State Bank of India (SBI) Chairman Dinesh Kumar Khara has rightly said that performance is NOT based on who owns it. He said it in response to a paper by Columbia University Professor Arvind Panagariya & Poonam Gupta of NCAER. They had recently suggested privatisation of all Public sector Banks except SBI.
14 Banks were nationalised in July,1969 & other 6 Banks were nationalised in 1980. It was the need of the hour then as the banks were only concentrating in Big cities & large chunk of our country remained unbanked.Then the government & RBI came out with a policy that if a bank wants to open a branch in Metropolitan area,they have to open atleast Two branches in Rural areas which were unbanked. This move by the government enabled banks to finance agriculture & allied activities which was a big relief to people in rural areas. The banks then financed for agriculture,its related activities thus relieving the poor farmers from the clutches of money lenders. No Private sector banks were ready to move & Operate in the rural areas then. Now, we are in 2022 after half a century of bank nationalisation in 1969,the network of branches in rural/semi urban areas of the country are fully covered mostly by SBI & Nationalised banks .
Privatisation is not a panacea for all the ills in the banking sector. Even some private banks have failed right from the days of Palai Central Bank which was 17th largest scheduled Bank in 1960.What Nationalised banks require is Management by Professionals,Non Interference by Government .The government can reduce their stake in Nationalised banks to 51 % or even less to 35% to 40% by offering for sale to the Indian Public. & the Board should have more successful bankers as Directors.
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