Get Ready for Struggle: AIBEA warns of Future Privatisation of PSU Banks

The All India Bank Employees’ Association (AIBEA) has expressed concern over the government’s decision to form a High-Level Committee to review India’s banking sector. In a circular dated October 31, 2026, the association said the committee’s work could lead to further banking reforms, including changes that may increase the role of private investors in public sector banks. AIBEA has urged bank employees to remain alert and prepare for further struggles against policies it believes could weaken public sector banking.

Government Forms High-Level Committee to Review Banking Sector

The Government of India has formed a High-Level Committee on Banking for Viksit Bharat to review the country’s banking sector and recommend reforms. The committee will suggest structural, institutional, regulatory and legal changes aimed at making Indian banks globally competitive, financially inclusive and resilient as part of the Viksit Bharat 2047 vision.

The committee will work for six months. It is chaired by Suresh N. Patel, former Central Vigilance Commissioner. Its other members are Shirish Chandra Murmu, Deputy Governor of the Reserve Bank of India; Padmaja Chunduru, former Managing Director and CEO of Indian Bank; N. S. Vishwanathan, former Deputy Governor of the RBI; and the Joint Secretary (Banking) in the Department of Financial Services, who will serve as Member Secretary.

The committee has been asked to examine existing banking practices and prudential norms and identify international best practices that could be adopted in India. It will also review the legal and regulatory frameworks governing commercial banks, Regional Rural Banks and cooperative banks to suggest ways to improve efficiency and make banking easier.

Another important task is to assess the long-term capital requirements of banks, Development Financial Institutions and Non-Banking Financial Companies. The committee will recommend funding sources and mechanisms to support credit growth. It will also examine differences in the cost of capital for businesses and suggest policies to encourage private investment and sustainable economic growth.

The committee will prepare a roadmap for using artificial intelligence and digital technology in banks, along with safeguards against cyber risks. It will also recommend ways to attract talent and improve employee skills to prepare the banking workforce for future requirements.

In addition, the committee will review the Priority Sector Lending framework and the Lead Bank Scheme. The aim will be to assess their effectiveness in promoting balanced credit distribution, financial inclusion and lending based on changing economic priorities. The committee may also examine other matters referred to it by the government.

AIBEA Says Privatisation Agenda Continued After 1991

AIBEA said public sector banks became the target of liberalisation and privatisation policies after the economic reforms introduced in 1991. According to the association, successive governments have continued to pursue reforms that could increase private ownership of public sector banks.

The law was initially amended to allow the government to reduce its shareholding in public sector banks to 49%. AIBEA opposed the move, which slowed the process of selling government shares.

In 2000, the then BJP-led government under Prime Minister Atal Bihari Vajpayee introduced a bill proposing to reduce the government’s shareholding in public sector banks to 33% and allow 67% ownership by private investors. AIBEA organised a strike and secured wider political support against the proposal, after which the bill was shelved.

However, the association believes the privatisation agenda has continued through various committees, policy proposals and reform initiatives.

AIBEA Refers to Finance Minister’s Remarks on Nationalisation

AIBEA also referred to remarks attributed to the Union Finance Minister in November 2025 concerning bank nationalisation and financial inclusion. According to AIBEA, the minister said that nationalisation in 1969 had not delivered the desired results in financial inclusion and that privatisation was unlikely to harm financial inclusion or national interests. AIBEA also quoted a remark suggesting that government control had made public sector banks unprofessional.

AIBEA further referred to a statement made by the Finance Minister a few months earlier, saying that younger people did not consider public sector banks particularly “cool”.

Regional Rural Banks

AIBEA said the government had also amended the law to allow private capital in Regional Rural Banks through disinvestment. It raised similar concerns about cooperative banks and the insurance sector, arguing that the wider financial sector was facing changes that required close attention from employees.

AIBEA Warns Against Possible Changes to Public Sector Banking

AIBEA believes the newly formed committee must be closely watched because of the history of banking reform proposals and the government’s recent policy decisions. The association said it was concerned about what recommendations the committee might make after reviewing the banking sector.

The association called on employees to remain alert, strengthen their campaign and prepare for further action if required.

AIBEA Says Bank Employees Have Gone on 55 Strikes Against Reforms

AIBEA said bank employees had observed 55 strikes over the past 35 years against banking reform policies introduced since 1991.

The association urged employees to intensify their campaign and remain ready for further struggles. It called on its members and affiliated unions to stay united and prepared as the government-appointed committee begins its review of India’s banking sector.