Bhattacharya further said that the goals that are expected to be achieved through privatization of public sector banks can actually be achieved by enabling state-owned banks and leveling the playing field.
Replying to a question on former RBI governor D, he told PTI, “The point is that privatization has never been the answer to all ills.” subbaraoIt is suggested that the government come out with a 10-year road map for privatization of all PSBs.
Subbarao had recently suggested that the government should come up with a 10-year road map for privatization of all public sector banks as it would provide the much needed forecast to the stakeholders.
Bhattacharya said, “I really don’t believe that we need so many public sector banks, the number of public sector banks can be less. Some of them may be privatized. And maybe you know, Strong banks can still remain public sector banks.” , who is currently the President and CEO of Salesforce India.
In 2020, the government merged 10 nationalized banks into four major lenders, taking the number of PSBs to 12.
Observing that even at this stage PSBs are not sufficiently efficient, he stressed that wholesale privatization of state-owned banks is not the answer.
Subbarao had also said that a large-scale approach to privatization of public sector banks is not desirable, but at the same time the issue should not be put on the back burner.
In the Union Budget for 2021-22, the government announced the privatization of two public sector banks in the year and approved a policy of strategic disinvestment of public sector enterprises.
Government think-tank NITI Aayog has already suggested two banks and an insurance company to the Core Group of Secretaries on disinvestment for privatization.
On the proposal of NITI Aayog to set up full-stack digital bankBhattacharya said people in the age group of 17 to 25 are fine with banks not having brick-and-mortar branches.
“Now, if there are customers… then at some point this (digital bank) will come into play,” he said.
Bhattacharya recalled that in 2010, he had approached the RBI for such a license and was told that there was no such proposal or any such idea.
Acknowledging that there are a lot of risks involved in setting up a full-stack digital bank, he said, “Change is inevitable. You can try to stop it, you can try to delay it. But you can’t stop it.” Can. Totally.”
Recently, NITI Aayog had said that India has a technology stack to facilitate digital banks and there is a need to create a regulatory framework to promote it.
The commission, in its report titled ‘Digital Banks: A Proposal for Licensing and Regulatory Regime for India’, made a case and offered a template and road map for a digital bank licensing and regulatory regime for the country.
Responding to a question on RBI’s proposed Central Bank Digital Currency (CBDC), he said the introduction of CBDC this year would be a big step.
“But the digital currency that exists today does not inspire confidence,” she said.
Noting that one of the biggest features of currency is that people holding it should be convinced about its value, Bhattacharya said that digital currency is like a commodity the way it is now.
The former SBI chief said the digital currency has to be on a different kind of platform, with only the central bank issuing it or mining it and attributing a value to it.
RBI has proposed to launch CBDC on a pilot basis this year, as announced by Finance Minister Nirmala Sitharaman in the budget.
In the Union Budget for 2022-23, the Finance Minister had said that the RBI will introduce a digital currency equivalent to Rs.