SBI Reliance Deal – The Backdoor Privatization of SBI?

TechnoparkToday.com(May, 2014):  It is reported that the State Bank of India (SBI) has signed up Reliance Money Infrastructure (RMIL), an Anil Arnbani Group company, in a ‘business correspondent’ deal to source a range of banking services.The deal authorizes RMIL to identify borrowers; collect, process, and submit loan applications; promote credit groups.take up post-sanction monitoring, follow-up, and recovery. As the service provider, RMIL will also collect small-value deposits; sell micro-insurance, mutual fund and pension products; and receive and deliver small-value remittances. According to the report the deal which was concluded on February 25 this year had been made effective with retrospective effect from October 5, 2013.

This is nothing but backdoor privatization of the basic segment of the banking operation in the leading Public Sector bank like SBI– the core area of lending, recovery and also a part of deposit collection work.

We fear that this strategy now started with SBI will make inroads in other nationalized banks.The outsourcing is being done to agencies controlled by the largest monopoly house which had been named by the CAG in a recent scam, having a clear conflict of interest striking at the root of the very purpose of bank nationalization. Moreover, the Reserve Bank of India has blacklisted many of the service providers engaged by AXIS BANK, HDFC BANK etc., in the recent past, mainly because these agencies breached the trust of the banks that have engaged them.

The amendment of banking regulations carried out in a UPA-NDA joint operation inside Parliament has allowed a big number of private banks to enter into the field. The present move of outsourcing core lending cum deposit related jobs in nationalized banks is complementary to the former and the project is one of privatization of the entire banking operation and economy. This will be disastrous to the national economy, which could survive the global financial crisis primarily due to the nationalized banks. Thisalso exposes the real intent of the Congress and BJP policies in favor of corporate cliques, both domestic and foreign.

The article is originally published by  The Centre of Indian Trade Unions.