Speaking at a session on managing global banking at the international banking conference, the managing director of one of the leading rating agencies, stated that banks cannot be profitable if they have to discharge a social obligation.

Monro-Davies observed that many banks owed their high non-performing assets (NPAs) base to the social obligation thrust on them by the government.The rating agency chief later told The Financial Express that government should decide fast whether it wanted to subsidise banks to cater to the social commitment or wanted a separate channel be set up to take on the responsibility.

"There should be some mechanism to separate the two activities. Alternatively, the banks could be used as an agent with the government guaranteeing all disbursements madefor fulfilling its social obligation," he said.

The Fitch-IBCA chief expressed concerns about the quality of assets of the Indian banks. "When doing our work on Indian banks our greatest concentration will be without doubt on the credit side. In particular, we will be paying great attention to the level of reserves you have set up against doubtful loans," he said.