Don’t merge loss-making banks, privatise them

Abstract

Privatisation will ensure that market discipline forces these banks to rectify their strategy. The final results of the public sector banks (PSBs) for fiscal 2015-16 have been declared. The results, as expected, were poor and the government, being owner of PSBs, has been paying utmost attention to the banking situation and initiating various actions such as strengthening the selection process of the top management, setting up a stressed assets fund and recovery tribunal, and legislating a bankruptcy code.

Finance Minister Arun Jaitley observed that the losses by banks were mainly on account of higher provisioning of bad loans, especially in the last two quarters, in well-known stressed sectors such as infrastructure, steel, and textiles, and that the government has sufficiently empowered banks to recover their dues. The Reserve Bank of India (RBI) has also initiated major policy steps to help PSBs to maintain robust books. Read more at: https://www.thehindu.com/opinion/columns/Don%E2%80%99t-merge-loss-making-banks-privatise-them/article14463397.ece