NBFCs) and microfinance institutions. Local area banks can also be converted as small banks.
Payment banks are envisaged to provide small savings accounts. NBFCs, corporate business correspondents, mobile telephone companies and supermarket chains are among entities to be permitted to open such banks. These banks can accept current and savings accounts up to Rs.1 lakh per customer. They will be allowed to handle payments and remittance through branches and can issue prepaid payment instruments.
The AIBEA pointed out that the Narasimhan Committee report, 1998, recommended setting up of small local banks in private sector. In 2009, the Raghuram Rajan Committee report also recommended opening of small banks in private sector. The RBI had issued a discussion paper on the subject last year. The Union Finance Minister had given a green signal to the project in the latest Union Budget.
The bank employees’ organisation is of the opinion that there is a concerted attempt to hand over banking to private agencies. The idea is to dilute and dismantle public sector banking, according to the organisation.
