Need to divest stakes in PSBs in graceful manner, says Viral Acharya

Acharya said that because the RBI does not distinguish in its rules between public and private sector banks it is forced to adopt weaker standards for the system as a whole

Former RBI Deputy Governor Viral V Acharya on Friday cautioned against fire sale of state-owned lenders, saying that disinvestment should be undertaken in a graceful manner at the right price and also made a case for privatisation of some healthy public sector banks.

Divestment beyond majority stake is the first step because it will help relax the fiscal constraint in terms of dependence of public sector banks on the government for capital, he said at a virtual event to release his book titled 'Quest for Restoring Financial Stability in India'.

"Perhaps reprivatisation of some of the healthiest public sector banks should also