Speaking on the ‘Social Function of Banks’, Mr. Patnaik said the proportion of agricultural credit to total credit disbursed by banks, which had risen dramatically after bank nationalisation in 1969, started falling dramatically after liberalisation. He said the “measures” of inclusion being considered are likely to “willy-nilly bring in moneylender-like actors into the picture”. He said the idea of banks recruiting banking correspondents to extend their reach is likely to introduce intermediaries who will act as moneylenders. “We are merely creating a class of modern moneylenders,” he remarked.
Telling trend
The recent reports about the “enormous repressive power wielded by microfinance agents against borrowers indicates the manner in which moneylenders can terrorise peasants and other borrowers,” Mr. Patnaik said.
Arguing against the widespread notion that banks are merely “middlemen between savers and investors”, Mr. Patnaik said, “Credit drives savings and investment, not the other way around.” Banks can finance credit without having any access to savings because they can borrow from the Central bank, he observed.
“Since banks create command over capital by determining which sector or social group will get access to credit, society must control banks,” he argued.
“Neoliberal policy makers,” Mr. Patnaik said, “no longer talk about the national economy, but about the Indian economy as being attached to the globalised system of finance capital.” He congratulated the workers in the banking industry for “not allowing the policy makers to go as far as they would have liked”.