Viewpoint: Bank Nationalisation

30 JUL,2019 | MEDC


 

Half a century has passed since the nationalization of 14 banks (all of which had then total deposits exceeding Rs. 50 crore). Whether it was a good or bad move is now not the issue. The point is whether it helped our financial services sector enhance its overall health and competitiveness. The answer to that is mixed.  Total privatization of the banking sector will be politically unacceptable in India, and for justifiable reasons too. While some private sector banks have performed remarkably well in India, there have also been notable failures. The defaults by some large shadow banks also show that private ownership of financial entities is not a panacea to the issues facing the sector. Nevertheless, most PSBs have been left behind in the critical technological race engulfing the banking sector, and they are also not as customer-friendly as many private sector banks. National interest comes first, and privatization or nationalization is secondary to the fact that India’s banking sector today needs reform and restructuring to strengthen its balance sheet.

*Photo Credit: Google

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