RBI supports govt’s gradual privatisation of PSU banks

The RBI clarified that researchers at the central bank were of the view that instead of a bigbang approach to public sector bank privatisation, a gradual approach — as announced by the government — would result in better outcomes.

The central bank was reacting to reports based on the article ‘Privatisation of Public Sector Banks: An Alternate Perspective’ published in the August 2022 issue of RBI Bulletin. It was viewed by some as RBI being opposed to privatisation of PSU banks. “As clearly stated in the article itself, the views expressed are those of the authors and do not represent the views of the RBI,” according to an RBI statement. “The press release relating to the August Bulletin highlights that “the gradual approach to privatisation adopted by the government can ensure that avoid is not created in fulfilling the social objective of financial inclusion,” the statement said.

A big-bang approach of privatisation of PSU banks may do more harm than good, an article in the RBI bulletin said and backed a more nuanced approach.