Private Sector Banks To Press For Level Playing Field

A strong demand for a level playing field in the banking industry is likely to be made at a meeting of the association of private banks, to be held at Chennai on January 11, banking sources here said.

Private banks were especially upset over not being given a level playing field when uniform standards and obligations were sought to be applied to all banks regardless of their ownership and origin, the sources said.

A major discrimination between public and private sector banks was that public institutions, government departments and municipal bodies have been advised to have their accounts and funds with public sector banks only.

Another setback was that guarantees and demand drafts issued by them were not accepted by government departments, customs, port trusts and other organisations, they said.

If the discrimination was done away with, it would go a long way in according equal opportunities to all those on the scene and bringing out the best in them, they said.

Stating that private banks matched the public sector banks in all aspects of service, sources said a level playing field would help them fare even better. Sources said another area of discrimination was non-extension of debt relief to private banks which meant that few people come forward to avail of loans from private banks.

But at the same time, these banks have to fulfil mandatory obligations such as lending in priority sectors, industry and agriculture affecting the banks' performance, they said.

They also said no effort should be spared to augment savings through the banking channel and that it was time for a review of continuing tax deduction at source (TDS) on bank deposits.

TDS acted as a sort of disincentive for flow of funds through the banking channel, they said, adding that this was important in the present-day market-driven economy in which the customer called the tune.