The Narendra Modi government and the Bharatiya Janata Party (BJP) forced the Reserve Bank of India (RBI) to go back on its report that cautioned against adopting a “big bang approach” to bank privatisation, the Congress alleged on Saturday and demanded a White Paper on the privatisation of public sector banks.
Addressing a press conference, Congress spokesperson Supriya Shrinate alleged that the BJP had reduced the RBI to the “Reverse Bank of India” by forcing a U-turn and the party itself had become a “Beche Jao Party [Keep selling party]”.
The RBI on Friday said the views expressed in the research paper, published in its official bulletin, were not of the central bank but that of the authors.
“The government put such pressure that the RBI within 24 hours had to disown its own research report by stating the views in the report ‘is not ours but of the researcher’. What a strange thing! The researcher is from RBI but not the report,” Ms. Shrinate said.
“Clearly, this isn’t the first time the RBI has been forced to accept the government’s will — remember the disastrous demonetisation,” she added.
Ms. Shrinate said it was a pity that the RBI that had once hailed the nationalisation of 14 banks as the single-most important economic decision taken by any government since 1947, was today forced to disown its researchers’ report praising public sector banks and their efficiency.
She said the Modi government had already reduced 27 public sector banks to 12 and now planned to privatise more banks.
The Congress spokesperson said that the study by the RBI’s research unit had red flagged the consequences of bank privatisation and highlighted how the cornerstone of the government’s policies had to be public good and so the standard of efficiency for public sector banks could not be profits alone.
“It insists that large public sector banks are better at priority sector lending, including infrastructure lending...The RBI bulletin clearly states that on measures of financial inclusion, like total branches, agricultural advances and priority sector lending advances, public banks prove to be more efficient than private ones,” Ms. Shrinate said.
She said that the bold decision taken by former Prime Minister Indira Gandhi to nationalise banks broke the monopoly of a few money lenders and provided common citizens the access to resources.
“The Modi government must lay out a full White Paper on privatisation of public sector banks,” she said.
It must also “pause, assess and make a public declaration on what does it aim to achieve through reckless privatisation”, she added.