RBI deputy governor suggests selling off PSU bank laggards

India may need a 'Sudarshan Chakra' to clean up the banks effectively, deputy governor said.

The deposit franchise of public sector banks should be sold off to private sector banks, says Viral Acharya, deputy governor, Reserve Bank of India (RBI). 
 
As per him, the pace at which state-run banks are working is slow and the time may be running out to clean-up their balance sheets and re-capitalise.
 
India may need a 'Sudarshan Chakra' to clean up the banks effectively, deputy governor said.
 
He was speaking at the 8th RK Talwar Memorial Lecture in Mumbai on September 7.
 
“I fear time is running out... The Indradhanush was a good plan, but to end the Indian story differently, we need soon a much more powerful plan – “Sudarshan Chakra” – aimed at swiftly, within months if not weeks, for restoring public sector bank health, in current ownership structure or otherwise,” Acharya said.
 
Acharya was working as economics professor at New York University before being appointed deputy governor of India’s central bank in December 2016.
 
“Can the valuable and sizable deposit franchises be sold off to private capital providers so that they can operate as healthy entities rather than be in the intensive care unit under the Reserve Bank’s Prompt Corrective Action (PCA)? Can we start with the relatively smaller banks under PCA as test cases for a decisive overhaul?” Acharya said.
 
He called for urgent steps by PSBs to address NPA crisis.
 
Source: ET.com

Event date: 
Friday, September 8, 2017

Add new comment