PSU bank privatization is not a panacea for the ills of the banking sector
Privatization may solve other problems in the Indian economy, free up fiscal resources and may even reduce corruption, but it is not a solution for regulatory weaknesses
The PNB fraud has rekindled the debate on bank privatization, often considered a solution for the poor management in public sector banks (). While government ownership of businesses is a bad idea and leads to poor economic outcomes, we should not pin all hopes on privatization as a solution. It is not a panacea for the ills of the banking sector unless accompanied by reforms in banking regulation.