I had walked into a PSU bank to pay my gas bills. The man at the counter asked me if I had an account with them. This was a PSU bank that was tottering near default, only a few years ago, until its enterprising chairperson turned it around. I said that I did not, and on his asking where my accounts where, I told him the names of the private sector banks with whom I bank. He sternly advised me that these banks are weak, and in troubled waters, and that I should open an account with his bank. His simple logic was that his was a PSU bank and that it would not fail. I was appalled at the disservice to private enterprise that seems to be happening at even the lowest levels. Sonia Gandhi’s views apart, most will agree that Indian banking would have reached greater heights if not for nationalisation. Some of the finest officers and staff that the PSU banks recruited in their heydays have been constrained to work with limited scope to demonstrate their abilities. We had only begun to undo the damage by allowing private sector banks to operate. We know that efficiency in operation, treasury, and customer service have improved on account of competition. Banking is about size, efficiency and risk taking, and we have examples from both public and private sector banks of those who have achieved these. Should ownership supersede the quality of staff and balance sheet?

NBFCs, not banks, could be in trouble

... contd.