‘Stress in banking sector should not be alibi for privatisation’, says report
- The committee recommended that the Reserve Bank of India—the regulator—and the government—the shareholder—should formulate coherent policy responses that will enable and empower the banks.
The stress in the banking sector should not be an alibi for privatising state-owned banks; instead, they should be empowered to deal with the present challenges, a parliamentary panel said in a report tabled in Lok Sabha on Tuesday.
The standing committee on finance chaired by Bharatiya Janata Party (BJP) leader Jayant Sinha said in its report that the situation in the banking sector was no doubt grim, but the panel remained optimistic that as most of the large legacy bad loans get resolved either through bankruptcy resolution process or outside it, the consequential recoveries will help the banks to shore up their balance sheets.
It is necessary and prudent that these large legacy non-performing assets are segregated for resolution, and the balance sheet of banks sanitised, allowing them to move ahead with their regular business, the report said.
The committee recommended that the Reserve Bank of India—the regulator—and the government—the shareholder—should formulate coherent policy responses that will enable and empower the banks.
“The committee would like to emphasize that the present crisis, which the committee believes is transient, should not become an alibi for privatization of public sector banks,” the report said.