Bank privatisation debate: Here’s how the doyens see it – The Economic Times

Clipped from: https://economictimes.indiatimes.com/industry/banking/finance/banking/bank-privatisation-debate-heres-how-the-doyens-see-it/articleshow/80877074.cms

SynopsisPunjab National Bank chief executive SS Mallikarjuna Rao mentioned the massive role of public sector banks in infrastructure financing. “The finance minister announces so many infrastructure projects, public sector banks would need to play a bigger role.”

Kolkata: Bank privatisation is not the panacea for all the ills and myth has long busted that ownership changes behaviour, former Reserve Bank of India deputy governor SS Mundra said Friday.

The government has announced its intent for privatising two banks and a general insurance company in 2021-22 stirring up a hornet’s nest.

The United Forum of Bank Unions, the umbrella organisation for all bank employees and officers’ association, has opposed the proposal and threatened to observe an all-India bank strike on March 15 and 16.

Investors are however happy with the proposals. BSE Bankex index gained 2544 points on the Budget day.

“The government wants stronger entities, and not guzzlers of public money,” Union Bank of India chief executive Rajkiran Rai G said. “It’s a good move. About two-third of the credit market is still with public sector banks. So the role of public sector banks is not over but we need more competition,” he said discussing the role of public banks in a webinar organised by Bengal Chamber of Commerce & Industry.

Mundra however stressed on retaining the sovereign ownership. He suggested that operational freedom along with government ownership may work better like it did in the western nations. Sovereign backing makes all the difference especially for a large section of depositors who feel it’s much safer to put money in government-owned banks.

Former RBI Governor YV Reddy once said that it’s not the ownership per se that’s important, but how the owner behaves.

Punjab National Bank chief executive SS Mallikarjuna Rao mentioned the massive role of public sector banks in infrastructure financing. “The finance minister announces so many infrastructure projects, public sector banks would need to play a bigger role.”

Rao however supported the privatisation proposal since the government cannot not infuse capital perennially in the banking sector.

Leave a Reply

Fill in your details below or click an icon to log in:

WordPress.com Logo

You are commenting using your WordPress.com account. Log Out /  Change )

Google photo

You are commenting using your Google account. Log Out /  Change )

Twitter picture

You are commenting using your Twitter account. Log Out /  Change )

Facebook photo

You are commenting using your Facebook account. Log Out /  Change )

Connecting to %s