Taking banking to the people

Flogging the Public Sector Banks (PSB) has become the favourite past time of the present-day intellectuals who swear by the marker philosophy or the philosophy of non-intervention. Intellectual servility has been a by product of liberalisation of the Indian economy. The approach to the reform of the banking system reflects on the euphoria to mimic the banking paradigms of the developed western world or stainly the American systems. A new banking culture has emerged as a result of this imitative practices. The new culture with its emphasis on a "quick kill" has alienated the banking system from the business development. It is this change i the mind set of the present-day Indian bankers. in mind-set who are focussing their energies on the glamorous segments of banking at the critics of cost of more basic segments, which casts a shadow over the future of Indian banking Little do the of PSBs realise that in terms of professional competence Indian bankers are second to none in the world. But, sadly, the "rootlessness" of the new banking culture, the characteristics of which I have spelt out elsewhere (Economic & Political Weekly, September 2, 1995)- tootlessness in the sense of not being founded on the India-specific socio-economic milieu, has overshadowed professional competence.

When viewed in the context of the contemporary banking scenario, the subject of this book, appropriately titled. Taking Banking to the Prople, assumes a greater significance. The phenomenal expansion of banking in India in the post nationalisation period, both in terms of widening and deepening of the banking system, is unprecedented in the history of the world banking, Bringing the rural sector, which was practically isolated from the rest of the economy, into the mainstream of modern banking was a stupendous achievement. In fact it formed part of the modernisation of the rural economy itself. In this dramatic transformation, the governments, both at the centre and states, Reserve Bank of India, public sector banks and the NIBM played a crucial role. The very concept of taking banking to the people, the techniques for extending the reach of banks, the training imparted to the personnel involved in this gigantic task, the travails and tribulations of the whole exercise-all these need to be chronicled for posterity and this is what the present book has achieved. It should be emphasised that for undertaking such a massive exercise, there were no models to copy from, like the "Basel norms" of today. What is perhaps more. important is the total commitment, on the part of all those involved, to the objective and the dedication with which it was pursued. The travails and tribulations of the personnel are graphically brought out in the book. And banking officials, at that point of time were not being paid princely sums. Those experts who today argue that PSBs are not attracting competent officers because their emoluments are nowhere near those in foreign banks would benefit greatly by reading this book. The book provides interesting insights into how tactfully the bankers involved themselves and negotiated various problems which arose. Thanks to these efforts of PSBs, it was possible for the Indian economy to graduate to a high-saving economy in the latter half of the 1970s, when India's saving rate rose to some 25 per cent of GDP. Viewed against this macro-economic perspective, this period constitutes a glorious chapter in the history of Indian banking, and Professor K Dinker Rao and his colleagues deserve to be commented for capturing the agonies and ecstasies of all those involved.

There is yet another reason why the document is important. It demonstrates the positive contribution of intervention, by both the Government of India and the RBI in formulating the country's banking policy with a vision. In the present context of liberalisation, when the word intervention has almost become a dirty word, the document could serve as a corrective instrument to the market. mythology.