Mumbai: The unprecedented takeover of a private Indian bank by a foreign competitor signals that the nation’s banking sector is opening up, Finance Minister Nirmala Sitharaman said.
Sitharaman lauded the Reserve Bank of India’s efforts in steering the bailout of Lakshmi Vilas Bank Ltd. by allowing a local unit of Singapore’s DBS Group Holdings Ltd. to buy the failed lender.
“That only sends the right message that Indian banking sector is being opened up,” Sitharaman said Tuesday in a Bloomberg Television interview.
Lakshmi Vilas is one of two banks to be rescued this year as the nation’s financial industry reels from one disaster to the next. A shadow banking crisis in 2018 and now the pandemic-fueled recession have hurt banks’ asset quality and capital, hampering their ability to lend.
To preserve stability of the financial system, the RBI took the rare step of arranging the bailout of Yes Bank Ltd. by state and private-sector lenders in March, followed by DBS’s deal to buy Lakshmi Vilas last month.
Prime Minister Narendra Modi’s government will also go ahead with privatizing a couple of state-run banks that have received cabinet approval, Sitharaman said, without elaborating.
“We shall look forward to having more interest in private-sector banking that sends a message that in fact we are open for a healthy banking system,” she said. –Bloomberg
Also read: We will spend money to help economy, not worry about fiscal deficit – Nirmala Sitharaman