Bring govt stake in PSBs below 51%: Banerjee

Nobel laureate Abhijit Banerjee called for reducing the government equity in public sector banks to below 51 per cent to remove the fear psychosis among bankers.

Addressing a press conference , Banerjee said fear of investigation by the Central Vigilance Commission in default cases has paralysed the banking system and bankers are scared to lend. Reducing government equity in public sector banks under 51 per cent takes them out of the CVC’s purview.

The fear of a CVC probe, he said, in case of loan defaults has paralysed bankers and the banking system and this power should be taken away.

"It leads to hiding of defaults, which creates problems. So, I want the government to have less equity in banks so that the fear psychosis in banking sector is eliminated," he said. There are enough checks and balances in the banking system and the CVC has been very heavy-handed in its approach, he added. Asked about the crisis in the banking system, Banerjee said it is “frightening”.

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