It refers to “Privatizing public sector banks is not a good idea” (April 6). The need to privatize public sector banks (PSBs) is not only due to high NPAs. The expansion of PSBs began in the 1970s with the opening of branches in rural and non-banking areas and these banks have rendered excellent service in instilling banking habits in the masses. There is no longer a need for such a network of bank branches now due to digitization and consolidation being required.
In the process, the need for so many PSBs does not arise and the government owning fewer professionally and profitably managed banks rather than having stakes in so many banks is appropriate. The government may also have a stake in only a few banks for its own purposes and operate them autonomously. It is time for PSBs to be run as independent business units and not always to be used as saviors from failing banks. A good mix of PSBs, private banks, foreign banks, cooperative banks and small financial banks is good for the growth of the economy.
The stumbling blocks
Since the nationalization of banks in 1969 and 1980, nationalized banks have contributed significantly to economic growth and social development. The growth of the branch network, rural development, financial intermediation and financial inclusion are largely due to the vital role played by PSBs. The excessive expansion of credit beyond the absorptive capacity of different segments of the economy from time to time has paved the way for an exponential growth in bad loans. Policy measures and tools to deal with bad debts have not yielded the desired results. The negative impact Covid induced on the economy has also taken a heavy toll on banks, especially PSBs, as they are at the forefront of efforts to revive the economy.
The poor performance of PSBs is largely due to government interventions, inadequate banking regulator oversight and control, ineffective governance policies and poor risk management. This forces the government to inject capital to comply with regulatory requirements, thus placing a heavy financial burden on the treasury.
This is the “primary foam” (April 6). Bull markets always see a flurry of IPOs as all of these companies want to profit from the boom. But it is encouraging that the quality of these IPOs is now better, which means investor money is less risky. However, for retail investors, the current situation is not ideal for parking money in IPOs. Instead, they should invest in listed stocks that have a proven track record or go the mutual fund route. Retail investors shouldn’t risk taking too much exposure in IPOs.
When Prime Minister Narendra Modi held a high-level meeting with senior government officials and prominent health experts on Sunday, he stressed the importance for people to adhere to established Covid-19 health protocols. Daily Covid-19 cases had reached a grim milestone of one lakh, with Maharashtra accounting for a significant portion of cases. There is no doubt that this is a matter of serious concern. It took just 20 days for the daily tally to drop from 20,000 to 80,000 in the second wave, compared to 64 days for a similar surge in the first wave.
This not only suggests how quickly the second wave was on the rise, but also gave credit to the idea that a new dual variant of Covid-19 and the UK variant, with its ability to infect humans more easily. and re-infecting people, could fuel the current second wave.
A worrying aspect of the second wave is the growing number of children who easily fall prey to Covid-19 infections.
Under these circumstances, it is important to step up vaccination and ensure that people do not show any laxity and squander any gains the country has made so far in its long battle against contagion.
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