 19 July 1969 was a historical day in the history of banking. That was the day 14 private sector banks were nationalized first time in the country. This year we are going to celebrate 50th anniversary of nationalization. At this point of time it is very important for us to look at history and see what happened, why nationalization was brought in, what was the benefits of nationalization and what happened subsequently when the economic reforms were introduced in 1991 and where we stand now and what will be the future of the banking system in this country. If we look at the period before independence, the banking sector was dominated by private sector banks, mainly run by the landlords and moneylenders. They were not catering to the people at large, they were charging very high rates of interest and people who were taking loan, who used to pledge their properties including land, house, ultimately used to lose everything to the moneylender. Between 1947 and 1951 there were 205 failure of private sector banks and that is why the government of India brought in major changes in the Banking Regulation Act and between 1951 to 1967 there were so many mergers, acquisitions, transfer of banks which were taken over by other banks and ultimately number of banks which were 567 came down to 91 in 1967. And at this background if you look at the functioning of the banking sector at that point of time you should also look at what all efforts the government of India was trying to do after independence to strengthen the banking sector. It was in 1955 for the first time the Imperial Bank of India was nationalized and State Bank of India was born. Only after State Bank of India came into existence the number of rural branches increased slightly. The government of India also took up other mergers like in 1955 nationalization of insurance was done and life insurance corporation came into existence. Similarly in 1957 industrial finance department was started in the RBI and there were also credit guarantee schemes which were brought in in 1960 to support the small industries and in 1955 industrial credit and investment corporation was established. In 1958 refinance corporation was set up. In 1964 industry development Bank of India was set up. Then subsequently in 1965 RBI set up national industrial credit fund and also an agriculture finance fund agriculture finance fund and all this helped to orient credit towards the larger section of the society. In spite of that the ultimate goal of reaching credit to the common man was not happening. And at this background there were few reports which were brought into focus. One was the Mahalo Nobis committee report which said that 10% of the population was owning 40% of the assets of the country and the income inequality was increasing. Then there was a committee on monopolies called the monopolies and minorities commission and that commission also pointed out that the income inequality within the country was increasing and Dr. R. K. Hasari who was a member of the planning commission brought out a report which he submitted to the planning commission and subsequently to the parliament which stated that there is a closer link between the business houses and the banking sector and the banking sector was giving credit only to the business houses. He suggested that unless we remove that bondage or clutches between the business houses and the banking sector it is going to affect the common man and the common man is not going to get benefited by the banking sector as a whole. This was the background with which the government of India started thinking about nationalization of banks. But that point of time then finance minister Moraji Desai was opposed to this concept. He was more interested in social control of banks. So Mrs. Gandhi had to take certain dramatic decisions and that was also a political compulsion for her. In 10 states her own party Congress had lost power during that time. So she had to tell people that this government is far helping the larger masses of the country which are also their wood bank. Under this background on 19th July 1969 if you see that few days before that this hectic activity which was silently done which is written in a book by Dr. D. N. Ghosh who was chairman of State Bank of India in the later years. But in 1969 he was the joint secretary in the ministry of finance. He mentions in that book how steps were taken and Mr. Moraji Desai resigned his post as finance minister and immediately after that a recommendation was put up for promulgating an ordinance by Mr. V. V. Giri who was the president and after promulgating the ordinance he resigns from the post of president because he had to conduct for the next election for the president. So in that romantic manner when the nationalization was brought in Mrs. Gandhi addressed the nation to the all India radio. In that she mentions that the purpose of nationalization is to bring banking services to the common man to provide credit to the common man. She never talks about profit. She is talking about social orientation of the banks and redirecting credit towards the larger majority and that is a purpose for which the nationalization was brought in and if you see from 1969 to 1990 there has been tremendous changes in the banking sector. First of all the banking sector the number of branches dramatically increased from 8,200 to 65,000 within a short span of time. The reach of banking sector bank branches started moving towards the rural areas, semi urban areas and because of which the larger section of the society started getting access to credit. Secondly there was free orientation of credit, the agriculture credit before nationalization in 1967 only 0.2% of the total credit went to the agriculture sector but it slowly started improving and by 1975 it had reached almost 18% of the total credit was going to the agriculture. There were schemes like the lead bank scheme brought in, there was a scheme for integrated rural development program which was a poverty alleviation program conducted through the banks by providing credit to the weaker section of the society because of which the agriculture got a fillip, small industries, artisans, the weaker sections in the society they started having access to credit. The third important improvement was the improvement in the credit in the so-called Vimaru states in the north eastern region, eastern region and the central region of the country where the credit availability to the common man or the overall credit itself was so poor that only 25% of the credit in the whole country went to these three regions. This dramatically got improved to 50% within a span of 10 years. So that way the so-called Vimaru states or the weaker states also started getting bank credit. The fourth was the improvement in the credit deposit ratio. There are studies which shows that large number of districts which went up to 205 from just 36 districts where the credit deposit ratio improved dramatically. That means the deposits which were collected in that local area was utilized to give loans to the local people themselves. Then the banking sectors functioning improved. The employees were a massive recruitment so an employed youth got opportunity to get into the banking sector and they were able to work with the common man. Then the regional rural banks came in and they started serving to the larger number of people in the country even today the largest priority sector lending is given only by the regional rural banks. So these developments which were the offshoot of the nationalization brought in a dramatic change in the country as a whole especially records show that income inequality which the earlier reports were talking about started coming down. Between 1970, 80 and 90 there has been dramatic shift in the income inequality. The weaker section, the lowest section of the society the bottom most 20% or 30% to 50% they started having improvement in their income level which overall changed and the larger portion of the wealth which was with the miniscule minority started reducing. That income inequality improvement could take place because of the banking industry only because of the nationalization which brought in a directed lending of the larger credit to the weaker section agriculture, farmers, women, artisans, small industries, small businessmen, small traders all this section of the society got benefited because of the nationalization. Now suddenly a shift took place in 1990 when we went for a loan from the IMF and the World Bank we signed an agreement with the IMF and World Bank that we will change the character of the banking sector and we will reorient the banking sector towards privatization. They brought in the National Assembly Committee 1 which recommended that the Government of India shareholding should be brought down to 33% and subsequently if we see between 1991 to now the shareholding of banks which was almost 100% in some of the banks by the government has got reduced to 52%, 55%, 60%, 75% slowly the character of the banking sector started changing. This led to a situation that the private sector was getting inside private sector representatives were getting into the banking sector as board of directors and Government of India was slowly withdrawing and Government of India also started changing the norms for lending because of which if you see between 1991 and now many changes have happened. One, the focus of credit shifted from small credit to larger borrowers. If you see the data 1991-92, the larger section of the credit, if you look at the numbers, almost 97% of the borrowers belonged to small borrowers category. Only a small portion of the credit went to the corporates or the large borrowers but subsequently slowly it started changing and today we see that 38% of the credit is going to just 11,643 people and these are all corporates who get loans beyond 100 crores and these are the people who are responsible for the non-performing assets. Now if we have an analysis of 1969-1991 and 1991-2018, the entire shift in credit has changed because of which once again accumulation of wealth has started increasing with few percentage of people. 10% of the population today controlled 63% of the total wealth of the country. Why? Which was only 34 in 1991. That is because of this changing in these policies and reorientation of credit. So what we have to look at the banking sector and the net result of the nationalization is that it was because of the nationalization and the related policies that income inequality could be reduced and also larger section of the society got access to credit. Not only access to getting into the bank and opening an account but also started getting access to credit which now have started diminishing. And banking sector now people are talking especially after this 2014 when this present government came into power that has totally reoriented the banking sector. They started with a Gyan Sangam where they said that we are bringing up a new roadmap for the banking industry and what is that roadmap to reduce the staff going for more digitalization which in a country like ours where 26% of the people are still illiterate, everybody cannot become digital banking customers but that has been the focus. Similarly the focus has been towards privatization. They brought in the bank board's bureau brought in private people into the bank's boards as MDs, Germans of the bank but which has not helped the banking sector and the policies which have been collaborated by the finance ministry and the RBI which has been implemented over the last four years. The asset quality review, the corporate debt restructuring and subsequently now withdrawing all that restructuring bringing in something called the prompt corrective action which is actually killing the banks is actually oriented towards destroying the public sector character of the bank. They are talking about denationalization. There are people like Arvind Subramaniam, chief economic advisor earlier to that Mr. Arvind Barangreya who was the Nithya Yog chairman who goes to Washington and says that the next election the political parties should give in their manifesto that they are going to privatize all the public sector banks. I challenge them that any party come up with that slogan that we will privatize the public sector banks whether people will support that they should realize. In spite of all their efforts even today 70% of the total business in this country is with the public sector banks. Why? Because people have trust on this bank instead of supporting these banks with more powers, more stringent actions which they can take on the non-performing asset borrowers. They are helping the borrowers to write off the loans. What schemes they have brought in recently like the insolvency and bankruptcy code where reliance has been benefited. See in the recent case of a settlement Alok Industries which owns 29,500 crores it owes to the banks that has been sold to reliance with 83% haircut that is writing off of 83%. Just for 17% of that asset value it has been sold to reliance. This is because of the change in policies of the government on the Reserve Bank of India. The Parliament Standing Committee on Finance submitted a beautiful report in 2016 February on what has to be done for the non-performing asset not a single recommendation has been implemented by this government. So what I appeal to the government of India, what I appeal to the bankers, what I appeal to the public of this country is that nationalization is very important for this country. A country where the income inequality is still increasing. Once again the focus has to shift towards public sector banks and reorientation of credit should take place. The credit should be oriented towards the largest majority of this country instead of the miniscule minority to whom the credit is going. There has to be stringent action against defaults. There has to be stringent action against the board of directors who are in the board who give these huge loans and also write off those huge loans. That way if the country re-oriented the credit towards the larger majority the economy will grow, employment will grow and my appeal to the politicians of this country is that in these 50 years of nationalization they should once again critically review what has happened. They should take note of the success of the nationalization between 1969 and 1990 and what way they themselves have destroyed this banking industry to a large extent because of the change in the policies. The people of the country have to wake up and stand with the banking sector, red unions stand with the people who support the public sector character of the banks and fight for strengthening the public sector banks, increasing the staff in the public sector banks so that more people, the unemployed youth in this country have access to the bank jobs and that way they are able to provide credit to once again the rural masses of the country, the farmers of the country, the women of this country, the students of the country who badly need education loan, the small traders, the small artisans, the small industries, the small businessmen who are trying to set up enterprises, they have to be given importance and that can happen only by strengthening the public sector banks and not by privatizing or destroying the public sector banks in this country. Thank you. Thank you all.