The Hindu : National : CPI opposes move to allow foreign takeover of private banks

Online edition of India's National Newspaper
Sunday, Oct 31, 2004

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National

CPI opposes move to allow foreign takeover of private banks

By Our Special Correspondent

NEW DELHI, OCT. 30. The Communist Party of India today opposed the Government's move to allow foreign banks to take over private Indian banks. Describing the strategy as ``erroneous,'' the party said it should be reviewed.

The party said the step would lead to diversion of resources for non-banking activities and speculation. Foreign banks never implemented the directions of the Reserve Bank, particularly with regard to making advances to the priority sector, agriculture and small-scale industry, it said.

``The foreign banks are devoid of any commitment for social banking. Banking for high-profile profitable commercial banking has always been their mission. These banks are known to be indulging in all types of malpractices, even doing illegal business, siphoning off funds outside the country ... '', the CPI National Council said in a resolution.

The Council, now in session, said that neither the RBI nor the Finance Ministry had ever been able to control the foreign banks. In a situation like this the Government move to allow the foreign banks to take over private banks was `ominous.'

What was amusing was that the Government, instead of making all-out efforts to broaden the tax base and mobilising additional domestic resources was only doling out concessions to the private foreign corporates in anticipation of foreign funds, it said.

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