RBI has raised questions on large scale privatization of public sector banks.
New Mumbai : RBI has raised questions on the large scale privatization of public sector banks. The massive privatization of public sector banks is doing more harm than good. Therefore, the Reserve Bank of India (RBI) has warned the central government that the government should proceed with caution in this matter. An RBI article states that private sector banks (PVBs) are more efficient in increasing profitability. Whereas public sector banks have done a good job in promoting financial inclusion (providing facilities to all the citizens of the country).
Privatization is not a new concept and its pros and cons are well known. The RBI said privatization has traditionally been the panacea for all problems, while economic considerations suggest a cautious approach is needed to move forward.
What did public sector banks do?
Public sector banks do not look only at profit. These banks have greatly promoted financial investment in carbon-reducing industries.
He promoted financial inclusion in urban and rural areas. Similarly, Brazil, China, Germany, Japan and European countries have promoted green transition, the article cited the study.
Earlier, the government had merged five associate banks of SBI and Bharatiya Mahila Bank with State Bank of India.
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Where's the merger?
- United Bank of India and Oriental Bank of Commerce: Punjab National Bank
- Syndicate Bank in Canara Bank
- Merger of Allahabad Bank with Indian Bank
- Andhra Bank and Corporation Bank: Union Bank of India
- Dena Bank and Vijaya Bank: In Bank of Baroda
Privatization of 10 Banks
In 2020, the central government merged 10 state-owned banks into four larger banks. The number of public sector banks has increased to 12. Which was 27 in 2017.
...so what would happen?
It is feared that if the government gradually moves towards privatization, there will be no move towards achieving the social goals of financial inclusion and monetary measures.
