Chennai, Nov 24 (IANS): The Communist Party of India (CPI) on Tuesday opposed the recommendations of Reserve Bank of India's (RBI) working group to issue banking licence to industrial/business houses and conversion of large finance companies into banks.

"It should be recalled here that at the time of Independence of our country, all the banks in India were owned by business houses but none of them came forward to help the government in its planned economic development projects," General Secretary D.Raja said in a statement.

"On the other hand, these private banks were mobilising savings of the people and cornered the same for their own business/vested interests. Because of this, many banks ran into problems and suffered from issues like conflict of interest," he added.

"Further, every now and then, we hear the crisis in private banks.

"A few days ago, we have seen the fate of Lakshmi Vilas Bank. It is unfortunate that instead of learning lessons, the RBI is proposing to hand over banking licence to corporate and business houses," Raja said.

Nationalised banks are the custodians of hard-earned savings of the common people of this country, he noted.

Arguing that the RBI's proposal will jeopardise their interests and run counter to India's economic development, he said that giving licence to corporate and business houses is the most retrograde step and should not be allowed.

The CPI was in the forefront in demanding nationalisation of banks and trade unions like AITUC and AIBEA had launched intense struggles on this demand.

"Our members of Parliament at that time raised this demand vehemently and enlisted the support of many political parties," Raja said.

"Finally, in 1969, (then Prime Minister) Mrs. Indira Gandhi nationalised the major private banks. Since then, these nationalised banks have played a pivotal role in our country's economic development and in safeguarding people's money.

"Nationalised banks have today become the main engine of economic development, Raja said.