I would like to revisit my earlier blog “Stray Thoughts on Bank Nationalization” before getting into the current one “Indian banks are not vulnerable, but their managers are”.

Recently I had an opportunity to highlight in a McKinsey Forum that the Indian experience particularly in the banking sector should provide the much needed comfort to the idea of government ownership. Ideally the government ownership in key sectors of the economy could provide watch dog role through their nominees in the boards.

The recent happenings in the international financial markets have forced the governments to recognize the fact that to shore up the confidence in the financial system one will need at least partial government ownership. It has taken about forty years for the leading nations of the world to come to the realization (from the time banks in India were nationalized) that the financial markets when left to the private sector will not always ensure the stability of the financial system. Only the governments can provide much needed confidence, strength and support to the financial system in times of adversity.

Surely, the nationalization of banks brought in by the then Prime Minister Indira Gandhi has not only ensured the safety of Indian financial system but also facilitated the development of Indian economy.

Thanks to this nationalization many bank branches were opened across the country and this in turn resulted in providing employment opportunities to many educated unemployed youth then - starting from 1970s and leading well into 1980s.

Though the decision was made by the Government of India, the employees of the nationalized banks in India ensured that the objectives of nationalization were fully realized.

These young and energetic bank managers ensured that the benefits of banking reached one and all in general and the needy population in particular. The massive transformation of the country into modern India was made possible only by these bank managers. If one can claim the bank nationalization is a success story in India, it was made possible by the bank managers.

Banking profession is indeed a well respected position in the world and particularly in India even today, even after the advent of IT industry. However, many stakeholders routinely intervene and try to influence the bank managers to pursue their personal interests. Many bank managers are very strong-willed and they do not succumb to such pressures. They also know very well, how to protect themselves and their banks.

Sometimes, unlucky few fall a prey to the evil designers. They also get physically assaulted by such self seekers. The recent incident – the slapping of a bank manager of a rural bank in Andhra Pradesh twice by a recently elected unruly Member of Parliament – is in bad taste. This not only captures the hapless situations faced by many bank managers but also brings out the true colors of the making of this Member of Parliament.

If the bank manager were really at fault, one can take prescribed departmental action against him. Members of Parliament – the law makers – are not expected to take the laws into their hands and go in for such direct action such as these!

I hear some of you saying – This can happen only in India.

The Member of Parliament not only brought bad name to himself but also to the Party on whose ticket he was elected. The minimum one expects is some strong action from his National Party against him.

Will this National Party act?

Only when their feelings are assuaged and their physical safety is assured the bank managers will feel confident in carrying out their normal duty. Otherwise one may see not many takers for bank managers’ role in the near future.

Banking profession should become a profession of choice. Definitely the Governments in power can facilitate this only through some strong actions to correct the other stakeholders and self seekers and ensuring rule of law.

Will they?