MUMBAI, February 23: The Indian Banks' Association (IBA) has called for a "hands-off" policy from the finance ministry. The premier bankers' body, in its presentation before the Narasimham panel on Monday in Mumbai, called for abolition of dual control of banks by the Reserve Bank of India (RBI) and the ministry's banking division.This, along with the demand for total divestment of government stake in public-sector banks and autonomy in recruitment and human-resource development (HRD) polices at the highest level, form the core of IBA's "freedom package".The apex bankers' body said that adherance to the dual control has constrained the working of banks. It is constraining their growth in the context of market-oriented operations on commercial lines. The suggestion is aimed at providing more operational freedom and administrative flexibility to banks, said senior IBA sources.
The body has also called for doing way with the system of monitoring banks by the RBI. The memorandum has suggested that thequantum of information sought by the central bank should be reduced. According to IBA, the RBI should concentrate on macro-management by leaving micro-management to the individual bank's commercial decision. The Reserve Bank is known to seek multiple information from banks, including minor details, leading banks to spend disproportionate time and energy in providing it. The IBA has suggested that supervisory control of banks by the RBI should shift to quality-control and audit of their management systems.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
