HYDERABAD: Former Reserve Bank Governor Y V Reddy today said there is no "crisis" in the Indian banking device, but cautioned that Indian banks will eventually pass into foreign fingers if there is no assessment of current policies.
The shareholding of foreign entities in the large personal banks in India is over 70 consistent with cent while in the public sector banks, government and LIC cling bulk possession and foreigners own majority of the remainder of the stake, Reddy said.
"We do not have 100 per cent government-owned banks. We have public sector banks with mixed ownership....Our banking system is predominantly owned by government, followed by foreigners and rest by Indians. I repeat, least by Indians," he said.
"Share of public sector banking is and will come down and under the current policy, that space will be occupied irrevocably by foreigner-owned banks unless there is a policy change," Reddy said, delivering a lecture on the Administrative Staff College of India here.
The current coverage of possession and governance in banking must be reviewed urgently to correct the out of date and distorted policies and this should be accomplished ahead of the banking device passes directly to foreign house owners, he said.
He additionally opined that there's a wish to reduce the Statutory Liquidity Ratio (SLR) and the Cash Reserve Ratio to global ranges for world competitiveness in the device.
"In brief, there is no crisis in banking, but banks are over-burdened with policy-induced obligations. The first step for improving our banking system is a commitment to reduce SLR and CRR to global levels as soon as possible. We can not have globally competitive economy with over-burdened banking system," he said.
On NPAs, Reddy said no longer all defaulters are "cheats" however the probability of default will increase if there are not any incentives for repayment.
"A high-level internal inquiry within the RBI should be undertaken to fix the responsibility for excesses in NPAs in the recent years and more important, to suggest and adopt measures to improve the system as whole," he said.
The shareholding of foreign entities in the large personal banks in India is over 70 consistent with cent while in the public sector banks, government and LIC cling bulk possession and foreigners own majority of the remainder of the stake, Reddy said.
"We do not have 100 per cent government-owned banks. We have public sector banks with mixed ownership....Our banking system is predominantly owned by government, followed by foreigners and rest by Indians. I repeat, least by Indians," he said.
"Share of public sector banking is and will come down and under the current policy, that space will be occupied irrevocably by foreigner-owned banks unless there is a policy change," Reddy said, delivering a lecture on the Administrative Staff College of India here.
The current coverage of possession and governance in banking must be reviewed urgently to correct the out of date and distorted policies and this should be accomplished ahead of the banking device passes directly to foreign house owners, he said.
He additionally opined that there's a wish to reduce the Statutory Liquidity Ratio (SLR) and the Cash Reserve Ratio to global ranges for world competitiveness in the device.
"In brief, there is no crisis in banking, but banks are over-burdened with policy-induced obligations. The first step for improving our banking system is a commitment to reduce SLR and CRR to global levels as soon as possible. We can not have globally competitive economy with over-burdened banking system," he said.
On NPAs, Reddy said no longer all defaulters are "cheats" however the probability of default will increase if there are not any incentives for repayment.
"A high-level internal inquiry within the RBI should be undertaken to fix the responsibility for excesses in NPAs in the recent years and more important, to suggest and adopt measures to improve the system as whole," he said.
Banks would pass into foreign hands if policy not changed: Ex-RBI governor Reddy
![Banks would pass into foreign hands if policy not changed: Ex-RBI governor Reddy]()
Reviewed by Kailash
on
February 02, 2018
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