Question

State three positive and two negative effects of privatisation of banks in India.

Answer 1

Privatization of banks refers to giving greater role to private entrepreneur and stakeholders and reducing the role of public entrepreneur and government through disinvestment of public sector and dilution of stake of the government in the banking sector.

Three positive effects of privatization of banks in India :-

1. It increased the competition in the banking sector and enhanced the services of the sector.

2. It reduced the debt of the government by reducing their stake in the sector.

3. It involved the participation of private skilled entrepreneurs into the banking sector.

Two negative effects of privatization of banks in India :-

1. The change affected the middle class group of the economy who were depended largely of public banks for day to day transaction.

2.It reduced the value of other public banks which were still in the market due to the slow service in comparison with private bank.