Attaching highest priority to the health of public sector banks, Finance Minister Arun Jaitley on Tuesday said India is not ready for their privatisation and the present characteristics of PSU banks will continue except for IDBI Bank.
We are trying to consolidate some of the banks, which may otherwise find it difficult in a competitive environment… In one case we are thinking of reducing the government stake to 49 percent in IDBI Bank,” the minister said here at the Economist India Summit.
Jaitley added that in a consolidated manner they would probably continue to be in the present state.
“But I think India still realises that there has been a very important role that some of these banks have performed,” he said.
Asked why privatisation in financial space is not taking place, he said, “In order to reach a particular level of reform you have to evolve into that stage of public opinion… In funding large part of social sector in India, public sector banks, despite competition had a far larger contribution.”
According to Jaitley, the public or political opinion is still to converge to a point where one can start thinking in terms of any form of privatisation in the sector.
“Some selective reforms do take place, for instance, we have announced a policy that government holdings (in banks) to be brought down to 52 percent,” he added.
On stressed assets, the finance minister said the Centre has initiated a large number of steps to reduce NPAs.
“There is not a single sector that we have left out in terms of resolving issues… If you were to ask me after the passage and may be possible implementation of GST, while that process is on what would be my priority at the moment, it is certainly the health of public sector banks,” he said.