Rajiv Lall: Privatisation not a panacea for PSU banks | Business Standard Column
Rajiv Lall: Privatisation not a panacea for PSU banks | Business Standard Column
Also read Rajiv Lall's article published in BS on August 27, 2014.
Also read Rajiv Lall's article published in BS on August 27, 2014.
This is a well articulated piece
on the options before GOI for infusing efficiency into the conduct of Indian
banking system. Perhaps, the example of Jan Dhan Yojana(JDY) is very relevant
if one has to find out the reasons for the inefficient functioning of public
sector organizations in general. The JDY which roped in 2 crore new bank
accounts within days of announcement of the Yojana
had the following salient features:
·
Near total dependence on public sector banks for implementation.
·
Presuming that LIC will meet insurance cost of
750 crores or more out of its revenues.
Abuse of public sector
organizations for achieving near-term political mileage is not a new thing.
But, as asserted in the article, such misuse has a cost in terms of
profitability, efficiency and workforce morale.
There has been a concerted effort from vested
interests to belittle the achievements of India’s public sector which had been
consciously nurtured by successive governments till late 1980’s. Right from
Railways, Post, Defence production,
Atomic Energy, Oil sector, Space Research and Banking our public sector
organizations were doing well. If only they were given a ‘level playing field’
when private sector was welcomed to participate in captive areas, India Growth
Story during the last two decades would have been different with two equally
powerful and prospering sectors(public and private).
Why private sector banks in India
are not able to improve their share in banking business substantially(their
share is much below 30 per cent) should be probed before arguing for
‘privatisation’ of PSU banks. Private sector banks are still reluctant to
accept small depositors or small borrowers as clientele even in urban areas,
not to speak about their unwillingness to reach out to rural areas.
Ideally, government should not
bring down its ownership share below the present level. The effort should be to
make additional contribution from investible surpluses with other public sector
organizations. For the purpose investment in PSU bank capital should be made
attractive by showing that PSU banks also function as efficiently as any good
working private sector company. This will need a change in outlook and
willingness to bring about drastic changes in management and HR practices. Public
confidence in public sector should be restored first.
M G Warrier, Mumbai
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