Redefine Public Sector
M G Warrier
July 24, 2019
Redefine public sector
This refers to Prof TT Ram Mohan’s article “No light at the end of the tunnel?” (Business Standard, Finger on the Pulse, July 24). Last 5 years have seen the Indian financial sector getting churned chaotically in unprecedented proportions. Contributing factors included diverse interests of depositors and borrowers, owners ( mainly GOI) and supervisors and regulators (represented by RBI) and the short-term views on long-term policy issues taken by political leadership represented by GOI.
In banking industry which is dependent on deposits from public for bulk resources, the bifurcation of institutions into public and private sectors for the purpose of regulation and supervision as also social responsibilities is fallacious. Aspects like the quality of management and the level of specialization in serving the clientele should differentiate institution ‘A’ from institution ‘B’ in the eyes of the public who make informed choices.
Instead of thinking in terms of quick-fix solutions like recapitalization and privatization, GOI should fast-track consolidation and infusion of professionalism in running public sector banks. The short tenures of Dr Raghuram Rajan, Dr Urjit Patel and now Dr Viral Acharya at RBI in a way benefited policy makers in Delhi. They received unbiased opinions about the ‘Do’s and Don’ts’ relating to the management of fiscal and monetary policies and supervision of institutions in the financial sector from independent celebrity economists.M G Warrier, Mumbai