Lettes: New banks

This refers to the editorial “The banking win-win” (December 20). I disagree that the passing of the Banking Laws (Amendment) Bill in the Lok Sabha would herald a new era in the Indian banking system. The government’s recent step will cause much harm to public sector banks. It may be recalled that when existing new-generation banks started functioning, they opened a new chapter in banking history. They attracted customers through the use of new technologies and techniques. That took away the cream of public sector banks’ businesses. What remained with them were left-out customers. Now, upcoming private banks would do the same by offering different incentives to lure more customers of public banks. Eventually, the latter would be left with dry accounts. Besides, with the reduction in total business (read deposits and advances) handled by public sector banks, they would become weaker by the day. How can they then achieve the real “big bank” status? To some extent, banks need to be blamed for their pathetic situation. Given the labour situation in India, their privatisation is difficult and so, the government believes in improving the competition by bringing in some more players into the banking system.

K V Rao Bangalore

Letters can be mailed, faxed or e-mailed to:
The Editor, Business Standard
Nehru House, 4 Bahadur Shah Zafar Marg
New Delhi 110 002
Fax: (011) 23720201
E-mail: letters@bsmail.in
All letters must have a postal address and telephone number