It is alarming to learn that the total market capitalization (which means the product of the number of shares and the market price of the shares) of the 21 Public Sector Banks is less than the market capitalization of one private bank HDFC Bank, by an astounding Rs. 59,000 crore. It may be emphasized that when various associate banks of State Bank of India were merged, State Bank of India became one among the 50 most valuable banks in the world. Now to know that the market capitalization of SBI inclusive of the PSBs have such a low value is a disturbing fact.
It is known that the stock market value of shares is dependent of their intrinsic strength and therefore, it is the duty of the Reserve Bank of India to assuage the fears of the investors and depositors as to why the Public Sector Banks have such a low rating and their value have shrunk considerably. The NPAs of these banks are now at an all-time high of 10-11% which is another cause for concern. Also it is pertinent that Rs. 88,000 crore were infused recently to bolster the capitalization of several Public Sector Banks.
The Finance Minister has to categorically state whether these PSBs are slipping into the red and the management structure of these banks have to be reorganized in order that reinforcement of the economic health of these PSBs are carried out to salvage the infirmities of these banks.
An important indicator is that the share values on the BSE and NSE have taken a severe beating and the fears of the people have to be assuaged by the Finance Minister making a credible statement as to why HDFC Bank which is a private bank has done so well compared to all the 21 PSBs which look to be heading to become sick banks.
This state of affairs is a reflection of the frailties of the government, the Finance Ministry and the RBI and remedying the same has to be taken up on a war footing.
Elvidio Miranda, via email
