Letter to BS: Who is to be blamed for the state of affairs in PSBs?

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This refers to “Celebrating 50 years of bank nationalisation” (July 15). The writer says that the RBI governor was not kept in loop. This reminds me how and when the governor was brought into picture.

I was working in the central office of RBI at Mumbai then. The rumours were afloat for some days in the wake of Morarji Desai’s virtual dismissal from finance ministership and takeover of the finance portfolio by the then Prime Minister Indira Gandhi that banks were likely to be nationalised any day. In the midst of these rumours, governor L K Jha at Mumbai received a call from the prime minister’s office in Delhi that the PM wanted to meet him urgently. Presuming that she wanted to discuss the issue of bank nationalisation, Jha sent for his secretary and dictated a detailed note saying that banks were already under comprehensive “social control” and nationalisation would not serve any purpose; on the other hand, it would cast an unnecessary responsibility on the government and the RBI. 

With that note in hand, Jha entered the PM’s chamber, a day later. Just as he was at the entry door, she addressed him saying, “I see you are carrying a fat note. You may leave it here”, pointing to a small table by her side, “and join the team in the adjoining room and help them in drafting an ordinance to nationalise all the private sector banks with deposits exceeding Rs 50 crore”.

The rest is history.

R C Mody, New Delhi
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