Chambers for privatisation of PSBs, Congress against idea

A chorus has grown among industry chambers for privatisation of public sector banks (PSBs), in the wake of the ~110billion fraud in Punjab National Bank (PNB).

The Federation of Indian Chambers of Commerce and Industry (Ficci) said the government should consider privatising these banks (PSBs) as more than ~2.6 trillion capital infusion in the 11 years has had limited impact in improving their health. Privatisation would reduce the drain on the exchequer, the chamber said.

Ficci President Rashesh Shah argued a dynamic banking sector was the need of the hour. The Associated Chambers of Commerce and Industry of India (Assocham) said the fraud in PNB should act as a strong trigger for the government to reduce its stake in it to less than 50 per cent. It argued PSBs should be allowed to function on the lines of private sector lenders.

The Congress, however, called the idea “preposterous” and “irresponsible”. Party spokesperson Manish Tewari said it would oppose any move to privatise nationalised banks. “You are unable to deal with NPAs (non-performing assets) and banking fraud and you say the entire banking system be privatised.”

Enough data was available to prove NPAs as a ratio of total deposits of PSBs was lower when compared to private banks.

“We had hoped the chief economic advisor and others, including Vinod Rai of the Banks Board Bureau, would have suggested ways to strengthen banking regulations. Instead, they want PSBs to be privatised. This needs to be nipped in the bud,” Tewari said. “Bank NPAs and bank frauds are different. Let the government tell the country the action that has been taken in each of the NPAs and bank fraud cases of last five years.”

The Congress also released documents that show that the court of the chief judicial magistrate of Chandigarh had declared chairman and managing director of Gitanjali Gems Mehul Choksi a proclaimed offender and absconder in August 2017. Choksi is the business partner of jeweller Nirav Modi and involved in the ~114 billion PNB fraud.

“This new revelation raises profound questions as to who facilitated the escape of these two gentlemen from the country, particularly Choksi,” Tewari said. “Would the prime minister and the finance minister tell the country who facilitated Choksi’s escape.”