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Lok Sabha Elections 2019: Experts discuss state of the banking sector

Updated : April 09, 2019 02:22 PM IST

CNBC-TV18, in its new series “Election 2019 State Of The Market”, analyses past elections and how governments have dealt with various issues in the key sectors.

To discuss the performance of the banking sector, we spoke to AK Purwar, industry expert; SS Mundra, former RBI deputy governor; and Neeraj Gambhir, money market expert.

Mundra said “Jan Dhan has been a good move. It was taken on a mission mode bringing so many people into the banking system in a given time. On an overall level, it has worked satisfactorily and it was a building block in terms of moving the economy towards digital transaction and direct benefit transfer."

Talking about the consolidation of PSU banks, Purwar said, "The way in which the banking system is evolving there is no necessity for a large number of public sector banks, there has to be a small number of them."

“Consolidation of public sector banks has been started well. The State Bank of India’s merger with associate banks was a very good move. Merger of Dena Bank and Vijaya Bank with Bank of Baroda has been good and BoB has been the second best bank,” said Purwar, adding that the IDBI Bank ownership shifting to LIC was a very good move. “So, all these three moves have put the banking system in somewhat better health than what it was but this has to be taken to its logical conclusion,” he said.

Gambhir is of the view that still a major chunk of public deposits are with PSU banks and we have failed to transfer that to private banks. “Is banking that special that 25 years after liberalization, we still need to retain a dominant public sector characteristic of this industry is a fundamental question that needs to be answered.”
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