Bank Unions Oppose Privatisation Remarks, Demand Strengthening of Public Sector Banks

Finance Minister Nirmala Sitharaman recently stated that the privatisation of state-owned banks would not adversely affect financial inclusion or national interests. However, the United Forum of Bank Unions (UFBU), an umbrella body for nine trade unions across all banks, has strongly contested this view. The UFBU highlighted the significant contributions of Public Sector Banks (PSBs), noting they were responsible for opening 90 percent of accounts under the Pradhan Mantri Jan Dhan Yojana and are the primary drivers of priority sector lending, social banking, rural penetration, and financial literacy initiatives.

The unions argued that no country has achieved universal banking through privatisation and that such a policy would undermine national and social interests, endanger financial inclusion, and threaten job security and public funds. They asserted that banking is a social and constitutional responsibility, not merely a profit-driven business, and that privatisation primarily benefits corporations over ordinary citizens.

The UFBU has called for a clear assurance from the central government that no public sector bank will be privatised. Instead, they demand that PSBs be strengthened through capital support, technological modernisation, and improved governance. Furthermore, they requested public consultation and a parliamentary debate before any decisions are made that could affect depositors, employees, and the general public.

Historically, the UFBU pointed out, public ownership transformed banking from serving only elite industrial houses to providing credit access to farmers, workers, small businesses, and weaker sections, expanding banking branches to numerous villages. They stated that private banks have not prioritised rural areas due to lower profitability. The unions emphasized that PSBs have demonstrated resilience during economic crises and the COVID-19 pandemic, standing firm with the nation.

**Impact** This news has a significant impact on the Indian financial sector and policy discussions surrounding state-owned enterprises. It can influence investor sentiment, shape future government decisions on banking reforms, and potentially affect the stock performance of public sector banks if specific privatisation plans are announced or withdrawn. The strong stance by unions indicates potential labour unrest and policy debates. Rating: 7/10.

**Difficult Terms** * **Financial Inclusion**: The initiative to ensure that all individuals and businesses have access to and can effectively use affordable and useful financial products and services, such as banking, credit, insurance, and payments. * **Privatisation**: The transfer of ownership, property, or business from the government to the private sector. * **Public Sector Banks (PSBs)**: Banks where the majority of the ownership is held by the Government of India or the state governments. * **Pradhan Mantri Jan Dhan Yojana**: A national mission for financial inclusion in India that aims to provide access to financial services like banking, savings accounts, remittance, credit, insurance, and pension in an affordable manner. * **Priority Lending**: A system where banks are mandated to lend a certain percentage of their total credit to sectors considered vital for the country's economic growth, such as agriculture, small and medium-sized enterprises (MSMEs), and housing. * **Social Banking**: Banking practices and services that aim to achieve social objectives like poverty alleviation, rural development, and financial inclusion, alongside commercial viability.