Letters: RBI can't abdicate its role

This refers to the Q&A with Reserve Bank of India (RBI) Deputy Governor K C Chakravarty (“It is not our job to help banks achieve targets,” September 3). His assertion that it is not the central bank’s job to help banks achieve targets ignores some fundamental issues. Who lays down the targets in the first place? Who sets limits on various activities of banks? Moreover, who owns these banks? The limits of credit provisioning to specified sectors of the economy and inter-sectoral allocations are devised by the Centre and RBI. Having laid down these parameters, it is improper to say no help needs to be extended to banks to reach these targets. Banks are severely handicapped by umpteen regulatory requirements. They do not enjoy the independence to do business on purely commercial considerations, prudential norms notwithstanding. They are not only ring-fenced by RBI regulations, but the international benchmarks laid down by the Basel requirements also create roadblocks on their strategic planning. It is also pertinent to point out that the strengths and weaknesses of all banks are not the same. Therefore, some space for individual manoeuvring is necessary.

G R Saha Kolkata

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