Indira Gandhi suggested that the banks investment in government securities be raised on the average for both slack and busy seasons by about 5 per cent. She estimated that this would make available about Rs. 200 crores for the public sector. This amount might be utilised for quick-yielding schemes, such as minor irrigation programmes, rural electrification and fisheries. Indira Gandhi said that even after the new policy of social control and reconstitution of the boards of directors, the former industrial chairmen of the bank still continued on the boards and influenced the present chairmen who had previously been general managers. ``We may examine, she said, ``whether through legislation or otherwise we can prevent such men from continuing on the board. The chief executives of the banks will not been then feel obliged to the former chairmen and they may be expected to take an independent line in regard to lending. She, therefore, favoured nationalisation. But Morarji Desai, Finance Minister and Deputy Prime Minister, opposed the proposal. In a note issued on July 10, he said: ``Recent experience does not suggest that the large banks need to be taken over so as to be made to do something which they are not doing. There is no reason why, under social control, they cannot be made to do what the State Bank is doing if that is in the national interest. Nor is it right that the State Bank should be expected to do what banks, as institutions concerned with the safety of their depositors funds, cannot do. Mere nationalisation will not provide more resources. Morarji Desai argued that as the banks were custodians of the peoples savings, it was only natural that they should exercise considerable care in deploying the funds entrusted to them while, at the same time, making credit available in accordance with national priorities. He stressed that no bank, whether in the private or the public sector, could abandon the test of viability of a credit transaction. He observed: ``The experiment of social control is a continuing one. It aims at socialisation of credit without nationalisation of banking. Our experience in the past year or so has shown that it is an experiment whose results, we have every reason to believe, will be rewarding. After announcing the decision to nationalise the 14 banks on July 29, 1969, Indira Gandhi herself took over the Finance portfolio, thereby making it difficult for Morarji Desai to remain in the Cabinet. When he expressed his strong resentment at her action, she told him he could continue in the Cabinet as Deputy Prime Minister and hold charge of some other portfolio. Morarji Desai described it as ``an amazing proposal and a very clever move, and he conveyed his inability to continue in the Cabinet. Morarji Desai wrote to her: ``If you wanted a change in the Finance Ministry, you could have discussed it with me. You know very well that I never discussed any matter with you in an improper manner. Even when I have differed from you on some matters, I have never been guilty of impropriety or discourtesy. But now you have behaved towards me in a manner in which no one would behave even with a clerk.
Posted on: Sat, 01 Nov 2014 13:24:04 +0000
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