The former Vice Chairman of NITI Aayog and, currently the Chairman of the 16th Finance Commission of India says the time of privatising PSU Banks has come…
Dr Arvind Panagariya, Chairman, 16th Finance Commission of India and former vice chairman of the country’s apex economic think tank NITI Aayog batted for privatisation of public sector banks once the general elections are over. Dr. Panagariya, who was talking at the Business Today Banking & Economy Summit, said that once the current dispensation returns to office post the general elections, it should be on their agenda.
In my Opinion, this is in fact a good opportunity, when the banks are now in good health, right now they are flourishing, they have solid value. This is a good time to privatise. I think this is good time, when the government comes back in its next term, to start seriously privatising some of the [public sector undertaking] banks,” he said at the summit held at GIFT City, Gandhinagar.
According to Dr. Panagariya, who headed the NITI Aayog earlier for two and half years as its first vice chairman, while earlier the PSU banks were in dire straits due heightened levels of non-performing assets (NPAs), the crises has been tackled by the government by rescuing them through funding. This has removed the risk of them being undervalued, which could have postponed the decision of selling the government’s stake in them. Currently, the PSU banks are performing well and have healthy asset books, which makes it an ideal time for privatising them.
“This is going to be long drawn process and not all [PSU] banks would be privatised together. But the process should begin. Because, I still think that the commercial pressure is required to be the banking to be efficient like manufacturing or other kind of activity. As privatisation progresses, we can judge whether the privatised banks are doing better than those who had not privatised. And then take a call on the other banks at that stage. But the process does need to begin [soon],” he added.
In the past the NPAs were massive and Dr. Panagariya was greatly worried about it. While the episode is behind us, he says, he hates to be duped into thinking that we are in a very secure zone. “But finance is strange animal. In what it may come back to recreating the NPAs etc. is hard to predict,” said Dr. Panagariya, while explaining the need for privatisation.