IMF Exhorts Government To Strenghten PSB Boards
New Delhi: Expressing worry over the steadily weakening of PSBs, the International Monetary Fund (IMF) has exhorted the Central Government to take steps in order to enhance the efficiency of bank operations and promote disciplined lending in the future.
The IMF emphasised that India needs to improve the way in which state-owned banks are run by strengthening board-level autonomy. It also stated that the government should consider eventually privatising the PSBs in the long run. Apart from this, stress must be laid upon strengthening the governance in public sector banks. The first step in this regards would be to strengthen the quality and independence of these banks’ boards, after which privatisation could be done.
With hopes of India’s economic revival in 2018-19, the IMF has stated that more can be done by the government to sustain the recent foreign direct investment inflows and remove trade barriers which continue to hinder the pace of economic growth in the country. Some of these steps include reducing trade documentation requirements and procedures, lowering tariffs, continuing to improve the business climate, and improving governance.
The IMF said that higher global oil prices and tighter global financial conditions are the two key external risks which pose potential threat to India’s economic growth. It further stated that the Reserve Bank of India (RBI) would need to gradually tighten monetary policy further due to rising inflation, driven mainly driven by higher oil prices and a falling rupee.