‘Views of authors’: RBI clarifies on article on privatisation of public banks

The Reserve Bank of India on Friday issued a clarification on its article by financial experts on privatisation of public sector banks wherein they had urged the Narendra Modi government to have a gradual approach.

The central bank said that the article has views expressed by the researchers and do not represent the views of the RBI. The central bank in its clarification quoted sections of the article which stated that the gradual approach to privatisation adopted by the government can ensure that a void is not created in fulfilling the social objective of financial inclusion.

The article had experts stating that the recent mega merger of public sector banks had resulted in the consolidation of the sector, creating stronger and more robust and competitive banks.

“A big bang approach of privatisation of these banks may do more harm than good. The government has already announced its intention to privatize two banks. Such a gradual approach would ensure that large scale privatisation does not create a void in fulfilling important social objectives of financial inclusion and monetary transmission,” the article had stated.

“Thus, the researchers are of the view that instead of a big bang approach, a gradual approach as announced by the Government would result in better outcomes,” the RBI said.