The Hindu Business Line : Bengal chambers hail plan for banking codes board

DESCRIBING the slack season credit policy announced by the RBI Governor on Thursday as an "exercise in stability," reflecting a cautious approach to the growth momentum, chambers of commerce here have welcomed the steps to increase the credit flow to agriculture.

They lauded the emphasis on improved customer services, and the decision to set up an independent `Banking Codes and Standards Board of India,' modelled on the UK mechanism, for evolving a comprehensive code of conduct for the fair treatment of customers.

According to Mr Aditya V. Agarwal, President, Merchants Chamber of Commerce, Small and Medium Enterprises (SMEs) are still not receiving the benefit of low interest rates and collateral-free loans. He said the prime lending rate of banks has not been replaced by the Mibor (Mumbai Interbank Offered Rate) as a benchmark rate, which was more transparent and acceptable to all.

Describing the measures laid out as being in tune with the optimistic economic outlook based on the high growth, the healthy capital market and the stable exchange rate, Mr Santosh Rungta, President of Bharat Chamber of Commerce, said the policy has correctly focused on financial sector reforms, a simplified and liberalised credit delivery mechanism for agriculture and SMEs and prudential norms.

He welcomed measures like raising the ceiling on overseas investment by Indian entities in overseas joint ventures and/or wholly-owned subsidiaries from 100 per cent to 200 per cent of their net worth under the automatic route.

Mr S. N. Nundy, President, Bengal National Chamber of Commerce & Industry, said further reforms would be required to ensure a higher credit flow at liberal terms (without collateral securities) to the small and tiny sectors. He said the RBI proposal to issue fresh guidelines on mergers and amalgamations between private banks and NBFCs would usher in greater financial prudence.

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