First, recognise that the bottom 10 banks cannot become viable under government control and the prevailing PSB culture; no amount of capital infusion by the government will suffice.
These banks must be sold to private equity funds [PE] with a minimum of 51 per cent holding, with a call option for the government or other PSBs to buy them back after, say, a minimum of five years and a maximum of 10 years at a predetermined price formula. PEs will bring in good capital, invest in technology and adopt best managerial practices. For this, the Nationalisation of Banks Act, 1969, should be amended — the Loka Sabha can pass it as a Money Bill.
For a model of what PEs can do, look towards the earlier fledging Ratnakar Bank in Maharashtra that was saved by PEs and a team of young professionals. Today, it is in the national reckoning after completing a successful initial public offering at the end five-six years.
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