Mumbai, Mar 19: The Indian Merchants Chamber (IMC) has called for more flexibility in the application of the non-performing asset (NPA) norms in the recession-hit industries like paper, cement, sugar, newsprint, bulk drugs, chemicals and synthetic fibres. This is part of the supplementary suggestions made by the body to the Narasimhan Committee on the banking sector reforms. The other supplementary suggestions relate to maintaining a minimum level of service during frequent bank holidays and easing of credit flows to the second-rung companies.IMC had, on March 5, given its views on the banking sector reforms relating to some general issues. The supplementary suggestions relate to the specific and practical problems faced by the industry in its interface with the banks and have been arrived at after discussions with industrialists at the IMC.
On the NPAs, the committee has suggested that commercial banks under the Indian Banks' Association (IBA) appoint a committee of chartered accountants withcross-border experience in dealing with NPAs and their effect on balance sheets. Once the guidelines are laid down, they will facilitate the Reserve Bank of India to ensure compliance and non-interference in individual cases, except in the case of absolutely exceptional circumstances of a particular account, the memorandum stated.
According to Sailesh Haribakti, partner, Haribhakti & Co, and the chairman of IMC's Banking and Insurance Committee, in the current scenario, accessing of bank funds has become extraordinarily difficult for the weak corporates in the recession-hit sectors. "Certain element of reassurance is needed as these companies are not fundamentally weak, but have stumbled upon due to recession in their industry. We are not talking for the companies that are already on their death-bed, but those that have only stumbled," he said.
Other supplementary suggestions relate to giving full autonomy to the banks to operate like board-managed companies without reference to the RBI or thegovernment except on a few important issues. IMC has also suggested privatisation of the banks up to 39 per cent in the next three years. Banks should also be merged to acquire competetive size.
"Total professionalism needs to be brought in for effective competition, especially in areas like risk management skills, appraisal skills, knowledge of competitive practices in various areas of banking including personnel and corporate banking," the memorandum stated. Another recommendation relates to large-scale adoption of information technology and due importance given to human resource management.
"There is a crying need for upgradation of skills of senior executives in banks and institutions and clear successor lines established before chairman incumbents retire," the memorandum stated.
Copyright © 1998 Indian Express Newspapers (Bombay) Ltd.
