Kishori Udeshi, a former Deputy Governor of the RBI and ex-chief of the Banking Codes and Standards Board of India, , came down heavily on banks in the country for what she called ‘cartelisation of savings rate.’

In a hard-hitting speech, after receiving the 11th MR Pai memorial award here on Tuesday, she pointed out that when the RBI deregulated the savings bank (SB) rate in October 2011, most banks fixed their SB rate at 4 per cent and it has remained there since then. “Are we to believe that the cost of deposit mobilisation is the same for all banks — big, small, public, private, foreign — and that it has remained static since 2011?” she asked.

In a radical proposal, Udeshi suggested the complete divestment by the government of its holdings in public sector banks, so that the pressure on the fisc by way of contributing to the recapitalising of such banks will be lifted. Or, the government, she said, could reduce the pressure by divesting up to 33 per cent of its holdings in public sector banks as once proposed by former finance minister Yashwant Sinha.

The second solution, though ‘Parliament friendly’, will not be able to cure the malaise that prevails in public sector banks and will only be a half measure, she added.

Jan Dhan scheme lauded Praising the Prime Minister’s Jan Dhan Yojana for accomplishing in one stroke what had not been achieved in 46 years of bank nationalisation, Udeshi said that the cynics have been silenced. There were still murmurs about the cost of starting those accounts and a demand from some banks that they should be reimbursed.

She said this should not come in the way of the right of the poor to be a bank customer and cited a recent statement by SBI Chairperson Arundhati Bhattacharya that the Jan Dhan accounts would become viable shortly.

Udeshi donated the award money of ₹1 lakh instituted by the Punjab and Maharashtra Cooperative Bank to the All-India Bank Depositors’ Association.

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