On July 19, 1969, the then Prime Minister of India Indira Gandhi nationalized 14 large private banks.This Month marks 51 years since that incident. Coincidentally, the nationalized banking industry is currently going through an unprecedented dilemma. As per the mega consolidation plan by Central Government, Oriental Bank of Commerce and United Bank of India merged into Punjab National Bank (PNB); Syndicate Bank into Canara Bank; Andhra Bank and Corporation Bank into Union Bank of India; and Allahabad Bank into Indian Bank. Following the consolidation, there are seven large public sector banks (PSBs), and five smaller ones. There were as many as 27 PSBs in 2017. The total number of public sector banks in the country came down from 18 to 12 beginning this financial year. It is undeniable that there is a blockade in public sector banking today. The gross non-performing assets (NPAs) of public sector banks (PSBs) have declined by Rs 89,189 crore from a peak of more than Rs
The banking system handles the savings of the common man. Protecting bank and bank's depositor is the main objective of the Reserve Bank, which is why the credibility of the banking system is maintained today. But the revelation of scams like Yes Bank, PMC Bank has once again created an atmosphere of mistrust in the banking industry. While insurance among deposits may not be the solution to some of the scams, it can be prevented only if the perpetrators of these scams are severely punished and held accountable to all concerned, including the Reserve Bank.