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Some PSU banks can be privatised but this isn't the right time: SBI chief

According to him, it would take at least two years for the banks to be strengthened for divestment

IANS  |  New Delhi 

Rajnish Kumar
Rajnish Kumar

The time is not right for privatisation of public sector (PSBs), though some of them could be divested by the after making them financially attractive, according to a top

"The time, though, is not right at present, because these would need time to be strengthened and one has to put behind the turmoil in the sector," Rajnish Kumar, of (SBI), told IANS on the sidelines of a meeting here.

He said that because of the perception that the system was going through a turmoil following the fraud discovered in the Punjab National Bank, the markets may not react favourably to such a move. "In any case, before privatisation, need to be made stronger so that they fetch the right price," he said.

According to him, it would take at least two years for the banks to be strengthened for divestment.

He said he was not per se opposed to privatisation of a "few banks", though the social initiatives undertaken in the system would suffer if many of the government-owned banks were privatised. He said the SBI alone could not manage to meet all the goals set by the on social inclusiveness.

The SBI chairman's attention was drawn to an article by which had argued that all the PSBs, except the SBI, could be privatised to make the banking system more dynamic. Panagariya said the social sector initiatives of the can be ensured by private sector banks through regulation.

Without taking up the argument, Kumar said it was often seen that private sector banks were not too keen to open accounts for people with very low incomes. "We can go and find out which will open an account for a person who has only Rs 200 in his pocket," he added.

Panagariya, at Columbia University, wrote on Wednesday in the that recent steps undertaken by the government and the RBI on recapitalisation, aligning the stressed asset resolution process to the Insolvency and Bankruptcy Code of 2016 and setting up of an enforcement department in the RBI were major steps to create a

"But these are not enough," he said, adding that, in the long run, full modernisation of the banking sector requires further structural reforms.

"One such reform that must be high up on the agenda of the next government is privatisation of all other than the State Bank of India," he wrote.

First Published: Fri, April 06 2018. 21:28 IST
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