RBI’s clarification on the article related to the privatization of public sector banks: The comments made by the Central Reserve Bank in an article regarding the privatization of public-sector banks sparked a debate. The Reserve Bank has now clarified the whole issue. The RBI stated that the article doesn’t oppose privatization, but rather recommends a systematic approach to banking instead of simultaneous privatization.
What RBI stated: The Reserve Bank issued a press release in response to media reports that the RBI was against privatizing Public Sector Banks (PSBs). According to RBI, the article clearly states these views are personal opinions and not those of the Reserve Bank of India.
According to RBI, RBI’s last paragraph states, inter alia that privatization is the solution to all problems from a traditional perspective, while the economic outlook has determined that it requires a prudent approach to pursue.
According to the article, a gradual shift towards privatization can prevent the creation of a zero situation. Let’s say that the government merged 10 banks from nationalization into four large banks in 2020. This has resulted in a drop of 12 public sector banks from 27 in 2017.