Saturday, March 8, 2014

Is the banking sector reform possible in India?

What ever the author wants on Indian Banking is nothing but utopian thinking and nothing would happen.The Public Sector banks would never be privatised and the central bank would not force to let the bad ones fail.The need to have both PSBs and the Central Bank under the Government Control is paramount  as  the Government has soci-economic responsibilities linked to the political agenda and the fincial position of the Government is weak to allow banks and the Central Bank to run on professional lines.  Though the last banking sector reforms introduced in two stages in 1993 and 1998 have brought in lot of competition and standards of Governance on par with international standards, still the Government have no intention to allow the banks and the Central Bank to have their full freedom to run on professional lines as evidenced by merging the failed Global Trust Bank with the PSB bank Oriental Bank of Commerce. The central government and the Economy depend heavily on banks and their deposits for meeting the fiscal deficits, the reforms in banking as envisaged by the author cannot take place. The Central Bank is also not autonomous to have its own way of having reforms as the Intervention by the Government even in Micro management of banks is unstoppable.    

Dr.T.V.Gopalakrishnan
(This comment is given to Businness Standard in response to an article on Banking Sector reform dated 8/3/14).

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