Financial Daily from THE HINDU group of publications
Saturday, Apr 01, 2006
Financial Daily from THE HINDU group of publications Saturday, Apr 01, 2006 |
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Public Sector Banks Money & Banking - Mergers & Acquisitions Consolidation is strength, Chidambaram tells PSBs Our Bureau
FMspeak PNB, after consolidation, could become as big as State Bank of India. Interest rates would remain attractive to both savers and depositors. There is credit-deposit mismatch, but we need to maintain growth rate.
Centralised banking: THE FINANCE Minister, Mr P. Chidambaram, and the CMD of Punjab National Bank, Mr S.C. Gupta, at the inauguration of PNB's 2000th Centralised Banking Branch in the Capital on Friday. — Ramesh Sharma
New Delhi , March 31 The Finance Minister, Mr P. Chidambaram, today exhorted public sector banks to embrace consolidation in the same way as they have adopted computerisation and accepted competition. Inaugurating the 2,000th centralised core-banking solutions (CBS) branch of Punjab National Bank (PNB)in the Capital, Mr Chidambaram made it clear that the 4Cs - computerisation, convergence, competition and consolidation - posed no threat to public sector banks, but would promote growth. "Consolidation will make Indian banks stronger. If computerisation, competition, convergence have not posed a threat to you, then consolidation should also not pose a threat. I am willing to wait. I want you to embrace consolidation and convergence as you did embrace computerisation," Mr Chidambaram said at a function organised by PNB here today.
Giant bank
Mr Chidambaram said that PNB would become a giant bank dominating the northern States if consolidation were to take place. He highlighted that PNB, after consolidation, would become as big as State Bank of India (SBI) and would give the latter a run for its money. "If there is anyone who should worry about consolidation, it is SBI employees and not you," Mr Chidambaram told PNB executives and senior management. PNB has in the last one year brought 1,000 branches under CBS and is the first among public sector banks to have 2,000 CBS branches.
C-D mismatch
Admitting that there is a credit-deposit mismatch in the economy, Mr Chidambaram, however, said that one should not lose sight of the fact that the economy was on a high growth path. "We need to ride this high growth path a little while longer so that we firmly put the economy on a high growth path," he said, adding that China had demonstrated that 8-9 per cent growth can be achieved over a decade on a sustainable basis. On the Cabinet's decision to provide Rs 1,700 crore as interest relief to farmers for kharif and rabi 2005-06, Mr Chidambaram said that this money hadbeen credited to the RBI and Nabard today and that bankers could now credit the individual farmers' account in April. "I want every farmer who has borrowed from a bank to have 2 percentage point of the interest paid and this must be reflected in his bank account by April 30 and latest by May 15," he said.
Interest rates
Later, speaking to reporters, Mr Chidambaram said that interest rates would remain attractive to both savers and depositors. On the issue of liquidity, the Finance Minister said that the Reserve Bank of India would address the issue. "The Monetary Policy is on April 18 and RBI is fully seized of the matter. Having regard to the increase in demand for credit, one must address the supply side and I am totally confident that RBI will address the supply side," Mr Chidambaram said. Asked whether he would favour a cut in Cash Reserve Ratio, Mr Chidambaram said that it's not for a Finance Minister to say that he favoured this or that measure. "These are all matters before the RBI Governor and he is fully competent to address the issue," he said.
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