The Rs 11,400 crore fraud at the Punjab National Bank (PNB) has triggered the call for bank privatisation, which is now gathering steam with industry stakeholders’ joining the league for it. FICCI President Rashesh Shah on Friday met Finance Minister Arun Jaitley and urged him to begin the process of bank privatisation in a phased manner, ET Now reported.
He told Arun Jaitley that only 2-3 Public Sector Banks (PSBs) are enough for the country. Earlier, FICCI and Assocham both urged the government to privatise PSBs in the light of the fraud at the PNB in which diamond czar Nirav Modi allegedly colluded with a former bank employee to obtain fake LoUs worth Rs 11,345 crore.
It was Assocham which raised the issue on February 18, four days after the PNB fraud became public, urging the government to reduce its stake in PSBs to less than 50%. Assocham said the banks should be made to work with a sense of accountability and keep the interest of stakeholders and depositors at priority along the lines of private banks.
A day later, FICCI reiterated the idea saying that the problems in the PSBs are deep-rooted and cannot be fixed easily even as the government has a massive Rs 2.11 lakh crore plan for bank recapitalisation. In fact, Godrej chief Adi Godrej, too, said that frauds at private banks were fewer or negligent and that he supported the bank privatisation call.
Banker Uday Kotak expressed aversion to the PNB fraud and said that he was embarased to be a banker. He said that the PNB fraud was an addition to the overall banking stress in the financial system. Besides PNB fraud, the banking system is reeling under a mountain of Rs 9.46 lakh crore loan. While the RBI has tightened rules for stressed asset resolution and the government has announced recap plan to kick-start credit cycle, industry bodies want PSBs to go private altogether, which they say, will bring accountability and efficiency to the system.