Delivering an address on `Corporate governance in banking and finance' organised by the Administrative Staff College of India, Tarapore said the Deposit Insurance Agency should have powers to ensure total transparency while a bank solicits deposits.

Any advertisement for deposits should carry with it the adverse features of the bank's operations from the viewpoint of the depositors' interest. In view of the various problems of indian banks, Tarapore said the insuring agency should be given powers to direct banks to take various measures to secure the depositors interest and there should be wide powers to supervise the bank from the viewpoint of the depositors interest. He also advocated against the recapitalisation proposal of the weak public sector banks and felt that itwould be essential that the asset reconstruction company route should not be a backdoor recapitalisation. The only hope lies in a rapid and bold thrust towards greater transparency.

Tarapore said depositors are, by far, the greatest stakeholders and the transparency of operations and responsibility of management and there should be oriented towards safeguarding the depositors interest. Any alteration of the present demarcation of powers as between various authorities would require legislative changes and these authorities are unlikely to readily shed powers and there would be inordinate delays before any meaningful legislative action.

In this context, he called upon the depositors association to publicise the well known adverse features in banks so that the pro bono publico provides sufficient warning to depositors. A well-designed publicity campaign by the depositors association is the best assurance that governance in weak banks will improve. Tarapore said the depositors should not be lulled intoconfidence that merely because a bank is in the public sector and the depositors money is safe irrespective of how far the deterioration may set into a bank. The malady is in the head and the instilling of any meaningful form of corporate governance in the indian public sector financial system would require early attention in a top-down approach, he added.