public sector banks: India doesn’t need so many public sector banks, says former SBI chief

India wants ‘fewer’ however stronger Public Sector Banks (PSBs), and the smaller ones could possibly be privatised or merged, former SBI chief Arundhati Bhattacharya has mentioned.

Bhattacharya additional mentioned a lot of the objectives which might be anticipated to be achieved by means of privatisation of PSBs also can really be achieved by enabling the state-owned banks and by levelling the enjoying discipline.

“The factor is, privatisation has by no means been the reply to all of the ills,” she advised PTI whereas responding to a query on former RBI governor D Subbarao’s suggestion that the federal government ought to give you a 10-year highway map for privatisation of all PSBs.

Subbarao had not too long ago recommended that the federal government ought to give you a 10-year highway map for privatisation of all PSBs as it could present a lot wanted predictability to stakeholders.

“I do not actually consider that we’d like so many public sector banks both, the variety of PSBs could possibly be decreased. A few of them could possibly be privatised. And perhaps you recognize, the stronger ones might nonetheless stay public sector banks,” mentioned Bhattacharya, who’s presently the chairperson and CEO of Salesforce India.

In 2020, the federal government merged 10 nationalised banks into 4 giant lenders, thereby bringing down the variety of PSBs to 12.

Whereas observing that even at this level of time PSBs will not be enabled sufficient, she asserted that wholesale privatisation of state-owned banks just isn’t the reply.

Subbarao had additionally mentioned that the massive bang strategy to privatisation of public sector banks just isn’t fascinating however on the identical time the difficulty shouldn’t be placed on the again burner.

Within the Union Finances for 2021-22, the federal government introduced its intent to take up the privatisation of two PSBs within the 12 months and accepted a coverage of strategic disinvestment of public sector enterprises.

The federal government think-tank NITI Aayog has already recommended two banks and one insurance coverage firm to the Core Group of Secretaries on Disinvestment for privatisation.

On NITI Aayog’s proposal of establishing full-stack digital banks, Bhattacharya mentioned the individuals within the age group between 17 and 25 appear to be okay with not having brick-and-mortar branches of banks.

“Now, if the shoppers are there…then at some stage in time this (digital banks) will come into play,” she mentioned.

Bhattacharya recalled that in 2010, she had approached the RBI searching for a license of this kind and she or he was advised that there was no such proposal or no such thought within the offing.

Whereas admitting that although there are a number of dangers in establishing full-stack digital banks, she mentioned, “The change is inevitable. Chances are you’ll attempt to cease it, you might attempt to delay it. However you possibly can’t cease it altogether.”

Lately, Niti Aayog had mentioned India has a expertise stack to facilitate digital banks and there may be want for making a regulatory framework for selling this.

The Aayog, in its report titled ‘Digital Banks: A Proposal for Licensing & Regulatory Regime for India’, had made a case and had provided a template and highway map for a digital financial institution licensing and regulatory regime for the nation.

Replying to a query on RBI’s proposed Central Financial institution Digital Foreign money (CBDC), she mentioned the launch of CBDC this 12 months might be a giant step.

“However the digital forex because it exists in the present day doesn’t encourage confidence,” she mentioned.

Noting that one of many largest attributes of forex is that folks holding it must be assured of its worth, Bhattacharya mentioned digital forex the way in which it’s now could be extra like a commodity.

The previous SBI chief opined that digital forex should be on a special type of platform with solely the central financial institution issuing it or mining it and attributing a price to it.

The RBI has proposed to launch CBDC on a pilot foundation this 12 months, as introduced within the Finances by finance minister Nirmala Sitharaman.

Within the Union Finances for 2022-23, the finance minister had mentioned the RBI would roll out a digital forex equal to the rupee within the present monetary 12 months.