Shah wants a dynamic banking sector

Given the continuous pressure on the government finances on account of the weak performance of the banks, the government should consider privatisation of Public Sector Banks, said Rashesh Shah, President of trade body FICCI.

“This would reduce drain on the exchequer and the money saved could be used for developmental schemes and programs of the government.

“A dynamic banking sector is the need of the hour and we should examine if there is at all a case for public sector domination in the banking sector,” he said as India works on sorting another major banking fraud the issue of Letter of Undertaking at the Punjab National Bank’s Mumbai branch.

Shah elaborated his thoughts, saying India needs sustainable high growth for its socio-economic development which will not be possible in the absence of support from a robust healthy financial sector.

The public-sector banks, which constitute almost 70% of the Indian banking system, are saddled with burgeoning stressed assets, he observed.

The Government has already injected over Rs.2.6 lakh crore in the public-sector banks through recapitalisation in the last eleven years, which has had limited impact in improving the health of public sector banks thus far.

He said FICCI (Federation of Indian Chambers of Commerce and Industry) firmly believes that the recapitalisation of public sector banks alone is not a permanent solution and will not be effective unless the inherent issues related to governance, productivity, risk management, talent, customer service, etc. are resolved. fii-news.com