Public sector banks in India: should these be privatised?

This paper examines the arguments usually extended to build a case for privatization of the public sector banks (PSBS) in India. In the process a few facts are placed in proper perspective to facilitate an informed debate on privatization and ated issues in the banking sector. It is not correct, for example, to say, as is being alleged in the current literature on the subject that reforms over a decade now have not made any significant improvement in the performance of the PSBS and they are facing a crisis or near crisis situation.
The often-repeated criticism of frequent re-capitalization of the nationalized banks is based more on perceptions and less on factual analysis. The fiscal burden aspect, it would appear, has been exaggerated. The competition and efficiency issues are generalized notwithstanding a few distinctive features of the banking sector. Often, conclusions are derived by comparing the incomparable units. For analysing the comparative efficiency and productivity, State Bank of India with over 9000 branches is found in the list of the banks, which includes single branch foreign banks as well. Also, evidence on international experience on the outcomes of private/foreign owned dominance of banking sector, it could be seen, is mixed at its best.