Banking reforms can wait: Kamath

Lauding the government and RBI for saving the day for India with conservative banking norms, ICICI Bank Chairman KV Kamath today said any further reforms in the sector should wait as global banks are in ‘disarray’.

“Indeed it has prevailed. Indeed the conservatism of Indian banking system and regulatory framework has prevailed,” Kamath said when asked if the policymakers’ conservative approach on banking sector reforms has saved the day for India in the wake of global financial crisis.

Asked if he was suggesting that the prevailing banking policies should not be altered, Kamath said: “At this point in time, we should not tinker with it.”

When asked if the government should now pursue the banking sector reforms as they were obstructed by the Left parties in the previous regime, Kamath said: “We already have a well-run banking system and a well-run financial system. It has adequate levels of capital. I think at this point in time we shall keep it undisturbed.”

“I think, universally the approach to banking, to financial markets is to basically be in the state of cautionary readiness where you maintain high levels of capitals and maintain very prudent policies.”

Expressing his views on RBI deferring the liberalisation of foreign banks, the ICICI Bank Chairman said: “I think it is entirely appropriate that they have said they will review it at appropriate time.”

“In the global context there is complete disarray in the banking space. It would not have been appropriate for India to take a decision at this point of time as there is no equilibrium in the global market (now),” Kamath said.

The Chairman of the country’s largest private sector bank said even the NPA (non-performing asset) levels for Indian banks were at a comfortable level, when compared to their global peers and this could be attributed to a well-managed system being in place.

“Considering what the world has gone through, I think behaviour of India NPA is not a concern... I would not be worried (by the NPA levels). This would mean that growth (in the sector) would continue at pace which the nation needs,” he noted.

Asked for his advise to the banking sector, the veteran banker said, “I will tell them to continue to be conservative. Continue with the policy and the path taken in the last six months.”