PRESS RELEASE :- 28-2-2011
By C.H. VENKATACHALAM, GENERAL SECRETARY, AIBEA
The Budget presented by the Finance Minister today is a continuation of the Government’s policy of pursuing banking sector reforms.
The FM has stated that he would be introducing various legislations in the banking and insurance sector aimed to allow further foreign capital in insurance companies, merger of Banks, etc.
The FM has clarified that the new Banking Licensing Policy would be announced soon to allow big business and corporate houses to start Banks. This would be a most retrograde step for Indian banking sector. This will enable the corporate houses to garner the precious savings of the masses for their profiteering and greedy motives. Indian savings would be diverted from development to speculation. This would also unwarrantedly push the Public Sector Banks to competition thus diverting them from social banking responsibilities.
Bad Loans in the Banks are increasing year after year. In the last year (2009-10) alone, Rs. 65,674 crores of loans by Indian Commercial Banks have become bad loans . But there is no measure announced in the Budget to recover the bad loans. There are more than 50,00 defaulted loan accounts/ NPA accounts involving more than Rs. One crore in each of these borrowal accounts. Bulk of the bad loans are amounts due from big corporates and industrial houses. Willful default should be treated as a criminal offence. But there is a willful casualness on the part of the Government to deal with this day-light robbery that is going on in the Banks. Loans become bad and they are written off. AIBEA will be releasing the list of these NPA accounts shortly.
FM has announced that Government would subscribe Rs. 6000 crores as capital to the Banks but the same is being done by taking loan from the World Bank thus bringing our banks under the conditionalities of the World Bank.
The huge task of financial inclusion is sought to be achieved by private banking facilitators and business correspondents. The Government proposes to take banking services to 73,000 villages not through the regular banking services of the Government’s Public Sector Banks but through large-scale outsourcing of the task to all types of private business correspondents including the corporate houses.
Instead of curbing the Micro Finance Institutions who are exploiting the poor people, the Government proposes to allow Foreign investments in these institutions. The proposal of Microfinance Equity Fund is meant to encourage these blood-suckers. What the Government should have done is to re-classify the loans to MFIs as commercial loans and not under the present priority loan loans. But this has been ignored.
The Co-operative Banking sector continues to be neglected. No announcements have been made to strengthen these people-friendly credit institutions. The genuine demand of exempting the profits of Co-op. Banks from the purview of Income Tax has been not acceded to.
Further, the Budget does not propose any concrete measures to deal with the problem of black money.
When the country is reeling under high inflation and alarming price rise, no measures have been announced to curb price rise.
Similarly, when the Government claims that the economy is back to normal health after the economic slow-down, what about the jobs lost by nearly 50 lacs of workers. Why there is no bail out for them.
The relief given under Income Tax for the salaries section is an eye-wash and is not matching with their minimum expectations.
But the concessions in Tax and Duty to the corporates and business houses is glaring and concessions have been given even in tax surcharge.
On the whole, the Budget has carried forward the UPA Government’s agenda of robbing Peter to pay Paul to create few billionaires at the cost of the masses who suffer degraded living condition unable to survive.
C.H.VENKATACHALAM
GENERAL SECRETARY