The Hindu Business Line : Bucking banks

Many journalists are wondering how public sector banks decided to hold their own against an `advice' from the Finance Ministry to re-think their decision to hike lending rates. When news first came that the Government had asked banks to consult their boards before deciding on rate hikes, most bankers told the press, of-the-record of course, that no public sector bank chief would have the gumption to stand up to the Finance Minister. And, yet, they did.

Two versions are now available on how it happened, both unsubstantiated though. One is that at the board meetings, where Finance Ministry nominees were present, the facts were presented in such a detailed manner that even the government nominees fell in line with the rate hike decision. The second is that the Finance Minister, P. Chidambaram, changed his mind on the issue somewhere along the way when the Ministry's `advise' was seen as a direct intervention in the working of the banks and, hence, an anti-reforms measure. Chidambaram, it is said, is not willing to give up his reformer tag under any circumstance.

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