This refers to A K Bhattacharya's column "Double trouble for PSUs" (Raisina Hill, August 25). The writer has found a flaw in the Narendra Modi-led government's approach to restructure public sector undertakings (PSUs), including public sector banks (PSBs).
It is not easy to restructure PSBs, given the scale of micro-management of these banks during the United Progressive Alliance government's regimes. The legacy of government directives has further confused the top managements in public banks. PSBs have acquired a habit of complying with these directives first and then adhering to the instructions of the Reserve Bank of India. Even if the government ownership is diluted to 33 per cent, what is the guarantee PSUs will get a new governance structure? The 67 per cent shareholders group will not be able to exercise its right over the owner's misdoings, given the highly diversified shareholding pattern existing in PSBs. Further, the class of investors best placed to take lead in such matters - mutual funds and insurance firms - has been missing in action.
It is better to be conservative instead of becoming restless and aggressive. Between conservatism and aggressiveness, the Modi government has been practising a professional approach to ticklish issues.
K V Rao Bangalore
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