Don’t account holders have the right to know where their money is being invested?
Image credit: Reuters/Bassam Khabieh
I was disturbed by news that my bank, the State Bank of India, has invested in a company that makes cluster bombs.
Last month, the Dutch peace organisation PAX, in a report, Worldwide Investments in Cluster Munitions: A Shared Responsibility, said that the State Bank of India had invested an estimated $87 million (Rs 570 crore) in Orbital ATK, a US company that is one of the world’s largest manufacturers of ammunition, including cluster bombs, and a leading supplier of precision systems and electronic warfare.
As the name indicates, cluster bombs are a bunch of several small bombs or bomblets that are released mid air to cover a wide area. Unexploded bomblets can kill or maim unintended targets long after a conflict has ended, and are costly to locate and remove.
Last week, an editorial in the National Catholic Reporter said: “To this day, parts of Cambodia, Laos and Vietnam are still infected with unexploded cluster bombs dropped by US forces 50 years ago. Old bomblets dug up in fields or that surface in village commons and school grounds can explode and still kill and maim. Other countries heavily contaminated with unexploded cluster munitions include Afghanistan, Kosovo, Iraq and Syria.”
The Convention on Cluster Munitions, an international treaty that prohibits the use, transfer and stockpile of cluster bombs, has 119 states, parties and signatories.
Countries that have not signed the convention and have worked against its adoption include Brazil, China, India, Israel, Pakistan, Russia and the United States.
According to the Cluster Munition Coalition that monitors the manufacture, distribution and use of cluster bombs all over the world, India and the US are among the 17 countries that produce cluster bombs that are being used in conflict zones across the world.
A Human Rights Watch report in May said that the Saudi Arabia-led coalition fighting in Yemen had repeatedly used US-made cluster bombs in populated areas of that country. In June, the US House of Representatives narrowly defeated a measure that would have barred the United States from supplying Saudi Arabia with these bombs.
Apart from Yemen, cluster bombs have also recently been used in Sudan, Syria, Libya and Ukraine, killing a large number of people.
The State Bank of India is the country’s largest bank with a 30.2 crore active customer base. Its reaction to the Pax report was that there was nothing illegal about its investment in Orbital ATK.
The State Bank of India refused to answer my queries on whether an investment that would indirectly lead to the killing and maiming of civilians in a war torn country was unethical. Another query asking the bank if it was unethical not to divulge details of its investments to its account holders whose money it reinvested, met with the same fate.
But a report in the Economic Times quoted an SBI official as saying that the bank "always works in accordance with local laws and regulations" and there is "no prohibition, whatsoever either in US or in India to finance such commercial projects".
Keeping account holders informed
In India, most banks outline a broad sector-wise distribution of their investments in their annual reports. But account holders don’t have any way to track how their savings, big and small, are being invested.
Apart from the Reserve Bank of India issuing guidelines from time to time, and a few banks adopting voluntary policies on Corporate Social Responsibility or Equator Principles, none of the banks in India have any binding policies to guide their investments – to make sure that their investments don’t cause harm to people or the environment, which impacts all of us.
While banks need to invest or lend to profit-making sectors to help account holders avail of interest on their savings, there will be several account holders who will not want to share in the profits of warfare or from those that cause irreparable damage to the environment.
If banks don’t reveal how my savings are invested, as an account holder, I am unable to make an informed choice. When my savings are part of the State Bank of India’s investment in cluster bombs, I am also guilty for the colossal loss of lives these bombs cause. I wouldn’t want to live with that guilt, or remain with a bank whose investments further fuel such misery. But I will have to wait until I find another bank that clearly says that it won’t make such investments.
Thus, while there is nothing illegal about the State Bank of India’s investment in a company that makes cluster bombs, there is a lot that is unethical.