Debashis Basu: A Swachh Financial Sector Abhiyan? | Business Standard Column

Debashis Basu: A Swachh Financial Sector Abhiyan? | Business Standard Column

My View:

The call for the cleansing of Indian Financial Sector has come at the right time. One had started getting a feeling that, as has been the experience earlier, India as a country was slowly returning to its slumber, after finding comfort in the promises from Modi on the repairs and maintenance of the basic structure of India as a nation.

The Indian banking system, more particularly public sector banks as a group, has been the target of criticism for all the ills in the financial sector. The previous finance minister and spokespersons from the finance ministry had given an impression that the Indian financial sector will be relieved of all ills by implementing the commissioned report of the Financial Sector Legislative Reforms Commission. This article exposes the weaknesses of FSLRC report and stresses the need for viewing financial sector as one entity which manages public funds, irrespective of source(the public funds include public savings in the form of bank deposits, investments in various financial and non-financial instruments with non-bank institutions including corporates and other bodies dependent on funds mobilised from public).

The inadequacy of regulatory apparatus and arrangement for resolution of grievances of depositors and ‘borrowers’ outside the banking system is a serious issue brought out in the article. Even if the government is keen to use the FSLRC report as the starting point for reforms in the financial sector, a closer look at the issues raised here(in the article) and changing the focus from destabilising existing regulatory and supervisory mechanism(mainly represented by RBI) to sharpening the tools used by its various limbs for improving  efficient functioning of financial sector would bring back the lost credibility in governance.
M G Warrier, Mumbai  


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