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Day 8- Ques Ans

 The Indian government is persistently advised to reduce its ownership in public sector banks (PSBs) to below 50 per cent. It is not ownership but the way banks are structured and run that is important for financial sector health. Do you agree? Comment.

Reducing ownership from PSUs is one of the suggestion which hovering around but this is not the major issue for financial sector health. There are certain other factors need to be fix-

  • There is a huge potential to improve the process of higher level selection of Bank management and directors. Political influence adversely affects the efficiency. BBB formation is a novel step in this regards
  • To achieve Basal III norms, Huge capital need to manage by PSUs. For that fund management, improving the NPA and cleaning the balance sheet is more important.
  • 22 PSUs are serving India with very small capital base in global comparison. Merger of banks to strengthen the financial base can bring huge positive for stressed banks.
  • Staffing in Banks, efficient Human resource is another concern for banks which concerns RBI also. This is one area where Banks need immediate focus.
  • Quality review of loan process followed by banks is also important to review and strengthen as RBI exercise of Asset Quality review has shown huge NPA Burdon on banks.

Banks, RBI, and government need to take few concrete steps to resolve these issues. Bankruptcy code bill, pressure on defaulters, Formation of BBB, Financing the banks in coming 3-4 years, and implantation of P. J. Nayak committee suggestions are welcoming steps in this regard.  Privatization of Banks is one of the steps for capitalization of banks but it cannot be stand alone solution for mess in financial sector.

What is the significance of the Pacific region for India? Why is India increasing its engagement with the Island nations of the Pacific?

India as emerging regional power it trying to touch global horizon through trade and military power. To achieve that Pacific Ocean has very much relevance by following reasons-

  • More than 50% trade in South East Asia region is forming Pacific Ocean.
  • Many islands are in Pacific Ocean to whom India wants to touch and wanted to have deep strategic region. FIPIC group is one major step towards it.
  • India Act East policy is directed to many nations in South East Asia and other who are situated in or nearby to Pacific Ocean.
  • Indian navy which is aspiring for Blue Navy needs strong presence and security tie up with islands in Pacific Ocean.
  • Future energy demand lies in ocean (Blue economy) and natural resources like hydrates, petroleum, renewable energy lies in territorial water of islands situated in Pacific Ocean. For that India need presence here.
  • To have strategic edge against China and Pakistan also Pacific Ocean is important.
  • Indian Diaspora is very much engaging in countries in that region to in cash that relation also India need to have presence here.
  • Countering climate change and for safety of Iceland nations Pacific Ocean need special concern form Indian side.
  • To protect Indian trade concern against TPP initiative  of USA India need to have active and innovative engagement.

In recent phase after moving ahead from Look East to Act east Pacific Ocean countries has much more relevance for India. FIPIC group and engagement with 14 Iceland nations, naval wartime practice in Pacific Ocean with major powers like USA, Japan, and Australia, and exploration of natural resources all are major steps taken by India to strengthen presence here.


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