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Jaimini Bhagwati: Public versus private banks

It is not ownership but the way banks are structured and run that is important for financial sector health

Topics
Psbs,public Sector Banks, Npas

Jaimini Bhagwati 

Jaimini Bhagwati

The Indian government is persistently advised to reduce its ownership in public sector banks (PSBs) to below 50 per cent. This is to be expected given that non-performing assets (NPAs) of PSBs have risen to alarming levels. Table I shows that NPAs of PSBs are considerably higher than comparable numbers for private banks.

According to those who would privatise Indian PSBs, tax-payers would be less exposed to the risk of recapitalising these banks at periodic intervals. Additionally, private banks are assumed to be more efficient at intermediating between depositors and investors. However, it ...

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First Published: Wed, April 20 2016. 21:50 IST
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