Benchmarks for banks - The Hindu

Benchmarks for banks - The Hindu

for PSBs
This refers to the
article by Charan Singh “Benchmark for banks(The Hindu, July 29). From international
rating agencies to NGOs or academics who make assessments as part of their
studies, normally use the same measure for gold and charcoal while making
comparisons and their findings mislead policy makers at the top to common man
at the ground level. This article stands out in making a plea not to use the
same parameters for comparisons and have norms depending on the context and
In the Indian financial
sector, which is growing fast and new types of organisations, big and small,
are coming up to cater to divergent needs, standardised norms for all types of
financial institutions is near impossible. In the banking sector, public
sector-private sector divide is a fallacy as both are dependent on the same
resources, namely public funds.
Time is opportune for RBI
to formalise its regular studies of impact of government policies on the
management and profitability of banks and other financial institutions.
Government-owned banks should know the effect of ‘directed lending’ and
undertaking services like providing ‘zero balance’ accounts to millions of
customers on their balance sheet. Such awareness will help them in shielding
criticism that financial support provided by government to them is a drain on
the exchequer. The central bank may also have to define with more clarity the
contours of activity areas for different types of banks.
G Warrier,


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