PNB scam ‘one-off’ case, media hype unwarranted: SBI chief rejects privatisation call

PNB scam ‘one-off’ case, media hype unwarranted: SBI chief rejects privatisation call

New Delhi: State Bank of India chairman Rajnish Kumar on Wednesday rejected demand for privatisation of public sector banks triggered by USD 1.77 billion (about Rs 11,400 crore) scam in Punjab National Bank involving billionaire jeweller Nirav Modi.
Speaking to NDTV, the SBI chief defended the record of public sector banks and asked if the private banks were free of scams.
However, he said that it was a “one-off incident” and the “hype and the negativity in the media is not warranted,” even as he admitted that the scam has destroyed the image of banks.
“Can anyone say that 100 per cent banks of the private sector have same standards of ethics and governance? I agree that governance needs to improve. But it is not a case where only public sector banks need to improve,” Kumar said.
Earlier in February, Finance Minister Arun Jaitley had ruled out privatisation of banks saying the move may not be politically acceptable.
“This (privatisation) involves a large political consensus. Also, that involves an amendment to the law (Banking Regulation Act). My impression is that Indian political opinion may not find favour with this idea itself. It’s a very challenging decision,” he said.
FICCI president Rashesh Shah had also met the finance minister and asked him to begin the process of bank privatisation in a phased manner, leaving just 2-3 lenders in the public sector.
The call for privatisation gathered currency after diamond jeweller Nirav Modi allegedly colluded with some officials of PNB to fraudulently obtain guarantees so as to avail of loans from Indian banks overseas.
Industry body Assocham had also urged the government to reduce its stake in public sector banks to less than 50 per cent so that they can work with the sense of accountability and with the interest of stakeholders and depositors on priority.
Some industrialists too supported bank privatisation.
Adi Godrej of Godrej Group said the move would be good for the country as there are ‘less or no’ frauds at private banks. Bajaj Group head Rahul Bajaj too pitched for bank privatisation.