Dinesh Kamath's Editorial 'Should PSBs be privatized?' that was published in Newsband

Should PSBs be privatized?

According to some experts related to finance, on account of the weak performance of the banks, the government should consider privatisation of PSBs. Some also stressed the need to shrink unproductive public sector banks and move forward with increasing private sector participation in the banking sector. Their argument is that the public-sector banks, which constitute almost 70% of the Indian banking system, are saddled with burgeoning stressed assets. The government has already injected over ₹2.6 lakh crore in the public-sector banks through recapitalisation in the last eleven years, which has had limited impact in improving the health of public sector banks thus far, they add.

Some customers of PSBS say, “Make the Investigating Agencies and Institutions like SEBI, CCI, CVC, CAG etc independent, empower them to the hilt, and answerable to the Constitution. Not put 'our' man to head such Institutions. Privatization of Banks may lead to giving credit to select individuals only. Taking loan will become tough for poor and agricultural sector will be affected badly.

At this juncture talking of privatisation by FICCI is just to divert attention from tightening the noose on defaulting industrialists to whom perhaps FICCI represent. Why have they forgotten cases of Hindustan commercial bank, Global Trust Bank, Traders Bank and many other banks. It is basically the need of robust systems and procedure along with strong audit/ inspection of RBI. Publicity stunt should be avoided - many awards in international fraternity are bought by corporates - both in public & private sector. Government & RBI must also look at NBFCs where also there are hidden cases.

This suggestion indirectly tells that wage earners money in bank deposits till now was swindled by few and once the banks are privatized more Niravs, Mallyas and Rotomacs can swindle the deposits easily and get away with them by handing the share to the top brats holding high offices to escape law, after all it is wage earners who are going to suffer; as of now they are suffering and little extra suffering would not matter much for the government.

The current pathetic mega frauds in Indian PSBs, is shaking the faith in Public sector units. The pros and cons of the Public and Private sector models should be evaluated with an open mind. In several developed countries, it is all Private banks and they too have scandals. It may be fruitful to try a combined Public/Private sector bank model in India. This is similar to the BHEL Tiruchi having ancillary units run by private entrepreneurs. The private entities and the Public BHEL have prospered over the past decades, by this synergy. The Indian government should setup similar mechanisms in the banking sector. With this approach, the bank customers will receive a courteous service from privately operated local branches. Bad loan problems will be brought to a check. Above all, the country will be saved from the evils of the nexus between mega private banks and corrupt politicians.

First of all make necessary laws to capture the bad loans. NPA is the main reason which sluggish the banking industry nowadays. Strict punishment for the loan defaulters will make everything under control. Privatisation is not at all a solution. Creator of NPA & NPA customers should be booked immediately with exemplary punishment. Attach their properties for credit to the respected bank loan account. National Interest should not be affected.