Former Reserve Bank of India (RBI) Governor Raghuram Rajan has indicated that some of the public sector banks (PSBs) should be privatised. It is known beyond doubt that private banks are performing far better than the PSBs. The profitability of the private banks is much higher and NPAs have been well under control amongst the private banks. In recent times, when the interest rates of fixed deposits are very low, the interest rates on loans are very low comparatively and therefore recovery of loans and therefore reduction of NPAs should have been easier. The private banks have been able to curb NPAs to a large extent and to run very healthy balance sheets. It is thus prudent that most of the PSBs should be privatized to professionalize banking in the country.
