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”.

The concluding paragraph of the article, inter-alia, mentions that:


The release also stated that the researchers are of the view that instead of a big bang approach, a gradual approach as announced by the government would result in better outcomes.

The RBI had said that India's state-run banks have gained greater market confidence in recent years and a big-bang approach to privatise these lenders may do more harm than good.

It said that if the sole motive is not only profit maximisation, then state-run banks have scored over the private counterparts in promoting financial inclusion and they help the countercyclical monetary policy action to gain traction.

"Public sector banks are not entirely guided by the profit maximization goal alone and have integrated the desirable financial inclusion goals in their objective function unlike PVBs (private banks)," the central bank wrote in its bulletin published on Thursday.

(With inputs from agencies)