Monetary Policy: Role for Private Sector Banks

February 1, 2016
Monetary Policy: Role for Private Sector Banks
Apropos “Interpretation of Maladies” (Economic Times, February 1), the brilliant analysis gives a realistic picture of the scenario in which RBI Governor will be presenting the last bimonthly monetary policy for FY06 on Tuesday. The plea to RBI to go slow on its policy initiatives to infuse professionalism in handling stressed assets by PSBs, though an ideal short-cut to ensure that economy does not suffer on account of sudden drying up of credit, will generate expectations that the GOI and RBI will remain soft with inefficiency in all situations for one reason or another.
Now is the time to put pressure on private sector banks to move out to risky areas and expand their share in total banking business. If this is not done, more than the existing players in the private sector, new banks of various denominations too will become risk-averse  and avoid sectors and geographical areas which are not considered ‘profitable’ and the burden of public sector banks to cater the left-over clientele will increase. Still, on the judgment day, they will not be spared from comparison with their private sector counterparts. The need of the hour is a level playing field for public and private sector banks in all areas, from management to resources mobilisation and credit decisions.



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