India doesn't need so many PSBs

New Delhi: India needs fewer, but stronger public-sector banks (PSBs), and the smaller ones could be privatised or merged, former SBI chief Arundhati Bhattacharya said. Bhattacharya further said much of the goals that are expected to be achieved through privatisation of PSBs can also actually be achieved by enabling the state-owned banks and by levelling the playing field.

"The thing is, privatisation has never been the answer to all the ills," she said while responding to a question on former RBI governor D Subbarao's suggestion that the government should come up with a 10-year road map for privatisation of all PSBs. Subbarao had recently suggested that the government should come up with a 10-year road map for privatisation of all PSBs as it would provide much needed predictability to stakeholders. "I don't really believe that we need so many public sector banks either, the number of PSBs could be decreased. "Some of them could be privatised. And maybe you know, the stronger ones could still remain public sector banks," said Bhattacharya, who is currently the chairperson and CEO of Salesforce India. In 2020, the government merged 10 nationalised banks into four large lenders, thereby bringing down the number of PSBs to 12.

While observing that even at this point of time PSBs are not enabled enough, she asserted that wholesale privatisation of state-owned banks is not the answer. Subbarao had also said that the big bang approach to privatisation 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 its intent to take up the privatisation of two PSBs in the year and approved a policy of strategic disinvestment of public sector enterprises. The government think-tank NITI Aayog has already suggested two banks and one insurance company to the Core Group of Secretaries on Disinvestment for privatisation.

On NITI Aayog's proposal of setting up full-stack digital banks, Bhattacharya said the people in the age group between 17 and 25 seem to be okay with not having brick-and-mortar branches of banks. "Now, if the customers are there...then at some point of time this (digital banks) will come into play," she said. Bhattacharya recalled that in 2010, she had approached the RBI seeking a license of this sort and she was told that there was no such proposal or no such thought in the offing. While admitting that even though there are a lot of risks in setting up full-stack digital banks, she said, "The change is inevitable. You may try to stop it, you may try to delay it. But you can't stop it altogether."

However, privatisation has never been the answer to all the ills

- Arundhati Bhattacharya