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Post the disclosure of the Nirav Modi scam, there have been heated debates within the banking sector on whether the government should privatise public sector banks (PSB). While many industry experts are in favour of privatisation of PSBs, like Uday Kotak who has said that there is no need for so many state-run banks, State Bank of India chief, Rajnish Kumar says otherwise.
Talking on the subject of ownership and whether privatisation of banks would help solve the problem of non performing assets (NPAs) at News18 Network's Rising India Summit, he had said that ownership of a bank should not matter – whether private or public – and that it is all about ethics.
Kumar claimed that the masses have a lot to thank public sector banks for. "Firstly, when you drive on a highway, enter an airport or feel good about the power situation, do not forget the bank. Let us understand the importance of public sector banks," said Kumar.
In an earlier interview to Economic Times, the SBI chairman had said that state-run banks play a definite role for the betterment of society which the private sector would not be willing to do. “There is a huge socio-economic agenda which only public sector banks cater to,’’ said Kumar.
According to him, what people need to keep in mind when talking about privatisation is that it is the government ownership that is saving the day. If it were a private bank, the government would have to step in to bail it out, and this is applicable across the world.
“People who speak about privatisation are missing the point. I am not advocating private or public sector banks or which model is better. All I am saying is that whatever the structure, there will be issues,” he noted.