This refers to the report "RBI wants govt to pare stakes in banks" (April 1). The timing of the blueprint for sweeping reforms in public sector banks (PSBs) indicates the obnoxious approach of the banking regulator (read Reserve Bank of India) in the sense that it knows the current government would not bother about such reforms, and it would be the headache of the new government in Delhi after the elections. How come RBI has become so bold in suggesting certain reforms at this juncture, though most of them have been coined by banking experts long back?
Barring privatisation, everything else has been included in the reforms. It is not, however, clear how a reduction in shareholding to 51 per cent would keep the government away from management control. When RBI suggests that it wants to withdraw from the respective boards of PSBs, it assumes that the PSBs' problems would continue and it does not want to become a party. The conflict of interest has come as an easy alibi for the recommendations. When most of the other senior management appointees to other PSBs are drawn from the State Bank Group, RBI finds that the group is more vulnerable when it taps its internal people for promotions. What glorious inconsistency.
K V Rao Bangalore
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