Thread by @munshi1857

state-owned banks. have an important social objective—to meet the needs of the most vulnerable sections of the economy. Does Private Banks do that ?
PSBs are directed and obligated to help weaker sector despite huge loss, No private Bank would invest in it.
#StopPrivatization

PVTsn makes mngmnt more accountable to markets ✅
But
➡️PSBs,having been partially privatized since 92 banking sector reforms,are already subject to stock-market discipline-including corporate disclosures & regular audited financial reports.
➡️mngmnt is already accountable
2/n

➡️PVTsn would foster competition which would reduce cost of financial intermediation & improve bank profitability✅
BUT
➡️it is unclear how a change in ownership from gov to private hands would increase competition if the number of participants in the industry remain the same
3/n

➡️Though, After amalgamation of major banks Fewer but stronger provided more effective competition than a large number of weak banks.

➡️Healthy competition k liye Privatisation is not the only option
#StopPrivatization
#SavePSB

4/n

➡️state control encourages mngmnt complacency as managers are secure in the knowledge the government will always come to the bank’s rescue if it is in trouble✅
BUT
➡️is ownership the sole criteria for gov intervention? I don't think so
#StopPrivatization
#SavePSBs

5/n

➡️Gov have in past bailed out banks that were considered “too big to fail", regardless of ownership, to prevent a systemic collapse.
➡️So the argument doesn't support that PVTsn is only option. No matter you are pvt/public,if you are big corp, govt has to aid to save Economy
6/n

➡️PSBs/PSUs are hobbled by bureaucratic restrictions & undue political interference,making the sector susceptible to elite capture.
political meddling can seriously hamper performance at PSBs.
India’s mounting bad debt problem may be partly a reflection of #CronyCapitalism
7/n

where political consideration may have forced hand of #bankers to extend credit to several powerful business houses who have since defaulted ✅
BUT
➡️PVTsn without strengthening regulatory control &imporoving governance won't prevent fraud,or curtail undue exposure to risk
8/n

➡️What PSBs/PSUs need is a new set or regulations& better efficient governance, without these two, whether be it pvt or public firm will fail no matter what
#StopPrivatization
#SavePSBs

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