How the people and their representatives ruined the Indian banking system - 1
Everyone likes to save little money. The rich, the poor, the average earner and even the lavish spender likes have a little nest of savings. Banks are the biggest mediums today to enable investment and savings transactions. It is no wonder then; we need banks for a good economic system and an ideal way of life. Where we can save some cash and also go for any needs of loans. They make good business too. You save your money at 4 or 6 percent and your friend gets a loan from the bank at 10 percent plus.
When the British left India, they left behind a fairly good banking system with a nice number of banks in select corners of the country. All we needed to do was use that system polish it well and spread it thick and deep. What instead Indians did was use it as a milking cow, ruining these institutions instead of using them for positive gains.
In the 1970’s Indira Gandhi led the nationalization of the banks. The secret was out in the open. Politicians controlled the banks and not bankers or professionals. They now had loads of powers over the banks, which were trustees of sorts of the public money. The people of India loved the idea. They even loved the idea of Vajpayee who years later, started selling shares of these banks as IPOs or FPOs in the open market. So, first you nationalize a bank, and then you make money selling its share. We Indians have done our socialist, communist and capitalist dharma in a matter of decades. All this time, did we ever stop to think, which way do we want our banks to go?
To spice up things, co-operative banking was launched in India. Now, most of these banks are going nowhere, with tight political control and awry finances. But then we had an economist Prime Minister. He is the great Dr. Manmohan Singh, who was earlier the finance minister of India and also a former governor of the Reserve Bank of India. You would think, banking system could be saved or put on a right track under his rule. And yes, he and his cronies in the government did allow a lot of great banking reforms in India. He made sure that all hard working politicians of his party, the Indian National Congress be accommodated as much as possible as the directors of various public sector banks.
The list of hard working Congress workers, who were appointed as directors of various banks include – Indu Singh Panwar (Central Bank of India), Ram Chandra Khuntia (Andhra Bank), Sooraj Prakash Khatri (Indian Overseas Bank), Maulin A Vaishnav (Bank of Baroda), A Ali Azizi (Bank of Maharashtra), Romesh Sabharwal (Central Bank of India), Masarrat Shahid (Bank of Baroda), Nafisa Ali Sodhi ( Indian Bank), Pankaj Gopalji Thakkar (Canara Bank), Ponguleti Sudhakar Reddy (Indian Bank), Satya Behn (Central Bank of India), Prabha K Taviad ( Bank of India), Maj (retd) Ved Prakash (Central Bank of India) etc. The list is quite long.A similar report on rediff you can read here.
Now, today the media, while branding the corporate and business class as villains of the latest banking mess that is brewing in India, they won’t tell you how the government of India being the legitimate representatives of people of India, played around favorites while running the banks. A recent report of the RBI shadows doubts on quality of board governance in the public sector banks. Is it possible that the policy of accommodating a number of working members of the party in the financial institutions backfired?