The only feasible way to have a healthy banking sector could be making it mostly private, along with two or three large, better-run government banks, suggests T N Ninan. Illustration: Dominic Xavier/ Rediff.com Whether one likes it or not, Indian banking is headed the way of telecom and aviation. Private entities will walk away with the cream, leaving mostly unviable entities in the public sector. And all the king's horses and all the king's men will not be able to save Humpty Dumpty from this fate. The private banks have a better net interest margin (3.4 per cent vs 2.4 per cent for public banks); lower costs (a wage bill that is 8.7 per cent of income, compared to 13.8 per cent for public banks); and therefore continuing profitability even as public banks have lost money for the last five years. More losses will come when the pandemic-related moratorium and other shock absorbers are taken away. The government's banks can't change their cost and ... » Learn More about Time to privatise government owned banks
