Role of banks and financial intermediaries - The Hindu

Role of banks and financial intermediaries - The Hindu

My VIEW:

The article is immensely
relevant in the context of the reforms in the financial sector now under way.
The prime objective of the reforms is to retain the health of the banking
system and to ensure that (i) banking business remains with banks regulated by
RBI under Banking Regulation Act, 1949 and RBI Act, 1934 and (ii) banks are
able to live up to the role expectations in regard to mobilising and managing
deposits ensuring safety and liquidity and a reasonable return to the savers
while deploying the funds mobilised to promote economic growth and financial
inclusion.
RBI’s recent efforts to
help banks reduce their stressed assets, bring more players who are already
doing ‘banking business’ into regulatory and supervisory discipline applicable
to the existing mainstream banks and consider possible structural changes
within the banking system to infuse professionalism and efficiency should be
viewed in the above context. The changes hopefully will help banking system
work with less NIMs(presently these have reached the level of 4 per cent in the
case of some banks) which will result in reduction of interest rates on loans
without reducing rates on deposits which are already low.  The success of these measures is crucial
to the retention of the 
savers and borrowers within the formal banking
system.


M
G Warrier
, Mumbai  

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