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RBI issues clarification on report on privatisation of PSBs

August 22, 2022

RBI issues clarification on report on privatisation of PSBs
The Reserve Bank of India (RBI) on Friday issued a clarification on a bulletin article on privatisation of public sector banks.

A press release by RBI stated the following, “As clearly stated in the article itself, the views expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India.

The Press Release relating to the August 2022 Bulletin highlights that “the gradual approach to privatisation adopted by the government can ensure that a void is not created in fulfilling the social objective of financial inclusion”.

“From the conventional perspective that privatisation is a panacea for all ills, the economic thinking has come a long way to acknowledge that a more nuanced approach is required while pursuing it”.

“Recent mega merger of PSBs has resulted in consolidation of the sector, creating stronger and more robust and competitive banks”.

“A big bang approach of privatisation of these banks may do more harm than good. The government has already announced its intention to privatize two banks. Such a gradual approach would ensure that large scale privatisation does not create a void in fulfilling important social objectives of financial inclusion and monetary transmission.”

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