On the chessboard: 2021 will see tectonic shifts in the banking industry

India Inc could make a re-entry into commercial banking - 40 years after the last round of bank nationalisation in 1980

Capital concerns

Recapitalisation of state-run banks may have outlived its purpose. It’s stuck on two counts — very little fiscal headroom, and the low valuations of these banks. While privatisation remains an option, the current low valuations make it unattractive. Between 2015-16 and 2019-20, the Centre pumped in Rs 3.56 trillion into these banks through direct subscription to equity shares and recapitalisation bonds. Their market capitalisation is a tad above Rs 4 trillion. The Centre may have to go in for the bank holding company model. This will also entail governance changes.

This is indicated by the decision to delay