Not wanting to be seen as being opposed to privatisation of banks, the Reserve Bank of India (RBI) clarified on Friday that a paper by its researchers published a day earlier do not reflect its stand on the issue.

The government has already announced its intent to sell stake in IDBI Bank and two other public sector banks, which it has not named.

A research paper, authored by RBI’s banking research division and published in the August RBI Bulletin, has favoured gradual privatisation of public sector banks so that a void is not created in fulfilling the social objective of financial inclusion.

The authors of the paper have argued against big-bang privatisation of public sector banks. “A big bang approach of privatisation of these banks may do more harm than good. The government has already announced its intention to privatise two banks. Such a gradual approach would ensure that large scale privatisation does not create a void in fulfilling important social objectives of financial inclusion and monetary transmission,” it said.

The RBI’s clarification has come in response to media reports stating that the central bank was against the privatisation of public sector bank.s. "As clearly stated in the article itself, the views expressed in the article are those of the authors and do not represent the views of the Reserve Bank of India," the central bank said on Friday.

The authors of the paper argued that while private sector banks are more efficient in profit maximisation, their public sector counterparts have done better in promoting financial inclusion, delivering farm loans and achieving monetary transmission.

“Privatisation is not a new concept, and its pros and cons are well known. From the conventional perspective that privatisation is a panacea for all ills, the economic thinking has come a long way to acknowledge that a more nuanced approach is required while pursuing it,” the paper said

In a recent policy paper, former Niti Aayog vice chairman Arvind Panagariya and Poonam Gupta, a member of the economic advisory council to the Prime Minister, had argued for the privatisation of all public sector banks except the State Bank of India.