Rejuvenating ailing banks
It is rather shocking that a former Reserve Bank Governor should be urging the government to shut down losing public sector banks (PSB) instead of making them profitable through a judicious process of consolidation. Bank shut-down will severely harm the country's millions of depositors leading to a major social and economic chaos, in the process. A bank is run with depositors' money. Depositors trust the system because they trust the country's Central bank and its policies. RBI makes a regular appraisal of bank performance and revises bank rates, credit-deposit ratio, etc. If necessary, the RBI makes intervention to prevent a bank collapse. Banks are liable to depositors, though only partly. Former RBI Governor Duvvuri Subbarao's latest prescription will only help habitual rich bank defaulters like Vijay Mallya to happily run away with poor depositors' savings.