Banking on thin ice | Business Standard Editorials

Banking on thin ice | Business Standard Editorials

Last one year has seen
the churning of Indian financial sector which has brought to surface several
structural and ‘organic’ deficiencies in the system which need quick
correction. Awareness is most important and media reports indicate that the
leadership at the highest level is seized of the need to ‘save the banking
system from its enemies within’.

Having said that, one
does not feel confident that GOI and RBI are on one page in regard to the modus
operandi for handling the situation. At least in financial sector, a ‘blow hot,
blow cold’ approach to causes for impaired health may do more harm than good.

The pressure on RBI
arising from diverse messages going to banks in regard to ‘doing
business’(JanDhan and restructuring of debts included), enlargement of
supervisory and regulatory responsibilities with opening of new genre of
institutions like small banks and payment banks which will have to initially
tap the clientele rejected by existing banks is already heavy. Add to this, the
irritants coming from a hush-hush implementation of controversial
recommendations of FSLRC.

It is in this context,
action on the lines suggested in the concluding para of the editorial becomes
all the more relevant. This will need purposeful dialogue between GOI and RBI
and a ‘consensus’ approach to issues affecting the health of the Indian
M G Warrier, Mumbai


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