Privatisation, no panacea
This pertains to the article ‘The time to privatise PSU banks is now" (January 3). At a time when the economy is in the path of revival, it is essential to strengthen those banks to deliver better performance rather than privatising them. The healthy and credible growth of public sector banks is imperative to avoid the excessive flow and concentration of depositors funds for the growth of some particular segments of the economy.
The inefficiency in the public sector banks is a matter of concern. Despite extensive computerisation and new loans and deposit products and services, public sector banks are lagging behind private sector banks.
The business risks, especially in the area of resource mobilisation and deployment of funds are comparatively high in PSU banks due to the unscientific methods and approaches in envisaging and mitigating them. The quality of the assets is fast deteriorating in public sector banks.
The segments of the economy performing poorly need a helping hand. Public sector banks must accomplish their role to accelerate growth without compromising social development.
In prescribing privatisation of PSBs, the writer Himadri Bhattacharya completely ignores the socio economic realities of India. While evaluating the performances of public banks with private banks, he does not take into account the number of customers handled per day per employee. Whatever would happen to the Jana Dhana accounts opened with so much fanfare by this government?
PSBs are also made to do unremunerative work by the government which reduces their profitability. The millions on EPFO pensions would also find no place in private banks as a monthly pension of around ₹3,000 is not going to be profitable and would need a big labour force to service them.
Many bank customers in rural India need help with the simplest of banking procedures. So digital mode of banking is out for them.
And finally what happens if the banks go bust? Do the depositors lose their money? Insurance by private parties is never going to be enough to cover all losses.
RBL Bank’s worrying signs
The recent developments in RBL Bank are a matter of serious concern. Even though RBI has confirmed the sound financial status of the bank and its capital adequacy ratio is above the stipulated level, the sudden exit of the MD&CEO and appointment of RBI nominee indicate that all is not well.
The asset book needs immediate scrutiny and all loans sanctioned in the last two years especially need to be reviewed.
Another pertinent issue in such widely held banks without a designated promoter is that the MD&CEO doubles as deemed promoter and his exit creates a vacuum. In such cases, it is advisable to have a position of Joint MD beforehand to ensure continuity and smooth succession.
The looming Omicron threat
Apropos ‘Omicron pushing up cases’ (January 3 ), it is shocking to note that totally around 28,000 cases of Covid-19 have come to light in the past few days in the country, which is a reflection of our carelessness.
The Centre as well as the State governments are giving the impression that “all is well”, when perhaps the situation is otherwise. It is an emergency situation for all the States, and they need to deal with it both financially and medically.
It is important to note that the governments in Delhi, Maharastra, Gujarat and West Bengal have already initiated drastic steps in regulating peoples movements for reducing the impact. We don’t know the situation when once the genome sequencing results come out from the tests conducted on affected people. There is no point crying over the split milk when it ca be avoided by timely action.
Katuru Durga Prasad Rao