19th July 2019 marked the 50th anniversary of banks nationalisation in India and it brought over some discussions. With the stroke of a pen, on the night of 19th July 1969, the Indian government nationalised 14 private sector banks and etched another important date in the history of the nation.
Former finance minister P. Chidamabaram and Yashwant Sinha said on CNBCTV18 that the decision over the nationalisation of the banks in 1969 was logical since the private banks in those days were badly run and served to use public savings to a select few.
But both argued that mid-way, it had proved to be unfruitful and that they should have de-nationalised some of them but their attempts received no political supports. Sinha said, “I was made to feel like a criminal…for even suggesting that the government’s stakes be brought down to 31 per cent.”
Yaga Venugopal Reddy, former governor of the RBI, talking about the past, present and future of the India’s government owned banks said, “Banks were nationalised at the whim of a Prime Minister, they will de-nationalised at the whim of another Prime Minister.”
He implied that the nationalisation of the banks to meet social ends was unnecessary on top of which the government, for the second time, nationalised six well-run banks which clearly gave the message that if you are well-run, you will be nationalised.
As of FY-19, the NPAs of Public sector Banks stand at around 13 percent against 4.2 percent of private sector banks. According to FY-2018’S RBI Report on Trend and Progress of Banking in India, private banks profited over Rs 40,000 crore while PSU banks reported losses of almost Rs 85,500 crores.