As part of their efforts to be more nationalist than capitalist Indian capitalists who are the undivided financiers of the BJP need to introspect. They should give up insisting on turning human and ecological material into capital. The Sangh Parivar and the BJP are in league with the capitalists in pursuit of the glory of Hindu Rashtra. The alliance is leading India straight into the dead end of global warming, biodiversity extinction, unemployment and destitution.
Instead of looking to the law to give sanctity to exploitation of worker’s labour and the Earth’s land in pursuit of surplus value, the capitalist class needs to voluntarily abandon the accounting practices and laws that protect their power. It may seem idealistic to expect this happen. But the yearning for a non-violent path to the overthrow of property relations based on exploitation is part of India’s political DNA. And without it there is no way out of the triple crisis of unemployment and ill-health, global warming and ecological collapse.
So it’s especially insane that along with most developing nations India is going to continue to acquiesce to the lunatic provisions of the Financial Stability Board (FSB) of the Bank of International Settlements that the G7 put together and got the G20 to agree on. These provisions are intended to secure the G7 private banks to eventually own and control all the G20 public and private sector banks.
For 2019 we need to prepare a manifesto for the Indian national Congress party under its new leader Rahul Gandhi and in a coalition of left parties in India to exit from the FSB.
It is quite insane that the BJP Government agreed to these rules that are designed to set up
JP Morgan Chase, Bank of America, Citigroup, Deutsche Bank, HSBC, Bank of China, Barclays, BNP Paribas, China Construction Bank, Goldman Sachs, Industrial and Commercial Bank of China Limited, Mitsubishi UFJ FG, Wells Fargo, Agricultural Bank of China, Bank of New York Mellon, Credit Suisse, Groupe Crédit Agricole, ING Bank, Mizuho FG, Morgan Stanley, Nordea, Royal Bank of Canada, Royal Bank of Scotland, Santander, Société Générale, Standard Chartered, State Street, Sumitomo Mitsui FG, UBS and Unicredit Group as Globally Systemically Important Banks (G-SIB) or Too Big to Fail Banks.
Why is State Bank of India (SBI) not on the latest list published by the FSB? (2) State Bank of India is bigger than many banks on that list.
As sovereign nations developing countries could easily capitalise new public sector banks quickly such that they could easily become some of the most important banks in the world. In this case the whole G-SIB concept and the FSB would lose their purpose. G7 countries have much too much money for the good of the Earth. They need to contract their money supply to within their borders instead of trying to find ever new ways to continue their hegemony over people and planet through banks. And for developing countries to create our own money we should protect ourselves from G7 money, not open the door to imports.
As far as India is concerned, either we throw out the Financial Resolution and Deposit Insurance Bill being introduced in our Parliament to enact the unsuitable provisions for Bank management suggested by the FSB, and instead address the governance issues such as collusion between defaulters and lenders, such as between Reliance Industries and SBI, or we revise the FSB to suit our purposes.
The other day frontline magazine ran an important article showing how irresponsibly the BJP Government has managed SBI and left it open to be undermined by Reliance Industries, the fraudulent corporation that is SBI’s main debtor. (3)
Revising the FSB may be impossible as the Washington Consensus in the G7 and G20 seems unassailable at present. What is therefore better is to take a national perspective. In India we should make an all-out political effort at the Parliamentary Standing Committee on Finance and in the media and through political parties to ensure that SBI and other PSBs are kept in the public sector and organised and managed properly with adequate Government financing and with oversight to prevent collusion between borrowers and lenders.
That G7 are intent on the privatisation of all banking take-overs is clear from the way in which the Bank of International Settlement’s (BIS) Basel Committee on Banking Supervision, the owner of the FSB, deals with nationalised banks in its March 2002 Report “Supervisory Guidance on Dealing with Weak Banks”, Report of the Task Force on Dealing with Weak Banks.
On page 35 paragraph 163 the guidelines state:
“By rescuing a troubled bank, the government may find itself as the majority or sole owner, i.e. the bank is in practice nationalised. This should be a temporary solution, and the government should actively seek interested buyers in order to divest its holding. In the meantime, the government should operate the bank on market-oriented terms and with professional staff. The government should also make its intentions very clear to other market participants and to the general public.” (3)
Clearly the global financial system is not in the interest of PSBs and India should resist adopting cut and paste approach to this capitalist approach to money propagated by the BIS and its FSB.
In India the difference between a leftist and a rightist approach to Public Sector Banks (PSB) is that the leftist approach understands that nationalised banks can be bailed out anytime by the Government, whilst the rightist approach is using the Financial Resolution and Deposit Insurance Bill (FRDIB) to promote a Financial Resolution Authority to exercise absolute unconstitutional power over banking, privatising PSBs in the process and readying Indian banks for take-over by G7 banks.
If passed by Parliament the FRDI bill combined with the corruption and collusion between BJP and Reliance Industries will be the final nails in the coffin of the PSBs to the detriment of small depositors and the money system of the country as a whole.
If banks are in the public sector we can issue zero coupon perpetual bonds and many other innovative forms of financing to provide zero interest money to Gram Panchayats and Town Wards for ecodevelopment. (4) In fact plain sovereign money as I have described elsewhere could also be introduced more easily as there is already a commitment to money as a sovereign public good in the constitution and in the nationalised banking system. (5)
If banks are private, interest rates will remain high for as long as the Rupee is in competition with the USD and the other private currencies being aggressively promoted globally by the G7 banks and their Treasuries. Furthermore Indian private banks will not be able to compete with foreign too big to fail banks due to the BJP’s incompetent handling of the banking sector, be it private or public, and Indians will end up importing money at very high cost. Money will be an interest bearing and repayable in terms too short to enable us to do forestry and ecological agriculture to create full employment and adapt to global warming. (6)
In India the opposition to the Financial Resolution and Deposit Insurance Bill is being led by All India Bank Officers Confederation (AIBOC). In his interview given to Newsclick (7), Thomas Franco, General Secretary of AIBOC summarises the facts. Whereas in the US the Treasury (the equivalent to our Finance Ministry) was given the Emergency Economic Stabilization Act of 2008 to provide authority and facilities that the Secretary of the Treasury can use to restore liquidity and stability to the financial system of the United States, in India no new statute is needed to authorise the Government of India to bail-out our banks to get the Non-Performing Assets addressed or deal with failing banks. In India there has been no run on the banks since nationalisation. Only two, Oriental Bank and Global Trust Bank failed and were taken over by the RBI and subsequently merged with a PSB. The PSB that hold most of the non-performing assets (NPAs) in construction, power, iron and steel, and above all telecommunications that totally amount to around 10% of total banking assets in the country are currently being recapitalised by the Government. But because of the free market approach of the BJP to the bailout of Indian PSBs, the recapitalisation is unlikely to go well, and this will be the last evidence the BJP will have created to achieve its aim of backdoor privatisation of the PSBs.
If backdoor privatisation of PSBs goes through as the BJP intends with this Financial Resolution and Deposit Insurance Bill, Indians may be permanently prevented from democratically controlling money supply through a sovereign money system under the constitution of India. And it will be impossible to have the kind of debt free money we need to organise to insulate ourselves against global warming whether as plain sovereign currency through constitutional revision and new statutory measures or as zero coupon perpetual bonds by using the present banking rules to fit us for the purpose of adapting to global warming.
Anandi Sharan was born in Switzerland, lives in Bangalore and last year worked in Araria District Bihar, India. She works on trying to find the best money system to help people adapt to climate change especially in India.
(1) Redge Nkosi, FirstSource Money South Africa, in International Movement for Monetary Reform, 12 December 2017