Proof of concept: Govt should consider a test case for bank privatisation

Demand for erstwhile public sector banks might build up among possible acquirers, leading to the discovery of more remunerative prices

The state-controlled section of India’s banking sector continues to be a major problem for policy makers. Not only is its slow credit growth delaying the revival in private sector investment, which is crucial for the economy’s return to a higher growth trajectory, but also recent revelations about allegedly fraudulent letters of undertaking (LoUs) being issued to companies controlled by jeweller Nirav Modi have highlighted the continuing problems with governance in these banks. No argument, practical or theoretical, can be made now for such a large proportion of India’s banking sector to be in the hands of the government. There has