Private sector bank officers say RBI needs to be proactive

The All India Private Sector Bank Officers Federation has said that the crisis and scams in 15 private sector banks, which failed after 1980, could have been easily averted had timely action been taken by the Reserve Bank of India and the Union government.

Emphasising that in the case of all these 15 failed banks, which include Nedungadi Bank, Bank of Karad, Bank of Nainital, Traders Bank, Bank of Cochin, Parur Central Bank and Benaras State Bank, the employees' union and officers associations and other sources had already alerted the RBI and the Union finance ministry about the looming crisis, an AIPSBO spokesperson said.

But both the Reserve Bank of India and the Union government preferred to ignore such warnings and slept over the issue.

In the meantime the crisis aggravated and reached such proportions that these banks could not be rescued.

Wondering why the RBI representatives on the board of private sector banks tend to turn a blind eye to early alarm bells set off after detection of many non-ethical practices in such banks, he said.

If further scams and crisis are to be averted in the banking sector, this kind of lackadaisical attitude of RBI and the Union government should immediately change and they should become more pro-active in future.

Referring to the Nedungadi Bank case, he said, everyone knows that it was the indulgence of a Mumbai-based share broker, who cornered its shares, that brought the crisis in this bank.

Though the periodic surveillance by RBI officials had already alerted them about the discrepancies and irregularities happening in this bank, the central bank did not bother to take timely corrective steps and that led to the bank's infamous downfall.

Around 14 other private sector banks have failed since 1980 due to such lackadaisical attitude on the part of RBI representatives on the board of these banks, he alleged.

Saying that to deliberate on such issues the All India Private Sector Bank Officers Federation has convened its 5th triennial conference in Thrissur on December 14 and 15, he said that about 500 delegates from 15 private sector banks from all over the country will attend the conference.

One of the main items on the agenda of this conference is to prepare and submit a charter demanding scraping of the prevailing rules that allow unscrupulous individuals and business groups to corner shares of the promoters thereby enabling them to take over the concerned private banks with nominal investments, he added.