Privatize all PSBs except SBI for now: The Economist – Times of India

NEW DELHI: All public sector banks (PSBs) should be privatized and only SBI—due to its outperformance—can remain government-owned for now, a policy paper by two influential economists has recommended.
The policy paper is to be presented at the India Policy Forum on Tuesday. It is written by Poonam Gupta. NCAER Director General and Member, Economic Advisory Council to the Prime Minister (PMEAC), and former Niti Aayog Vice President & Columbia University Professor Arvind Panagariya,
“In principle, the privatization case we have made is applicable to all PSBs, including SBI. But we recognize that within the Indian economic structure and political ethos, no government would want to be without a single PSB in its portfolio. Keeping this in view, the target, whether explicitly stated or left vague, should be to privatize all PSBs other than SBI…”
“Of course, if after a few years, the situation becomes more conducive for privatization, the target can be further extended to include SBI in the privatization list,” the authors argued. He said that with the bulk of banking going to the private sector, reserve Bank of India It will also feel pressure to streamline its processes, rules and regulations to deliver better results as the fact that three-fifths of the banking sector is out of regulatory reach will no longer serve as an explanation for its lapses.