Turning down suggestions from a section of industry that privatisation is the best response to save public-sector banks drown in scams and debt, finance minister Arun Jaitley clarified on Saturday that the government had no immediate plans for the same. He also slammed the lack of ethics among companies and the lackadaisical attitude of bank managements as well as supervisory bodies including auditors and regulators, which provided a fertile ground for fraudsters to thrive.
Speaking at The Economic Times’ Global Business Summit, Jaitley said while it’s worrisome that nobody raised a red flag when the fraud happened, equally worrisome is the fact that “top managements of banks were indifferent to what was going on or were unaware of what was going on”. The FM stated the government will walk the extra mile to bring all perpetrators of the multi-crore PNB scam to book, even if it means tightening the law further.
Taking a grim view of the whole affair, Jaitley said Indian businesses have to develop a habit of doing ethical business. “Those who deviate from that cause must always remember that the consequences will not only be commercial and civil.” On the call for privatisation of PSBs, Jaitley said such a move will not be politically astute and hence, “very challenging”. “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 is a very challenging decision,” he noted.
FICCI president Rashesh Shah, the latest to join the list of industrialists batting for privatisation of PSBs, said on Friday that he met the FM and asked the latter to begin the process of bank privatisation in a phased manner, leaving only two or three banks in the public sector. Earlier, industry body Assocham had urged the government to reduce its stake in public sector banks to less than 50 per cent so that theycan work with the sense of accountability and with the interest of stakeholders and depositors on priority.
Among the industrialists who supported bank privatisation is Adi Godrej of Godrej Group, who said the move would be good for the country as there are ‘less or no’ frauds at private banks. Rahul Bajaj of Bajaj Group, too, pitched for bank privatisation.
‘Regulators must have a third eye’
Finance Minister Arun Jaitley on Saturday slammed regulators for failing to detect the H11,400-crore fraud at Punjab National Bank for seven long years, saying unlike politicians, regulators in the Indian system are unaccountable.Speaking on the scam for the second time this week, he said employees conniving with fraudsters is worrisome. Also worrisome is that no red flag was raised. Regulators should have a “third eye” open to detect and check such frauds. He said the industry needs to get into the habit of doing ‘ethical’ business as such frauds are “scars” and push reforms and ease of doing business to the background