Reform Banks, Give Autonomy
Apropos the editorial, When the mighty fall, Reform should arise (ET dated 9/3/16), no doubt, the banking system needs to implement reforms, structurally and functionally, to improve its Governance Standards, finances and operations and provide support to the economy and not to those who systematically loot and kill the economy in all respects.
That camouflaged bad debts equal to or more than the disclosed bad debts can't be hidden anymore because of the recurring damages they bring to the economy. The Vijay Mallya’s case is only the tip of the Iceberg. It is time to recognise and identify the overall weaknesses of banks due to the absence of a bond market or institution to finance long-term projects, the interference of politicians and bureaucrats in banking operations and a legal system that is not up to speed. Both RBI and banks do not have the autonomy and the Government’s reluctance to keep away from RBI and banks brings only destruction to the financial system and the mighty and their cronies get the money they want. Reforms in fact should start with administration, legal system and Governance standards with more of deeds than words and gradually taken to financial institutions and markets.
Dr T V Gopalakrishnan
( This appeared in Economic Times dt 10/3/16)
1 comment:
Well said: When the chairpersons of banks receive best banker awards amidst the falling valuations of the PSBs and the mountain of NPAs at the hands of the FM swollen heads do not let them see the reality. Autonomy is just one part of the story.
Finance Ministry should let the RBI take full control of regulation and the RBI in turn should also create the confidence in the system that they are capable of reining in the system. The goals of nationalisation of banks are forgotten in the drive for profits at any cost. Still, when valuations are going down the banks are not pulled up!!
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