The Hindu Business Line : ‘Banks must gear up to face challenges ahead’

Kolkata, Dec 12 Mr V. Leeladhar, Deputy Governor, Reserve Bank of India, today cautioned banks about the two major challenges, namely the shrinking margin and liquidity management, they had to cope with. The exporters complaining about the rupee appreciation, he made it clear, must learn to live with the changing dynamics of a liberalised scenario.

He was talking to newspersons after inaugurating to United Bank of India’s CBS Data Centre, Disaster Recovery Centre and 201st CBS Branch here on Wednesday.

Clearing system

Referring to the proposal for the formation of a common clearing corporation for the banking system, Mr Leeladhar said the RBI would work on the regulation for the proposed corporation once the Payments & Settlement Bill became an Act. The Bill, which had been passed by both the Houses of Parliament, was awaiting the President’s approval. Right now clearing operation was undertaken in 2,500 centres across the country and the practices and procedures were not uniform. Such a situation could not continue for long and standardisation of practices was needed.

As per the provision of the Bill, 51 per cent ownership of the proposed corporation would be held by public sector banks and the balance 49 per cent by other banks including private banks. The details were still to be worked out. Once the Bill became Act, the Indian Banks Association would float a company and the work on regulation would start.

Several Challenges

Earlier, while addressing the function organised by UBI, Mr Leeladhar drew attention to several other challenges facing the banking industry and these included adoption of a standardised approach towards data management, new services and products, product proliferation through Web-based interface which was not possible now, security issues, customer relations management and business continuity planning.