Govt-as-investor in public sector banks

The fundamental point is that India's PSBs need to be cleaned up and made saleable before the government can think of divesting a large part of its ownership in the restructured banks

Everybody’s favourite topic these days is the need to privatise public sector banks (PSBs), especially after the scam at Punjab National Bank (PNB). Will the government listen to the chorus? It did not in the past, and is unlikely to do so now, with an election year approaching fast. The need for doing something on privatisation has been reiterated repeatedly, starting with the Narasimhan panel, which suggested that the weaker banks should be closed down, if they cannot fend for themselves.

Of late, Finance Minister Arun Jaitley has been talking about the need for mergers and consolidation and the latest Economic