Governance more important than ownership of banks, says SBI chairman

A government move to reduce its stake in some public sector banks will not do any harm, he says.

State Bank of India (SBI) chairman Rajnish Kumar on Monday said it doesn’t matter who owns a bank but what matters is how it is governed.

His statement comes amid the Centre’s plan to bring down government stake in some public sector banks (PSBs).

In his speech at the Seventh G Ramachandran Memorial Lecture organised by South India Chamber of Commerce & Industry, he said the banking system has developed a lot.

“There are only two choices. Small private sector companies must find a niche for themselves. Otherwise, they cannot compete against the large public or private sector,” he said.

The move to privatise some public sector banks will not do any harm to the banking sector or the economy, he felt.

“We have a scenario where SBI, and at least six large banks, post merger, can take care of the social banking agenda of the government while the rest can be in the private sector,” said Kumar.

The general perception is that if the private sector goes down, it is not tax payers’ money. “I don’t believe in that. Any enterprise going there is a loss to the taxpayers, be it private or public. Closure of any enterprise is against the interest of the common man and the tax payers of the country,” he added.

Speaking on digitisation, he said, mobile banking may become the most preferred banking channel, even more than internet banking, in the days to come.

“Out of 100 transactions at SBI, only nine are being made in branches. While transactions at ATMs at the time of demonetisation were around 55 per cent, now they are down to around 30 per cent. Digital and mobile banking have seen a rise from 25-30 per cent to 55 per cent now. Going ahead, internet banking and mobile banking are likely to flourish,” he added.