"We need some important and aggressive changes," Abhijit Banerjee asserted

Highlights "We need some important and aggressive changes," Abhijit Banerjee said

Dr Banerjee called the banking crisis "frightening"

Abhijit Banerjee, Esther Duflo and Michael Kremer won the Economics Nobel

Nobel laureate Abhijit Banerjee said today that the government's equity in public sector banks should be reduced to below 50 per cent in order to end fear psychosis among bankers.

"The banking crisis is frightening. We should worry about it. We should be more vigilant...One day the bank is fine and then suddenly it is in crisis...We should be able to stop the crisis much ahead before it happens," the renowned US-based economist said, addressing a press conference.

"We need some important and aggressive changes," he asserted.

The fear of investigation by the Central Vigilance Commission (CVC) in default cases had paralysed the banking system and bankers do not want to lend.

"Reducing government equity in public sector banks to under 51 per cent will take them out of the CVC's purview," he said.

Refusing to get into questions on the economy or any controversial topic, Dr Banerjee said in a meeting earlier in the morning, Prime Minister Narendra Modi had "cracked a joke" that the media was trying to trap him and "get him to say anti-Modi things".

Dr Banerjee shares the Nobel with Esther Duflo - they are married - and Michael Kremer.

His criticism of the state of the economy and the government's policies fueled a debate with BJP leaders like Union Minister Piyush Goyal hitting back sharply, calling him a "left-leaning" economist.

Against this backdrop, his meeting with the Prime Minister generated much interest.

PM Modi tweeted that he had an "excellent meeting" with the Nobel winner. "His passion towards human empowerment is clearly visible. We had a healthy and extensive interaction on various subjects. India is proud of his accomplishments. Wishing him the very best for his future endeavours," said the PM.