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Mumbai, July 28: Bank trade unions have strongly opposed a reduction in the government holding in public sector banks to 33 per cent. This was one of the major recommendations of the Narasimham Committee report.
At a meeting with the Reserve Bank governor Bimal Jalan, the trade union representatives said that they are against the concept of narrow banking. According to the union leaders, weak banks provide important services in different parts of the country and any narrowing of their functions will not be in the country's interest.
The Narasimham Committee had recommended the conversion of weak and loss-making banks into narrow banks, which will invest in only government securities and curb commercial lendings.
Trade union leaders pointed out that the asset-reconstruction fund, which has been suggested by the Narasimham Committee, was fraught with moral hazard. There was also a discussion on the legal and other measures needed to effect quick recovery of loans and reducing non-performing assets of Mumbai, July 28: Bank trade unions have strongly opposed a reduction in the government holding in public sector banks to 33 per cent. This was one of the major recommendations of the Narasimham Committee report.
At a meeting with the Reserve Bank governor Bimal Jalan, the trade union representatives said that they are against the concept of narrow banking. According to the union leaders, weak banks provide important services in different parts of the country and any narrowing of their functions will not be in the country's interest.
The Narasimham Committee had recommended the conversion of weak and loss-making banks into narrow banks, which will invest in only government securities and curb commercial lendings.
Trade union leaders pointed out that the asset-reconstruction fund, which has been suggested by the Narasimham Committee, was fraught with moral hazard. There was also a discussion on the legal and other measures needed to effect quick recovery of loans and reducing non-performing assets ofbanks, an RBI release stated.
The release further said that quick recovery was possible only if banks have the power of attaching properties and defaulting borrowers are penalised effectively.
According to the RBI release, discussions were held on the need for providing suitable safeguards to banking personnel involved in decision-making, pros and cons of induction of new technology in the banking services and the need to strengthen management-employee cooperation and consultations at the industry level.
Earlier, the governor stated that the Indian banking sector had an important role to play in a changing global environment. He added that the banking sector in India is expected to make a significant contribution to India's economic growth and in increasing employment opportunities. It also plays an important role in making India's external sector strong.
The RBI release said that the governor emphasised that the Indian banking sector would be strong and vibrant only if the management, officers andstaff of the banks made joint efforts towards achieving this objective.The governor also drew attention of the unions to some areas in which the banking industry could do more, such as customer service and information technology. He said that banks needed to expedite reduction in the transaction time and costs in order to improve their services and efficiency.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
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