Verma Seeks Distance From Govt
MS Verma, chairman of State Bank of India, stressed on the need to have an arms-length relationship between public sector banks on the one hand and the Reserve Bank of India along with the government on the other.
Stating this at the forty-third annual general meeting of the shareholders yesterday, Verma said: "I believe our efficiently managed public sector banks deserve nothing short of this."
He said there is a need to separate the ownership and regulatory roles of the government. "A committee set up by government is already looking into this.".
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He also felt a need to have a comprehensive Act for governing the workings of commercial banks, all-India financial institutions and other non banking intermediaries.
He explained that there is no reason to have separate statutes for banks and financial institutions when there is a growing convergence among their functions. In this light he said that the SBI Act which governs the working of the bank too needs to be amended.
Verma also stressed on providing more authority to Indian Banks' Association.
"The reform has brought a sea change in the structure of the industry and if we really want the IBA to continue to function as Self Regulatory Authority, it is imperative that its membership base is broadened and sufficient authority is delegated to it," he said.
Verma said in order to take advantage of its size, the bank would have to outsource selected technological and operational needs. "This will help us concentrate on core business, high voltage specialisation leading to useful value addition and optimal resource utilisation," he said.
Verma said that in dollar terms, by year 2003-2004, the bank is poised to post a profit of $1 billion.
Replying to shareholders query on low dividend he said, "Money is the raw material of the bank and world wide no bank provides high dividend,. Instead the money is used in increasing bank's networth and performance. financial institutions and banks need money because it is their bloodline and thus the dividend payout ratio is at a reasonable level."