Bank privatisation by the backdoor

Abstract

The P J Nayak Committee on the governance of bank boards has proposed that the Bank Nationalisation Act and related legislation be repealed. It wants government shareholding in public sector banks to be transferred to a Bank Investment Committee that will be manned by professional bankers. The report assumes incorrectly that ownership determines board performance and that the quality of bank boards, in turn, determines bank performance. The key issues at the public sector banks, in fact, are those related to management.