bank strike: Selling PSU banks to corporates ‘colossal mistake’, says Raghuram Rajan as workers plan strike
Rajan, in an interview to PTI, cast doubt on the successful privatisation of inefficient public sector banks and added that if they are sold to corporates, that will be a colossal mistake.
“I think it would be a colossal mistake to sell the banks to industrial houses,” he said, adding that it will also be politically infeasible to sell any decent-sized bank to foreign banks.
This may come as a booster for the United Forum of Bank Unions (UFBU), that has given the call for a nationwide strike to protest against the proposed privatisation of two state-owned lenders, which is likely to impact bank services on Monday and Tuesday.
Many public sector lenders, including the State Bank of India (SBI), have informed their customers that their normal working could be affected at the branches and offices if the planned strike materialises.
Rajan said that while the 2021-22 Budget has placed a lot of weight on privatisation, the history of the government delivering on this is checkered, and he wondered how it will be different this time.
The government has budgeted Rs 1.75 lakh crore from stake sales in public sector companies and financial institutions, including 2 public sector banks and one general insurance company for the next fiscal beginning April 1. However, in the past, the government has failed to meet its divestment targets by huge margins.
The government succeeded in privatising IDBI Bank in 2019 but it was bought by Life Insurance Corporation of India, which is owned by the government itself, effectively retaining the ownership of the bank. Apart from that, the government has managed to merge 14 public sector banks in the last four years.
About the proposed privatisation of two banks, Rajan said there is very little detail on how this will be done. The former RBI chief said perhaps one of India’s private banks may be in a position to acquire a public sector bank, but he is not sure whether they have the appetite for it.
Impact of the bank strike
Services such as deposits and withdrawals at branches, cheque clearances and loan approvals would be affected due to the strike.
UFBU, an umbrella body of nine unions, in a statement claimed that about 10 lakh bank employees and officers of the banks will participate in the strike.
(This story has used content from PTI)
