The Hindu Business Line : Mr R. Viswananthan, a freelance trainer-cum-consultant and retired deputy MD, SBI; Vivekananda College, Chennai

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Mr R. Viswananthan, a freelance trainer-cum-consultant and retired deputy MD, SBI; Vivekananda College, Chennai

Mr R. Viswananthan (left), a freelance trainer-cum-consultant and retired Deputy Managing Director of SBI, at a BL Club meeting at Vivekananda College in Chennai. Seated next to him are Swami Maharaj Yatatmanadaji and Mr S. Swaminathan, Principal.

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Chennai, Jan . 8 The recent financial tsunami or sub-prime crisis arose because of the presence of too much money and reckless lending behaviour. For better banking, there was a need to strengthen the basic values of the banks through tight supervision. Also, leverage and liquidity concerns should be addressed, said Mr R. Viswananthan, a freelance trainer-cum-consultant who is also a retired Deputy Managing Director of State Bank of India.

He was addressing students of the Vivekananda College, Mylapore, at a BL Club event presented by Indian Overseas Bank.

During his address, he gave the students an overview of modern banking. Though the credit rating agencies were basically there to monitor the health of credit lending, they did not have any liability for their wrong actions, he pointed out.

According to Mr Viswananthan, at present, the country had 27 public sector banks, 23 private banks and 28 foreign banks, making a total of 78 scheduled commercial banks.

Though SBI came into existence in 1955, it was not owned by the Government of India till last year though the RBI had a major stake in it. In the olden days, it was class banking as against mass banking now.

Regional banks came into existence eyeing the business of multanis or kandhuvattis. At present, there were around 91 rural banks, four local area banks and 1,770 urban co-operative banks.

According to him, modern banking was responsible for basic functions, namely, collecting the savings of society by way of deposits, facilitating investments, offering the public payments system such as cheques and remittances and movement of funds.

Banks across the world still had a near monopoly of savings and investment. Governments were, therefore, protective of them and no bank could operate without receiving the Government’s licence. Deposits to a particular amount were guaranteed by the Government. Further, the management of banks was tightly supervised. If a bank collapses, the Government steps in to take it over.

Basle norms

Internationally, the capital requirements of all banks are kept in control by the Bank for International Settlement (BIS), Basle. The Basle norms were framed to keep a check on the minimum capital requirement of banks.

Mr Viswananthan concluded his lecture with Mahatma Gandhi’s quote, ‘The earth provides for everyone’s need and not for everyone’s greed,’ drawing attention to the current financial scenario. Swami Maharaj Yatatmanadaji and Mr S. Swaminathan, Principal, were among those present at the meet.

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