Tighter
prudential norms for banks
Our Banking Bureau
13 October 2001
Mumbai:
Finance Minister Yashwant Sinha has indicated that tougher
prudential norms will be set for banks. Speaking at the
inauguration of BancIT 2001,
in Mumbai on 12 October, Sinha said stronger prudential norms and
recapitalisation are a must for banks.
“The reason to follow
international norms is mobility of capital and that is why it is
necessary to make those prudential norms international and
tougher. The health of the financial system is now an
international concern. The willingness of the rest of the world to
do business with us, or any other country, by way of trade or
direct investment or any other kind of investments will depend on
their confidence in us,” Sinha said.
Sinha also insisted that
banks set up a proper system for asset-liability management. “A
proper cushion needs to be kept by way of capital reserves against
market exposure and capital size should set a limit for risk
exposure of an individual financial institution. This, in turn,
will require stricter accounting and reporting norms on the part
of the banks.”
Addressing the question
of public sector banks facing competition from private and foreign
banks Sinha said the vast network of branches of public sector
banks
might turn from strength to liability. The branch concept may take
a backseat in the next three-to-four years, as banks, even without
branches, would be attracting customers. This was a clear hint to
public sector banks to upgrade their technology to stay ahead in
the race.
List
of general reports on banks
|