Bank privatisation: In February 2018, the then Finance Minister Arun Jaitley outrightly rejected the privatization of banks and said that public sector banks are very helpful in running government schemes smoothly.
Bank privatisation: Discussion on this issue has intensified after the announcement of privatization of two more public sector banks in the budget. At a program in Mumbai on Sunday, Finance Minister Nirmala Sitharaman said that the government will work closely with the Reserve Bank on privatization. However, he refused to tell about which or which banks are being selected for sale. Banking sector experts and economic experts are giving their opinion about privatization. Some people say that the government should privatize big and well performing banks. Some experts say that privatization of banks which are not doing well is most important.
On this discussion, Swaminathan Iyer, Consulting Editor and Senior Economic Expert of Economic Times has told some important things through an article in Times of India. He has said that while Finance Minister, Arun Jaitley was against the privatization of public sector banks. He said that public sector banks are very helpful in running government schemes smoothly. He said that PSB can be asked to finance such big projects of the government, where the fiscal measures of the government are decreasing. However, the present Modi government has completely changed its mind and is now moving towards privatization.
The decision to privatize is not politically acceptable – Jaitley
Speaking at the Economic Times Global Business Summit in February 2018, the then Finance Minister Arun Jaitley opposed the privatization of public sector banks. At the same time, a case of 11400 crore bank fraud with Punjab National Bank came on behalf of Nirav Modi. Speaking at the summit, Arun Jaitley had said that the decision to privatize public sector banks may not be politically acceptable. He said that political consensus is necessary for this. Apart from this, changes will also have to be made in the Banking Regulation Act. Jaitley had clearly said that my impression is that Indian political thought is not compatible with this idea. The decision to privatize will be very challenging.
Which bank will bid, who may be involved, two major questions
Iyer has raised two major questions in his article. Who can join this bid and the government will decide which banks to privatize. He said that the government should allow foreign banks to make privatization and disinvestment successful. He also has enough capital and wants to enter the Indian banking sector. Good investors will only be willing to buy big banks whose performance is better. They will not be willing to buy small banks. Foreign banks will also be ready to pay a reasonable price. However, he questioned the intent of the bureaucracy regarding this. He says that bureaucracy wants to keep control. In such a situation, privatization of big banks will not be easy. He also said that big private banks of the country can also be buyers of these banks, but due to Coron, their economic condition has also become thin.
CEA talked about four state-owned banks
After the budget announcement, Chief Economic Advisor KV Subramaniam welcomed the decision to privatize state-run banks in an interview with Bloomberg. He said that this is just the beginning. In the coming days, there will be only four to less public sector banks in the country. KV Subramaniam said that in future banking will join the strategic sector and there will be only 4 public sector banks in the country. Apart from this, all banks are privatized. Currently there are 12 public sector banks in the country. After the announcement of privatization of 2 banks, this will come down to 10. Looking at the history, on July 19, 1969, the country’s immediate Prime Minister and Finance Minister Indira Gandhi nationalized 14 big private banks. With this decision, the government controlled 80 percent of the banking assets.
