by On this day (19th July) 53 years ago, 14 private banks were nationalised. Then again in April 1980, six more private banks were nationalised. SBI was brought under the government control earlier in 1955 and its 7 associates in 1960. These 28 public-sector banks (PSBs) had their dominance until 1995 with almost 90 percent market share. The remaining market share was with the private banks. Then came the tech-savvy new generation private banks following liberalization of the economy in 1991. Much water has flown under the bridge since then. Now the number of the PSBs has come down from 28 to 12 following a series of mergers and amalgamations. The market share of the PSBs has also come down from 90% to below 60% in the last 30 years.
It is likely that out of the 12 PSBs, two are going to change hands in near future, since it has been envisaged in the Union Budget for 2021-22. A paper co-authored by two noted economists–former Niti Aayog vice-chairman and the NCAER chief—has recommended that all PSBs barring SBI be privatised. The reasons for the proposed privatisation emanate from the fact that PSBs have underperformed in the areas of asset quality, returns on equity/dividend payments and the valuation aspects. Of course, the PSBs need to pay heed to some of the harsh realities…Check for latest Daily News on Banking