Parliamentary Standing Committee of Finance is very keen to solve the stressed assets of the banking industry in India. It has talked with various heads of organisations like RBI, SBI and other Public Sector Banks in phases. It is observing the internal and external factors behind the financial crisis and the management problem of the banking industry. In an exclusive interview Prof. Saugata Roy, MP, and a member of Standing Committee of Finance talked to BE’s Kishore Kumar Biswas on various issues related to banking industry.
Q. The banking industry in India has been undergoing huge stress. The Parliamentary Standing Committee met recently with 11 heads of banks to discuss this. What is your opinion about the banking sector, particularly, the PSBs?
A. The Parliamentary Standing Committee of finance talked to the Governor of the RBI and its deputy governors, Chairman of the SBI, and heads of public sector banks. All have put forward their opinions about the industry. The RBI thinks that they should have given more supervisory power to look after banking. RBI officials also told that it has no power to appoint or discharge any heads of PSBs. It is also not possible for them to supervise all the units of the industry.
The heads of 11 PSBs told the Committee that they were trying hard and expect that by 2020 the health of the banks would be recovered. The non performing assets are rising. It is close to Rs. 9 lakh crore. It might be higher in the coming days. The government has been helping the PSBs to get over from this situation. We have to wait for the turnaround as has been designed by the bankers.
Q. Do you think that privatisation of some of the banks, in this situation, can be an option?
A. No. We have not thought of privatisation to solve the problem. Everything will be done to strengthen the public sector.
Q. Do you think that there should have been changes in the IBC for better applicability of it?
A. It is yet to be decided whether changes was necessary. But we are not ruling out that option. The first 12 units which have been sent to the NCLT are very big loan receivers. Most of the companies are in steel sector. It also known that steel sector now is not as weak as it was earlier. We have to see how much is recovered from these companies. If it is very much less then we have to think for a better option.
Q. Prompt corrective action (PCA) has been imposed on 11 PSBs. Your comments?
A. We have talked to the bankers under PCA. They have told us that they are doing the job under many constraints. They are also hopeful about a turnaround of the banks. At the same time many of them told us that they are facing the problem regarding quality human resources, particularly at the middle level. This is why they had opted for a more digitized system.
Q. It is seen that everybody is blaming the banks, the RBI and businessmen for this crisis of the industry. But the weak economic situation is also blamed for the ongoing crisis.
A. Yes, that is true. But we are not blaming anyone. We are just observing the situation. The economic growth is not at the desired level. Health of the banks must improve with better economic health.
Q. It said that political interference in the banking operation is also a reason behind the ailing banking industry. In many cases it is claimed that a section of politicians, at times, try to influence some projects of their favourite client.
A. It is just an excuse. Politicians are not in bank boards or any decision making process. How can politicians influence banking business? This is not a justified claim.