Privatise all public sector banks except SBI, analysts tell govt

With bank frauds carried out by corporates in nexus with employees unearthed recently and  given that public sector banks (PSB) sit on crores of NPAs, analysts are asking govt to get out of owning so many banks.

SBI, which hasn’t figured in recent scams, is out of critics ire however.

Back in 1969 Indira Gandhi nationalised 14 banks largely viewed as an act for political leverage, but has proved to be economic loss, researches point out. Six more were nationalised in 1980.

The public sector banks have fulfilled the goal of financial inclusion to a certain extent by setting up rural branches and executing govt schemes, but the same comes at an enormous cost, experts point out.

These banks need capital infusion from govt at regular intervals, the bulk of which is done by tax payer’s money.

All six big bank frauds dug up recently involve public sector banks – the Nirav Modi – Mehul Choksi(Punjab National Bank), the Rotomac Case (Bank of Baroda) , the Sambholi Sugars (Oriental Bank of Commerce), RP Infosystems (consortium of  PSBS including PNB) .

All said, the govt is in no mood to privatise the PSBs. The Modi govt in fact looks to merge the banks into four to five big PSB brands instead of the 21 banks it presently owns.

 

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