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The Finance Minister, Mr P. Chidambaram, and the CMD of Bank of Baroda, Dr Anil K. Khandelwal, launching the bank's customer centric initiatives at a function in Mumbai on Friday. - Paul Noronha

Mumbai , Jan. 6

THE Government will take stringent action in the recent IPO scam, in which one individual used multiple demat accounts to buy shares. It will simultaneously work on improving the system to detect such risks, the Union Finance Minister, Mr P. Chidambaram, has said.

HE said he had made his stand clear to the Securities and Exchange Board of India, the Reserve Bank of India and the banks on the issue. "I have been told it is a systemic problem. But I don't accept such a system which accepts multiple accounts from one address," he said.

When asked about steps to increase the headroom for public sector banks to raise Tier-I capital, the Finance Minister said RBI would soon be coming out with a paper on the new classification of Tier-I and Tier-II capital. "Once RBI comes out with the new classification, the public sector banks would have no problem in raising capital for the next 4-5 years," he said.

Public sector banks need to raise capital to meet their Capital Adequacy Requirements before the implementation of Basel-II norms and to meet the growth in credit. In many banks, the Government stake is close to the limit of 51 per cent, which prevents them from accessing the equity market for additional funds.

Mr Chidambaram was speaking to reporters on the sidelines of a press conference at Bank of Baroda to announce the bank's customer-centric initiatives.

In his speech, he said there was no need for the staff and union members of public sector banks to fear change.

"India has outstanding human resources and an open polity and hence there should not be any fear of technology or change. The unions must accept the needs of customers and the fact that technology will decide the future of the financial sector, especially banks," he said.

Mr Chidambaram said that credit made available to SMEs would double in the next five years and the targeted growth in this segment was 25 per cent.

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