2953 Resolution seeking [RAJYASABHA] Banking Companies 2954 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 I. RESOLUTION SEEKING DIS Again, these finances were utilised for, APPROVAL OF THE BANKING particularly, hoarding and profiteering in COMPANIES (ACQUISITION AND foodgrains. It has been estimated that TRANSFER OF UNDERTAKINGS) sometimes the advances amounted to even Rs. ORDINANCE, 1969 (No. 8 of 1969) 130 crores as a result of which the poor —contd. peasants in the countryside had been fleeced II. THE BANKING COMPANIES and the consumer in the town had suffered on (ACQUISITION AND TRANSFER account of the profiteering in foodgrains. This OF UNDERTAKINGS) BILL, 1969 — has attracted adverse criticism from various contd, economists and also from various surveys and documents published by the Reserve Bank of SHRI BHUPESH GUPTA : Mr. Vice- our country. Chairman, Sir, for some years our people have been demanding nationalisation of the Much of the speculation and black trade commercial banks in the country. The demand would not have been possible were it not for was due to the fact that the banks had been the fact that the banks were in control of those working not only to the detriment of the very people who are occupying today, to the national interest but even against the principles misfortune of this great nation, commanding and commitments of the Constitution of our positions in our economy and had not been yet country as enunciated in its Directive pulled down from those positions in order to Principles. Experience has shown that banking be pushed back in their economic operations. funds were being utilised to build up concentra- tion of wealth and economic power to distort Now, Mr. Vice-Chairman, the total bank our economic development, to hold the society deposits in 1951 amounted to barely Rs. 900 to ransom, to indulge in profiteering and crores. In 1965 it rose to Rs. 3,07a crores of speculation and to create a run on our rupees, and today it is well over Rs. 4,000 economy. crores. The significance of this will be understood when we appreciate that the Experience had also shown that by using deposits now account for 15 to 17 per cent, of the huge funds available to the banks, savings the total national income of the country of the community at large, some sections of compared to 9 per cent, which was the amount the big business at the top were trying to ol deposit in 1951. That is to say, in a period of occupy an entrenched position in a whole 15 years banks have been in a position to grab number of industrial units and in vast spheres 15 to 17 per cent, of our national income of trade, with the result that our planning whereas only ten or fitteen years ago they could again and again came up against the get only 9 per cent, which was also a big sum. difficulties created by them, and these people Now, where does the money come from ? by reason of their control of such huge national reserves were in a position to Deposits do not come from the big families. disregard national priorities and give rather a Deposit comes from 1.25 crores of depositors distorted and perverted direction to our spread all .over the country. Theretore, we can economic growth. Therefore, from the point say that it is the savings of the nation and the of view of the national economy it is made community, and that is why these huge savings more and more clear that we would have to ol the nation and the community should be in take a measure of this kind. the hands of the nation, subject to the Not only this, the banking world under superintendence, direction and control of the the control of a few families operated to the nation. Exactly the opposite happens. They have detriment of the common man. Reckless passed into the hands ol those people who were credit expansion by many of the banking thriving on the savings of the common people concerns resulted in what may be easily who were suffering. This aspect has to be called deficit financing in the private sector borne in mind. giving boost to prices and inflationary processes which the country can think of How can you think of giving a properdirection only after taking into account side by side to our national economy when• 15 to 17 per the official deficit financing, credit cent, of the national incomehad been placed in expansion for speculative and other the hands of a fewmonopoly houses who were purposes by the major banks in our country. indulging in Often that aspect has been overlooked while criticising the deficit financing which goes on through the printing of notes in the Nasik Press. 2955 Resolution seeking [7 AUG. 1969] Banking Companies 2956- disapproval of Banking [Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 corruption, blackmsrketing, black trade, some Whereas the banks were getting these huge ot which we always get to know even from amounts in their hands, we find that the the official reports. For example, recently we industry received, according to the latest got the report of the Licensing Inquiry figures 61*5 per cent of the total bank Committee. That is one aspect of it. Another advances, but this is again misfeading. If you is that these deposits were acquired from all go into the break-up,, you will find that most of over the country, from all the 17 or 18 States these bank advances went to the big business of India, Union Territories included. But they houses and it has been shown that 20 or had been spent in four or five States, namely, 30families have grabbed a major share ot the bi West Bengal, Madras, Maharashtra, Mysore .5 per cent of the total bank advances under the and Gujarat. I mention this fact because when head "Industry." Therefore, you must not just we talk about regional disparities and generalise this thing. We must take into economic imbalances in our country, we must account here the •"haves'* and the "have-nots" also remember that this is largely due to the within their own sphere. fact that those who have been controlling the finances of the country, have been investing In so far as agriculture is concerned, it has not from a broad national angle, but from the suffered most under these private banks. angle ot their business interests, taking into Agriculture has received only o. 2 per cent of account their convenience and also the the total advances, not even 1 per cent of the possibility of earning quick profit. As a result total advances. In other words, it got Rs. 20 many of the other States have suffered. lakhs out of every Rs. 100 crores ol" advance. This is the position. 'Yet, we are told that agriculture was receiving a fair deal.. From agriculture we receive 45 per cent of our In this context, Mr. Vice-Chairman, if you national income. Seventy per cent of the just look at the banking offices in our population depend on agriculture. All goes country—-I am giving some figures— you well, if agriculture is well. All goes wrong, if will find that out of the 5,812 bank offices all agriculture is wrong. Yet the huge savings of over the country, 3,065 are concentrated in the community are utilised not for helping and five States only. This is again another evidence sustaining the vital, life-giving sector of our of concentration of the banking operations, not economy, but the funds are diverted into from the point ol view ot broad national monopolistic channels to build up economic interest, but from the point of view of those empires and power. This is certainly one major who are corn-minding the savings of the reason why banks should have been natio- community. What does it mean ? The national nalised much earlier. We are paying for our savings which came into the hands of some folly in terms of sweat and toil, tears and have not been utilised for the nation in a fair sorrow. If the banks had been nationalised and even-handed manner, with the result that a much earlier, Parliament would have been in a targe number ot sectors became "have-nots" position to demand' and make allocations and from the point ot view of accomodation of credit accommodation for our agriculture. But credits and other facilities which are as the banks were in the hands of the Tatas and particularly required for starting co-operative, Birlas, we were not in a position to say small and even medium industries. It is a anything about them. Questions would not be common complaint in our country to-day that allowed because, it would be said, the matter is the smill and medium industries, not to speak not under any Ministry and it is not within the of co-operatives, do not get bank purview of parliamentary check-up or accommodation because the bank directors and interpellation. others at the top would like an internal arrangement among them to be so made that Commerce received 25.6 per cent of the total the deposits available to them go to finance bank advances, but here again the small trade their business, subsidiaries ot their companies and business, the cooperative sector, suffered and also for building up mutual business very badly. When we say commerce, we have empires. Therefore, not only the peasants and in mind here the big elements in the field of the workers and the commin man have industry and commerce, in the commercial suffered under the existing arrangement which world,, who grab the money by reason of the- we are now going to change, but even small the control of their banks. It is true-that certain and med-dium industries and co-operatives regulations were made that have suffered under this arrangement. 6—24 R. S./69 2957 Resolution seeking [RAJYA SABHA] Banking Companies 2958 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shri Bhupesh Gupta] its regulations. We shall deal with the other the Punjab National Bank, for example, aspects of it. Two points i would like to make. should not give advances to its own dire- The Indian branches of the foreign banks ctors. But nothing prevents the United should have been nationalised because they Commercial Bank from giving advances to control in deposits Rs. 500 crores ; less than a the directors of the Punjab National Bank dozen banks have so much business. 1 do not and the Punjab National Bank from giving see as to why we could not have done it. If advances to the directors of the United President Nassar could do it, il General Ne Commercial Bank. Win could do it ; it other countries could nationalise the foreign banks, why should we It is well known that when some years ago, hesitate to do so ( Is it because America will Mr. Dalmia was arrested in Man Singh Road not give us money '{ Is it because West on charges ot swindle and other things, there Germany will hold us to ransom ? Is it because appeared on the scene his great son-in-law— the United Kingdom will turn against us f he is not a flon-in-law like Mr. C. D. Pande— Mr. Shanti Prasad Jain. He came to Uelhi and In any case, they have turned against us by went to C. D. Deshmukh and ottered him imposing a 15 per cent ad valorem duty on the immediately Rs. 2j crores, a cheque on the textile imports from this country. Why are you Punjab National Bank, in order to get his afraid of it ? It remains to be explained. After father-in-law released—a good son-in-law, I all, Rs. 500 crores in a few hands is not a small must say, but only at the cost ot the nation. amount or a poor country like ours besides the Now, he ottered the money because the money which is not in the hands of our charge was that Mr. Ram Krishna Dalmia had nationals. You can catch our nationals and put embezzled about Rs. 2j crores. The savings ol them in the Tihar Central Jail without the community were readily available for the diplomatic complications, but you cannot catch son-in-law to rescue his father-in-law from an American or an Englishman or other foreign the clutches of law when he was being held national because not only they have diplomatic on a charge ot swindle. 1 do not know what representation here, but some of my friends Mr. Man Singh had -done before he was opposite will lead delegation after delegation in killed in the Chambal Valley. But I do know the name of friendship between nations. So, I that Mr. Man Singh the Chambal Valley was would like to know from the Prime Minister as tar more respectable a man than many of the to why this unmerited gesture has been shown monopolists in the country because the loot ot to quarters which do not deserve it. Man Singh, compared to that these Again, I should like to say that the monopolists are looting in the country, would exemption limit of Rs. 50 crores seems to be have been very, very insignificant and small, too high. Personally speaking, our party stands and yet Man Singh had to fall to the bullets of for nationalisation of all banks. And life will the authority, and the Tatas and Birias, teach you. Life has taught many a Prime Dalmias and Jains thrive in wealth and Minister and we hope this Prime Minister will prosperity at the cost of the nation. The bank* also be taught that nationalisation is a national have made it possible. necessity and ultimately we will have to go in Mr. Vice-Chairman, you will find that for a hundred per cent nationalisation. even in regard to the State Bank, 75 per cent ot the advances went to the private sector, But today, none-the-less this measure is a and only 19 per cent to the public sector. momentous measure because these fourteen There again the advances ot the State Bank, banks between them control Rs. 3,000 crores of Rs. 198 crores, went to 66 big accounts the total deposits. Their depisits plus the whose individual borrowing was Rs. 1 crore deposits of the State Bank today placed in the and more. These trends yet remain. I hope hands of the State, amount to over 85 per cent they will be taken due note of when we of the total deposits. This is certainly a very administer the law. Here 1 need not go into significant achievement and the Prime Minister the other aspects •of the matter. This is a very needs to be congratulated for it. I would also very important thing that we have congratulate the Government because I am a nationalised the banks generous man. I would congratulate the Prime Minister 4 P.M. As far as the credit part of it is concerned, credit rules are laid down by them. Well we have the Reserve Bank and it has got 29S9 Resolution s-cking [7 AUG. 1969] Banking Companies 2960 disapprova' of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) BUI, 1969 particularly because but for her initiative. .. But none-the-less our Shrimati Ttr-keshwari (Interruptions) I have grown old in Parliament. Sinha will not have many things new... I have seen a few Prime Ministers. I have seen (Interruptions) Mr. Dahyabhai Patel you many a Finance Minister, rising and falling should be happy that after all, a very elegant before time. I have seen many a people passing lady is imitating you namely, Shrimati through the Treasury Benches, some to Tarkeshwari Sinha..., oblivion, others to glory if you like to call it so, whitever you call ; but most ot them have gone (Interruptions) into oblivion, unwept, unsung. Now, when I congratulate the Prime Minister I hope you will Now, Mr. Vice-Chairman, I am not going not call her a fellow-traveller for that, because 1 into the Communist meeting and ?11 that. The congratulate your party also because we are Congress can never hold a meeting as the generous. The communists are large-hearted Communists hold their meetings. That is well people. They do not hesitate to congratulate known. That is why f say they are you. I know you belong to another party. I Congressmen and we are Communists. know 1 am hgating to replace the Congress Government by a Government of Left and The same thing was said when the State democratic unity. Yet when I see a Government Bank had been nationalised. The same taking a measure in the national interests, in arguments we hear from some ol the parties on response to the urges and demands of the this side. They said it was a communist people, I give that Government ungrudging measure. Pandit jawaharlal Nehru had gone the support and sympathy. Tnat is what I say here. communist way. He had become a fellow- You may be afraid of communism. Here my traveller. Mr. Deshrnukh was advised by the friend, Mr. Dahyabhai Patel, used to say—-and communists. The same old matter again. Yet, he would not deny it—to Pandit Jawaharlal the caravan is passing. Nationalisation is Nehru when he was occupying the place which taking place, because of the compulsion of life, his daughter is occupying now, "Mr. Prime the compulsion ol economy, the demands of Minister, you are doing what Mr. B;iupesh the people. This is one aspect I wanted to point Gupta wants" Fancy Fandit Jawaharlal Nehru out. (interruption) Mr. Vice-Uhairman, you at doing what Mr. Bhupesh Gupta asked him to least take me as an old Member. I may not be a do. good Member, but am an old one. i came to Parliament in 1952. I have sat through in this House sometime) to your annoyance, sometimes to your pleasure, but ever present in this House. 1 have not been an unfunctioning parliamentarian. I cannot recall when the Central Government from those benches came out with such a bold, far-reaching, measure as the bank nationalisation. There have been good measures. We have supported them ; but this is particularly courageous and far-reaching because it strikes at the citadel of monoploy SHRI BHUPESH GUPTA : Now I find some capital. We have have only stormed into it. We members in the Congress Party are not only have to capture it, and there you will require lobbying with the Swatantra Party, but are new and other measures, follow-up measures, talcing Mr. Dahyabhai Patel's dope and using and also proper aamimstration on a democratic the same argument, the same language, against basis, in co-operation with the bank the daughter of I'andit Jawaharlal Nehru. She is employees, the employees of the banks that being called for doing this thing a fellow- you are nationalising. . . . traveller which Pandit Jawaharlal Nehru had also been called in the United States of America SHRI DAHYABHAI V. PATEL (Gujarat) : for allegedly doing certain things at the As you have in West Bengal. instance, they said, of the communists, in a true communist style. He was attacked like that. But SHRI BHUPESH GUPTA : West Bengal is 1 hope this Government is strong enough not to in his head. What can I do ? I cannot wipe out be swerved from its path by this kind of West Bengal irons the map of India. Banks provocation. will be nationalised in Bombay also. 2961 Resolution seeking [RAJYA SABHA] Banking Companies 2962 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bui, 1969 [Shri Bhupesh Gupta] I I am shocked that man of his position, because Therefore, Mr. Vice-Chairman, the he belongs to the ruling party should have ever Government deserves our congratulations. The dared to utter such things that bank Congress Party and other people also deserve nationalisation is the same as the our congratulations because after all, I do say nationalisation of women. That again is that if their party were opposed to borrowed from the exploded anti-communist nationalisation, the whole of the opposition, a propaganda. few people, would not have succeeded in SHRI BABHUBHA1 M. CHINAI getting it. And the Prime Minister was quite (Maharashtra) : On a point of order. Mr. Gupta right when she said she was implementing the has quoted some speech of Mr. Patil in which decisions of the A-IGC. The trouble with the he has said about the nationalisation of Government is one Minister takes such a long marriages but not the nationalisation of time to implement the decision on privy purses women. He is misquoting him. I would like to that I do not know what will happen to correct him. the privy purses and the princes by the time this measure comes. But here is a good thing. SHRI BHUPESH GUPTA : There is no Within six days of passing ol the resolution, point of order. I am sure those who offer him the banks are nationalised. That is how dinner must defend him. They can defend him. people should behave. That shows courage. So I say that Mr. Patil has said that. Another That shows eonlidence in the people. That factor 1 must point out. Mr. Patil is going shows the understanding of a good cause. round the country, running a campaign against And no wonder the people of the whole the nationalisation and we are also following country have rallied to the nationalisation him. On the 13th of this month I shall be in enthusiastically. Rarely have I seen a Bombay, I am giving you notice, Mr. Chinai. Government measure getting so much support Who is running a campaign ? We are not in the country. Rarely have 1 seen a Govern- running it. Your panyman is running it. Not ment measure being acclaimed and applauded only that. in the manner in which the bank nationalisation is done. Therefore 1 am not up.et by it A scurrilous campaign is being run against because the Congressmen may try to take such members in the Congress Party who stand advantage electoraJly; but as far as I am for nationalisation. We send our people to concerned, am I to go by narrow party listen to their speeches and when they come interests or electoral advantages, a seat here or and report to us, we find out whether they were a seat there or am I to go by the paramount Congressmen, because after all it is the demand of the national interest ? So long as decision of the Congress Party which is being the measure conforms to the national interest, implemented. Mr. Patil who talks about we have reason to celebrate, all of us discipline in the party should behave as a loyal jointly, from both sides of the House that for member of the party and should not only once we have taken a big, bold courageous support nationalisation but he should go to the measure with a promise for the future. masses, explain the nationalisation and support That is all that is needed. I wish therefore the it. Communists are dragged in, 1 may tell you. measure full success. Had Mr. Patil belonged to the Central Unfortunately it has been frowned upon not Committee of the Communist Party, we would only by some friends from the Opposition but have summarily expelled him from the Party. I surprisingly enough, by some ex-Cabinet read the other day—I am a journalist of a short, Ministers, the topnotchers of the Congress you may not like my journalism—'The Party and I was shocked and horrified when I Searchlight' and I saw an article by Shrimati read in the paper that Mr. Patil, speaking on Tarkeshwari Sinha, sppposed to be my fellow the 24th July in the Rotary Club here, was journalist—I am told she earns Rs. 4,000 a comparing nationalisation with the month by writing ; I have never earned, how nationalisation of marriage. I do not know can I match her ? In the paper 'Current' which is whether Mr. Patil was in a delirious state or he the paper which Ja-waharlal Nehru denounced was being just naive or dirty when he wanted in this House— he would not even like the to discredit and defame a progressive, good paper to be named, which is a really scurrilous, measure by insulting women as if our women pro-American rag, I found Shrimati Tarkesh- are capable of being nationalised and all that, wari Sinha, a leading lady of the Syndicate as if our civilisation teaches us in terms of nationalising women. 2963 Resolution seeking [7 AUG. 1969] Banking Companies 2964 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 may be hem. Lady of the Syndicate they will trying to steal the credit away from him. But call, writing a scurrilous article not merely how is it that when Shri Gin wanted to give against the Communists—we consider it to be effect to the recommendation of the Bank a tribute when Shrimati Sinha writes against Award in regard to the bonus and wage us—but against their Prime Minister, their increase for the bank employees, Mr. Party, their policy and the decision and yet we Dcshmukh advised Mr. Jawaharlal Nehru not are told a few things about discipline of the to accept those favourable recommendations Congress Party. and he rejected them ? Shri Ciri resigned from his position. Here is the man who was to be reprimanded, Mr. Dharia, and also Mr. Chandra Saekhar who SHRI LOKANATH MISRA (Orissa) : He has was also to be reprimanded. Mr. Dharia was in taken 45 minutes. I do not know how you trouble because some high and mighty got are distributing the time. angry with him. Why should there be this dou- ble standard ? If Mr. Chandra Shekhar is liable SHRI BHUPESH GUPTA : I do' not to be reprimanded for having utilised his wish to upset them. They like my speech, not fundamental right on the floor of* this House me. to demand something of the Finance Minister, Mr. Patil and Mrs. Sinha deserve summary expulsion from the Congress Party and yet nothing of the kind is taking place. Shrimati Sinha has a wrong idea.

SHRI DAHYABHAI V. PATEL : Why not join the Congress Party and wash these dirty linen there ? SHRI BHUPESH GUPTA : Finally, I would say that you should take one lesson from this law. A measure of this kind the Government can never take without removing the main political obstacle in the administration of the Government. That is why I welcome the decision. I cannot think of discussing this Bill for nationalisation without Mr. Morarji Desai being out of the Finance Ministry and out of the Government. You know it very well that some people, for whatever reason, are very influential and they have many supporters and so on. When they are in key positions, they obstruct and temporise others and for SHRI BHUPESH GUPTA : My friend Shri convenience sake, others yield to pressure and Rajnarain for whom 1 have great regard and somehow or other good things do not come up. personal affection said that I should praise Mr. Therefore I never look upon it as a personal Deshmukh because he nationalised the thing as Mr. S. K. Patil or such others are L.I.C looking upon it because, it we were at all determined to nationalise banks, then the high SHRI GODEY MURAHAR1 (Uttar priest of social control and saboteour of Pradesh) : He is saying the opposite. nationalisation, Mr. Morarji Desai, had SHRI RAJNARAIN : Do not say it. certainly to be got rid of in order to push through this measure. SHRI BHUPESH GUPTA : Mind you, when THE VICE-CHAIKMAN (SHRI M. P. he nationalised the L.I.C we praised the Government at that time also but it is BHARVAGA) : Yes, that will do. interesting for me to point out in this old age—I SHRI BHUPESH GUPTA : One word am entering the afternoon of my life and at that finally before I sit down. time i was here —that life insurance was nationalised at the instance of Jawaharlal Nehru THE VICE-CHAIRMAN (SHRI M. P. when the scandal of life insurance came and it BHARGAVA) : There have been several is surprising that Mr. Deshmukh is 'finally'. 2965 Resolution seeking [RAJYA SABHA] Banking Companies 2966 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Ml, 1969 SHRI BHUPESH GUPTA : Now it should THt, VICE-CHAIRMAN (SHRJ M. P. be finally'. Now this is a 'finally' without BHARGAVA) : No., Mr. Bhupesh Gupta. 'several', outside the category of 'several; now it That will do. is like the Deputy Prime Minister, only one, next to the Prime Minister. SHRI BHUPESH GUPI'A : All right, Sir. They should not be put in high places. People Now here my suggestion will be—before I who are really committed to the public sector, sit down—that the bank employees should be who have no connections with the big business taken into confidence and given their rightful but competent experts, should be placed. part to play. It has been shown that those who opposed it, those who wanted to attack it under THE VICE-CHAIRMAN (SHRI M. P. Section j5AD in the social control measures, BHARGAVA) : That will do. whose sponsor is since out of office, their stand has been vindicated. Their co-operation should SHRI BHUPESH GUPTA :... in the be taken. Conditions should be created, service commanding position for running these conditions and other things should be so nationalised banks. created that they are in a position to fulfil the role assigned to them or we expect to give Once again I congratulate the Govern* them. Secondly 1 would like to say ultimately ment and particulary the Prime Minister for that we must have one Board. You cannot have having taken this very bold measure, and I the various units, Mr. Vice-Chairman. My fear hope the A.I.C.C. Resolution at Bangalore, the is this. If you have various units, these other sections of it, will be implemented, and fourteen, somebody may start some day the before this Parlia« ment Session is out we move for denationalisation. That way it would like to see some more measures placed becomes easy to start the move. But if you before the country. People have got to be have one system ultimately, then it becomes galvanised and moved into action for the more difficult. That is why I would make the making of the nation against the monopolists. suggestion that the ground should immediately Therefore I hope more measures would follow be prepared for it. soon before the Session is out. As far as compensation is concerned it should be very little. 1 think Government is THE VICE-CHAIRMAN (SHRI M. P. thinking of giving very high compensation. It BHARGAVA) : In future you should keep to should not be given. The face value of the time. Mr. B. K. P. Sinha. paid-up capital, that should be the compensation ; by no means should it exceed SHRI B. K. P. SINHA (Bihar) : Mr. Vice- that. Chairman, for once. . . .

Then finally in this connection...

THE VICE-CHAIRMAN (SHRI M. P. BHARGAVA) : Again 'finally' ? SHRI B. K. P. SINHA : Mr. Vice-Chairman, this is one of the rare occasions when 1 find SHRI BHUPESH GUPTA : It is 'finally' of myself in substantial agreement with the main the other clause. argument advanced by the previous speaker Mr. Bhupesh Gupta though I heartily disagree THE VICE-CHAIRMAN (SHRI M. P. with many of those factional and partisan BHARGAVA) : I do not want to be harsh but I broadsides he had launched against us and should say that you have taken a lot of time some hon. Members of our party. already.

SHRI BHUPESH GUPTA : All right, Mr. Mr. Vice-Chairman, it is a bold step. It is a Vice-Chairman. Not being the final point I may courageous step. It is an imaginative step— tell you this thing here that Birlas and people nationalisation of banks. To steal a phrase from belonging to the big business should not be Mr. Armstrong, the first man who landed on placed in high positions. I only just want to end the moon, for the Prime Minister it is one smalt up with these words... step ; for the nation it is one great leap forward. 2967 Resolution seeking [7 AUG. 1969] Banking Companies 2968 disapprova of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bit, 1969 Mr. Vice-Chairman, four decades back on Mr. Vice-Chairman, 1. will give only two the sands of Karachi, our great organisation examples to indicate that the system in which projected the picture of a free India that was to we have been operating has failed. Take the be. In subsequent years we developed under case ot the demand of the Government the great leadership Pandit Jawaharlal Nehru servants, State employees, for higher wages. that conception, and opted for a socialist With the pittance that they receive it is not society. And iocialism without nationalisation possible to make both ends meet. It will not be of banks is inconceivable, for the banks to day possible for them and their families and their re an integral part of the whole economy, an children to lead a purposelul and healthy life, integral part of the economic apparatus. Oar hut then, if their demands are conceded, it will banks today are not what they were a hundred be impossible for the Government of India, or years back. They are the nerve centres of the for any State to meet the demand by increasing economic hie. They are the nerve centres of the taxation, or otherwise. So here the system system in which we operate. And if we want to projects an insoluble problem. We have opened control that system, if we want to give a social technical schools. We have given boys training direction to that system, then there is no option in engineering and other professions. But for us except to take charge of that machinery. today, because they cannot be absorbed by the But while socialism implies a nationalised economic system, we are closing these banking system the reverse is not true, and a technical schools. We are reducing the nationalised banking system is not necessarily admissions in them, and even in the liberal arts, an indication of a socialist order. Banks have say, B.A. or M.A., we have been forced to been nationalised in Italy, in France, in reduce the number of admissions. While the Australia, but they have been operating as a nation requires for its development more of wing, as part a of the free enterprise economic education the system constrains us to limit svstem. This is a fact which we shou'd keep in education and particularly technical: education. mind. The Prime Minister and others have If proof were needed that the system is in a talked ol the technical perfection of the crisis, these two examples-afford irrefutable management of the banks. Banks should be proof. Therefore we have to think of a new managed and managed well, but the issue aoes system. not end there. The problem is not solved simnly bv the efficient management of these The gods that we have worshipped for the banks. We have to set our targets higher. I have last twenty years have failed us. heard hon. Members—Mr. lihupesh Gupta also—wax eloquent on the regional disparity, We speak of the system of mixed economy on the denial of finance to small entrepreneurs, but in my opinion mixed economy is but an on the denial of finance to professional people. euiphemism for a system of private property 1 say that if we move in the direction ol curing and private enterprise. Unless we get out of these, then we would be moving in a right that, unless we set our targets higher, I am sure direction. But then, if that is the goal which we we shall not be able to-make a succeess of this set betore ourselves, if that is the destination scheme. which we seek to achieve, then, in my opinion, we are setting our targets very low. People talk of giving opportunities to> small entrepreneurs. People talk of expending credit to the agricultural sector. But then istead ol ore Mr. Vice-Chairman, today, the system in Birla or one Dalmia you will be creating ao which we have been operating for the last diminutive Birlas or ao diminutive Dalmias. twenty years is in a crisis. Figures indicate that That would be an improvement on the present industrial production has risen high. Figures system but then let us realise that that could indicate that agricultural production is on the not change the essential character of the up-grade. But these figures should not blind us system. The essential character of the system to the fact that the system under which we would remain the same. And what is in crisis ? have heen operating is in a deep crisis. The It is the system that is in crisis. And therefore I sure indication of a crisis is that it projects say we have to set our targets higher. We have before us insoluble problems, situations which to-introduce structural changes in the economy lead to dead ends. and unless we introduce structural changes in the economy in the agricultural sector, in the industrial sector and

2969 Resolution seeking [RAJYASABHA] Banking Companies 2970 disapproval of Banking (Acquisition "^Transfer of Companies Ordinance, 1969 Undertaking) Bill, lb [Shri B. K. P. Sinha] in the region of been obtained after the ceilling has been commerce we will not be able to make this imposed so that we shall be able to inject an scheme the great success that we desire it element of socialism in the agricultural sector to be. also. Here I am reminded of Poland where they have small holdings but by a judicious system of investment, by a system of contracts Mr. Vice-Chairman, for 'he benefit of my with agriculturists, by establishing tractor Communist friends I would like to quote from farms and machinery farms, they have been Karl Marx. Karl Marx says in his Das able to impose a socialist discipline in Kapital : agricultural sector. I remember to have read some time back that there was a proposal here "The credit system will serve as a powerful to establish State tractor and machinery units. lever but only as one element in connnection I think if that is done, if we take a leaf out of with other great organic revolutions of the the Polish experience where agriculture is not mode of production". Lenin repeats the same nationalised, then we shall be doing a great sentiment in his great article "The Threatening service to this country. Catastrophe and How to Combat It" an article written on the eve of the overthrow of the Kerensky regime in 1917. When these great Mr. Vice-Chairman, I welcome whatever masters talk of nationalised banking they had has been done so far. I am reminded in this before their eyes the vision of a socialist order connection of Indonesia and Ghana. Let and they recognised that nationalised banking Indonesia and Ghana be both beacon lights can be a successful, can be a beneficial and warning to our leaders and to our measure only as part of a larger, more Government. In Indonesia they took some bold powerful and more virile socialist order. steps but they failed because after taking those Therefore sometimes I feel nervous when steps their steps began to falter, their hands people talk only of removing regional began to shake. Sukarno thought that by imbalances or building up the small simply introducing political element in the entrepreneurs. I again repeat that we must set administration without changing the structure our targets higher. I do not urge at this stage of the economy he could be successful but that by one stroke we should establish a com- nemesis overlook him. In Chana also the same pletely socialised or nationalised industrial, history was repeated. Nkr-umah took some agricultural and commercial sector. I know, wise and progressive steps but either because Mr. Vice-Chairman, democracy, particularly of the compulsions of the system in which he parliamentary democracy, is a very slow sought to operate or because he did not like to moving machine. To take 'decisions, to go beyond a certain limit he began to rest on implement them, takes time. I do not urge on his oars and the result was that tl.ee was this Government that in this matter they economic chaos and Ghana also had to revert should count in days or months but nor can we back to a system which was least calculated to afford to count in terms of decades or lead it towards a happy and p-o perous order. I centuries. I feel we must register a bold support this measure in the hope that some advance towards the establishment of a great good will come out of this for the socialist industrial sector and a socialist country ; I support this measure also in (lie agricultural sector. When I think of agriculture hope that this is the first step and that this I feel that it is not only enough to pump funds Government and our Prime Minister shall not in the ag-icultural sector. The funds should be hesitate or falter in the way but wotdd try to so pumped, the situation should be so c-e ited introduce more and more of socialism in the that in the agricultural sector itself there is productive machinery, both industrial and greater social control by the Government or by agricultural, and also in the commercial the credit institutions. I am reminded that it sector. has been suggested that ceiling should be enforced. Well and good. I am told in Bengal SHRI BHUPESH GUPTA : Only look after Several lakhs of acres because of the your Suhartos. imposition of the ceiling have come into the possession of the State but we must follow this up with a measure of rational consolidation. SHRI B.K.P. SINHA : If these steps are Instead of distributing this land to small plot- taken I am sure unborn generations will holders we should introduce cooperative remember the name of our Prime Minister system in this land which had with gratitude.

2971 Resolution seeking [7 AUG. 1969] Banking Companies 2972 disapproval of Banking {Acquisition and 1 ransferoj Companies Ordinance, 1969 Undertakings) Bill, 1969 THE PRIME MINISTER AND are not impeded for want of credit. We want to MINISTER OF FINANCE (SHRIMATI initiate corrective action against the INDIRA GANDHI) : At the moment, Mr. concentration of economic power and Vice-Chairman, we are more concerned with privilage which has come about ra the wake of those who are already born and facing economic development. We cannot deny that tremendous difficulties all over the country. the control of the banking system by the bigger business groups was an important contributory factor in the growth of monopolies in the This debate in the House has revealed many private sector. In spite of all the publicised strange things, the people who support the efficiency of the private banking system over Bill and why they support it, those who do all these years we find that deposits in them not support it and the reasons for which they constitute only 16 per cent of the national do not support it and many strange income. I understand—I think this point has arguments, theories and simile have been been made by other hon. Members— that there put forth. Whatever these reasons, I are still 13 districts m India where there is not should like to express my gratitude for a single banking office and that the major the general support which hon. Members metropolitan centres still account for the bulk have extended to this Bill. I have already ot bank deposits and bank credit. Can anyone expressed my thoughts on it here and most deny that the development of banking facilities of the points which have been made have has been lopsided and that bank* have not already been dealt with previously. I been efix'.ent instruments in the mobilisation should like to remind the House that it was of deposits and the provision of credit for more than a decade ago that Parliament worthwhile purposes in different parts of put belore the country the goal of a socialist our country . pattern of society. To us, this did not imply ownership of all the means of I do not want to embark on the virtues or production by the State ; in fact we did otherwise of the public sector, because I have visualise that there should be large areas for said a few words on it again this morning. The the operation of private initiative and enter- matter has been mentioned by several hon. prise subject always to regulation in Members. I should like to say, however, that the public interest. However socialist in the field of banking, the public sector has a pattern of society did impose on us the record of winch it can be legitimately proud. 1 obligation to bring the strategic areas of see my hon. friend, Shri Babuhai Chinai, here our economy under public ownership and and 1 would, therefore,. . . control. It meant also that Government had, and has, an obligation to take remedial SHRI ARJUN ARORA : Shri C. D< Pande measures to ensure that our political is also here. democracy is not eroded by economic distortions. In every country, including the SHRIMATI INDIRA GANDHI : . like to say a predominantly capitalist communities, it few words specifically about the State Bank. I has been recognisd that banks and other think it has shown imagination and initiative in financial institutions pecupy a vital formulating and implementing programmes to position. In economies such as ours, finance small-scale industries since 1956. At which is a developing one and which is the end of 1968, the total sanctioned limits for seeking 1o compre s the process of assistance to small scale industrial units by the development within the span of a few five- State Bank and its subsidiaries amounted to Rs. year plans, the role of banks is even more 162 crores. The State Bank al«o played an important than in the mature economies. We important part in providing remittance must stimulate the saving habit amongst all facilities. In 1969 alone remittances effected sections of our people, both in the rural and through the State Bank on behalf of the co- the urban areas. We must see that these operative banks which are dispersed savings are garnered and utilised in throughout the country, amounted to nearly Rs. accordance with the priorities and 700 crores. Also, the State Bank, from the very objectives of our Plans. And in our new beginning, looked upon the provision of Plan on which we have lust embarked, we banking facilities in the rural areas and semi- want to, provide greater opportunities for urban areas to be one of its primary small and new entrepreneurs. We want to responsibilities. More than 70 ensure that the full potentialities of the agricultural revolution, whic'i under way in many parts of the country, are realised and that the efforts and aspirations of our progressive farmers 2973 Resolution seeking [RAJYA SABHA] Banking Companies 2974 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shrimati Indira Gandhi] security in the form of property and that it per cent, of the branches opened by the should be denied to others even if the projects State Bank and iti subsidiaries were in proposed by them are otherwise credit-worthy. towns with a population of less than I think that the whole emphasis should shift 35,000. About 60 per cent, of the total from credit-worthiness of persons to the number of branches are today located credit-worthiness of purpose. Loans which in such smaller places. help production and in stimulating Also, the State Bank has been a pioneer employment will now be encouraged, while in introducing several new facilities. Some borrowing for speculation and similar of ttie« are : travellers* cheques, credit purposes will be discouraged. Today our transfers, instalment credit scheme for banks are not well equipped to deal with loan the benefit of small-scale industries, one- applications on the basis of their viability. man office and schemes for assisting, for Government will take early steps to arrange helping qualified technicians, transport for intensive training of personnel for operators and retail trade. The State technical appraisal of projects and in view of Bank has undertaken these developmental nationalisation it will be possible to pool the activities without detriment to com- resources of the fourteen banks and to promote mercial and banking principles. In the- programmes of training on a common basis. mobilisation of deposits its record com- pares favourably with other banks. Now, I have said before and I should like to repeat this is where I come to Shri Ghinai. In that nationalisation does not mean that existing 1968, the State Bank's deposits rose by I a industrial enterprises will be deprived of their per cent, and its performance was better credit needs for genuine productive purposes. than that of other banks. Shri Chinai But we are aware of the tendency, on the part observed that while the deposits of the of some enterprises, to make heavy demands State Bank rose only by 84 per cent, during on bank resources, while their own internal 1960-68, the deposits of the other resources are used for other purposes such as scheduled banks in the private lector went up cornering shares and acquiring control over by 174 per cent. Now, how has this other enterprises. These practices, I am sure, happened ? The statement doei not the House will agree, must be curbed. May I accurately reflect the growth of public also emphasise that nationalisation will lead to deposits in the State Bank, because »t the a mo-e equitable distribution of credit end of December, i960 the aggregate deports throughout the country. Hon. Members are with the State Bank were Rs. 576 crovc', out aware that many areas of our country have of which Rs. 241 crores were P.L. 480 remained backward, not for want of natural re- funds. The P.L. 480 deposits were sources, but for various historical reasons. It is subsequently transferred to the Reserve our duty to ensure that their backwardness is Bank of India over the next two or three not perpetuated for want of finance. Now with years under a phased programme. Therefore, nationalisation, it will be possible to draw up a if we exclude the P.L. 480 deposits, the rationalised programme of expansion which public deposits in the State Bank rose will pay special attention to those States and from Rs. 335 crores, i.e., Rs. 576 crores those parts of the country which have so far minus Rs. 241 crores, to Rs. 1,061 crores lagged behind. Institutions providing finance at the end of December, 1968. This^ for the development of industries have recently reflects a rise of about 200 per cent. During decided to take certain steps to encourage the same period, the deposits of other enterprises in backward areas and the Indian scheduled banks, rose by about nationalised banks must provide working 140 per cent. It is clear that we have capital and contribute to the growth of allowed the State Bank to function industries in these backward regions. untrammelled, without interference by It is unfortunate that even some responsible Government on political or other consi- persons and some even in Parliament should derations and I think this should give try to create misgivings ariS a sense of •ufficient assurance to this House and the insecurity amongst depositors. I should like to peonle at large that the banks which we have repeat the assurance, if indeed it is needed, at taken over will function not as wings of the all, that the interests of the depositors will Government, but as sound business always institutions.

There is one point which I would like to make very strongly. It is, that sound business does not mean that credit should be provided only to those who can furnish I 2975 Resolution seeking [7 AUG.' 1969] Banking Companies 2976 disapprova' of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bil., 1969 be kept in the forefront and they may rest unionists and professional and managerial assured that their funds in the nationalised classes have welcomed it both for its intrinsic banks are as safe as those in the State Bank merits and for the evidence it affords of of India or in the Post Office Savings Banks. Government's concern for social justice and Critics forget that small savers in our country economic growth. Many other people have have long been used to putting their money also been coming. And, if I may say so, the in Post Office Savings Banks for nearly a shift, so obvious, between the stand taken by century, and the State Bank has already more the Jan Sangh in the other House and the stand than a decade of loyal service to its credit. I taken by it in this House, is itself evidence that am sure that depositors will not pay heed to within these few days even they, isolated as the criticism of the self-appointed guardians they are from the contemporary world by the of their interests. Their true guardian is the cobweb of the past, of the superstition and of Government. communalism, must pay some heed to the upsurge of feeling which they sec all around Efficiency and courtesy should be the them. watchword of our nationalised banks. Special responsibility rests not only on the The Swatantra Party's thinking, Sir, we Government but the employees of the banks have always thought to be a little twisted, including the supervisory and managerial and how twisted it is, has been demonstrated staff. I have no doubt that the professional, once again. My hon. friend opposite managerial staff will rise to the occasion as talked of fundamental rights. I would like to they now have a unique opportunity to ask the House only one question : Is the right promote the real interests of the community of a person to put money into a particular through sincere and dedicated service. I have bank equal to, or is it greater than, the right of faith in the innate good sense of the the common man to basic necessities, which employees of the public sector, and I am right also is enshrined in our Constitution ? sure that this faith will be fully vindicated in We all have rights. We all have needs. But their performance in the years to come. May there must be some kind of comparison and I add that the large numbers who have been balance. Some years ago, when I paid a State coming to see me have of their own accord visit to the United States, I quoted a proverb assured me of their co-operation in this which I believe comes from Maharashtra : A matter ? man says, "I complained that I had no shoes until I met the man who had no feet". We have I should like to request businessmen and to look at the p-oblems of the country from that industrialists to adopt nationalisation not angle. Nobody want* to deny the rights of any merely in the spirit of acquiscing in an person unless those rights are impinging on accomplished fact but of extending their the far mo-e valid rights of a far larger hand of co-operation in developing our number. This is the question which is before economy. May I remind them that us. It may also interest the hon. Member Government and they have a vital common that after I had said that 95 per cent, of the interest in accelerating economic growth public supported the measure., besides the through progressive and coordinated large numbers of associat'ons, labour, peasants, endeavour. Thee i.v still considerable room rikshawallahs, stone-cutters and others for free play and for initiative and drive in who came to me, a large number of people have many fields. So, I hope that instead of written or come from the intelligentsia adopting a purely neTative, critical attitude ! : including bankers, editors, depositors, etc., towards the pol c es of the Government, they assuring me that they would like to be counted will real'se their obligation towards society among the 95 pc- cent. It is for hon. Members and work with the Government towards the to judge whether —I think this point has fulfilment of the objectives which are ensh been made, I cannot remember by whom— ined in our Plan. chaos is more likely to comp because of some The hon. Member sitting opposite to me slight annoyance or small inconvenience to spoke at some length about the type of a few people than from the disturbance peonle who have been coming to greet me and tension which growing disparity and who have welcomed and applauded this might cause among vast numbers of the under measure of nationalisation. I think that no privileged in our country. single measure which the Government Irs Some hon. Members here and many undertaken in recsi.t years has evoked such people ou'side have raised the bogey widespread approval. Farmers, small-scale industrialist?, trade 2977 Resolution seeking [RAJYA SABHA] Banking Companies 2978 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shrimati Indira Gandhi] of Communism. No one can have missed the tremendoui It is strange to see that Macarthyism which psychological change which has come about has long been dead in the place of its birth in this country by this one small step. I do should have now found a foothold across the not think that anybody, even the least seas and the continents in India. It goes understanding, even the poorest person, to show that those who propound this theory think5! that this is going to change his life have an astounding igno.'ance of the political suddenly or that it is some miraculous wand forces at work in our country and of the facts which has been waved. They are very of life in the India of 1969. I was astonished conscious that it is not. But they think that at to see screaming headlines in some last things are moving. They think that we financial newspapers about a speech were in a rut and now we have got out of the which I made yesterday or the day before. I rut. How far we move, where we move, that said nothing in that speech which I have not responsibility is still with us. But the people been saying for many years— when I was believe that we have been able to push back Congress President, after that and before the forces of inertia and of the status quo. that. I think that this is a very deliberate Nowhere else is this change of mood and attempt to distort and misrepresent the exhileraton more noticeable than in my own thoughts, feelings or sort of views which I party. Congressmen who live at the grass- was trying to put across to the people who roots level feel that bank nationalisation is had gathered together. Certainly, I said that the fulfilment of the larger goals and many changes have to take place. Is objectives of our party to Which its leaders there anybody here who will say that we do pledged themselves even in the thick of the not want changes in this country ? What are struggle for freedom, decades ago. It is an we sitting here for ? What are the important step forward in keeping with our Government functioning for ? It is the promise to the people and in keeping with business of everyone of us who is the changing needs of the time. Tf I may, I responsible, who is at all interested in the should like to quote something : welfare of the country to see that the country changes steadily and as fast as "I am afraid that for years to come India possible because the people's impatience is would be engaged in passing legislations growing. It has already been said, I have in order to raise the downtrodden, the said it in this House, that this is a small step fallen from the mire into which they have we have taken. I do not think it is a giant step been sunk by the capitalists, by the or a revolutionary step, but it is a small, very landlords, by the so-called higher classes. definite Step in a particular direction, and If we are to relieve these people from the what I said there was that if we did not imple- mire, then it would be the bounden duly of ment this step correctly or if we did the national Government of India in order not do all the follow-up which was necessary, to set its house in order continually to give then this step would be worthless. This is preference to these people and free them what I said. Tnis is what I believe in. from the burdens under which they are Many things have to be changed in our being crushed." country. The whole picture of dis-partity has to be changed. I do not thin'c this has This is not a Communist speaking, it is anything to do even with socialism. This is Mahatma Gandhi. Some hon. Member, I just good sense. Therefore, 5 p. M. we think my good friend, Shri S. N. Mishra, should try, and not get swept off our feet or expressed fears regarding the I'kely poitical appointments. Now, 'polities', is a word with Lke King Canute try to control the waves : believing that if we want the sea to stop at a strange and d ffeent meanings. When I was particular place, it will stop. H';re the sea is in E lgl.iud a long time ago— I was a a mass of human beings, human beings who student—we. heard the phrase 'the politics of arc politically conscious, human beings the unpolitical' which is that any change in who have suftVed and st-ugjled for freedom the existing state of aff-iirs is considered and who todty are suffering and struggling 'political', but if a person sticks to the stmts for development and to mike that freedom quo and fights the forces of change, that is real and worth while. It is not in the power of considered to be unpolitical. Only the other hon. Members opposite nor is it in my day, I read a well-known, non-Communist power to stop this upsurge of public feeling. liberal British journal. In it there was a But we shoild do everything possible to description of the typical double standard help them to a better life. ' which exists. It said that radical rules are 2979 Resolution seeking [7 AUG, 1969] Banking Companies 2980 disapprova of Banking {Acquisition and Transfer of Companies Ordinance, 19G9 Undertakings) Bill, 1969 called doctrinaire meddling while status quo DR. BHAI MAHAVIR (Delhi) : Mr. Vice- right-wing rules are supposed to be the free Chairman, Sir, I would like to thank the hon. man's common sense. Similar confused Prime Minister for the very left-handed thinking seems to persist in our country compliment that she has given to our party. In also. spite of our being com-munalist and superstitious, she seems to see some sign of Sir, bank nationalisation. . . I see that our thinking in a rational way on thi3 Bill. I my friend, Mr. Bhupesh Gupta, is smiling hope that she understands that there are from there. He gave a long speech but superstitions and superstitions and there are only the very fiial point had any relevance not only those superstitions which we harbour, to the Bill which we are considering or she also has certain superstitions of her own. In even to bank nationalisation. Anyway, this respect, nationalisation may not turn out to bank nationalisation, as I have said earlier, be a superstition, it may not achieve the is but a part though a significant part, objectives which she so eloquently has tried to of our larger programme. May I say, plead for this afternoon here. to refute the headlines which have been appearing in the newspapers, that there My submission is that on an issue like this is no mystery or hidden surprise about where cool and patient thought ought to have our future programme? Our policies been given to all the implications, what the steps and our programmes have always been would mean, what they will require, what they an open book, before the people. The will call far, instead of that thought being broad socialist objectives which my given, the manner in which has been sought to party seeks to serve and which we be done is something which has created more have placed before excitement, more political controversy and less Parliament of realistic economic appraisal. The have been approved by Parliament. The situation is that the Prime Minister claims that Qationalistion of banks was intended to there have been certain objectives before us serve the same goal. Other aspects of our for a decade. Of course, there have been programme have been incorporated in our certain eternal truths which have been there Plans and in the economic policy which our before us for decades, for ages. But then great party has approved. They were the truth suddenly dawned on her one fine summed up recently in a resolution adopted morning after a decade when she got dictated unanimously by my party in Bangalore. some stray thoughts and the.;e stray thoughts There are other items in the programme; went to Bangalore. I do not see, when there they have to be studied in depth. Today was no idea of the nationalisation of these 14 we have taken one step. We have to see leading commercial banks in the note which she that it is properly, rightly implemented. We dictated and which was debated or discussed at shall certainly look at the other programmes Bangalore, how it is that it is being claimed that which the party has approved. But what is they have been consistent for more than a needed at this moment is a new sense of decade in the policies that they were urgency, a new sense of dynamism, a new pursuing. My submission is that the sense of dedication and of service. Let us discussion at Bangalore—and if this House make this the occasion. After a long time can recall, liscussion that was held in we have such a large commitment to this February at the time when the Social Central programme with support from every Bill was introduced and passed, the Prime political party, with the exception of two, and Minister and the Deputy Prime Minister had from the country at large. This can form the much to say in favour of the experiment of basis for our co-operation in taking our social contral on banks. country in this direction which not at once, [THR VICF-CHAIRMAN (SHRI AKBAR ALI but certainly step by step, will take us KHAN) in the Chair] out of the present stagnation, will take us towards a better and brighter future. It was said that the objectives which we With these words, Sir, I should like the have in view will be achieved through this type House to reject the motion of the hon. of control over these banks. Even in this Member opposite and to give its full support particular note from which this whole story to the Bill for bank nationalisation which is a started, the Prime Minister only referred to one right measure enthusiastically welcomed by of the two possibilities, the possibility of the country as a whole. nationalising five SHRI DAHYAB\HM V. PATEL : Mr. Bhupesh Gupta, what are you doing ? You have been welcomed. 2981 Resolution seeking [RAJYA SABHA] Banking Companies 2982 disapprova of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Dr. Bhai Mahavir] whether they know what a bank is, whether leading banks. How from five she jumped to they have seen a bank- But they have been 14 is a story which most of us are today raising slogans which have been doled out to familiar with. (Interruption by Shri Sheet Bhidra them or which they have been asked to repeat Yajee). We know, for example, the two for the pleasure and flattery of the Prime alternatives, strict social control or Minister. nationalisation. Bat the situation that arose was one in which th rre was a Presidential Our friend from the Congress side, Mr. B. candidate being fjreed on the Prime Minister K. P. Sinha, earlier was kind enough to have whom she could not accept, and because of interestingly referred to Dr. Nkrumah. and Dr. that compulsion there was no alternative left, Soekarno while placing before the Prime perhaps, for the P.ime Minister or, for that Minister the example which she could follow. I matter, no alternative would have been left hope she learns from the example of Dr. for any p;:so\, highly self-conscious, highly Soekarno what type of friends he had and how Strong-willed, highly sensitive, but to react. they let him down. I hope the friends she has at And she has reacted and we know that this is this moment, in this particular case, will not do where her stray thoughts led her and are to her what the friends of Dr. Soekarno did to leading the country. him in respect of Indonesia, and I hope also that this country will be saved of the fate which I am not talking just now on the Bill at came upon Indonesia because of the conspiracy such. I am at the moment talking of the of the Communist Party there. manner in which the BUI originated. The Ordinance was issued just 40 hours before Sir, my submission, therefore, is that the this Parliament was to meet, signed by a P.- whole thing has been taken up in an esident who was on the verge of quitting, atmosphere surcharged with political passion, handing over charge, signed by him, and if political excitement. I would like, the rumours are correct, even drafted not by nevertheless, to place before you some of the the people of the Finance Ministry but by facts which I consider relevant and which some people outside the Government should be weighed by this honourable House heirarchy. before a decision is taken on this important measure. Mr. Vice-Chairman, in this situation, the Prime Minister can have the pleasure of Sir, nobody here has put forward a case ridiculing some of the Opposition points that why banks should be nationalised. I would have been raised and still holding fast to like to know if this House or any Member what I would call her superstition that mere thereof . . . nationalisation is a panacea for all ills. Mere nationalisation is not a panacea for all ills. Nationalisation can be useful and somtimes nationalisation may not be useful. All this i3 to be considered, all this is to be judged, all this is to be weighed. But my concern is that there has been no opportunity provided by the Government for all the pros and cons to be considered, for all the points in favour and against to be measured and then a consensus or a decision arrived at where the country takes a step forward. Here a step has been taken in the interest of our under political compulsion, not only under politicial, ideological or doctrinaire compulsions but compulsions dictated by factions within the rulling party. And now THE VICE-CHAIRMAN (SHRI AKBAR certain demonstrations are being stage- ALI KHAN) : You address me Dr. Mahavir. managed and it is being said that there has been such a spontaneous atmosphere and enthusiasm in the country. Some people who DR. BHAI MAHAVIR : If you cannot save go to the Prime Minister's house, I me from his interruptions I have to save wonder myself. 2983 Resolution seeking [7 AUG. 1969] Banking Companies 2984 disapproia of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bit , llC9 (Interruption by Shri Sheet Bhadra the chairmanship of Shri V. L. Mehta in i960. Tajee) All these bodies went into the question and gave the considered opinion that commercial THE VICE-CHAIRMAN (SHRI AKBAR barJcs were not suitable for agricultural ALI KHAN) : Order, order. financing. Only recently have the Government and the people had some rethinking and they have come to different DR. BHAI MAHAVIR : My question, conclusions. But then is it the fault of therefore, is that this is a matter which ihould commercial banks alone ? Can we blame have been discussed in a calm and the commercial banks and can wc justify dispassionate manner and all the pros and the step that we are taking on this matter cons should have been weighed. alone ? I would suggest that even the Government ignored or neglected agriculture as Certain points have been raised in favour of a sector in the Second Plan itself. I nationalisation which I would call remember, for example, soon after the First governmentalisat'on. It is not nationalisation. Plan was over, the Prime Minister of India After all, everything that is done in this had declared that after three years no grain of country is part of the nation. But now the food would be imported from outside. But the Government has taken control of all important next year we had record imports of foodgrains institutions of banking. So this from outside. That was in spite of governmentlisation of important bank3 has improvement in agriculture because of natural been resorted to, firstly, because it is said that factors. If our leaders, if our Government, they did not finance agriculture. Of course, it is could not foresee a couple of years ahead and true that not more than 2 per cent, of the food production was a term which they had advances have gone to agriculture of the coined, it is natural for all other people also to commercial banks in this country. But we think in the same line. When the Govern- should also remember that these advances ment ' itself was not expecting commercial which have gone to agriculture, to them we can banks to go in for agricultural credit, well, add some of the advances which have gone to it is hard and unfair, it is unrealistic, it is only agriculture based industries like sugar cane, trying to find an excuse for taking such a step. cotton or ginning mills, oil crushing mills and Take the step by all means. But then give so on. Then, these banks have also been arguments which are cogent, which can be purchasing debentures and land mortgage tested in respect of their correctness. I do not banks have gone indirectly for the fi lancing of find this argument can hold much water. Then, agriculture. But even then if this angle is there, it is being said that the small industries are not certainly, one has to admit that 2 per cent, to a being financed by the commercial banks. I sector which contributes 50 per cent, of our might say in the beginning here that I am national income is not a share which should be not for all the practices that have been considered sufficient. Then, what is the reason followed by commercial banks. I know there thereof ? The reason thereof is that hitherto the have been failures. I know there is a Government and all thinking people in this pretty good deal of undesirable and improper country believe that financing of agriculture activity going on. But then we are not here was a specialised sector and it was not for the only to say what the com-merical banks are commercial banks to meddle in it. And doing. We are here to judge the Bill, because of this when in 1904 the first Co- whether this measure which the Governement operative Societies Act was passed the slogan contemplates will, do away with the evils that that became popular was "Find Raisseisen". are there, or which can be supposed to be there, Raisseisen was the man who established co- and whether we will have a new dawn a new operative credit societies in Europe. All such order, in which the heavens will descend on this co-operative credit societies were considered Earth. This is what we are to ask ourselves. to be the only means holding the key to the Now, between June i960 and March 1966, problems •of agriculturists in respect of the loans givea to small industries by credit. commercial banks, I find, increased by 333 per cent, during these six years. And even then ^ Then as late as re.50, when the Rural you see that in June 1966, not all the loans that Banking Enquiry Committee under Sir were sanctioned to the small industries had Purushottamdas Thakurdas was appointed, a been utilised. Something like 41 rural credit survey was conducted by the Reserve Bank and the Committee on Co- operation was appointed under

2985 Resolution seeking [RAJYASABHA Banking Companies 2986 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1%9 Undertakings) Bill, 1969

[Dr. Bhai Mahavir] Bank permits this and something like 3.4 per per cent, of the loans sanctioned were cent, of the advances were given to the remaining unutilised, because naturally small directors in the case of the commercial industries cannot grow merely through banks, well, I do not think we can base our credit facilities. theory on this argument. There has been interlocking of banks and There are other difficulties also and some company directorships. The Companies Act of those difficulties are only for the permits 20 directoiships to an individual. In Government to solve. They cannot merely be order to check interlocking of directorships, washed away. If a small industry is to be set the maximum limit of directorships a person up in a city like Delhi where the Central is permitted to hold is 20. We find here that Government is sitting, where all the the average in the case of ccmmercial banks departments are concentrated in a smill area, was 8, i.e., one director was holding 8 the person who wants to start the small directorships in van'ous companies. But if industry will take at least two years for you take the directors of the State Bank of getting all the formalities completed and India, the average comes to 9. It is more than fulfilling the various requirements of the the average of the other commercial banks various departments of the Government. and not in any way less. We have not been Does the Government not realise that the red- able to solve the problem of reduction in tapism, delay, inefficiency and corruption of interlocking directorships in respect of these the bureaucratic machinery is holding up the institutions which we completely control. growth of small industries ? That the samall- scale industry sector is not able, to utilise the Now I would like to come to investment credit facilities offered to it is something in Government and approved securities. which should set us thinking in some other I have got figures here of investments directions also. made in Government and approved securities as a percentage of deposits, for There has been a charge that these two years 1967 and 1968. My figures are as banks cave large loans to their own di- en the 31st December. All banks, excluding rectors. In 13 large private banks at the end the State Bark of India, had invested 29.2 of 1966, Rs. 50 crores of loans had per cent, of their deposits in Government been made available to their directors and approved securities in 1967. In 1968 or the companies in which they were they had invested 24.07 per cent. In 1967 the interested. That comes to 3.4 per cent, of State Bank of India, for the purpose of conti- the total advances made by them. Now, pariscn, had invested 27.7 per cent, of its when we claim that by nationalisation deposits in such securities. In 1968, this can be reduced, we should be able to they had invested 26.7 per cent. Now, I do not prove if on the basis of facts and figures. find there is much of a difference between the There is an occasion for comparision. We two. If anything, the difference is merely have get the State Bank of India, a the difference between tweedledom and nationalised bank. We have got the Life tweedledee. And this is sought to be made Insurance Corporation. We have got the the main reason or main ground for which Unit Trust of India. And we have got other the Government is going to undertake all this Government financing agencies. Let us look heavy burden of managing and running at their record and let u? indicate this is the the banking institutions of the country. I way in which nationalised or govern-mentalised do not know whether that step could be institutions should behave, in a better considered wise. It has been called manner than the commercial institutions have bold. It could well be considered rash. It has been behaving. So, here I am quoting some been called courageous. It could well have figures to show how the State Bank of India been termed reckless. I would not like stands in this respect. On the 31st merely to use adjectives as has been sought December, 1966, advances to the directors to be done here. I would only like to place or the companies in which the directors facts and I would like facts to speak for were interested amounted to Rs. 130 crores themselves. which is 24 per cent, of the total advances given by the State Bank of India. Now all this is Then, tliere is another aspect of the under the careful, critical scrutiny cf the question and that aspect is the question of the Reserve Bank. And if the Reserve Life Insurance Corporation. When 2987 Resolution seeking [7 AUG. 1969] Banking Companies 2988 disapproval of Bonking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 life insurance was nationalised our Com- has examined it ; the Actuaries Committee has munist friends here and the fellow travellers considered it ; another body is examining it ; and also people who out of conviction—I do then the Government will consider it. I would not blame everybody to be a doctrinaire or a like to put it to the House that if there had faddist—believed that it would bring about been competition, if instead of one monolithic some improvement, welcomed it. I would nationalised institution in the form of the L. I. like to ask these gentlemen what the C, there had been various companies, long ago experience of the Life Insurance Corporation the premimum rates would have come down is. Only the other day I put it before the because in competition, they would have tried Prime Minister, but I could not get a reply to offer better terms, lower the premium rates because the Question Hour was over. Now, by way of incentive, give better service in 1954, when the insurance companies had conditions and better offerings in the form of not been nationalised, they reduced their more convenience. But here when it is premium rates by 12 to 15 per cent. In 1956, nationalised, competition goes and there is when life insurance was nationalised and the nothing left for the officer to bother about. He Life Insurance Corporation came into being, becomes a bureaucrat. He becomes a man who it was felt that some sort of a gesture should will not bother about the people who come to be made in the form of a reduction in see him. He merely sits with this legs premium rates. And what was the gesture that stretched on his table and he never bothers was made ? One rupee per thousand was the about the people coming to see him. reduction given in a blank manner. No logic was used, no reasoning was applied, no rational considerations were given and What is the effect of this nationalisation on simply a reduction of one rupee per thousand the workers ? I would like to put this question to for all types of policies was given. A person my friends here who are so much enthusiastic who was on the verge of retirement was about the Government taking over everything. given one rupee per thousand as benefit and What will it mean to the workers ? Will this others also were given the same reduction. It nationalisation of banks mean more rights for was an irrational and unscientific basis. To- the workers or will it curtail their rights ? 1 day the major fact is that the profit of the Life would like this to be considered. What it will Insurance Corporation is coming because of ultimately mean is that all the employees who the high level of mortality which they keep were up till now bargaining with small for the purpose of calculation of premium employers, wifh small boards of directors, will rates. I shall quote from the Sixth Valuation henceforward be pitted against a monolithic Report of the L. I. C, it says : State monopoly in the form of one joint employer which is more lifeless than a machine and which is incomparably stronger than the "During the inter-valuation period, the previous employers. The workers would find it actual death strain under whole life and much harder to bring down this Government. I endowment plans was 43 per cent, of the would remind our friends of the strike very expected death strain on the basis of recently in the State Bank of India, the mortality table used in the valuation." experience there of and the way that strike had What it means is that if, according to the to be recalled in deference to the wishes of the table on which the premium rates are people. The employees could not succeed. Had calculated, they consider 100 as the mortality there been a small concern, a private company, figure, actually only 43 people are dying and our Ministers and everybody else, our leaders, so 57 per cent excess is charged by the L. I. right from top to bottom would have gone and C. This is a nationalised institution. It is they would have brought pressure on the under the control of the Government. I want management boards and the employee* would to ask the Prime Minister, and I would put it have got some of their demands conceded. But to the House also : When you claim that all what has happened is an eye-opener. I would this is being done for the small man and also like to cite the incidents at the when small men constitute the vast majority Indraprashdia Bhavan on the 19th September, in the L. I. C, if you reduce the premium 1968. The Indra-prashtha Bhavan incidents are rates the benefit will go to the small man. standing I monuments to the heartlessness But years are passing and they are not able to of the take a decision. We are told that the L. I. C. 7—24 R. S.f69 2989 Resolution seeking [RAJYASABHA] Banking Companies 2990 disapproval of Banking (Acquisition and Transfer of Companies Ordianee, 1969 Undertakings) Bill, 1969 [Dr. Bhai Mahavir] Government as an here for the investment figures o£ the L.I.G. employer. What is the Government behaving to be disclosed. But the L.I.G is not prepared like ? Is it behaving like a model employer ? to give out the figures of investment and the Is it looking after the interests of its joint value of different shares it holds at any employees ? No, certainly not. It is not doing time. When that is not done, our fear is—and it. And when it is not doing it, I would like to it is not my fear alone and I know that infor- point out that those people who supported mation which I have got just now is correct— the L.I.G. nationalisation, the communist that the L.I.G. is responsible not for removing friends, they have had to wage a constant the disparities, but the L.I.G. has promoted war against the management of the L.I.G. for the disparities in this country. It lends to big the benefits of its employees. When that is a business houses in big lumps, 50 lakhs, 60 fact, can we merely believe that because the lakhs, 70 lakhs of rupees. Small borrower L.I.G. has been nationalised, it* workers cannot borrow those amounts and the big must be very happy ? This is one of the borrowers come in. Had there been small superstitions which the Prime Minister and companies they would have been in touch others should get themselves rid of. I would with a larger number of small industrialists also like to say that if the Government comes who borrow 2 lakhs, 3 lakhs, 4 lakhs, 5 lakhs out with an undertaking that when the banks or 10 lakhs of rupees. Such loans could have are taken over, the best grades will be given been advanced to them. But the L. I. G. mops to all the employees—the Bank of India's up the savings of the small people of the grades are better than those of certain other country, and then, loans it to whom ? The banks—and if the Government is prepared to Birlas' securities are greater and greater than give such a committment here and now, then, the small soap manufacturers. The L.I.G. will I would welcome it and I would in fact urge say to the small manufacturer, "Look you are that they must say that there will be uniform here in possession of property worth only a pay-scales and service conditions and none small amount, only 1 lakh or 2 lakhs or 10 of the employees will be brought down from lakhs of rupees while we have people the where he stands. If the Government does value of whose property is Rs. 3 crores, Rs. 5 this, at least there will be one consolation crores and Rs. 10 crores. And how can we that the workers will be more happy. consider you to be deserving to get out loan ? " Therefore, it is because of this that the loan Then, Sir, how is it that a few months ago money which is mopped up in the form of the Government, in spite of great opposition savings from the whole country is poured into from here and from our Young Turks and the hands of the big business houses, and the others also, passed that Section 36AD of the disparities increase. Banking Laws (Amendment) Act in which the right to strike was taken away ? Is that [THE DEPUTY CHAIRMAN in the Chair] right to be restored to the workers now or not ? I would like to say this point again because all this depends much on the claims which the being placed before us by the These disparities are not only. . . (Time Government. Further I may say that today bell rings) industrial relations in public sector undertakings are in a bad shape and much remains to be done in this respect ? What is our experience in respect of nationalisation in general, Sir ? There is monopoly. There is delay. There is red-tapism. There is inefficiency. The small man is not benefited. Is that not the experience of the Government's financial agencies ? My friend, Mr. Chandra Shekhar, is not here. He has fought a herculean battle for the purpose of bringing some benefit to the poor man, to the small man. But what a find here is that he has not succeeded very much. We have been struggling there. We have been fighting

2991 Resolution seeking [7 AUG1969] Banking Companies 2992 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 get these benefits. At this time we should know all that. In fact I wanted to say that the DR. BHAI MAHAVIR : I am making my whole thing should have been given calm points very swiftly and I am covering my consideration. One man who could have told points . us something about the nationalisation of banks is Mr. Iengar, a former Governor of the THE DEPUTY CHAIRMAN : At what Reserve Bank. He has written two articles. I time did you begin ? would like to refer to them for your information. SHRI PITAMBER DAS : If you find it interesting and if you feel it is informative, SHRI ARJUN ARORA : He is an you can allow him; otherwise, not. employee of the private sector.

THE DEPUTY CHAIRMAN : He began at THE DEPUTY CHAIRMAN : Mr. Arora, 5.08. please do not interrupt him.

DR. BHAI MAHAVIR : Madam, not many DR. BHAI MAHAVIR : All right, he is an Members are going to present these points. employee of the private sector. But he was a Generally they are going to present either former Governor of the Reserve Bank. He approbation or flattery. occupied the highest position in our monetary hierarchy. He has given certain facts. If you THE DEPUTY CHAIRMAN : I have just read these articles he tells us : been advised that the Jan Sangh has been allotted 32 minutes and Dr. Mahavir has taken "The whole approach of the Government near about half an hour. I want to know how and of the Reserve Bank was that the much more time does he want. handling of credit to the farmer required special institutions and that the most DR. BHAI MAHAVIR : I will finish as appropriate institutions were cooperative early as I can. I am not going to waste time. societies and co-operative banks." Similarly, Madam, there are certain other THE DEPUTY CHAIRMAN : Ten minutes things which need to be told. I was happy to more. learn from the Prime Minister that she wishes to revise the concept of security. She wants DR. BHAI MAHAVIR : I will try to finish security to be considered not only in terms of . . . the man taking the loan, but in terms of his objective. I would like to ask the hon. Law SHRI G. RAMACHANDRAN (Nomi- Minister who if present here whether it is not a nated) : Madam, if you give more time to fact that the L.I.C. does not have any somebody, you take that time from some machinery today to check whether or not the others. That must never be forgotten. funds which are given are actually utilised for the purpose for which they have been given. THE DEPUTY CHAIRMAN : I agree with Debentures are issued. The L.I.C. invests in you that everybody should keep this time- those debentures but there is no machinery to limit. Mr. Rajnarain, you must take note of it. check whether the debentures are utilised for the purpose intended. Do they make sure also DR. BHAI MAHAVIR : Madam, it is my when they put money in the debentures, very considered submission that the L.I.C. has whether there is any contribution from the not been helpful in reducing the disparities of those companies towards that industry or wealth or economic power or concentration of whether all the profits that it is earning are power. It has added to that disparity. spent on moTe lucrative business and cheap Therefore, that is the reason why the loans are taken from the L.I.C. just to supple- investment figures are not published. I would ment their business empire ? What is request the Government to come out with the happening is that the L.I.C. is not only adding investment figures at least now because at this to the disparity in income distribution, it is also stage we are told that these are the benefits of adding to the disparity in regional nationalisation, that the small man will get development. I have figures of the money these benefits, that other people will collected in the form of actual business and the investment figure

2993 Resolution seeking [RAJYASABHA] Banking Companies 2994 disapproval of Banking (Acquisition and'Transfer ef Companies Ordinance, 1969 Undertakings) Bill, 1969 [Dr. Bhai Mahavir] in various zones. There f i deration here also. The same man will be is the northern zone consisting of Haryana, administering these banks also. I would like Himachal Pradesh, Jammu and Kashmir, the Government to tell us in how many cases Delhi, Punjab, Rajasthan and U.P.—relatively the L.I.C. has underwritten values of under-developed States and in these States, debentures or share issues below Rs. 3 lakhs ? Delhi is the only State which could be I know and have figures but time does not considered to be more developed than the rest. permit me to go into all that. I would like also Here something like 23.92 is the percentage of to ask whether the supporters of the Go- the money collected in the form of premia vernment forget that there is corruption also. If from the people and the investment is 15.68, they talk of corruption in the private sector, which means the balance goes in favour of there is corruption in public sector also. I hope some other zone. What is that ? It is the eastern the Prime Minister remembers and the Law zone comprising Bihar, Orissa and Bengal Minister remembers the Mundhra deal and it where some of the heavy plants are located was in the public sector. Mr. Feroz Gandhi was and the public sector undertakings are all the person who brought it before the House but concentrated. The money collected there is then there comes the question of how many 19.56 % but the investment is 28.96 %. I need Mundhras lie even today in the cupboards of not say anything more on this than to point out the L.I.C. undiscovered, unseen by the people ? that the regional imbalance instead of being Therefore I ask this question. There is reduced, is being accenturated because of the corruption in the Super Bazaar. There is policy of the L.I.C. and there is nobody to corruption in many places which I need not question it because it is a monopoly of the refer to here. So mere taking over of the State. They will not give information. The institution by the Government is not the Government has never been able to to satisfy panacea. It is not a 'Rama-bhan' for everything. us with investment figures and they are not It is something which calls for better character, published. They are not secret documents. better social order and dedication among the Anybody can go and find out from the various employees of the Government. This is registrars' offices in the different States all the something which is lacking in the Government facts about investments of the L.I.C. in respect circles right from the highest to the lowest and of the shares of the different companies but the so it is not easy to claim or hope that Government is not prepared to give us in a everything will be all right. Accountability is compiled form. So I feel that the L.I.C. is not the question. To whom will they be doing what these banks, it is claimed, will do accountable? Will the Parliament be able to in the form of reducing regional imbalance or supervise and effectively control ? If not, we disparity in income. We have only to refer to are only changing masters and placing new the Fourth Plan where it has been officially bosses in the places of the old ones and the admitted that most Government financing people who will benefit will be those who can institutions, even the co-operative banks, have have some strings pulled or who can have been beneficial only to the rich people. The relations with the bosses. That will not solve small man has not been able to benefit from the country's problem or the problem of the them. The reason is that when we take power downtrodden people. in our own hands, I am surprised to find that those who have been fighting against I will give one example of the West Bengal monopolies are the strongest supporters of the Finance Corporation. I would like the Minister Government forming a monopoly in banks and to verify it if he likes. There was a loan of Rs. when the Government forms a monopoly, do 10 lakhs to the Singhanias on first mortgage they hope that everything will be fair as in a and they sought permission for a second fairyland or in heaven ? I do not think that mortgage also. That was refused by the hope can be supported on the basis of the Corporation. In spite of that refusal the Sin- experience of the various institutions. Here ghanias went in for a second mortgage. When what we find is, even in the co-operative banks this information was received by the and agricultural financing institutions, all the Corporation, the Corporation did not have the benefit goes to the big man, to the man who courage to recall the loan. They tried to can establish some rapport with the Minister or regularise it. I know personally of several cases the high-ups or the party boss. That will be where when a small man did those things, the the con. loan was recalled. You can apply your guillotin to a small 2995 Resolution seeking [7 AUG. 1969] Banking Companies 2996 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 man but you do not have the courage to apply it—that the banks remain independent as in it to the big man. That is how in our the case of Italy or France where they keep on democracy our political parties are giving different terms to customers so that functioning. even under Government control they work as independent units and thereby they offer If figures are placed before you about the competitive terms to the customers. investments of the L.I.C., the I.F.C., the U.T.I., I.C.I.C.I., you would find that there has been a THE DEPUTY CHAIRMAN : That will do great addition to dispartity because of the now. Please conclude. financing policies of these institutions and a DR. BHAI MAHAVIR : The last good percentage of money secured from the danger is that political patronage becomes an small zones is being given for the benefit of important thing here. Directorships or other the big concerns which arrange to get offices in banks will be given on political loans. considerations, and this fear has been voiced from the other side also. It will become a To-day the managers o[ these banks are sanctuary for the Ministers defeated in happy, because till now the responsibility was elections. It will become a sanatorium for the on them to secure more money and to welcome victims of political shocks here and there. This the depositors. They were offering good terms. is the big danger. This is the danger to which Whenever a person went, at least they offered my friend here has also called attention. the person seat and courtesy but now they have started thinking otherwise. I know of some THE DEPUTY CHAIRMAN : No more. managers who say : 'Now we feel very Please take your seat. relieved. There is none whom we will have to obey. If a person comes, let him come or not.' DR. BHAI MAHAVIR : I would like to They are small banks that are envying the have a final word. Mr. Bhupesh Gupta was managers of big banks because they feel they given much more time and he went on will be under pressure to expand their business. speaking saying every time 'finally' 'finally' Then there will be red-tape. The officials of the and thus took much more time than I have Government will try to delay things. No taken now. decision will be taken. Wherever there is the slightest chance of a decision going wrong, THE DEPUTY CHAIRMAN : You have they will always try to defer decisions and put taken about forty-five minutes and you should it off on somebody else. The result will be, be satisfied with it. I will guillotine the where a particular concern needs money speeches now. Mrs. Raja-gopalan. urgently, no decision will be taken and time will be allow to pass. I remember a small story. SHRI ARJUN ARORA : You ar15 making a A building cought fire. They sent for the fire mistake. I am waiting to be called to speak. brigade. Because there was so much of red- tape, the fire brigade did not come in time. The SHRI DAHYABHAI V. PATEL : You say building got gutted and a new building had you will guillotine the speeches, Madam. This come up there but because they had orders the is very unfair to my party. 1 have not fire brigade after six months and the new exhausted my party's quota; I have left time building was given a good wash because they and that my party Members should get. had the orders to do it. That is the way they will function. Then there is no fixation of THE DEPUTY CHAIRMAN : You officers' salaries who go on deputation. I have got twenty-five minutes more. personally know of many cases. An officer comes on deputation. Two years pass and his SHRI DAHYABHAI V. PATEL : I have salary is not fixed and he cannot get his spoken and I have left time for a second monthly salary. He has to borrow money from speaker of my party. He is not being given the friends for meeting his needs. time as you say you will apply the guillotine.

Then it has been said that there will be no THE DEPUTY CHAIRMAN : You have competition. I hope the Government will see got the time. Your Swatantra Party alone has to it that after they take this over—they are twenty-five minutes left. The bent on it and they will do 2997 Resolution seeking [RAJYASABHA] Banking Companies 2998 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [The Deputy Chairman] clearly proved that the Government has really other parties have consumed their time, more good intentions and is for the welfare of the than their time, I know, but you will get your downtrodden people and the development of time. the backward areas. Now I want to tell the House that we have to Madam, as far as the nationalisation of sit long enough today to finish the banks is concerned, as has already been consideration stage. After the Law Minister's mentioned by many Members, it is nothing reply to the speeches made I ihall put the new, because they have been experimenting it Motion for consideration to vote. Tomorrow by making the Imperial Bank of India the State we shall take up the clause by clause Bank of India. Also the LIC is a standing consideration of the Bill and also take up the example of nationalisation. And what is the amendments to the clauses. Here I have the list reason for nationalisation of banks ? Of course of speakers yet to speak. If each and everyone the Government has realised rather late that the wants to speak, let him. You may sit as long as economic structure of the country has been you like but the consideration stage must be such that the monopolists with the con- over today; it must be finished today. If this is centration of economic power in a few hands the intention of the House, then we shall go and they were ransacking the entire country for on. their own benefit and not for the country's benefit. So, for economic stability and for SHRI S. S, MARISWAMY : No, to- curbing monopoly it was essential that morrow. financial institutions should work properly so that the benefit is reaped by all including the THE DEPUTY CHAIRMAN : Consi- weaker sections of the community. deration of the Bill must be finished today and tomorrow we take up the clauses and the Madam, 1 would just like to say before I go amendments. to the Bill that as soon as the Ordinance was promulgated the Prime Minister made a SHRI PITAMBER DAS : Just a small point; broadcast to the nation in which she said, "I it is not only the Law Minister, I have also to should like to assure all sections of industry reply because my Resolution and the Motion and trade that legitimate needs for credit will for consideration have been connected up; they be safeguarded. Indeed, it shall be our go side by side. endeavour to ensure that bank credit expands on the basis of genuine savings in keeping THE DEPUTY CHAIRMAN : So, you have with the growing needs of all productive to reply; he has to reply. I forgot the sectors of the economy." I hope this will be the Resolution when I said that minister will reply. guiding line for the industry and the economic Mrs. Rajagopalan. growth of the country, and there will be proper SHRI ARJUN ARORA : You have made a distribution of the finances of the nationalised mistake. You should have called me. banks." I hope this would be the guide line as far as industry and trade are concerned. THE DEPUTY CHAIRMAN : Have I made a mistake ? Well, I shall call you. I have called Then, Madam, coming to the Bill, in Mrs. Rajagopalan. Mrs. Rajagopalan, you Chapter II about the banks that have branches have to keep within your time limit of ten outside India it says that the "(hief executive minutes. officer for the time being of the corresponding new bank may exercise all powers and do all SHRJMATI LALITHA (RAJAGO such acts and things as may be exercised or PALAN) (Tamil Nadu) : I always keep to my done by the existing bank for the puipose of time limit, Madam Deputy Chairman. effectively transferring such assets and discharging such liabilities." Thus the At the outset I congratulate the Govern- executive officer is given all the powers to ment, and the Prime Minister particularly, for deal with these branches. But in the same the bold and light step taken in the Chapter on page 4 it says : nationalisation of fourteen major banks. There was an impression that the Government was "Nothing in this Act shall be construed as only making lip propaganda and was not applying to the assets, rights, powers, serious about the major issues concerning the authorities and privileges and property welfare of the country and the people. The movable and immovable, cash balances Government has dispelled this fear by this historic measure and 2999 Resolution seeking [7 AUG. 1969J Banking Companies 3000 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) BiV, 1969 and investments in any country outside I Then, Mr. Vice-Chairman, in the same India (and other rights and interests arising Chapter it says about the Advisory Board and out of such property) of any existing bank the Board of Directors. I am very happy that operating in that country if, under the laws the Advisory Board and the executive Board in force in that country, it is not contain representatives of depositors, permissible for a banking company, employees, farmers, workers, artisans and owned or controlled by Government to everybody who are to be elected or nominated carry on the business of banking there." according to the scheme made under sub- section (1) of proposed section 13. At the So this clearly shows that this kind of thing same time I would like to bring to the notice cannot be implemented, in such countries of the Law Minister that the President of the where it is not permissible. I want a clari- All India Bank Employees Association has fication as we have no intention of nationa- suggested that the nationalised banks should lising foreign banks or whatever bank have representatives on them from each State branches we have in foreign countries. So I so that they may guide thae banks in would like to know what the Government is formulating their policy in keeping with the going to do about this sub-clause (7) which special needs of the State in mind. This is a does not go well with sub-clause (a) in good suggestion and it is left to the Law which the chief executive officer is given all Minister whether this could be considered by powers. I want a clarification from the Law the Government. Minister. I also feel that the Reserve Bank should As for compensation Mr. Dahyabhai Patel have full control and vigilance over the was very much worried what will happen. nationalised banks for the time being so that He said, "I do not know in what way they you ensure What procedures and other are going to give compensation and what measures should be adopted and how the will happen to deposits," and all that. But banking system should be run on a sound Chapter III very clearly says ir. Clause 6 that basis. there will be interim payment and "it shall pay to the existing bank by a cheque drawn 6 P.M. on the Reserve Bank." I am sure Mr. I am happy that in Chapter V it says : Dahyabhai Patel has confidence in the cheques drawn on the Reserve Bank. "Every corresponding new bank shall cause its books to be closed and balanced on the 31st day of December of each year Madam, in the same Chapter it says about and shall appoint, with the previous the constitution of the Tribunal, and I am approval of the Reserve Bank, auditors for very happy that the Chairman of a Tribunal the audit of its accounts." shall be a Judge of a High Court or of the Supreme Court. It also contains a specialist I am also happy to lind what is said on page in banking and a Chartered Accountant. It 15 : also takes somebody who knows about this compensation matter. "If any difficulty aiises in giving effect to the provisions of this Act, the Central Government may make such order, not [THE VICE-CHAIRMAN (SHRI M. P. BHAR- inconsistent with the provisions of this Act, GAVA) in the Chair.] as may appear to it to be necessary for the purpose of removing the difficulty : Mr. Vice-Chairman, about the Custodian of the bank it says that the existing Provided that no such power shall be Custodian shall be the Custodian of the exercised after the expiry of a period of two corresponding new bank and the Custodian years from the commencement of this Act." shall hold office during the pleasure of the Central Government. This is all a very vague I would like the Government to consider all thing. I would like to know whether the the suggestions made by hon. Members and if Custodians have any specific term of office there are any loopholes or if there is any or what the terms and conditions of their difficulty they should see that proper steps are appointments are. I would like to know this taken within the prescribed period. from the hon. Minister. 3001 Resolution seeking [RAJVA SABHA] Banking Companies 3002 disapproval 0/Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shrimati Lalitha (Rajagopalan)] Here it is said that the Government of India Mr. Vice-Ghairman, yesterday Mr. may not entertain but it should be that the Chandra Shekhar was referring to the smaller Government of India will not entertain such banks which have been left out and he also kind of pleas because if concession is given pointed out that they were not really smaller once and you give in sterling then you will banks in the sense that they provided credits have to give in dollars, roubles and what not. to smaller people but that those smaller banks We should say that we shall give only in our were all controlled by the big business people. own currency and not in any other country's I also want to know what they are going to do currency especially since we are short of fo- regarding these smaller banks which are reign exchange. controlled by the big business. I hope this nationalisation of banks is only a Sir, I am also happy to find from a news stepping stone to success, a stepping stone to item in today's papers that wider sections of the dream that is now coining to a reality. We the community will be covered in the matter have been stressing for a socialist pattern of of bank credits. It is said there that the society not only in this forum but even outside nationalised banks may extend credit facilities and I am sure that the Government after this to certain sections which have not benefited courageous step will go ahead and implement significantly from the institution of banking. one by one all the programmes that have been And this gives the answer to Mr. Dahyabhai enunciated by the party for the welfare of the Patel who said that large crowds which were downtrodden and for bringing economic going to the Prime Minister were rickshaw prosperity, industrial growth, and peace and pullers, taxi drivers and such others who have security to the country. no bank accounts. This clearly shows that the Government intends to help these people because the proposal is said to cover SHRI K. SUNDARAM (Tamil Nadu) : Mr. professional groups like doctors, dentists, Vice-Chairman, Sir, it was only in November- engineers and technicians and other groups December last year that we passed the Banking likely to benefit are rickshaw and taxi •drivers Law (Amendment) Act for the social control of who may be enabled to own the vehicles they banks which came into force in February 1969. ply. They may get loans up to 60 per cent of Within a short period of eight months we are the cost of a new vehicle or 70 per cent of the now being asked to pass this Bill called the market price of a second-hand vehicle not Banking Companies (Acquisition and Transfer more than two years old. It also says that of Undertakings) Bill, 1969. In this short period people who want to start clinics will also be of eight months has there been any such radical provided with funds. This clearly shows that change in our economic position to warrant the Government have every intention of such a Bill being rushed through in such a haste helping the smaller and the bigger people ? This House being an august body has to provided they all give their cooperation and calmly, quietly and dispassionately considered help in promoting the growth of industry and why this measure has come up at this time. I economic stability of the country. can only say that it has emanated from the stray thoughts of the Prime Minister submitted to the 1 would like to say one thing about the Bangalore session of the AICC and it has really foreign banks which are holding interests gone far astray. This Bill seems to be the here. That is a problem when we nationalise reaction, rather a violent reaction, to the events our banks. One news item which I saw says that took place at the Bangalore session and the that the Government may not entertain such subsequent events that followed. We were told kind of pleas from the U.K. bank for sterling during the Budget session that we have a green payments. It is said here : revolution and things are very bright and "Official sources point out that even porsperous and that we are well on our way to though the Chartered Bank of Britain is the the economic take-off stage. There has been no holding company, the Allahabad Bank is a warning that there has been a drastic change in bank incorporated in India and as such its our economy nor has there been a warning of shareholders will get compensation in the such a Bill as it has been presented to us today. manner prescribed in the Bill now before The only change that we see is that the Prime Parliament. There cannot be a different Minister is in the helm of economic affairs; we yardstick for payment of compensation do not see any other merely because it is the subsidiary of a foreign bank."

3003 Resolution seeking [7 AUGa 1969] Banking Companies 3004 disapproval of Banking (Acqutsiton ^ Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 change at all. She has told us that she is borrowed money or who were connected with learning economics and this economics such companies which had borrowed money student devalued our currency a few years from these banks were immediately reduced. ago, a thing which we cannot forget. 'It has According to the statement of the Deputy gone down the pages of history as virtually Finance Minister last year between 1967 and having ruined the economy of the nation. The 1968 the ratio of their borrowing was brought same Piime Minister is now in full control of down from 10.1 per cent to 3- 1 per cent. It the economy of the nation. With due respect will be interesting to note that the State Bank of to the Prime Minister, I would say that women India maintained the highest percentage of such are generally hasty and afterwards they regret advances. At the end of 1969, twenty leading for their lapses. This legislation is another commercial banks accounted for 86 per cent of such measure, a hasty measure and this is the the banking business and they sanctioned second example. additional credit limits to agriculture and other small-scale industries to the tune of Rs. 130 crores and Rs. 84 crores respectively. This is an indication of their earnestness in carrying out the directives of the Reserve Bank. We should also not forget that these commercial SHRI K. SUNDARAM : An Ordinance was banks were forbidden from giving any loan to issued to take over these fourteen major agriculturists all these years because it was banks. We should not forget the considered to be risk lending. In spite o that, circumstances under which democracy, is within this short time, though there was not functioning today. There is no President. much demand from the small-scale industries There is no Vice-President, but only an Acting for credit, they have achieved quite a good President is the custodian of the Constitution result. They were asked to explain what today. There is a partial Vacuum in they have done within that short period. Four democracy as it exists today. Under these hundred and eighty-seven new offices have conditions such a drastic •change is the been opened in the semi-urban and rural sector economic policy of the nation is being and 363 offices in the urban unbanked sector. introduced in very indecent haste. No The target fixed was that there should be a bank convincing case has been made out for for every town with a population of 10,000 such an urgency. But for the events that have before 1970. I am quite sure that they taken place in the Congress Party, I am sure would have fulfilled this target and would have there will not be a measure of thi° type that done much more. The Prime Minister just has been brought forward today. It has been now said that there are only 13 districts in the policy of the Congress Government to India where no bank still exists. It was the duty nationalise banks, but it would have gone on in of the State Bank to have selected such places. a very smooth manner. The change over They should have gone there and met this de- would have taken place smoothly but for the ficiency. In spite of that in February 1969 Bangalore session of the Congress. Even these banks started an agricultural credit under the Banking Law (Amendment) Act corporation with a capital of Rs. 100 crores. of 1969 there are provisions as to when This sum of Rs. 100 crores was in proportion to take over banks and under what conditions to the deposits received by each bank. With this such banks should be taken over. sum of Rs. 100 crores they were about to set up Wherever and whenever a bank persistly the machinery that was required with expertise fails to implement or refuses to carry out the on agricultural financing. Before they could instructions of the Reserve Bank, such banks set up the machinery and move forward and will be taken over by the Reserve Bank. satisfy these conditions, they have been There is that provision, but that has been nationalised. It is a common scene in our bypassed already. Here we should study the Indian villages that whenever the father and behaviour of the banking industry since the mother quarrel, the mother beats up the child- introduction of the Banking Law Amendment ren, to give vent to her feelings. This is what Bill. There have been no directives to the has happened. The quarrels between the banking industry until this Act was passed factions in the Congress Party have resulted in about the social objectives in the national these banks becoming the casualty. policy of the ruling party. The moment the Unwarranted charges have been levelled Reserve Bank gave them a positive direction as against the banking industry like concentration to what was to be done, they implemented it of money, monopoly and implicitly, for example, in the organisational changes. The directors who had

3005 Resolution seeking [RAJYASABHA] Banking Companies 3006 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969

[Shri K. Sundaram] these things. counted for 25 per cent, savings bank We should not forget that immediately 26 per cent and fixed deposits 49 per after independence in 1949 the cent. They had only 9 per cent of the Banking Regulation Act was introdu- total advances in liquid cash. ced. Ever since that no new bank has been licensed so far. We have created Sixty four per cent was used for a monopoly as early as 1949. Is it advances to the trade and industry, there fault if consciously we have and the balance was in securities allowed them to monopolise? We which could be encashed at any given have even permitted them to moment if there was any need. We amalgamate, to become bigger should also not forget that these monopolies and then we come and say deposits are of a very short-term that they should not become nature, and that they are paying 4i to monopolies and they should be 5 per cent for the deposits and they dissolved. During the war years when charge 9 to 10 per cent for their there were no persons to borrow customers. It is the difference of 4 or money, these banks were competing 5 per cent in which they have to meet against each other. They went to these their administrative charges, their industrialists and requested them to expenses, their bad debts, their borrow money. They took them on bonuses, their taxes, and build up their boards. They expanded their reserve. Within this 4 or 5 per cent business. They wanted people who they have to meet all these things. knew the tricks of the trade to be on Whether the nationalised banks will their boards, so that they would be do the work so economically and able to give proper and secure loans to make the maximum use of the funds their customers. This is the service available with them and show such that they have rendered. {Interrup- results is very doubtful. tions) Mr. Vice-Chairman, I am very much disturbed. There is another SHRI JOACHIM ALVA : Have conference going on in the House. your banks done anything for housing THE VICE-CHAIRMAN (SHRI for their employees ? M. P. BHARGAVA) : No conference SHRI K. SUNDARAM : Were they on that side please. ever asked to do it ? What happened to the industries? When the new SHRI K. SUNDARAM : These industries were asked to provide directors during these years have housing for their workers, no industry rendered yeoman service to the came forward to put it up, and so they banking industry. But for these people had to withdraw it. There was a the banking industry would not have stagnation in the expansion of expanded to the level of today. Not industry. If the banks had been asked only that. They have injected the to do it, instead of investing in banking habit into the thousands of buildings in the city, they would have small traders and retailers in our definitely invested in housing for their country. But for this the banking industry would not have expanded to own employees as any other industry its present capacity. We should not would have done. We see the L.I.C. forget that these banks have been putting up buildings, and at what liberally contributing to the loans cost? How much rent they are getting raised by the Central Government as for these buildings? We see Rs. 50 well as the State Governments. My lakhs is the rent on one building only. friend, Dr. Mahavir gave figures to Such huge loans are lent by the L.I.C. show that it has been always in the for newspaper buildings, for offices, for region of 24 and 25 per cent. They unproductive purposes. never failed to support the public SHRI JOACHIM ALVA : Your cause in relation to the compulsory 25 monopolists are also there. per cent they had to repay in the form of Government securities. SHRI K. SUNDARAM : Mr. Vice- Now, another charge raised agains1 Chairman, this Bill contemplates these banks is that of profiteering. Let taking over of hundred per cent of the us go into the details of this also. In assets and liabilities of these banks, of the case of the fourteen banks that only these 14 banks, whereas the other have now been nationalised, at the 40 banks are left out whose end of 1968, their total profits were borrowings or deposits are less than only Rs. 6' 64 crores. How did they Rs. 50 crores. The same freedom, the make this profit? They had a total same facility should have been given deposit of Rs. 2,741 crores on 31st to these 14 banks also. We should not December, 1968, of which current forget that when land reforms were deposits ac- introduced, a ceiling was fixed and everybody 3007 Resolution seeking [7 AUG. 1969] Banking Companies 3008 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bi'I, 1969 who had owned land was allowed to own land it is going to be a pragmatic step, the total to that extent of the ceiling and whatever was credit available is only Rs. 2,741 crores. there over and above the ceiling, that was Whether it is with the commercial banks or only nationalised and not the entire land. So, nationalised banks, the same thing is going to this is a very great mistake and Government be utilised within the country for development should not have done it. This will go against purposes. I wonder how this can improve or the fundamental rights of the owners. It will increase the rate of growth of the economy of amount to confiscation of their right of our nation. Until recently the banks waited for holding property. their clients in their offices. They were asked to go and lend money on their creditworthiness. The Bill also envisages giving compen- According to the Prime Minister, the process is sation. Now compensation itself is a very to be reversed. The fundamental change in the complicated matter. We have seen that when role of finance is to be translated into action the zemindary was abolished, the Government with a social purpose. Whether the profitability came forward and agreed to pay appropriate of the bank will be considered or the social compensation, and there are hundreds of cases purpose is to be considered and how it is to be even today pending disposal. The amount of balanced and weighed, that is the question. I compensation has not been settled so far. fail to understand how the nationalised banks Similarly when crores of rupees worth of are going to do this everyday with every buildings,land and other assets of the banks customer. So far the finances followed are there, how are they going to settle this development. Now the Government wants the compensation ? One has to wait and see. finance to lead the development. They have to Though there are Tribunals to be appointed, it take much greater risk. Have they made any will be a very hard task to fix the provision for providing for this risk of finance ? compensation for assets because of the I do not see there is any other way except to nationalisation. In the normal course there will write it off as bad debt and create a special be a market rate for such property, but once it fund. Of course the difference between the 4$ is nationalised it will be very hard and very or 5i per cent that you pay as the interest on the difficult to arrive at what would have been the Government bonds and the dividend of 10 per market value on the day on which it was cent will be available for this purpose. The nationalised. In addition to that what they say creditworthiness is not on the persons but on is they will pay the value whichever is lower, the purpose. Now, Mr. Vice-Chairman, the either the market value or the intrinsic value ICIC and the IFC are such big finance whichever is lower. Why? It is their legitimate corporators. They do lend money in very large property. They had been compelled to part amounts to industries. But they have got a team with it. Why they should accept the lowest of of technocrats to go into details, and they are to the two methods of calculation I fail to be convinced how a plant or an industry is understand. These shareholders had been going to work, and they go into other minute normally getting about 8, 9 or 10 per cent, details, and unless they are fully convinced that return on their shareholdings all these years. It it will be a profitable undertaking, they will is not a very high profit. The banks were not never lend money. If the nationalised bank is declaring a very high dividend but a steady going to deal with the small trader, small dividend of 8, 9 or 10 per cent. agriculturist, small merchant, small industrialist, has it got sufficient machinery to THE VICE-CHAIRMAN (SHRI M.P. go into this and find out exactly their BHARGAVA) : Only three or four minutes profitability and their repaying capacity before more for you. it will advance money? I doubt very much. It is claimed that the vast population of the agricul- SHRI K. SUNDARAM : I will take a little turists will be catered to by these nationalised more time. It was only recenly that the Prime banks. Very recently we had the report of Mr. Minister said that Rs. 200 crores or more B. Venkatasubbiah about the cooperatives. For would be diverted from these commercial so many years they have been in the fields of banks for the public sector. Before these agriculture, credit and agricultural services. banks could decide whether to agree to Rs. Now you will find that it is absolutely 200 crores or more or less these have been inadequate and it is absolutely no use nationalised. Our Law Minister says that it is depending on these cooperatives if the a pragmatic step and not a dogmatic step. I agricultural sector is to fail to see how 3009 Resolution seeking [RAJYASABHA] Banking Companies 3010 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shri K. Sundaram] we discussed it. This change in the banks, will it give further credits to these sick mills ? I be served better. Now, can the nationali" sed would like to know. banks overnight multiply one hundred times their present strength to serve the vast field of Mr. Vice-Chairman, the Prime Minister agriculturists in the rural sector ? I doubt. It is claims much support for this Bill. But she has mere high talk and high boast and nothing else. no patience to hear the full Bench of the About the remittances into the State Bank the Supreme Court. They want to hurry and this Prime Minister gave some statistics. I can give Bill is to be passed in a haste. They think that my own experience. Every manufacturer who these two Houses of Parliament are the rubber- manufactures excisable commodities must stamps of the Prime Minister. That is how we remit the excise duty into the State Bank only. are being treated today. This Bill which has There are lakhs and lakhs, sometimes several been passed by the Lok Sabha or handed over lakhs of industrial undertakings, who may be to us as passed by the Lok Sabha, we had only remitting per day. But such people are given hardly six hours to go through it. Is this the only a limited number of remittances per way Parliament is to be treated? I am very month or per week. An industrial undertaking sorry to say that . . . is given only four remittances per week. Mind you- It is for receiving money. To receive THE VICE-CHAIRMAN (SHRI M.P. money into the State Bank of India,they put BHARGAVA) : I am sorry. I cannot give you restrictions cr-Ti remit only so many times in a any further time. I have given you full time montn, no. every day, not so many times a day. which was there for your party. You have That is the service that the State Bank is giving exceeded it. today. SHRI K. SUNDARAM : This is the last point. This is only the penultimate stage of THE VICE-CHAIRMAN (SHRI M.P. dictatorship. There is no doubt about it. BHARGAVA): You will have to wind up Therefore, this Bill should be thrown away. now. Thank you. SHRI K. SUNDARAM : In this Bill there THE VICE-CHAIRMAN (SHRI M.P. has been only a mention of a scheme. The BHARGAVA) : Now, I want the guidance of entire thing depends upon what is the scheme, the House. I have still got 20 names before me how you are going to translate it into action. of the hon. Members who want to take part in Then only can it be pragmatic. Until then it can the debate. As far as the parties are concerned, only be dogmatic. Where is that scheme. Place all the parties' time has been consumed except it before Parliament. Let us consider it and find the DMK and the Muslim League. Now, if the out whether it will be really successful or not. House wants to sit up to 8.00 p.m., then I think As Mr. Pande has said, it is a gamble we will accommodate these two Members. otherwise. Now, in the absence of any such SOME HON. MEMBERS : No, no. scheme, this House cannot decide whether it would be really successful or not. Well, there THE VICE-CHAIRMAN (SHRI M.P. are quite a number of dangers which we have BHARGAVA) : That was the decision. to face in this nationalisation. There are SHRI PIT AMBER DAS : I have a sug- regional imbalances already. The Centre-State gestion to make that we do not sit till 8.00 p.m. relationship is already strained. And this will to-day. Instead we sit on Saturday and then only give room and another lever to accentuate finish it off, of course, if it is acceptable. the feelings and wound them further. What SHRIMATI YASHODA REDDY (An-dhra about the Five Year Plan ? Now, this overnight Pradesh) : This was raised in the Business change, this change without any thought, is Advisory Committee and we were told that going to change •our plans, it is going to alter being second Saturday—may be the Members the plans. And all the things, what you have of Parliament may be willing to come—. the done for the last four years holding up the plan, staff of the Rajya Sabha Secretariat will be have been changed. The entire economy is inconvenienced. thrown overboard. THE VICE-CHAIRMAN (SHRI M. P. Lastly, 1 would like the Prime Minister to be BHARGAVA) : That difficulty is there. more practical. There are quite a number of SHRI BHUPESH GUPTA : I think sick mills. Even this morning tomorrow we can sit as long as we like.

3011 Resolution seeking [7 AUG. 1969] Banking Companies 3012 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 THE VICE-CHAIRMAN (SHRI M.P. SHRI BHUPESH GUPTA : Let us know it. BHARGAVA) : Mr. Bhupesh Gupta, the Division. Mr. Vice-Chairman, we shall sit as difficulty is that there are over ioo amend- Jong as is necessary today to complete the ments. They are bound to take up a lot of time First Reading. and unless we finish the First Reading today, it will not be possible. THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : Mr. Somasundaram. SHRI BHUPESH GUPTA : We are ready to sit. I am ready to sit up to 12 of the clock SHRI G. RAMACHANDRAN (Nominated) this night. : I want to say that you should not throw a non-party man into the waste paper basket THE VICE-CHAIRMAN (SHRI M.P. because he belongs to no party. BHARGAVA) : If that is acceptable to the House. . . THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : The difficulty is like that. I SOME HON. MEMBERS : No. have got names of eight Independents before me from yesterday. You sent me a chit. I SHRI PITAMBER DAS : Shri Bhupesh indicated that I might be able to accommodate Gupta has no attraction at home. you after 5 .30 or so. But the debate has gone beyond that. Now, I cannot go over the list. SHRI BHUPESH GUPTA : On a personal So, you should appreciate the difficulty of the explanation, my friend says that Bhupesh Chair also. Gupta has no attraction at home. I am speaking for those people who are away from SHRI ARJUN ARORA : The list has been home, they will at least be relieved of the deliberately departed from and betrayed today. worry. My name was there.

THE VICE-CHAIRMAN (SHRI M.P. THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : If it is acceptable to the BHARGAVA) : Not to my knowledge. Your House, I will call Mr. G.P. Somasunda-ram name is still there. and Mr. Khaja Mohideen, and then call upon Mr. Pitamber Das to reply to the Resolution. SHRI ARJUN ARORA : I should have Is that. . . come immediately after Dr. Bhai Maha-vir. But then somebody else walked in. SEVERAL HON. MEMBERS : No, no. THE VICE-CHAIRMAN (SHRI M.P. THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : You are the first on the BHARGAVA) : I am entirely in the hands of Congress list. That is the position. the House. So long as they want to sit, I am prepared to.. . SHRI ARJUN ARORA : I should have been called, according to the list, immediately after Dr. Bhai Mahavir. THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : I do not know what has happened. SHRI ARJUN ARORA : But I was not called. THE VICE-CHAIRMAN (SHRI M.P BHARGAVA) : I am not taking the guidance THE VICE-CHAIRMAN (SHRI M.P. of the House. BHARGAVA) : So, is it the intention of the House that we sit up to 1 o of the clock ? SOME HON. MEMBERS : Yes, yes.

SHRI BHUPESH GUPTA : Division. THE VICE-CHAIRMAN (SHRI M.P. BHARGAVA) : Division on what? 3013 Resolution seeking [RAJYASABHA] Banking Companies 3014 disapproval of Banking {Acquisition and Transfer of Cnmpanies Ordinance, 1969 Undertakings) Bill, 1969

Sir, it is a fact that we have more p o verty in this country than riches. If w are to usher the socialistic pattern of so" ciety, there should be a proper distri bution. As I said earlier, as there is only-poverty in this country, let it be distri- buted among all. In other words, let the rich who have been tasting the riches for a long time feel a bit of poverty also. The Government THE VICE-CHAIRMAN (SHRI M.P. can achieve the socialistic pattern by bringing BHARGAVA) : Now let us proceed. Mr. measures like ceiling on urban property, Somasundaram. nationalisation of general insurance, foreign banks as well as Indian banks with a share capital of less than Rs. 50 crores and big industrial houses. Foreign banks as well as non-nationalised Indian banks should not be spared because much business will flow into SHRI G. P. SOMASUNDARAM (Tamil these banks, with the result that nationalisation Nadu) : Mr. Vice-Chairman, Sir, I am very of banks will not be as profitable as that is grateful to you for giving me an opportunity today. to express my view on the question of the nationalisation of banks. At the outset I must There is already much criticism about the congratulate the Prime Minister not only for State undertakings. Therefore, the utmost taking a bold step such as this, but also for caution is necessary in the running of these the way in which she did it. She had to face institutions. The banks should be run on opposition— »he is still facing it—-not only commercial lines and politics should not come from Members of her own party but also in. Representation should be given to the State from the right wing who are influential Governments in the Board of Management so persons but without mass supprot. Much has that the interests of the States will be kept in been said for and against this nationalisation. view while policy decisions are taken. I do not want to elaborate the advantages of this measure. The very fact that this measure If our economy is to proceed on a sound has not resulted in any mass movement footing village banks should be opened. This against it, indicates clearly that it is on will help the villagers as well as agriculturists. sound basis. We all know that the Gold Much attention must be given to agriculture in Control Act and the Compulsory Deposit the years to come and, therefore, a portion of Scheme brought forward by the former the activities of the nationalised banks should Finance Minister were opposed by the be set apart for the development of agriculture. people at large with the result that the The nationalised banks should be asked to pay Government was forced to water down the attention to the village and cottage industries measures. In the case of nationalisation of particularly the handloom industry. As far as banks it has the support of all people except possible assistance should be given by banks to the money bags. So let the Prime Minister new-comers in the various fields. In fact I need not water down this measure and also would suggest that there should be a ceiling for need not hesitate to bring forth other providing assistance to an individual. progressive measures. Please permit me to congratulate again the Sir, everybody knew that this is not the Prime Minister. It is a matter of great pleasure panacea for all ills. This is a right step in the to me because the step is a right one. right direction. The other progressive Secondly, the desire of my late revered leader, measures as promised by the Prime Minister Shri Annadurai, has been fulfilled to a certain will have to follow forthwith. We have extent. With these words I conclude my waited for a long period of twenty years. speech. Yet we have not given the basic necessities of food, clothing and shelter to our brethren. THE VICE-CHAIRMAN (SHRI M.P. How long can they wait? BHARGAVA) : I can only appeal to the I would beg the Prime Minister not to Members to exercise a little self-restraint Mr. promise these basic necessities to the future Arjun Arora. generations but to make them available to the present generation itself. After all, when we are living in the days of Apollo- II no task is insurmountable. 3015 Resolution seeking [7 AUG. 1969] Banking Companies 3016 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 SHRI ARJUN ARORA : I am prepared not PANDIT S. S. N. TANKHA (Uttar to speak. Pradesh) : He said about that also.

THE VICE-CHAIRMAN (SHRI M.P. SHRI ARJUN ARORA : The advances to BHARGAVA) : You have your chance. the directors or their families or their relations are enormous. When the social control came SHRI ARJUN ARORA : I have already and it was stipulated that one cannot have been deprived of my opportunity. So if you finances from the bank of which one is a think I should not speak I am prepared to co- director, the bankers, the directors, the tycoons, opeiate with you. the business magnates and the industrialists adopted a policy of "You scratch my back and THE VICE-CHAIRMAN (SHRI M.P. I will scratch yours". It was an arrangement BHARGAVA) : I do not think that you should between them that A advanced money to B not speak when I have called your name. from the bank of which A was a director and B advanced money to A from the bank of which SHRI ARJUN ARORA : I will speak for B was a director. It was quid pro quo and only ten minutes. Sir, I rise to support the Bill social control miserably failed and turned out though I feel the Bill could have been better. to be a hoax. This is about malpractices. But The nationalisation of 14 major banks in the even honest bankers and honest businessmen, country is a rather partial fulfilment of one of of whom unfortunately there are very few in our dreams. For example, I remember, that in the country to-day, are after highest yields and 1963 Mr. K. V. Raghunatha Reddy, who was best returns. They are not after any social then speaking on the otherside, moved a Non- purpose. They are not after the development of official Resolution calling for nationalisation the country. They chose investments on the of banks and the House overwhelmingly basis of what the returns were going to be. So supported that non-official resolution which the result was that even the honest bankers after three days' debate was talked out. Many advanced money to the most profitable in the country from many platforms have enterprises, and the most necessary, the most demanded the nationalisation of banks and the essential sectors, from the social point of view, Prime Minister is only modest when she says agriculture, small-scale industries, the new that 95 per cent, of the people support this enterpreneurs and the deserving, suffered. measure. As a matter of fact, 99.9 recurring per cent, of the people support this measure. Mr. Vice-Chairman, the banks have become the main providers of the decisive part of credit SHRI G. RAMACHANDRAN : There is no and money used by the community. The banks one to challenge you on that point. to-day are the most powerful, the most significant providers of money needed by the SHRI ARJUN ARORA : It is their community. So this power, this big power of misfortune, not mine. These 14 major banks determining the fate of the economic life of a which have been nationalised were controlled country cannot be left, and should not be left, by a few individuals. Less than 1 per cent, of in the hands of a few families. A study by the the Share-holders of these companies had a Company Law Administration has revealed controlling interest in them. So at the most 14 that the 20 major banks of the country have and their hangers on are affected. The rest of only 188 directors. And these 20 major banks the people are solidly with the Prime Minister command practically the whole of the deposits. and the Government in support of this So, are we prepared in this country to leave measure. such enormous economic power in the hands of 188 people? Banks are an essential part of our Sir, banks in the private sector are grea-ded economy and cannot be left in private hands. as mere businesses. There are two types of Of course, mere nationalisation is not the businessmen. There are some businessmen panacea. The Prime Minister is clear about it. who indulge in malpractices and any scrutiny A number of speakers from this side of the of the working of banks will reveal that the House have been clear about it. So it was banks abound in malpractices. Dr. Mahavir, for wrong of Dr. Mahavir to say that example, quoted the advances of the State nationalisation will not create wonders. We do Bank of India. not claim that mere nationalisation will create wonders. The But what is the position about the other banks, these commercial banks?

3017 Resolution seeking [RAJYASABHA] Banking Companies 3018 disapproval of Banking [Acquisit ion and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969

[Shri Arjun Arora] danger of State Then, Mr. Vice-Chairman, transference of Capitalism is, of course, looming large over the ownership of banks into public hand* will not horizon of India. We have to do some thinking have any consequences for the society if the on the manner in which this big act of banks continue to be operated as they have nationalisation is to be implemented. We have been operated so far I have all along been to see that nationalisation of banks is followed enthusiastic about nationalisation of banks. I by the revolutionising of the working of the was happy when the Prime Minister and the banks. I hope nobody will get frightened by the Cabinet took the decision to nationalise banks word "revolutionising". Bringing in efficiency on July 19. But at 9-30 that evening, the Prime Minister made a speech on the network of All itself is a revolutionary step. But in the context India Radio. Once sentence in that broadcast of nationalised banks, mere efficiency will not alarmed me and I must share that alarm with do. Mere prompt service will not do. Mere you, Mr. Vice-Chairman, and with the House. quick responses to a few will not do. The She said : "Nationalisation ol banks does not transference of the banking system to public mean the begi-ning of a new era of ownership and control should mean the nationalisation". That is an illogical sentence conversion of banks into an apparatus for in the whole of her very good broadcast. If we supplying producers with money capital. When want to make the nationalisation of banks a I say producers, I do not only mean the Tatas, success, the whole economic structure will Birlas, Mafatlas and their tribe, but all have to be transformed. We cannot merely talk producers in the country. This conversion of socialism and nationalise one particular should also mean providing of money to the thing after fifteen years and say that socialism consumers at the right price, at the right is very near. The whole economic structure moment and in the right quantities. If, for will have to be transformed and a new era of example, in this country the standard of living nationalisation will have to be brought in. I of the people has to be raised, enormous want the Prime Minister to apply her mind to schemes of hire-purchase will have to be this again and take steps not only to evolved by the nationalised banks. If the revolutionise the working banks, but also to nationalised banks evolve and adopt enormous revolutionise the whole economy. schemes of hire-purchase in order to raise the standard of living of the people, to enable them 7 P.M. to buy articles of consumption and articles which really mean much in civilised existence As far as the banks are concerned, the it will lead to further setting up of consumer insistence that the structure of these fourteen industries and greater employment . We cannot banks should not be disturbed, that the fight, Mr. Hathi cannot fight, unemployment acquisition of shareholding by the Go- merely by setting up more employment vernment should mean the least disturbance, exchanges. is a wrong approach. The banks must be THE MINISTER OF LABOUR AND converted into an instrument of the people, for REHABILITATION (SHRI JAISUKH-LAL the betterment of the people, for the HATHI) : Certainly, I agree. improvement of their living standards, and a national banking policy must be evolved. SHRI ARJUN ARORA : We must establish [Timt bell rings.] One word about more and more industries, particularly more compensation and I will conclude in order to and more consumer goods industries. cooperate with you. SHRI JAISUKHLAL HATHI : I agree. SHRI ARJUN ARORA : And those There are already demands for come industries can be established and run profitably pensation based on inflated rates. The only if people have purchasing power. The Government should be very clear on this that it nationalised banks should not only provide will not succumb to any pressure in support of money to producers but they should provide the demand for compensation on inflated rates. money to consumers also. And if they provide (Interruption) The shareholders of the banks money to consumers and back hire-purchase which have been nationalised, the big families schemes, for example, it will lead to greater of the managements of these fourteen banks employment not only for the engineers but also who are vitally concerned in the shareholdings, for the artisans. have put forward their claims. The divi-| dends in banking have been enormous and 3019 Resolution seeking [7 AUG. 1969] Banking Companies 3020 disapprova'. of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bit , 1969 the share capital has more than repaid itself a brought under the scope of this Bill. My fear, hundred times. So, there should be no however, is that this omission is really a hesitation in the Government declaring that loophole which is bound to be taken advantage only the face value of the shares will be taken of by the vested interests who will connive into consideration and full amount of the face means to neutralise the effect of the Bill. It is a value will be paid only where the shareholding well-known matter that black money is playing is fully paid up. a havoc in the economy in our country and now means will be sought to swell the deposits in THE VICE-CHAIRMAN (SHRI M.P. the unnationalised banks to indulge in the same BHARGAVA) : You have already taken process. I have not observed among the fifteen minutes. provisions of the Bill any such measure that will guard against such an eventuality. I would SHRI ARJUN ARORA : I have a lot to say propose that there should be a measure which in this and I have to move a few amendments. would automatically bring into the purview of I hope you will please give me time tomorrow nationalisation if the assets reach a particular when I move my amendments and put my mark, say, Rs. 50 crores. If it is the intention of case. Thank you. the Government to control this vital instrument of power and shift it from the domain of vested SHRI S. A. KHAJA MOHIDEEN (Tamil interests and monopolists, the logical method Nadu) : Sir, I rise to support the Banking should necessarily be to make it a foolproof Company's (Acquisition and Transfer of Bill with simultaneous provisions to block any Undertakings) Bill, 1969. In so doing I am vicious endeavour on the part of the vested obsessed with a disillusionment. The scope of interests. I feel, therefore, that instepd of this the Bill as I read it, appears to be so restricted half measure which to my mind is just that it is not known if the noble objective of tinkering, the nationalisation should have been diversification of the wealth of the country to complete without any kind of discrimination the common man and the masses will be whatsoever. There is no rational ground to realised as contemplated. I consider it support the view that a partial set-up should be necessary to emphasise that until and unless a allowed to continue in the old structure and radical view is taken, until and un-unless the also foreign banks be given the licence to act as economic structure which is sought to be re- they please. The entire energy of the Govern- shaped is constructed from the base, it will be ment will be wasted and spent in detecting the hard to realise the aims and objectives. I do not evasiveness that would be brought about by wish that this banking problem should be these loopholes in the Bill. handled in a half-hearted manner but the issue should be taken in its totality. The announce- We should be honest to feel that what we ment of the Bill, preceded by the Ordinance, of are doing it for tbe common man. This course, has created a psychological impact on nationalisation means that it is a fundamental tbe masses, and an emotional feeling has been transfer of monetary power from a band of apparent everywhere in the mind of the tycoons to the society, to the masses, and seek common man, but this has to be utilised to its proper methods of diversification so as to logical conclusion. A close study reveals that a confer the monetary power over the large modest attempt is made just to tickle this masses so that the nation as such will be given crucial issue to obtain the mighty objective. an opportunity to participate in the economic development. All along a few have controlled It is observed that only fourteen important the banking industry ard thus became powerful banks have been brought under and strong men in the society. Nothing could nationalisation, thus bringing into effect 72 per move except by their permission and wish. cent of the total deposits under Governmental The direct consequence was that the country is control, and leaving 44 banks to continue with now faced with conditions of scarcity, the rest of deposits to function under a system unemployment and tremendous uniest in every which has not been socially just nor has been sector. It is not that this aspect had not been in the interest of the economy of the country. foreseen by our leaders. As a matter of fact the Further, other financial institutions, cor- question of nationalisation was actually in porations, s*weir h'i"di systems more par- view from the time freedom was won. One of ticularly, that carry on economic business in the first acts after the advent of lakhs and crores of rupees, have not been 8—24 R. S./69 3021 Resolution seeking [RAJYASABHA] Banking Companies 3022 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bit, 1969 [Shri S. A. Khaja Mohideen] freedom was country admuvstered the whole system. The to tune the activities of the Reserve Bank to real beneficiaries were the big indus-, trialists control the entire banking industry for the and enormous wealth accumulated i and purpose of utilising it to the benefit of the concentrated in the hands of a few. The large masses. It was in pursuance of this very essential aspect of this country is decidedly objective that the Imperial Bank of India was agriculture ard small scale industries that touch converted into the State Bank. The the mass in the society. These commercial development of t(lis Bank, its services, banks have been so constituted and the particularly in the rural parts of the country, Director nistrators functioned in such an have shown how useful and advantageous it environment that only major institutions took could be to the common man. This has been advantage and earned huge profits. It is to be possible by the wide ramifications of the imagined that while millions after millions State Bank in the country, though it functions were accumulating in the accounts of a few within a restricted scope. Another aspect to industrialists the common man in the country be borne in mind is the persistent demand for struggled and awaited wheat from count) ies nationalisation of banks from the moment we thousands of miles away. It should not be gained freedom. There has been no many forgotten that we possess the man power, non-official resolutions on the subject, but at natural resources and genius second to none every time the powers who controlled the yet, we are enshrined in a system that we machinety had nothing but empty promises cannot move towards rightful construction of merely to placate the banking tycoons who society. After 20 years, we are crying piled millions gftet millions in their accounts. pathetically over food shortage, unemployment We are indeed thankful that it has now and a possible deluge. dawned upon the Prime Minister herself to realise that the time has come to face the I may also refer to the planning and the situation and to save the country from further recommendations of the Planning Committee. chaos and ruin. What surprises me is that this The planning has been brought to a halt by modest attempt as indicated in this Bill, the vested interest controlling the monetary which of course does not take over the entire power for the reason that the plan seeks to moueiary power of the country, has created diversify the deposits against concentration of such furore and every attempt is made to wealth in a few hands. Those who control the block the measure. The so-called national monetary power see to it that machine of press, the instrument of monopolists in the planning does not move. It has become country and old reactionary elements have inevitable for this reason that 80 per cent, of raised such a hue and cry that a deluge awaits the banking is confined to five giant us as a result of the nationalisation. industries in the country, and any planning From the publicity of this problem given in that benefits the common man, will be the press, this clearly seen that deliberate inimical to the interest of these great attempts are being sought to hide the essential industrialists. The so-called social control beneficial features of nationalisation. We all initiated by the ex-Finance Minister Shri agreed that the system of our administration Morarji Desai, has proved a failure and will should be democratic socialism, which means never succeed for one reason that that inspite that the economic power is so diversified that of the fact that a partial control was sought to an opportunity is created for the vast masses be imposed on the administration of the to participate in the economy of the country. banks, but the Directors and Chairman of the For example, the small scale industries and banks being the same saw to it that no shift various projects sought to be initiated by was mide in regard to the diversification of intelligent and patriotic individuals obtain the finance in the manner desired. requisite aid from the State. This is possible only if the monetary control is in the hands who implicitly believe in democratic In conclusion, I once more declare, that socialism and not in the hands of those few while supporting the Bill I maintain most individuals who are merely interested to emphatically that the scope o<" the Bill enrich themselves. should be expanded to include all banks particularly the foreign banks and the public Areview of the banking industry for the should be educated how the enormous were last 20 years clearly discloses the fact that a the gains earned by a few individuals to the few industrialists and capitalists of the detriment of the masses. I would however like to sound a note of caution. 3023 Resolution seeking [7 AUG. 1969] Banking Companies 3024 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 In our zeal to nationalise the banks and save during its constitution. So I am making the the masses, no undue restriction should be suggestion that this may kindly be considered placed on the normal functioning of the banks, while the Board is being constituted. thus throwing the normal economic activity to chaos. The normal credit needs of the Regarding the scheme, clause 23 makes it industries which employ thousands of people abundantly clear that it has to be formulated should be met in the same way as before. The recent strike of the State Bank should be a and placed before the Parliament. When such a scheme is placed before the Parliament, lesson to all public-owned institutions. Strike there is ample scope for everyone to suggest in a nationalised banking institution should be banned and any dispute of the employees ways and means as to how the banking system should work. should be settled only by conciliatory means. The weapon of strike should certainly be removed from the employees so that the Now I go to the other factors. So much public gains more of confidence in the criticism has been made by some Members of Government-owned banking system. the Opposition that the Ordinance and the Bill are Deing rushed through. It is not so. It is by Thank you, Sir. a unanimous resolution of the party in power that the Ordinance and the Bill are being SHRI B. T. KEMPARAJ (Mysore) : Mr. brought here. When that is the case, there need Vice-Chairman, I stand to support the Banking not be any fear in the mir.ds of the Members Companies (Acquisition and Transfer of of the Opposition that there is any conflict or Undertakings) Bill, 1969 and I refer to clause difference of opinion in the country. 13(3) where it is contemplated to constitute a Board of Directors. It reads as follows : Our Communist Party leader Mr. Bhu-pesh Gupta, whiie heartily supporting the Bill, he "Every Board ol Directors of a cor- tried to beat about the bush. Without any responding new bank shall include re- reason at all he tried to make out a case of presentatives of the following, namely, the difference of opinion. I do not know what depositors of such bank, employees thereof, information they get from which source. farmers, workers and artisans, to be elected Therefore, whenever we make any substantive or nominated in such manner as may be criticism, there must be sufficient reasoning specified in the scheme made under sub- for that. Without making out a specific case, to section (1)." go on creating and also finding facts which are not existing, which are not relevant to the In this connection I wish to state that the context will be of no use. Of course criticisms condition of the down-trodden and the de- are allowed, but it should not be a criticism, pressed classes should be taken into consi- just to make the Press or the public feel that deration. Therefore it is very essential that in something is going on. the formation of the Board of Directors one Scheduled Caste or a Scheduled Tribe person has to be nominated. In the Statement of This nationalisation of banking, not only Objects and Reasons it is clearly stated : this one, so many schemes on other policies, which have been constantly referred to for the "The banking system touches the lives of last several years, have to be taken into millions and has to be inspired by a larger consideration and they have to be given effect social purchase and has to subserve national to. This being the Gandhi Centenary Year, as a priorities and objectives, such as rapid first step this nationalisation of banking has growth in agriculture, small industries and been taken up. Some hon. Member said that exports, raising of employment levels, nationalisation is not socialism and this is also encouragement of new enterpreneurs and not; it is minus socialism. But I want to know the development of backward areas." what exactly the socialism means. Even Therefore, when the Bill is contemplated for Mahatmaji has advocated the theory of the improvement of the economic condition of socialism and he has also stated the difference between communism and socialism. The the down-trodden, weaker sections, to socialistic approach is entirely different from guarantee the measures to be taken there must communism. I quote Mahatmaji. be a guarantee by way of nomination on the Board of Directors 9—24 R. S./69 3025 Resolution seeking [RAJYA SABHA] Banking Companies 3026 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) BUI, 1969

[Shri B. T. Kemparaj] "Major decisions regarding production, "Socialism and Communism of the West distribution, consumption and investment— are based on certain conceptions which are and in fact all significant socioeconomic fundamentally different from ours. One relationships—must be made by agencies such conception is their belief in essential informed by social purpose. selfishness of human nature. I do not subscribe to it for I kno«v that the essential Therefore, the attainment of objectives of difference between man and the brute is equality and social justice requires more that the former can respond to the call of comprehensive planning and greater the spirit in him, can rise superior to the command of Government over resources than passions that he owns in common with the has been attempted so far. Preventing brute and, therefore, superior to selfishness increase in concentration of economic power and violence, which belong to the brute is a part of this problem. The impending nature and not to the immortal spirit of monopolies legislation, Government's powers man. This is the fundamental conception of of licensing and allocation judiciously used Hinduism, which has years of penance and and purposeful policies of public financial austerity at the back of discover/ of this institutions and the social control of banking, truth." are expected to play a significant role in this regard." Therefore, this philosophy makes out that our socialism, as it is expounded and advocated Therefore, Mr. Vice-Chairman, what some of by Mahatmaji, is entirely different from the the Members of the Opposition have stated— point of view that the communists look at. that this Bill is being rushed through, etc.—will Then coming to the other point I quote this be having no ground or having no strength. statement of Mahatmaji. Therefore, I fully support this Bill and I request that all the Members of this august House "My notion of democracy is that under it support the Bill. the weakest should have the same opportunity as the strongest. That can never happen except through non-violence. No country in the world today shows any but patronizing regard for the weak ..." Therefore I say that it is the Father of the Nation who has said and left us to follow these principles.

Again, regarding public institutions and banks Mahatmaji has said : "The public should be the bank for all public institutions, which should not last a day longer than the public wish. Any institution run with the interest of accumulated capital ceases to be amenable to public opinion and becomes autocratic and self-righteous." Therefore it is not a new thing that is expounded or found out. There is this feeling and also there is this policy which Mahatmaji intended to come into force. Unless these principles Pare brought into force and brought into action there is no goal for socialism. So the weaker sections cannot come up. Again, in the Fourth Plan also, the fra- mers of the Fourth Five-Year Plan (Draft) have said :

3027 Resolution seeking [7 AUG. 1969] Banking Companies 3028 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969

3029 Resolution seeking [RAJYA SABHA] Banking Companies 3030 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969

3031 Resolution seeking [7 AUG. 1969] Banking Companies 3022 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Uundertakings) Bill, 1969 say I did get this feeling myself also. But I do not agree with Mr. Pande when he says that thete is no necessity of passing this Bill before the 1 ith. If they had not brought the Ordinance two things would have happened. Some sort of thinking has been set afoot rightly or wrongly that this is being rushed through for political reasons with which one may or may not agree and 1 disagree but certainly I feel that seldom has such a great measure of such great consequences has been drafted piloted and passed through the other House and this House with so much of hurry. I say this with an absolute sense of res- ponsibility. SHRI AWADHESHWAR PRASAD SINHA (Bihar) : There was no hury in Lok SHRIMATI YASHODA REDDY : Mr. Sabha. Vice-Chairman, Sir, 1 thank you very much for (Interruptions) giving me this chance almost as the last speaker. I must at the very outset say that I SHRIMATI YASHODA REDDY : I say it welcome this Bill for more than three reasons, with responsibility and great understanding, flistly because my party has passed it, secondly because I know till the last day . . . because my leader has said correctly that 90 AN HON. MEMBER : You are confusing per cent, of the people are behind her and the issues. thirdly because I see overwhelming support on both sides of this House. SHRIMATI YASHODA REDDY : I am not confusing it. I am only saying that we should SHRI Z. A. AHMAD (Uttar Pradesh) : Not not brush aside when some body brings on its merits? forward a resolution and there was enough room. Let us accept it though we may not SHRIMATI YASHODA REDDY: Also on agree with them and say that it was absolutely merits certainly. political. Nor do we say that everything was SHRIMATI LALITHA (RAJA- wrong or every thirg was right. But people GOPALAN) : You only welcome it? could think that way and there was some scope for it. Let us be honest about it. That is all that (Interruptions) I want to say. SHRIMATI YASHODA REDDY : I am I entirely agree with my hon. friends that it welcoming it and I support it. One •word I has been a very bold and historic step. I also would like to say about the Resolution of Mr. agree with the hon. Law Minister when he Pitamber Das and the arguments he advanced. spoke yesterday here and especially with one Sir, I must confess it -will not be fair to sentence of his speech I am satisfied. He said : myself, to my party or to my leader if I am not "I have got almost the near unanimous support honest enough to say what I really did feel the for this laudable object." I entirely agree with day the Ordinance was issued. It did make me him and there are no two opinions on that. feel why when Parliament was meeting just in Even the Jan Sangh and the Swatantra Party 36 hours this should have been done. Certainly would agree as far as the laudable object is it made me feel that way. I never doubt the concerned, as the Law Minister has stated. He intentions or the motive of the Government also said that this laudable object, this great behind the issue of the Ordinance but it promise which we are giving to the people of certainly did strike me as something unusual India, to the poorer sections, especially in the that just before Parliament this thing should poverty-stricken areas of the country, can be have been done. And certainly with the appreciated, understood and even compli- overwhelming support this measure has got not mented only if it is implimented correctly and only within the party but in Parliament also I the results achieved. If I have to say one or felt that we could have waited till the two words of caution, Parliament met. Possibly—I am not questioning—there may be very valid reasons but honestly I must 3033 Resolution seeking [RAJYA SABHA] Banking Companies 3034 disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shrimati Yeshoda Reddy] one or two them should not only have banking experience, words of what I consider to be suggestions for but also have an understanding of the political the constructive implementation or correct issue, which is socialism for the good of implementation, I hope my hon. friends will everybody, without doing any harm to the not misunderstand me. present economy of the country . . . SHRI SHEEL BHADRA YAJEE : The SHRI B. K. P. SINHA : Suggest my name. political and economic issues are interlinked. SHRIMATI YASHODA REDDY : As SHRIMATI YASHODA REDDY : Mr. B. he said very correctly, in this whole issue K. P. Sinha's name is there and if the unfortunately the political and economic Government feel so they are most welcome to aspects are interlinked. Politics and economics do it. I plead I do not have the t much of are interlinked. Unless you have a political banking or economic experience. I shall say ideology, you cannot bring about economic one word about the democratic gesture of progress. But unfortunately I must concur with giving representation to depositors, farmers, most of the critics and we should not deny that workers and artisans on the advisory boards. I we have giver, them scope. Our Party has given hope the House will not mistake me. I want to the scope of making people feel that we have know why we should not give representation to brought politics into this very good economics the big industry people also, i.e., business and measure. It has been propagated by my Party industry. Not because I say that they should get for so many years and recently it was passed in the benefit, but I feel that they would help you the Bangalore session almost unanimously . with their experiene of private banking. (Time bell). If you want me not to go into the (Interruptions) I was told just now by a person merits of the Bill, I will bow down to you and who is a director in the bank that after social sit down. control we are having one or two representatives of big business. Some people The VICE-CHAIRMAN (SHRI D- from big industry should be there. They should THENGARI) : You may try to expedite- not be in a overwhelming majority. Just one or SHRIMATI YASHODA REDDY : I would two representatives to put forward their point of like to sreak, now that the time at my disposal view. I shall give you two reasons. If I am is limited, like the much-quoted words of wrong I do not want it. I do not want to be Madam Prime Minister »«.,'stray thoughts'. It misunderstood. It would help you in the has been much misused. May I also give my transition period of changing the private suggestion at least as stray suggestions, in the banking into nationalised banking. form of one or two words ? And if I am to explain them, I will, otherwise not. As to how SHRI JOACHIM ALVA : We do not want this will work in practice will depend firstly— them. They are suckers. may I tell the Government—on the men who (Interruptions) are going to man them. This has been said by many people. Certainly our public sector has SHRIMATI YASHODA REDDY I entirely beem criticised. I must also tell one of our agree that they should not be in power, but friends who says that the public sector projects they should be represented. have not given us return?!, that we must SHRI JOACHIM ALVA: We do not want realise that they are not quick—return projects. them, not one of them. They are more or less long-term projects. They are in the take-off stage and they will take a SHRIMATI YASHODA REDDY : I must long time to give us returns. But certainly tell the Government one thing. Without giving some of our difficulties and some of the up their economic policies and without hurting criticisms have been due to the pre-sonnel. the economic situation of India, the The bane has been the wrong personnel. They Government should make the Reserve Bank have put in there people who know nothing give financial guidelines in consultation with about public projects or industries. That has the Planning Commission and the finance been the bane. They have put in the wrong Ministry. Our whole banking and economy personnel. May I tell the Government that hereafter must primarily meet the Five Year people whom you are going to put in charge of Plans and the objectives and guidelines should be made in such a way that the banks are given operational targets. After all

3035 Resolution seeking [7 AUG. 1969] Banking Companies 3036 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 whatever be the credit policy that the institutions are going to formulate, it must ultimately meet the social and development plans and not only just mere economic needs. as much as the State Bank. So, they found one difficulty. First of all in giving money to these My second suggestion is this and I am people, because they were so poor, there was glad that the Prime Minister has just now some hesitancy. After all the banks have got made the assurance that the competitiveness the feeling that the loans should be secure. of the present banks would be maintained, both for getting more deposits and to give better service to the nation. I am glad that The second thing I would like to insist is the Prime Minister just now made a this. The money these people got into the rural reference to it and I hope they will sector was not for development work. Now maintain it. the Government should see when it opens branches in the various rural sectors—which I Another point is that it should not be highly hope it will do; they have not put in in this centralised. It should be decentralised. There bill, but they said they are going to do it— must be a little more decentralisation in when they give money in the rural sector, they the working of these banks. If the banks must also have some vision to see that the in various places for giving credit to the money which is given to the people is used for rural sector, have to take permission from developmental purposes. Because I know it, New Delhi, the farmer, the small artisan, and coming from my village I have seen it, etc. will not get credit. If it is tide up but you must only pity them. You see their with too much red-tapism, it will not help social condition. They take money on loan, them. Only one word more. I am glad they take money from someone to wipe out that the Prime Minister has said in the previous loan. They take it saying they regard to credit-worthiness, that it is rot want it for digging a well 01 some such thing. so much the credit-worthiness of the human That is the only way they can get the money. I being, but it should be based on the do not say they are dishonest. They do it, they nature of the work. Here is a good example. cannot help it. So what I want to say is you I do not have time to elaborate it, but the must see to it that it is used for development Sonys of Japan two people, have come up like purpose. Othre-wise you will have inflation. that. They have become really the biggest Secondly, as somebody suggested, if we could company in the world today. The Prime have some security measure like a crop Minister put it very neatly by saying that insurance or small risks insurance, they will credit-worthiness should shift from person be in a position to pay back the loan. to purpose. That is a very good thing. But one word I would like to add to it, if only by way of caution. Ultimately we know that I honestly welcome this Bill and I wish the banking and banking institutions are based Government all success. But let them not be not only on profit and loss but also they complacent that just passing the Bill will do control the economy. I was told that everything. Unless they implement it and see these commercial banks never gave that there is no economic failure, they will have encouragement to the rural sector. Even to take the blame, the whole Party will have to the Reserve Bank and the State Bank in take the blame. I ask them to look to it and see all fairness I must say, did more in this that the working of the Bill is made on correct field than any other. lines and the implementation is there so that the laudable object for which they have brought this measure is made a success. The Reserve Bank also, when it gave its Tomorrow let not the nation say that here was credit through the co-operatives to the rural somebody who took a bold and hasty action people, found one difficulty. which was not a wise one. Let not that be said. Let us all co-operate. Let us make it a success. I hope that Government will | get all assurance and that it will be a 1 great success.

3037 Resolution seeking [RAJYASABHA] Banking Companies 3038 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 SHRI G. RAMAGHANDRAN : Mr. have to go", and then Mr. Sapiu rose to his feet Vice-Chairman, I must say that this debate and asked, "Does not that mean, Gandhiji, seems to have gripped the House as few expropriation?" And Gandhiji's answer came debates I have seen in the years I have been like a flash, "That word does not frighten me". here. People are sticking to their seats like Later on there was an occasion when Gandhiji leeches in order to hear the debate and was discussing this matter with the redoubtable participate in the debate. But we are all Andhra leader, called Andhra Kesari, the late taking prefixed postures on this Bill,dictated Mr. Prakasam. They were discussing the future even before the debate has started. You see of the textile mills. Now Prakasamji was a firm postures. The Congress is now com- fanatic for khadi. He wanted khadi to become mitted to the Bill and I have no doubt it will the national order in economics at that level. be passed. The Swatantra Party is opposing it So, the question of compensation to the Mills tooth and nail. The Communist is jubilant was mooted. Then do you know what Gandhiji that this thing is coming through. So, we are said? He jerked up and said, "Compensation taking well-defined postures already. Thanks from whom to whom? Compensation for those to the genious of the Prime Minister and the who have enjoyed these privileges for a sagacity of the Law Minister, people are hundred years ? And from where will wondering and sometimes asking why there compensation come ? It will again come from should have been an Ordinance. I think it was the people ?" He brushed aside the idea of extremely good that there was this Ordina- compensation. Gandhiji was the most radical nce. If the Ordinance had not come, we economic planner of this country and everytime would not be sitting here finishing this job we are in a crisis we turn back to him. Today today and tomorrow. There can be many also when the Prime Minister quoted those things said about it, I am not going into it. It challenging words from Gandhiji, I said, "Yes. is good there was an Ordinance. It is good Gandhiji still lives in our minds and a that we have this Bill and in congratulating particularly when we are in trouble and facing the Prime Minister who took the initiative opposition." If all these are Gandhian ideas, and gave us the inspiration I want to which normally you expect the Congress to put congratulate the able Law Minister also. He into practice, and which it has not often, why has brought in a first class Bill. It a can be then does Rajaji object to this ? Now I am told amended, it can be changed like any other that even Acharya Kripalani and Mrs.Kripalani Bill. But let him share with the Prime are not very happy about this. I do not know, Minister the great credit for this Bill. but I can say about Rajaji, because I had been very close to him and I still retain, in spite of all my political differences with him, the deepest The Prime Minister ended her speech by a reverence for the man, that he once put people splendid and apt quotation from Gandhiji. who objected to Hindi in prison; he will today She read out a few very radical and brilliant put people who support Hindi in prison. And he sentences from Gandhiji and paused has a delightful way of turning round and dramatically and said "This is not a quotation asking you, "Has not a man a right to change from a Communist but but this is a quotation his opinion ?" Let us grant him the right to from Mahatma Gandhi." 1 can assure you and change his opinion. Let us hope he goes on you will know it yourself that there are many changing again. We do not quarrel with such quotations that can come from Gandhiji. him. In fact we seem to have systematically evaded the revolutionary economic con- 8 P. M. concepts of Gandhiji during these many years we have had independence. We have understood something of Gandhian politics, we have understood something of Gandhian education, we have understood something of Gandhian sociology, but Gandhian economics SHRI G. RAMACHANDRAN : Now, still remains the least understood of all the among those who understood Gajdhian Gandhian things which stand before us today. economics—perhaps a little more than most of As early as the Round Table Conference in us—was Dr. Lohia. He wanted to introduce a 1931 in London Gandhiji said something Trusteeship Bill in Parliament. .Now, this word which we can recall with pride today. He said "Trusteeship" at once reminds me of what at the Conference, "Every single interest Gandhiji told a Maharajah. A Maharajah which is opposed to the interests of the consulted him as masses shall 3039 Resolution seeking [7 AUG. 1969] Banking Companies 3040 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 to what he should do in the new situation that going to bring about a millenuium into our was arising in India. His answer was country this is not a magic wand which I am extremely simple—"Surrender all political waving which will transform our society power to the people and make your palaces overnight. Not at all." She is perfectly and money into a trust for the people." This is conscious that this is one little step only in the the kind of thing that we must keep in mind as right direction. And as I listened to the Prime we look at this very small measure of this Bill Minister, I felt proud of this brave woman, that has come about. At Karachi, years ago, capable of taking big decisions and facing the long before we became independent, we said, consequences. Let us add strength to her we shall nationalise all the key industries. elbow. Let each one of us line up behind her Have we done that even in 1969? Have we na- and let it be said of u! some day that when the nationalised the key industries like steel coal, first sroke of socialism was ushered in this basic chemicals, transport ? country we all lined up beind a great Prime Minister. AN HON. MEMBER : Banking. Thank you. SHRI G. RAMACHANDRAN: Banking also. We have only now started nationalising THE VICE-CHAIRMAN (SHRI D. it. So, the party in power—I am speaking THENGARI) : Shri Pranab Kumar Mokherjee. today as a non-party man—was pledged to all SHRI AWADHESHWAR PRASAD these things down through these years. For the SINHA : How long are we going to sit? first time since independence, there is a little stroke of reality in this bank nationalisation. SHRI SHEEL BHADRA YAJEE : No And it is creating a kind of startled reaction more. sometimes even inside the Congress party. I know that there are members of that party who SHRI CHANDRA SHEKHAR : He is a are not at all happy about this bank na- new Member. He should be allowed to speak. tionalisation. But the current flows strong and the tide is so powerful, that they are swept into SHRI BHUPESH GUPTA : He is a it. This is the history of India at the moment. new Member. THE VICE-CHAIRMAN (SHRI D. Then, there is my friend, Mr. Bhupesh THENGARI) : I seek the cooperation of the Gupta, he made a wonderful speech this House in one respect. Mr. Mukherjee has been morning; and for the first time in his life he called. He will be speaking. That is one thing. kept on congratulating, cognratulating, and Then, there are still some other names, some congratulating the Prime Minister. I think he ten, from the Congress Party and one from the overdid it. Mr. Bhupesh Gupta is, of course, non-Congress. What is the consensus of the very famous for overdoing things. If he had House ? After Shri Mukherjee, shall Shri stopped—and I am saying this with a sense of Pitamber Das speak? admiration—ten minute before he ended, he would have made a masterful oration. But in SHRI AKBAR ALI KHAN : After him the the last ten minutes he went on repeating and Law Minister and then Mr. Pitamber Das. repeating. But I am grateful to him. He has ketp an open mind. In many things he differs THE VICE-CHAIRMAN (SHRI D. THENGARI) : Shall I take it that the from the ruling party. But today he took his consensus of the House is that after Shri bat off which he does not wear, to the Mukherjee, Shri Pitamber Das will speak? Congress Party and said, "I congratulate you." Let us accept his congratulation in the way in HON. MEMBERS : Yes. which it has been given. SHRI PRANAB KUMAR MOKHERJEE Now let us look at this matter for a minute (West Bengal) : Mr. Vice-Chairman Sir, at the or two more. Many Members from the outset I offer my thanks to you and through you Opposition parties kept on saying that this to all the Members of this august House for cannot bring about any magic results. But who giving me an opportunity to speak on this Bill. said this more forcefully on the floor of the Sir, the demand for the nationalisation of the House than the Prime Minister? She said banks is not anything new. For pretty again and again, "This is not

3041 Reso'ution seeking [RAJYASABHA] Banking Companies 3042 disapproval of Banking {Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 [Shri Pranab Kumar Mokherjee] long years, calculation and that according to that almost all of the leftist parties of the country calculation, the compensation would come to and the major trade union organisations, even a a figure of Rs. 150 crores. I shall request the section of the Congressmen, were demanding hon. Minister, through you, to look into the the nationalisation of the banks. And I must matter whether the compensation would be offer my thanks to the factionalism and that high, to the tune of Rs. 150 crores? groupism of the Congress Party, for, at least a good thing came out of it, and that is the The next point that has been provided in nationalisation of the 14 major scheduled the Bill is that the existing Chairmen of the banks. Undoubtedly the Prime Minister different banking institutions would be deserves congralutations, not so much for the" appointed as the custodians of the banks. I merit of the Bill. As we already know, many of think, Sir, the Government is going to the members from the other side of this House nationalise the banks with a new view, with a have spoken about the loopholes of Bill. But new outlook which cannot be properly we must congratulate her for the courage she implemented through these persons who displayed even when surrounded by a galaxy were in charge of these banking institutions of the advocates of the monopolists and the for these long years, and I think if they are profiteers who tried successfully to prevent appointed custodians they would not be able any nationalisations of the banks all these to visualise the governmental policy through long years. these nationalised banks. So I would request It has been pointed out that political the Minister to take this point also into considerations are given predominance over conisderation. economic considerations in the nationalisations of banks. I do not find if there is any harm in Again I offer my thanks and, through you, it. Nowadays when politics affect every aspect Sir, to the Members of the House for of our life, when politics affect every bit of allowing me to speak at the fag end of the our, life I do not think how economic insti- debate. tutions like banks cannot be considered without political motivation. And the most amazing thing is this. The Swa-tantra Party, particularly the leader of the Swatantra Party, Mr. Dahyabhai Patel, talked much of politics on this issue and took up the issue as a political one even. The other day I was going through a speech published in Statesman, Delhi edition. Mr. Rajagopalachari, an esteemed leader of the Swatantra Party, called the monopolists industrialists and big business houses of the country to array behind the Swatantra Party, to come under the Swatantra Party, and he advised the big businessmen to give up their lukewarm and placid attitude towards the party which stands for free enterprise. The most interesting thing is this. They are condemning the Prime Minister for taking a political motivation in this Bill. At the same time they themselves are taking this as a political issue Mr. Vice-Chairman, in this debate two or and it seems that if the Prime Minister made three points have been raised which politics of nationalisation, the Swatantra Party necessitate reply from me particularly did not lag far behind. because they had been addressed to me, So far as the merit of the Bill is concern- through you of course, one point by the ed, I must submit one or two points. It has hon'ble Law Minister and, two by my friend, been said that compensation to the extent of Mr. Chandra Shekhar. The Law Minister Rs. 75 crores would be paid to the asked me whether I meant to say that there shareholders. The other day it was pointed out will be no strikes in public undertakings. I in this House that in a Bombay economics never said that. On the other hand what I said journal titled Commerce there is was that the Imperial Bank of India, before its nationalisation in 1955. during 34 long years of its-life, had experienced only one strike in 1954 and that too did not last longer than 3043 Resolution seeking [7 AUG. 1969] Banking Companies 3044' disapproval of Banking (Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 a day. After its nationalisation in 1955, SHRI CHANDRA SHEKHAR: You disown during a short period of 14 years only it has Dr. Syama Prasad Mookerjee. experienced two strikes, one in 1960 for as many as 21 days and the other one in 1969 SHRI PITAMBER DAS: Dr. Mookerjee of for 17 long days. 1948. Yes, I owned him in and after 1951. Apart AN HON. MEMBER : Political con- from that, my fiiend misunderstands me when sciousness. he says that I do not stand for curb on concentration of economic power. The Jana SHRI M. PURKAYASTHA (Assam) : In Sangh stands for it. It wants a curb on 1969 by a section of workers and officers. concentration of economic power. What my friends of the Congress now have done is that SHRI PITAMBER DAS : Yes, 22 they have changed that concentration from the thousand workes in i960 and 1700 officers in hands of one to the hands of the other. I told the 1969 and the loss that the Bank incurred ran House the other day also that according to the in to several crores. The only thing with Jana Sangh the remedy does not lie in the which I was concerned and which I made change of hands. The remedy lies in breaking abundantly clear was the frequency of the that coi.cntration. And, therefore, our suggestion strikes and the duration of these strikes and in this respect is that if you really want to put a that the strikes could be ended earlier. There curb on concentration of economic power, then are strikes even in the private undertakings. you have to'take this power away from the But they cannot last long. What is important hands of industrialists as well as from the hands is the attitude towards these strikes, this of the Government; they cannot do the job. If bureaucratic attitude of the bosses who sit we really want to curb this concentration, then tight at the top, drawing fat salaries, with no the Reseive Bank of India which in practice is stakes in the undertaking. That is the cause of subservient to the Government today should be these prolonged strikes. I was afraid of that. raised to the status of a real autonomous monetary authority.(Interruptions). Let me put My friend, Mr. Chandra Shekhar, recalled the complete picture before you first and then I the year 1948 when Dr. Shyama Prasad am willing to answer any of your questions in Mukherjee advocated curb on concentration this connection. Its character and composition of economic power. should be altered suitably for this purpose. Independent economists, as distinct from SHRI JOACHIM ALVA : The greatest bureaucrats, should head the Reserve Bank of orator of the Indian Parliament. India and control effectively its Board of SHRI PITAMBER DAS: I congratulate Directors. Such a reconstituted Reserve Bank you for this outspokenness. should be the official autonomous authority on all monetary problems such as currency and SHRI G. RAMACHANDRAN: May I credit. ask a question ? What is the inference you want us to draw from the fact that there have While Government remains the supreme been strikes after it became the State Bank? authority regarding fiscal policy, it should One is the peace of the grave and the other is respect the authority of such a Reserve Bank of the rebel's life of a new people. India regarding monetary policies Whenever there is a difference of opinion on policy SHRI PITAMBER DAS: If you have to matters between the monetary authority and the choose between 'no losses' and 'losses in Finance Ministry, the matter should be placed several crores' and prefer 'loss in several before Parliament and its verdict taken. The crores', I have hardly anything to say. Finance Ministry should have no power to However, Mr. Chandra Shekher said that in override the decisions of the monetary authority 1948, the Founder President of the Jana without formal approval of Parliament. This is Sangh, favoured a curb on concentration of the structure that I suggest if you really want to economic power. Then why is it that this put a curb on concentration ofecomonicp o wer. Party does not advocate that? Probably that is what he meant. I want to inform him that the The second point that Mr. Chandra Shekhar Jana Sangh was not present in 1948. It came raised is that he traced the-histoiy of bank into existence much later, in 1951. And, nationalisation from 1931. secondly, in 1948 Dr. Mookerjee was in undesirable company which he quit later on.

3045 Reso'ution seeking [RAJYASABHA] Banking Companies 3046 disapproval of Banking {Acquisition and Transfer of

Companies Ordinance, 1969 Undertakings) Bill, 1969

[Shri Pitamber Das] SHRI BHUPESH GUPTA: For the He is correct. But what I could not under, present he has nationalised Dahyabhai's seat. stand was that when they went on waiting tor Bank nationalisation for 38 long years SHRI P. GOVINDA MENON: It is not why could they not wait for another 38 possible for me, Sir, to rise to the soaring hours? Why this in decent haste of pro heights of ideology to which the Prime mulgating an Ordinance the iqth minister rose, and I will not make an attempt evening when Parliament was going to in that direction. Even if I make an attempt, I meet on the 21st? 8 may not succeed. After having heard the thThuS!, T™ S°me of the relevant points that had speeches of about 25 or 26 Members of this been raised and it was r ccessary or me to House supporting the Bill and 4 or 5 others reply to them. I again request the House to opposing the Bill, what am I to say? disapprove of this Ordinance which had been promulgated in a very unciigmhed manner. Now, Sir, the opposition to the Bill is on account of a deep-rooted and ingrained Thank you. opposition to public undertakings in this country, a belief that private undertakings SHRI BHUPESH GUPTA: We are alone will succeed. Mr. Pitamber Das partially meeting his request. We are repeated the statement which he made replacing it by an Act. yesterday regarding the 14-day long strike in THE MINISTER OF LAW AND SOCIAL the State Bank of India. Sir, for his WELFARE (SHRI P. GOVINDA MENON): information and for the information of the members of this House, I would say that in 1955 when I was Chief Minister of my state, I was also the Labour Minister, and in the the Tata Oil Mills Company in Cochin there was a strike which extended not for 14 days but for 55 days. Yesterday I refered to the strike in the jute mills. Therefore, I do not understand this point of referring to the strike which had taken place in the State Bank of India. Mr. Vice-Chairman, Sir, late this evening I do not want to make a long speech because after Mr. Pitamber Das is moving a motion hearing the large number of speakers who disapproving of the Ordinance. I am aware of supported the Bill and after rinding that those the fact, Sir, that in the article providing for who opposed the Bill are absent in the house issue of Ordinances, there is a provision for now, except the Jan Sangh Members, I do not the House to disapprove an Ordinance. But think that there is any need for me to speak in when the Government introduces a Bill to support of the principles of this Bill. replace the Ordinance issued by the President, a motion to the Ordinance appears One of the main points raised by to be an empty ritual which has become very Members of the Swatantra group was that common in both the Houses of Parliament this is practically the penultimate act towards nowadays. dictatorship. And I am surprsied to find that when the mover of the Bill is rising to answer SHRI PITAMBER DAS : For your some of the criticisms made against the Bill information, I may tell you that the Re- by these redoubtable champions of private solution was given much earlier than the enterprise, none of them is found here. Bill. The Bill was brought later. SHRI B. K. P. SINHA : There is some one sitting in the front row. SHRI P. GOVINDA MENON: That is all right. If the hon. Member thought that after SHRI P. GOVINDA MENON : Yes, in having issued this Ordinance on the tgthjuly, order to fill the vacuum, my friend, Mr. 1969, the Government would sit quiet Rajnarain, had to occupy the place of Mr. without bringing a Bill to replace that Dahyabhai Patel. Ordinance, I have nothing to say. The real point raised regarding the Ordinance not only by Mr. Pitamber Das but by some others 3047 Resolution seeking [7 AUG. 1969] Banking Companies 3048 disapproval of Banking (Acquisition and Transfer of rlTanies Ordinance, 19G9 Undertakings) Bill, 1969 also, was : Why this Ordinance 40 hours in that scheme. Therefore, I do not want to before the parliament was going to meet? answer any one of the points raised with Now, I would remind the House that when it respect to the details regarding the working of was thought that life insurance should be the nationalised banks. nationalised what was done was to issue an Ordinance and then the Bill came. Here the Those who made criticisms against the L.I.G. Ordinance was issued and Government was and the State Bank of India, etc. are not very particular to see that the step taken under present here, but I want to say this because it the Ordinance should not remain without the should go on record that it has become a support of Parliament for more than the time fashion with certain friends in Parliament necessary. That is why as soon as Parliament to condemn in season and out of season assembled, we brought the Bill to replace the the public undertakings in our country. Ordinance, and the Prime Minister in her Why is it that that happens? May I draw your statement immediately after the issuance of the attention, Sir, that the torch of observation and Ordinance had explained why an Ordinance criticism is directed only against the public became necessary. undertakings? Has there ever been any committee appointed by Parliament to look into the working of the private undertakings ? I do not want further to speak upon That is never done. And when the report of the these matters except to touch upon certain Parliamentary Committee on Public points raised by one or two Members Undertakings comes on our Tables we look whose speeches impressed me very much— into it and say—some of us— that the public not that the others did not impress me undertakings are not good. Sir, yesterday, Mr. and if I am not able to refer to all the Dahyabhai Patel said that everything should be 32 or 33 Members who spoke here, done by the Reserve Bank and the it is not because I am disrespectful to Government should not give any directions. I any one of them. I enjoyed the speech want to draw the attention of this House and of made by Mr. G. Ramachandran who, Mr. Dahyabhai Patel if he would hear this, that because he stands aloof from politics, the Reserve Bank of India which was has been able to have a clear view of the established in 1934 as a shareholding concern, matter before us. A stronger support to the was nationalised in 1948 and it is the first Bill than came from Mr. Ramachandran national financial institution which exists in I did not hear either in this House or our country and there is uniform in the other House. And coming as appreciation of the working of the Reserve it did from a close follower of Mahatmaji Bank from all sections of the house, and that is and an intellectual, it is one of the implied in the demand that directions strongest supports which we could should be made by the Reserve Bank and not by get for the Bill. I liked the speech the Government. In 1955 the State Bank of made by my respected colleague India was constituted after nationalising the Mr. A. P. Jain for the statement which Imperial Bank of India. We have on the first was there that this is starting a chain floor of the Parliament House a branch of the reaction, this is the first act which will State Bank of India working there, I have to be followed by other acts. That believe, solely for the benefit of Members of was referred to by the Prime Minister Parliament. The State Bank of India has also in different words. Unless this is become very popular when compared with followed by other steps which have been the other private sector banks and the reference promised, probably much that has been to that effect which I made in the other House said about the consequences of this bill, was adverted to by a friend of mine in the even by those who supported it, may Congress Party. I am thankful to the Prime become true. Therefore, it will be Minister for having collected information! followed, I am sure, by other steps. and repudiated the criticism which was Certain points were raised as to how made against me by that member. the nationalised banks should work. Therefore, - this ingrained and deep rooted I draw their attention to the clause in opposition to the public undertakings and the Bill providing for a scheme which the belief that the private undertakings will be drawn up by the Government will all work well, is something which has to in consultation with the Reserve Bank be dispelled. That is a political criticism, and placed before Parliament for discussion not an economic criticism. for amendment andannulment, alteration and all that, and the details regarding these matters will come only 3049 Resolution seeking [RAJYASABHA] Banking Companies 3050 disapproval of Banking {Acquisitionand Transfer of Companies Ordinance, 1969 Undertakings) Bill 1969 [Shri P. Govinda Menon] Sir, a question was may carry on trade, not otherwise. It is open to asked by Mr. Ajit Prasad Jain as to why the the shareholders to say, " We will not continue as existing banks are allowed to continue. a Company." Please remember that these Because that was a matter on which some shareholders are distributed throughout the land explanation is necessary, I think I should and when we say that Bank A or Bank B or Bank offer that explanation. These fourteen banks C belongs to this industry or group or that which are being nationalised, are industry or group, do not forget that the shares corporations established under the which they hold in these companies are very Companies Act of 1956. They were first limited in number. In fact that is our objection to registered under the Companies Act. these big banking companies continuing in the They were companies. Then, on account private sector. It is a business—I mean it is an ar- of the licences issued by the Reserve rangement—under which a few people deal with Bank of India to them to carry on banking the money of the many because the money in the business they have become banking banks belongs to the depositors. companies. The Banking Regulation Act says that the provisions of the Banking Regulation SHRI A. P. JAIN : May I ask one question? If Act are in addition to and not in derogation of you look into the constitution of these existing the matters contained in the Companies banks you will find that a majority of the shares Act. What has been attempted by this Bill is are held by a few persons who are controlling to take over the banking activities of these the banks, and what will happen after these banks and when these banking activities banks are allowed to exist is that these few are taken over, the companies continue controlling persons will go on utilising the to exist. And if we proceed to dissolve the money of poor shareholders in the manner they companies also by this Bill, there may be like. certain legal difficulties which follow.The question will arise why in order to take over SHRI P. GOVINDA MENON : I do not think the banking business we should so, Sir, because once the substratum of the destroy the companies, and that is why bank is taken away, it is open even to a single that provision is there. Moreover, Sir, there are shareholder to go to a court of law and ask for the certain foreign branches in certain countries winding up of the company. It is open to the which nationalised banks will not be shareholders to demand their money and what allowed to operate. We should have branches these persons who control the business inToreign countries for many purposes, would then do will be to pay compensation to foreign exchange also will be earned those shareholders and try to continue. That is thereby. Therefore, it was provided that these what they may do. When there is a shareholder existing companies will continue and they who objects to the way in which the business is can transact certain businesses. transacted, then, that shareholder's rights are Again a question was asked : Why should we purchased. That is what happens and here we leave the shareholders to the mercy of these have defined what the rights of the shareholders companies in the matter of getting are. There are also provisions in the Companies compensation? Now, Sir, these companies will Act, Section 397 onwards, where the have to pay whatever compensation is given to shareholders can complain to the courts where the shareholders in the Bill. One of the reasons there is oppression of a minority by the majority. why they should continue is to distribute the Now, Sir, this Bill grants to the shareholders a compensation and where interim compensation certain measure of compensation and I would say is paid, it will be only after a written that it is not open to any management to withhold undertaking is given that it will be distributed. the payment of compensation to the shareholders unless the shareholders agree that they will There has been, Sir, this criticism and I continue in the new company; otherwise, it will think that I have answered some of the have to be paid. questions raised by Mr. Ajit Prasad Jain. They cannot carry on trade so long as the licences SHRI A. P. JAIN : Where is that granted under Section 22 of the Banking provision ? Companies Act are there. I presume that as soon as this Bill becomes law, the Reserve SHRI P. GOVINDA MENON : This is what Bank will cancel the banking licences of all I have to say to Mr. Jain. these fourteen banks and then they will have the right to carry on trade if the shareholders agree that tbey 3051 Resolution seeking [7 AUG. 1969] Banking Companies 3052 disapproval of Banking [Acquisition and Transfer of Companies Ordinance, 1969 Undertakings) Bill, 1969 SHRI A. P. JAIN : Where is the legal The question is : provision ? "That the Bill to provide for the ac- quisition and transfer of the undertakings of SHRI P. GOVINDA MENON : It is there certain banking companies in order to serve in the Companies Act. Here the provision is better the needs of development of the . . . economy in conformity with national policy and objectives and for matters connected SHRI N. SRI RAMA REDDY (Mysore) : therewith or incidental thereto, as passed by Is there any difficulty to pay the shareholders the Lok Sabha, be referred to a Select directly by the Government? Committee of the Rajya Sabha consisting of 15 Members, namely:

SHRI P. GOVINDA MENON : There is 1. Shri Pitamber Das some legal difficulty. So far as I am concerned, it is my concern to see that after 2. Shri Sundar Singh Bhandari having taken this great step of nationalising 3. Dr. Bhai Mahavir these fourteen banks, no legal difficulty should 4. Shri D. Thengari arise. We are taking the undertakings of the banks and the compensation has to be paid to 5. Shri Niranjan Varma the banks. Now the shareholders and the banks 6. Shri Rattan Lai Jain are different. We cannot pay it directly to the shareholders and so we have provided that interim payment can be made to the 7. Shri N. K. Shejwalker shareholders if the Banks agree. That is why 8. Shri Man Singh Varma clause 15 has been drafted in the manner in 9. Shri Prem Manohar which it has been done. I can assure the House that long hours have been spent by me and the legal advisers of the Government 10. Shri Dahyabhai V. Patel to see that while we take this great step 11. Shri Loknath Misra of nationalising the 14 banks in the private sector and bringing them to the public sector, 12. Shri M. K. Mohta there should be no difficulty created. That 13. Shri Sitaram Jaipuria is also very important. It is not enough if we 14. Shri Devi Singh and pass the Bill in the Parliament. We must see that it becomes the law and for that certain 15. The Mover, Shri J. P. Yadav safeguards have to be provided. I tell you with instruction to report by the 31st day of that this is the reason why the Bill has been August, 1969." drafted in the manner in which it has been done. I do not want to says anything further. The motion was negatived.

I am thankful to all the sections of the THE VICE-CHAIRMAN (SHRI D- House for the support which they have given THENGARI) : The question is : and I pray that the motion be passed. "That the Bill to provide for the ac- quisition and transfer of the undertakings of THE VICE-CHAIRMAN (SHRI D. certain banking companies in order to serve THENGARI) : The question is : better the needs of development of the economy in conformity with national policy "That this House disapproves the and objectives and for matters connected Banking Companies (Acqusition and therewith or incidental thereto, as passed by Transfer of Undertakings) Ordinance, the Lok Sabha, be taken into 1969 (No. 8 of 1969) promulgated by the consideration." Vice-President acting as President on the 19th July, 1969." The motion was adopted. The motion was negatived. THE VICE-CHAIRMAN (SHRI D. THE VICE-CHAIRMAN (SHRI D. THENGARI) : The House stands adjourned THENGARI) : : I shall now put Mr. Yadav's till 11 A.M. tomorrow. amendment to vote. The House then adjourned at forty-five minutes past eight of the clock till eleven of the clock on Friday, the 8th August, 1969.