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Tag Archives: Rural Banking

Bank on Government’s Social Agenda

Comments Off on Bank on Government’s Social AgendaPosted by on March 4, 2011

It has always been nice to hear the Central Banker of the country talking and favouring financial inclusion despite of tremendous pressure in favour of financial consolidation. Though, this does not down size the importance of Financial Consolidation, looking into type of competition the banks or rather banking sector in locked into.  The prospective change in policy, when it comes to granting license to Banks to operate, towards asking them to commit themselves to Governments’ social agenda of Financial Inclusion is again an august step.

 

Four decades succeeding the bank nationalization, have just succeeded in provide access to banking services to barely 30,000 out of 6 Lakh habitations. This clearly means the huge task that banks still have to complete. Looking into achievements of banks one may infer as if the banks were just paying lip service to governments agenda of financial inclusion.

 

Central Bank, should perhaps consider asking new bankers to have their headquarters located in one of 570000 habitations, which are still facing financial exclusion. As this will automatically initiate what is called as seepage economy at those places and in process will gradually attract more bankers and other stakeholders in the development process there.

 

Due credit goes to the backing given by Prime Minister Manmohan Singh to the Central Banker of the country, which forced even union finance ministry to a bit down on its focus towards financial consolidation. Though finance ministry, still wants to stick to financial consolidation, as Union Finance Minister Pranab Mukherjee could not abstain himself from containing in Financial Bill 2011-12 presented by him in the Parliament on February 28, 2011.

Always Yours–As Usual—Saurabh Singh

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RBI and Finance Ministry at Cross Heads

Comments Off on RBI and Finance Ministry at Cross HeadsPosted by on December 2, 2009

The RBI is not in favor of the consolidation in banking industry as it feels that right time is still to arrive. They have a valid reason too. In a country, where the process of financial inclusion has not been completed, talking of consolidation does not make a sense. Though they understand that as a country, there exists a problem of having Banks more in numbers, where as there is absence of dominant players in the sector, leaving a few exceptions. But it still hold the view that as a factor, financial inclusion has much weight as compared to bank consolidation.

On the other hand finance ministry has asked the top five public sector banks to come up with the ideas on banking consolidation by the end of current fiscal. They have further been told to submit a detailed roadmap and also do the due diligence of the small banks they could acquire. The finance ministry is of the opinion that there should be 8 to 10 large public sector banks as compared against 27 at present. They have point, as their problem is of governance, overstaffing, fat organizational structure and thus more expenses to be meat from Government Budget. Thus ROI that the Government is generating can not be called satisfactory. Certainly they want to be in the banking sector, but the only point that it wants to make is; that the Government needs to be represented as dominant player and simultaneously the consolidation will also reduce the burden on Government exchequer while efficiency would be boosted.

I have presented both the point of views, now it’s up to you, that whom you choose to align with. Here, a clear conflict exists, but at the same time, both the points have a valid reasons and arguments to support it.

Good day

Saurabh, India

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