The Hindu Business Line : AIBOC panel's study on consolidation, FDI policies to be ready soon

THE Independent Commission on Banking Policy, which was set up in October 2004 by the All-India Bank Officers' Confederation (AIBOC) to examine the developments of banking policies since 1991, is likely to come out with its report in a month, according to the AIBOC Joint General-Secretary and Convenor of the commission, Mr T.R. Bhat.

Addressing newspersons on the sidelines of felicitation to Mr A. Padmanabha Shetty, Officer-Nominee Director on the board of Vijaya Bank, here, he said that the AIBOC set up this commission to study issues related to banking policies — especially those related to consolidation in banking sector and the FDI hike in private banks — and to suggest alternatives to them.

The commission, which is working on these issues, will come out with a report in a month, he said.

Mr S.P. Shukla, former Finance Secretary and former Planning Commission member, is the Chairman of the commission.

Disapproving the statements of the Union Finance Minister that the foreign direct investment in private banks will enable them to augment their capital, Mr Bhat said the rights issue of private sector Karnataka Bank is getting a good response from investors.

It shows that Indian private sector banks can augment their capital without foreign investment.

"People have faith in well managed private sector banks," he said.

To a query on consolidation moves in banking industry, he said the confederation is opposed to merger just for the sake of it. State Bank of India's size will be only one-tenth of the largest US bank, even if all its associate banks are merged with it.

"Size and efficiency do not have correlation. In fact, smaller banks have performed well compared to others," he said.

The AIBOC thought it necessary to find solutions to these issues and constituted the independent commission, he added.

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AIBOC panel's study on consolidation, FDI policies to be ready soon