P.Chidambaram is known for his assertiveness and does not like any non-compliance to his diktat. CMDs of banks, atleast a vast majority of them, are known to be extremely faithful to Finance Ministry.
Public sector banks are now under pressure from PC to reduce their base rates and hence interest rates on loans. Though PC argues that reduction in interest rates will increase credit offtake, many studies have pointed out that interest rates are now not a deterrent to borrowers.
Public sector banks are listed in the stock market and their managements are supposed to protect the interests of all shareholders. Forcing them to reduce interest rates is not conducive to corporate governance. It is unfortunate that banks' regulator, RBI is becoming more subservient to the ministry.It is in a way SEBI's responsibility to ensure that interest of banks' shareholders is protected. But then SEBI also is controlled by tentacles of Finance Ministry.
Unless public sector banks are truly independent from governmental influence, professionalism will be absent. Though the government is certainly a shareholder, a major one at that, it has no right to dictate managerial decisions to banks. Let bank managements manage; don't make them puppets.
Public sector banks are now under pressure from PC to reduce their base rates and hence interest rates on loans. Though PC argues that reduction in interest rates will increase credit offtake, many studies have pointed out that interest rates are now not a deterrent to borrowers.
Public sector banks are listed in the stock market and their managements are supposed to protect the interests of all shareholders. Forcing them to reduce interest rates is not conducive to corporate governance. It is unfortunate that banks' regulator, RBI is becoming more subservient to the ministry.It is in a way SEBI's responsibility to ensure that interest of banks' shareholders is protected. But then SEBI also is controlled by tentacles of Finance Ministry.
Unless public sector banks are truly independent from governmental influence, professionalism will be absent. Though the government is certainly a shareholder, a major one at that, it has no right to dictate managerial decisions to banks. Let bank managements manage; don't make them puppets.
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