This refers to the report “Independent directors of pvt banks face RBI heat” (September 3). At a time when the banking sector is under the threat of a slow resolution of the unbearable heap of bad loans and recurring scams, any move to enhance governance in banks will be big respite to stakeholders. Violation of rules and regulations are not rare and as a consequence, banks are losing credibility and capability. Resource mobilisation and the capacity to lend are getting badly affected. Large divergence in the classification of the assets created by the banks are not uncommon.
Notwithstanding the fact that the directors are supposed to protect the interest of the banks, many a times they become part and parcel of decisions that are outside the purview of the policies and guidelines of the central bank. At this juncture, the Reserve Bank of India must step forward with stringent measures against the violators to maintain good governance in banks. A lot of the scarce resources of banks are diverted or deployed to unscrupulous borrowers to secure the vested interest of some officials. Sensitisation and initiation of punitive actions are needed to weed out corrupt practices and to ensure the best of governance in banks.
V S K Pillai Kottayam
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