Banking Sector Reform Becomes Big Agenda For Centre
Banking sector reform becomes big agenda after labor-agriculture, RBI Working Group report will show the way.
The recommendations made by the RBI’s internal working group on the change in the holding pattern (ownership stake) of the banks are part of the larger banking reform of the central government.
The central government is already working on the agenda of major changes in public sector banks.
The efforts of the government to set up a large size bank according to the growing economy of the country will be supported by the suggestions of the RBI Working Group.
Based on this, some public sector banks can also move forward with privatization.
Experts believe that the central government is now going to take a decision on banking reforms in recent days, after taking two decisions on labor laws and reforms stuck in agriculture for many years.
The recommendations of the RBI Working Group have particularly emphasized the need for large and broad-based capital banks in India.
It is because of this that it has been recommended that large industrial houses of India should also get more freedom to enter the banking sector.
In this context, several amendments to the existing rules have been recommended.
Arguing about this, this report says that, “As of December 2019, India’s only bank is SBI among the top 100 banks in the world.”
In this list, Spain’s Banca de Sabadell is on the hundredth place with a capital base of Rs 18 lakh crore.
Whereas after SBI, the capital base of all four big banks of India is very less than Banka di Saabadel. ”
If we look at the banking rules of the NDA government from the year 2014.
It is clear that during its tenure there have been continuous decisions to merge public sector banks to make them a strong bank.
In September 2019, it has decided to merge 10 public sector banks into four banks.
The merger process has been implemented in April 2020. Earlier, the decision to merge Dena Bank and Vijaya Bank with Bank of Baroda and merge all its subsidiary banks into SBI was also taken during the NDA government.
Meanwhile, the government had sold its significant stake in state-owned IDBI Bank to Life Insurance Corporation of India.
Now the government is also looking for ways to reduce its existing 47 percent stake in IDBI Bank.
The Finance Ministry is in constant discussion about this. Discussions are also being held with other related ministries and regulatory agencies of the Finance Ministry.
The Prime Minister’s Office is also supportive of major reforms in the banking sector.
The expansion of existing private sector banks and allowing large industrial houses to enter the banking sector will be an important part of this agenda.
Currently, there are three public sector banks in which the government is willing to sell its equity. It has Bank of Maharashtra, Punjab and Sindh Bank and UCO Bank.
The government also wants to exit by selling its stake in IDBI Bank. Very important decisions are expected to be taken soon regarding these four banks.
