CALCUTTA, March 16: Chiefs of public sector banks are supporting unions' demand for a comprehensive change in the banking sector legislations. The Indian Banks' Association (IBA), the representative body of bank managements, has called for reforms in some aspects of the banking sector.General secretary of the All India Bank Officers' Confederation SR Sengupta told reporters here on Monday that chairmen of public sector banks have told him that amendments in the current banking rules and regulations are needed.
The bank unions, under the leadership of the United Forum of Bank Unions, have already made a representation to the Narasimhan Committee on the aspects of legislative reforms. The committee, which was formed on December 27, has the mandate to review the earlier Narasimhan Committee report which was submitted in 1991 and recommend changes in it.
The committee asked all segments of the sector to submit their viewpoints before it. According to Sengupta, the banking unions focussed on capitaladequacy during their representation before the Narasimhan Committee. Now, various assets of banks are assigned weights according to their risk perception while computing capital adequacy. Government-guaranteed securities are assigned zero weights.
The union representatives told the committee that advances to the government sector or government-owned organisations should also be treated as zero-risk assets. This will improve the capital adequacy of many banks which have been designated as `weak,' Sengupta said.
To strengthen his arguments, Sengupta told the committee that banks in south-east Asian countries, including Japan, are already following this practice.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
