New Delhi / Govt should cut stake in state-run banks to below 50%: Abhijit Banerjee

NEW DELHI: Terming India’s banking crisis “frightening”, Nobel laureate Abhijit Banerjee on Tuesday called for reforming state-run banks by cutting government stake to below 50%. The statement came after he had a “healthy and extensive” meeting with PM Narendra Modi at the latter’s residence. 

Speaking to reporters after the meeting, he said, “Balance sheets are not picking up enough information,” in an obvious reference to several scams and high level of doubtful loans with India’s banks.

According to Banerjee, India’s bankers are suffering from a “fear psychosis”, as state holding meant several extra layers of checks including scrutiny by the Vigilance Commission. To drive his point home, the Nobel laureate illustrated how private banks are doing fine without additional layers of checks. 

Fending off reporters’ attempts to get him to speak out against the government, he said, “I had a cordial and good meeting. Prime Minister Modi started by cracking a joke on how media is trying to trap me to say anti-Modi things. He’s been watching TV and he knows what you are trying to do.”

Modi also praised Banerjee in a tweet, terming the latter’s “passion for human empowerment” as “clearly visible”. 

Banerjee had earlier criticised the Modi government’s handling of the slowdown, calling for a rollback of the corporate tax cut and creating demand by putting money in the hands of the poor. However, on Tuesday he termed his meeting with the PM gave him an insight into the Prime Minister’s “way of thinking about India” as well as the “thinking behind policy making”.  

Nobel laureate Abhijit Banerjee said PM Narendra Modi explained to him during their meeting how he was trying to reform bureaucracy and expose the civil service “to the realities on the ground”. Modi tweeted a picture of the meeting, saying: “Excellent meeting with Nobel Laureate Abhijit Banerjee. His passion towards human empowerment is clearlyvisible. We had a healthy and extensive interaction on various subjects. India is proud of his accomplishments. Wishing him the very best for his future endeavours.”