The CEA also called for the diversification of business model by PSBs so that lenders were able to absorb any economic shock.

Chief Economic Advisor (CEA) Krishnamurthy Subramanian on Friday advocated taking forward the P J Nayak committee’s recommendations on governance reforms in public sector banks (PSBs), saying until these reforms were institutionalised, the risk in the sector would persist.

“The Centre has shown the political will to let PSBs run independently without interference in their commercial decisions. But let’s also take a step back to do a reality check. This happened due to a political will but has not been institutionalised yet fully,” he said.

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