Privatisation cannot solve all bank woes: RBI ex-dy guv

Kolkata: Bank privatisation cannot solve all the ills and myth has long busted that ownership changes behaviour, feels former Reserve Bank of India deputy governor S S Mundra. He was addressing a seminar organised by the Bengal Chamber of Commerce and Industry (BCC&I).
The government has announced its intent for privatising two banks and a general insurance company in 2021-22. Mundra 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 is much safer to put money in government-owned banks.
“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 at the webinar.
PNB chief executive S S 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.