Banks Should Up Efficiency, Says Phd Chamber

The PHD Chamber of Commerce and Industry (PHDCCI) yesterday urged Indian banks to increase their productivity and efficiency and also earmark a certain percentage of their profits for credit risk fundout of their internal resources.

All commercial and credit risks which are a part of banks normal business risks should be borne by the banks, the PHDCCI said in a press release here.

It welcomed the move of Bank of Baroda for suspending imposition of 1 per cent levy on advances to SSIs. Since advances are already secured by way of hypothecation or pledge and also by collaterals, any additional charge would prove to be counter-productive.

 

This would make SSIs and small borrowers uncompetitive in the present liberalised environment, besides making them sick or potentially sick enterprise the chamber release said.

Funds are hardly available from the banking system to SSI and even at a rate of 17-18 per cent, banks get a spread of 8 to per cent. This high spread should enable the banks to cover the risk component of banking business. The spreads globally are, however, of the order of 2 to 3 per cent, the chamber said.