Talking Point: PSBs could go private, but the time is not now, says SBI Chairman

“The time, though, is not right at present, because these banks would need time to be strengthened and one has to put behind the turmoil in the banking sector,” Rajnish Kumar, Chairman, State Bank of India (SBI), said here. He said because of the perception that the banking system was going through a turmoil following the fraud discovered in the Punjab National Bank, the markets may not react favourably to such a move. 

“In any case, before privatisation, banks need to be made stronger so that they fetch the right price,” he said. According to him, it would take at least two years for the banks to be strengthened for divestment. He said he was not per se opposed to privatisation of a “few banks”, though the social initiatives undertaken in the banking system would suffer if many of the government-owned banks were privatised. 

He said the SBI alone could not manage to meet all the goals set by the government on social inclusiveness. The SBI Chairman’s attention was drawn to an article by economist Arvind Panagariya which had argued that all the PSBs, except the SBI, could be privatised to make the banking system more dynamic. 

Panagariya had said the social sector initiatives of the government can be ensured by private sector banks through regulation. Without taking up the argument, Kumar said it was often seen that private sector banks were not too keen to open accounts for people with negligible incomes. 

“We can go and find out which private sector bank will open an account for a person who has only Rs 200 in his pocket,” he added.