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Former RBI Governor Y V Reddy has said that the idea of government first restructuring public sector banks (PSBs) and then selling a stake in them is a flawed idea as restructuring invariably comes with a cost.
"The idea that you consolidate PSB banks, restructure and then sell is wrong. Ultimately, restructuring has invariably some cost. Let the fellow do the restructuring who is taking over, then you doing it," the former RBI Governor said in an interview to PTI.
Asked to comment on the Finance Ministry requesting Monetary Policy Committee (MPC) members for a meeting ahead of the second bi-monthly policy review of 2017-18 last month, Reddy said that MPC members are competent enough as they are also economists.
"If they (Finmin) have called them (MPC member) on the capacity of economist then it is different — purely as MPC then yes — that's an official communication," Reddy said, adding, "I think, what has happened is MPC has just started. The conventions are yet to develop and procedures are yet to develop."
Referring to the Insolvency and Bankruptcy Code (IBC), he noted that it is good that the legislative framework has been put in place.
"It's (IBC) an important development. Therefore, certainly, it is a desirable thing," Reddy said.
Asked about his opinion of the present RBI Governor Urjit Patel who rarely communicates with the media, Reddy pointed out that every RBI Governor has his own style of functioning.
"For instance, C Rangarajan was speaking quite frequently as RBI Governor, Bimal Jalan used to speak less frequently, but used the deputy governors. D Subbarao used to talk frequently. So, it depends," he noted.
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