NEW DELHI: The Congress on Friday declared that any attempt to reduce the Union government’s stake in 12 public sector banks to below 51 percent would be firmly resisted both in Parliament and outside.The party emphasized that the mergers within the public sector banking industry over the past seven years were broadly accepted only because the Union government’s share was not reduced below 51 percent.Jairam Ramesh, Congress general secretary in charge of communications, recalled that 55 years ago on this day, then Prime Minister Indira Gandhi had decisively nationalized 14 banks, marking a significant chapter in India’s economic history.”I have described the background to this momentous event based on archival material in my ‘Intertwined Lives: PN Haksar and Indira Gandhi’. DN Ghosh, who played a key role along with Haksar, has also detailed it in his memoir ‘No Regrets’,” he said. Ramesh also mentioned that IG Patel, who was the special secretary in the finance ministry at the time, has written about this significant policy shift in his ‘Glimpses of Indian Economic Policy: An Insider’s View’.Bank nationalization had profound impacts on lending for agriculture, rural development, and other priority sectors of the economy, Ramesh noted. He asserted that public sector institutions have served the country well during global financial crises and have built an impressive pool of managerial expertise.Over the past seven years, several mergers in the public sector banking industry have taken place. United Bank of India and Oriental Bank of Commerce have merged with Punjab National Bank; Syndicate Bank has merged with Canara Bank; Allahabad Bank has merged with Indian Bank; Union Bank of India has absorbed Andhra Bank and Corporation Bank; and Vijaya Bank and Dena Bank have been taken over by Bank of Baroda. Additionally, the State Bank of Patiala, State Bank of Bikaner and Jaipur, State Bank of Mysore, State Bank of Travancore, State Bank of Hyderabad, and Bharatiya Mahila Bank have been acquired by the State Bank of India.Ramesh acknowledged that these mergers have presented their own challenges. “Big is not always better,” he said. “But they were broadly accepted only because the Union Government’s share in public sector banks was not to be reduced below 51%.””Any move to dilute that position in the 12 public sector banks that function presently would continue to be resisted forcefully both in Parliament and outside,” Ramesh asserted.He also pointed out that while bank nationalization was a landmark event in July 1969, it initially faced criticism from political parties such as the Bharatiya Jan Sangh. However, within five months, the Jan Sangh was publicly demanding the nationalization of foreign banks as well, Ramesh noted.
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