India will have 8-10 very competitive public sector banks once the “dust settles” and the consolidation phase ends, Union Minister Jayant Sinha said today.
Currently, there are 27 state-owned banks in the country.
“We are doing all the things necessary to really ensure that these banks are vibrant, are competitive and a huge sort of reform agenda we have underway for the banks right now… and of course we are now in the third phase of that,” the Union Minister of State for Finance said.
“We have gone through governance and management reforms, we have gone through the asset quality review…and now we are in the consolidation phase where we are really trying to ensure that at the end of this consolidation phase, we have a set of competitive banks,” Sinha said, speaking at an event organised by Indian Software Product Industry Round Table (iSPIRT) here.
“We have 27 public sector banks right now. When the dust settles, I think we will have may be eight or ten very competitive banks. Some of them are going to be large scale global players, some of them are going to be differentiated banks,” he said.
What the country needs at the end of the day is to ensure financial inclusion does not suffer and at the same time we have competitive institutions, he said.
He added that if we let our public sector institutions like banks, Air India, BSNL/MTNL languish so that they are not competitive, it is akin to a “de facto privatisation”.
“In this de facto privatisation, rather than the value of those enterprises built up over decades with public money going to the public, it goes to the disruptive entrepreneurs or whoever it is who are able to take share away from these public sector enterprises…,” he said.
“There will be de facto privatisation of wealth. We may have some billionaires because of this, but ultimately it is people who will be suffering,” he said.
Recalling Prime Minister Narendra Modi’s message about the role of government as a trustee of people’s wealth, Sinha said, “As the trustee of people, we can’t let all the value in the public sector go into the private sector because that contributes to inequality and uneven distribution of wealth.” (MORE) PTI KSU RC .