As a buyer, will you look at only the sick banks? As a seller also, one has to be little careful … whatever you decide to put on board; it should be, the product should be sellable, or the PSUs should be sellable, said Anurag Thakur.
Minister of State for Finance Anurag Singh Thakur said the two banks that the government will choose to privatise have to be sellable. In an interview to Sunny Verma, he said: “As a buyer, will you look at only the sick banks? As a seller also, one has to be little careful … whatever you decide to put on board, it should be, the product should be sellable, or the PSUs should be sellable.” Edited excerpts:
Privatisation is the boldest announcement in the Budget, which may go on for next 5-10 years. But on the farm laws side, the government is facing some backlash on fears of private sector entry. Will you be able to forge consensus on privatisation?
The UPA government was known for policy paralysis whereas the Modi government is known for reforms. Even during the pandemic, we have looked for opportunities in the adversity of the day. And that is why reforms in the sector of power, coal mining, defence equipment manufacturing, space, even agriculture, these are bigger reforms than 1991 (reforms). And reform in the sector of agriculture is clearly with the right intention to double the farmers income.
But the question is that there is some backlash, which we are not able to sort out.
Let me get back to the first point. The earlier government was known for policy paralysis, (but) this government is known as reformist. So, definitely in a democracy through dialogue, you can resolve the things. Every protest, whatever happened in the past also, has been resolved through dialogue and the government is open for dialogue and it will be resolved.
On the banking side, what will be the government’s approach. Will you work on the weak banks to be privatised? What is the thinking on it?
As of now, we have 12 banks and government has infused a lot of capital in the first five years, more than Rs 3.5 lakh crore into that and the only intention was to strengthen the banks. Amalgamation, mergers happened to strengthen the banking system, they have come out of the PCA (Prompt Corrective Action) framework and definitely we want more banks in this country, whether private or public sector banks.
Bank should be healthy and robust system should be there to lend more, more credit should be available and that can only happen with the financial health of the bank being right.
So, we did all these things: amalgamation, recapitalisation, taking them out of the PCA framework. Now, this is the right time to privatise or monetise assets in case of a couple of banks. We are in the process of shortlisting banks, then we will go to the market.
Will it be the small, weak banks or maybe the mid-sized banks…
As a buyer, will you look at only the sick banks? As a seller also, one has to be a little careful. Look at the UPA first five years, they were able to raise close to about Rs 8,499 crore, in those five years, they failed.
In the next five years, they raised close to Rs 1 lakh crore through asset monetisation (divestment), whereas the NDA government has done close to Rs 3 lakh crore plus, but then it is also very important. It’s a long process, it’s a time-taking process. So, whatever you decide to put on board, it should be, the product should be sellable, or the PSUs should be sellable.
The RBI (internal committee) recently came out with the discussion paper recommending that corporate houses should be allowed in the banking sector. Has the government taken any view on it as bank privatisation will require a lot of capital?
It may be one of the internal committee reports. There is no formal decision of the RBI. Second, there are already private banks in India, not just one but many. There could be more and who holds the shareholding as of now. So I think the only issue is India needs more banks, stronger banks, with better lending facilities with better financial health. That is the need of the hour.
The Budget has been a bold, big picture macro-wise but the heart now lies in implementation, because many of these are tough decisions to implement…
I agree with you. But if you look during the Covid time. that was the most challenging, even during that time emergency credit line guarantee scheme, we have done well in that Rs 3 lakh crore scheme was announced, 20 per cent additional working capital more than Rs 2.5 lakh crore has already been sanctioned, because the government worked hard on its implementation, there was a continuous feedback taken from the banks, implementation was good. In many other sectors also, distribution of food grains to more than 800 million people across all states and union territories was not an easy thing we did.
Transfer of funds into the bank account of more than 20 crore women Jan Dhan account holders. So, we’ve actually worked on the better implementation during the Covid time and same thing will happen during this year post-Budget for better implementation of these schemes and the policies that we have announced
Have you looked into this whole issue of cryptocurrencies, we are going to have a bill on it…
Government has formed the inter ministerial committee which has given its report. This group has looked into all the details. Many countries are looking at the virtual currency and the digital currency. Now, the issue is a virtual currency by the government, digital currency by the government that is one area to look but on the other hand, there are private cryptocurrencies as well. You will see more fluctuation, I believe, in the private cryptocurrency rather than the fiat. As a government, you have to look at all the aspects and I think that is why this committee has looked into all these aspects they have come out with their reports this will go to the Cabinet. The moment Cabinet clears it … we’ll bring out the Bill in this session.
Budget also had the asset reconstruction company proposal but there will be no government equity in that and it will be entirely set up by the banks. Will this model be successful?
It should be, I think, a lot of discussions took place and post that this decision has been taken.
Is there any particular reason government did not contribute any equity to the ARC?
Why should government become part of everything? Banks do their OTS (One Time Settlement) on their own, as they go to the NCLT (National Company Law Tribunal) on their own. Also they have this various other platform from SARFAESI to DRT to others. This (ARC) could be one of another platforms where they could recover better
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