Banks spend more time with regulators than with customers — UTI chief

NEW DELHI, NOV 27: Banks spend most of their time between the three regulators -- Reserve Bank of India (RBI), Securities and Exchange Boa...

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NEW DELHI, NOV 27: Banks spend most of their time between the three regulators — Reserve Bank of India (RBI), Securities and Exchange Board of India (Sebi) and the Banking Division of the Finance Ministry — than with the customers. Often conflicts also do arise among the three regulators thus creating confusion for the banks. Hence, there is a need for a "super regulator" in the financial sector.

This was stated by the Chairman of Unit Trust of India (UTI), P S Subramanyam on Monday. Addressing the session on "Towards a new generation of banks" in the India Economic Summit 2000, organised jointly by the World Economic Forum (WEF) and CII, Subramanyam stated that banks should not see government as the government but just as a shareholder. Making a point for a clear distinction between ownership and management, he added that setting up of super regulator would reduce the interference on the banks at various levels while at the same time the super regulator can also ensure that the banks proceed on the required lines. "The time has come for a systematic solution to the problem and the super regulator would provide the solution", he added.

Making a strong point for the Indian banks to go global, Subramanayam added that the relaxations in the policy framework is needed to allow the banks to go global. "Just as foreign banks are making foray in the Indian market, the Indian banks also need to look at the global market", he added. Calling for a level playing field for the foreign banks in India, he also called for addressing the issue of possible stake by the foreign banks in the PSU banks.

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Speaking at the session, K V Kamath, Managing Director and CEO of ICICI Limited made a strong case for universal banking by stating that the Indian banks now have to merge their retail business with the project financing activities. He urged the Indian banks to concentrate on improving and innovating products, processes and delivery channels which would enable the banks to stand up to competition from their foreign counterparts. Thanks to the new technology, 80 per cent of the transactions were taking outside the branch as compared to 90 per cent of the transactions within the branch previously, he added.

Calling for a change in the public sector nature of the Indian banks, Javed Shirazi, Country Head, Deutsche Bank, India, said that time has come for the Indian banking sector to do away with the any sort of RBI intervention in the interest rates. "Time has come to do away with Prime Lending Rates (PLR) and RBI’s intervention in the interest rates", he added.