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The Central government’s bid to privatize Public Sector Banks (PSBs) may not be the finest way forward to address the issue of alarming rise of NPAs in the Banking sector. Explain.

Topic: Indian Economy and issues relating to planning, mobilization, of resources, growth, development and employment.

4. The Central government’s bid to privatize Public Sector Banks (PSBs) may not be the finest way forward to address the issue of alarming rise of NPAs in the Banking sector. Explain. (250 words)

Reference:  The Hindu

Why the question:

The Union government has announced its intent to privatise Public Sector Banks (PSBs) in the recent Budget session.

Key Demand of the question:

Explain in what way the Central government’s bid to privatize Public Sector Banks (PSBs) may not be the finest way forward to address the issue of alarming rise of NPAs in the Banking sector

Directive:

Explain – Clarify the topic by giving a detailed account as to how and why it occurred, or what is the particular context. You must be defining key terms where ever appropriate, and substantiate with relevant associated facts.

Structure of the answer:

Introduction:

The failure of innumerable private banks around the world, challenge the notion that only private banks are efficient. The large volumes of NPAs observed in private corporate entities also challenge the notion of private enterprises being the epitome of efficiency.

Body:

The answer body must have the following aspects covered:

  • Explain the Positive role played by public banks.
  • Threat posed by privatization of banks.
  • Unfair criticism of Public sector banks.
  • Suggest solutions to address the issue.

Conclusion:

Conclude with way forward; Privatisation of PSBs is not a definitive panacea for the problems of the banking sector in India.