Letter to BS: Privatising public sector banks to improve professionalism

This refers to Akash Prakash’s thought-provoking piece “PNB and the public sector banks” (February 27). Let us concede that in India, since the Nehruvian days when the public sector commanded some respect, there has been a sponsored lobby out to annihilate public sector undertakings by any means available. We have witnessed the fall of institutions such as UTI.

The methods used included creating legal hurdles in parity in functional matters with the private sector, ensuring weaknesses in top management by interference in top-level appointments and HR issues using the government’s ownership rights and sometimes by allowing infiltration of people of doubtful integrity at higher levels. As regards banking in India, as the source of funds and the clientele served by the public sector and private sector banks are the same, there should not have been much difficulty in providing a level playing field for both categories of banks.

But, in reality, we find that only private sector banks get the full freedom to do business on their own terms (choice of clientele, freedom to operate where they want, no interference in HR-related matters including top-level remunerations). Public sector banks are made answerable to their masters in the finance ministry, accept responsibility for providing credit for all government-sponsored programmes and ensure G Secs are fully subscribed whenever central and state governments enter the market. Of course in making government borrowings successful they have other public sector organisations such as LIC that are expected to support the government on an ongoing basis.

When it comes to privatisation, are we talking about handing over the banks to the Mallyas and Modis who are running away with bank funds? Or are we aiming at professionalisation of the Indian banking system, irrespective of ownership? These are choices that have to be made fast. Time is running out.

M G Warrier   Mumbai

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