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Remembering DN Ghosh, the Architect of Bank Nationalisation in 1969


Former SBI Chairman also played a role in preventing Ambanis from taking over L&T

By Nitya Chakraborty

Dhruba Narayan Ghosh, known as D N Ghosh, the young official who played the leading role in preparing the draft of the ordinance on bank nationalisation issued on July19, 1969, passed away in Kolkata on November 6. He was 95. Originally, a member of the Indian Audit and Accounts Service (IAAS), Ghosh was the chairman of the State Bank of from 1985 to 1989 and later as chairman of Larsen & Toubro fought and defeated the Ambanis who were bent on taking over this premier engineering and construction company of the country.

Ghosh had a varied career in different senior positions of the Government of India during his 36 years of service but his outstanding achievement was his ability to finalise the details of the draft ordinance on the nationalisation of 14 private banks in the country within 24 hours. The manner in which this historic decision was taken by the then Prime Minister Indira Gandhi in the midst of her battle against the senior Congress leaders group known as Syndicate had all the elements of a blockbuster thriller .

Ghosh has written some details in his memoir ‘No regrets' published in 2015. I had also discussed with him a lot on this issue during my interaction with him both in Delhi and Kolkata during his post retirement days. He always thought that both this bank nationalisation draft and saving L & T from the takeover bid by the Ambanis, are the two most important achievements in his long career.

The way Ghosh was picked up by the Prime Minister's Office for the crucial job of preparing the bank nationalisation is fascinating. In the late evening of July 17, 1969, five days after the Bangalore meeting of the AICC, Ghosh got a call from P.N. Haksar's office to see him in his residence urgently. Ghosh rushed to the residence of Haksar who, as the Principal Secretary, was at that time the most important person in the Indira Gandhi government.. Haksar was alone in his room and there he came to know that the PM was considering the nationalisation of banks. He was asked whether the draft on this would be possible before July19 morning as the President had to sign it by evening. The next day, the President was due to remit his office and the Parliament session would start on July 21.

D N Ghosh agreed. He was the deputy secretary of the banking division but his experience in dealing with the earlier legislations was known to Haksar. Once Ghosh said that he could do it by the deadline, Haksar said that he would take the green signal from the PM the next morning. A Baksi, IFCI chairman and an expert on banking also joined the discussions and this went up to the wee hours of July 18. Haksar became fully convinced that the draft ordinance could be ready the next day. He told Ghosh to meet him at 8-30 AM in his office.

When Ghosh reached PMO, already Haksar got nod from the PM but PM wanted to meet the man who would carry out this big task. So Ghosh met her shortly. PM wanted to know whether he could prepare the draft in a day, Ghosh nodded. He left PM's office and before leaving Haksar told him' Mind you ‘All the developments since last evening have vanished from history''

In fact, nobody knew about this crucial decision in the Government on that day, excepting thee left leaning officials. Ghosh was a Students Federation activist in his Presidency College years. He represented Presidency in the Bengal contingent of AISF that attended the convention of students in Delhi in 1947. Haksar and Bakshi have been close friends from their London days when both dabbled in leftwing of the Indian students based in Britain.

Ghosh was a bit worried that I G Patel, the powerful economic affairs secretary and RBI Governor L K Jha were not kept in the loop, though Jha had some inkling that something was going on behind his back. Once the decision was endorsed by the PM, Haksar contacted I G Patel and L K Jha to come and attend a meeting at the PMO in the afternoon. By then, it was a fait accompli to both as it was PM's final decision and the ordinance would be issued next day. Both IG and Jha assured to provide assistance to Ghosh to make it foolproof.

Ghosh and his colleagues from the law ministry were put in RBI guest house that July 18 night. While the Ghosh team was working, L K Jha who was also staying in the Governor's suite in the Guest House, dropped in between for rendering assistance. It was a gruelling work schedule throughout the night as part by part, the draft was being typed. Serious differences also cropped up at the final stage of the meeting. For solving that L K Jha had to intervene at 2-30 AM. But finally, everything went well and as promised by Ghosh, the draft was ready by 9 AM. The cabinet meeting was scheduled at 5 PM on July 19. The ordinance was approved and the Prime Minister announced the historic decision at 8-30 PM through her broadcast.

After the first battle was won, Ghosh prepared for the second battle. This was more difficult, the legal battle. The ordinance, as usual was challenged in the Supreme Court and the petitioners were defended by eminent lawyers including Nani Palkiwala. After a long battle in the apex Court, and bringing some amendments, the revised ordinance was issued on February 14, 1970, the bill replacing the ordinance was introduced in Parliament on February 27, 1970, passed by both houses in March and finally received the President's assent on March 31, 1970. The nationalization of banks was to stay. Ghosh could win his own as also Indira Gandhi's political battle.

Ghosh was an expert on financial sector. He continued as the Chairman of Sameeksha Trust which publishes the Economic & Political Weekly. He was connected with a large number of cultural activities in Kolkata. He was highly appreciated for his analysis of the problems of the Indian as also global financial sector. He contributed an illuminating piece on Global Financial Crisis of 2008 in IPA's Golden Jubilee volume. He led a long active life but still his demise has kept a void among the forward looking banking community. (IPA Service)








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