RBI governor is correct in demanding more powers over PSBs, says Montek

"The (PNB) fraud by itself cannot be an argument for privatisation. We have seen frauds in even the most sophisticated private banking systems in the West"

Former Planning Commission deputy chairman Montek Singh Ahluwalia favours diluting the Centre’s stake in select public sector banks (PSBs) to below 50 per cent. However, he tells Indivjal Dhasmana that the case for privatising PSBs is independent of the Punjab National Bank (PNB) fraud. He favours abolishing the banking division to avoid micromanagement by the government and says PSBs need flexibility if they are to compete effectively. Edited excerpts:

Following the fraud at PNB, the demand for the privatisation of banks is increasing. What is your take on this?

The fraud by itself cannot be an argument for privatisation. We have