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The Center should privatize all public sector banks (PSBs) except State Bank of India (SBI), says a report on PSB privatization prepared by National Council of Applied Economic Research (NCAER) Director General Poonam Gupta – a member of The Economic Advisory Council to the Prime Minister — and Arvind Panagariya — a Columbia University professor and former vice-chairman of NITI Aayog.
“We propose that the case for privatization applies to all public radio stations, including SBI. But we realize that within the Indian economic framework and political ethos, the government would like to retain at least one PSB in its portfolio. Thus, keeping in mind its size and relatively better performance, we suggest that the target should be to privatize all PSUs except SBI for now,” says a report titled “Privatization of Public Sector Banks in India Why, How and to where?”
The report said the government should start privatization with two strong banks. “In our opinion, on the way to the privatization of all 11 public public banks, it is important that the first two banks selected for privatization set an example for the success of future privatizations. The selected banks may be those with the highest return on assets and equity and the lowest NPAs in the last five years,” it said. According to the government’s plans, two weak banks are likely to be privatized.
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