SBI has no option but to dilute its equity if it is to maintain its capitaladequacy, and a rights renunciation by the Reserve Bank is one way in whichSBI can get out of bearing the public sector label. There is little reasonfor the bank staff to oppose the move. SBI is a profitable bank, and thereis no reason why the workmen should be tied down to an industry-wide wagesettlement. Privatisation has the potential not only to increaseproductivity, but also for the workmen to share in the gains of that rise inproductivity. It is true, of course, that the bank currently has staff inexcess of its needs. That problem can be solved innovatively, by increasingbanking hours, introducing working in shifts, shifting some support staff toman new ventures in insurance. The problem does not lie in the fear of joblosses. The trouble is, in fact, cultural in nature. Decades of governmentcontrol have resulted in the absence of a commercial culture in PSU banks,and a bureaucratic addiction to pushing files.

The hope is that privatisation will unleash those changes that will lead toa restoration of a commercial and service culture, as opposed to abureaucratic one. For privatisation to work, it will need to be accompaniedby a big change in personnel policies. Lateral recruitment, incentive-linkedsalaries, and accountability to shareholders need to be put in place. Butprivatisation is the first step towards achieving that goal. The governmentneeds to speedily amend the SBI Act to start the process.