The central bank also said that if the sole objective is not simply profit maximization, state-run banks have outperformed their private counterparts in promoting financial inclusion and will help countercyclical monetary policy action to gain traction. We do.
“Public sector banks are not solely guided by profit maximization targets and have integrated desirable financial inclusion goals into their objective function unlike PVBs (private banks),” the central bank wrote in its bulletin published today.
Despite criticism of weak balance sheets, state-run lenders have withstood the shock of the Covid-19 pandemic “remarkably well” and the recent merger of PSBs has resulted in consolidation of the sector, making the sector stronger and more robust and competitive. Banks are formed.
reserve Bank of IndiaThe U.S.’s so-called alternative views come amid a firm belief that New Delhi will introduce a bill in Parliament that would facilitate the privatization of state-run banks. The finance ministry is also holding discussions with banking sector regulator RBI on stake ownership and control issues related to privatization. Promoters can currently hold a maximum of 26% stake in private banks.
Finance Minister in the budget for the financial year 22 presented on February 1, 2021 Nirmala Sitharaman The government had said that the government would privatize two public sector banks, besides
whose privatization process is underway, and a general insurer.
In April 2021, NITI Aayog had given its recommendations to the Department of Disinvestment on the banks that should be privatized. Central
And have reportedly been shortlisted, but the names have not been made public. According to people with knowledge of the matter, there has been no significant progress since then.
RBI today said, “The government has already announced its intention to privatize the two banks. Such a gradual approach will ensure that large-scale privatization will help meet the important social objectives of financial inclusion and monetary transmission.” does not produce zero.”
In 2017, five associate banks and Bharatiya Mahila Bank were merged with the country’s largest lender
, In a mega consolidation in 2020, the government had merged 10 nationalized banks into four major lenders, reducing the number of PSBs from 27 in 2017 to 12.
establishment National Asset Reconstruction Company Limited (NARCL) will help clear the old burden of bad loans from their balance sheets and the recently formed National Bank for Financing Infrastructure and Development (NABFID) will provide an alternative channel of infrastructure funding, thus reducing asset liability mismatch concerns. Will do PSB, it added.
“From the traditional view that privatization is the panacea for all ills, economic thinking has come a long way to recognize that a more nuanced approach is needed to pursue it,” the central bank said.