Industry body the Associated Chambers of Commerce and Industry of India, or Assocham, on Sunday asked the Narendra Modi government to reduce its stake in all Public Sector Banks to less than 50%, PTI reported. Assocham’s advice came after fraudulent transactions of Rs 11,400 crore were detected at the Punjab National Bank last week.
The industry body said the government should allow Public Sector Banks to function like private lenders with full accountability to their shareholders and protecting depositor interest.
“Public Sector Unit banks, ironically, are slipping from one crisis to the other and there is a limit the government can keep bailing them out at the cost of taxpayers’ money, even if it is the principal shareholder in these lenders,” Assocham said. It claimed that senior managements in these banks spend time taking instructions on innocuous issues from bureaucrats.
“In the process, the core banking functions, including all important risk mitigation and management, take a back seat,” the body said. It added that once the government reduced its stake in Public Sector Banks to below 50%, they would enjoy much more autonomy and the boards and chief executive officers would run the institutions with full accountability.
Assocham Secretary General DS Rawat said that the industry also needs to do some “introspection”. “While we seek more autonomy for the banks, we from the industry must also set certain standards for us for ensuring a clean and best banking and business practices,” he said. He asked the Reserve Bank of India to engage with the industry in finding ways to do clean business.
Limited-time offer: Big stories, small price. Keep independent media alive. Become a Scroll member today!
Our journalism is for everyone. But you can get special privileges by buying an annual Scroll Membership. Sign up today!