Time ripe for holding co for PSBs to fix fund-crunch, fraud mess: Mundra

Singapore: It is the right time to consider a holding company for Indian public sector banks to manage the country's fraud-hit and cash-strapped financial industry, former RBI deputy governor S S Mundra said. Mundra, however, said that conditions were not right for privatisation of state-run lenders due to the socio-economic situation of India.

"Time is ripe now to hold discussions on a holding company for banks. Let the bank holding company start with the government majority and it should have a majority in individual bank," Mundra said the State Bank of India-sponsored Mint Asia Global Banking Conclave here last night.

In step two, the government should do away with the majority in the holding company.

"I think that should be the road map and this might take 15-20 years," said Mundra.

He agreed with SBI chairman Rajnish Kumar that conditions were not right for privatisation of the Public Sector Banks (PSBs). "Clearly privatisation (of PSB) is no panacea; that is quite clear," added Mundra at the conclave attended by some 200 members of the Indian business community here. "Given India's current socio-economic condition, it is not right (time) for privatisation. May be after 20 years, you will have the right situation," said Kumar.