The Hindu Business Line : `Take balanced view on FDI in private banks'

MR M. Narasimham, the architect of Indian banking sector reforms, has said that the country should have a balanced view on foreign direct investments (FDI) in private banks.

Instead of discussing the ceiling for such investments, it was more important to see what foreign investors bring by way of resources, technology, management and access to international markets.

Mr Narasimham, currently Chairman of Administrative Staff College of India (ASCI), was delivering the inaugural address at the seminar on `Banking sector reforms - Looking ahead' here on Saturday. The seminar was organised by the Federation of Andhra Pradesh Chambers of Commerce and Industry (FAPCCI) and Indian Institute of Economics.

Mr Narasimham also called for consolidation of public sector banks. The idea of having two or three banks of international size, nine or 10 national level banks and some regional or local banks was still relevant.

He, however, felt that mergers should not be forced. "We should resist the temptation of merging weak public sector banks with stronger ones. Such mergers may not strengthen the weak but could weaken the strong," he said.

Mergers should not be undertaken for their own sake and merely to enlarge the balance sheets. Mergers should help banks synergise their energies.

He also observed that functioning of regional rural banks called for a review. "Merger with other rural banks or with sponsor banks could be an option."

"Customers in the country, be it a depositor or borrower, has been taken for granted for too long. This has to change," he said.

Expressing similar views, Ms Ranjana Kumar, Chairperson of Nabard (National Bank for Agriculture and Rural Development), said the banks should not take the rural clientele for granted. On service area approach, she said people in the rural areas, like their counterparts in urban areas, should have the choice to select a bank. Banks should know that they might lose customers if services and products offered by them were not up to the mark.

Speaking on the China factor, she said while China made strides in other sectors, India's banking sector was much stronger. She foresaw several new specialisations and newer products coming up in the sector.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Wealth management by banks poised to grow

Forex reserves dip by over $1 b

IDBI examining options to merge home finance arm with itself

`Take balanced view on FDI in private banks'

Bank of India sees Rs 850-cr net this fiscal

Bank credit rises Rs 6,919 cr

BoI, SIDBI tie up to boost credit to SMEs