The Hindu : Government should stop with regulating: Vaghul

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Sunday, Feb 15, 2004

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Government should stop with regulating: Vaghul

By Our Special Correspondent

COIMBATORE, FEB. 14. The Government should keep out of the banking business and concentrate on governance, the chairman of the ICICI Bank, N.Vaghul, said here on Friday.

Talking to presspersons after delivering the 125th Rajaji Endowment Lecture on `Relevance of Spirituality in the Modern Times', he said that mere divestment did not mean that the Government disassociated itself from business. "For instance, who appoints the chairman?" he queried.

He said that political interference was a stumbling block to growth prospects.

Mr.Vaghul was categorical that the Government's "intervention phase" was over. "Its withdrawal should be abrupt and not gradual.

He pointed out that there had been "regulators" for each sector.

For example, the telecom sector had the Telecom Regulatory Authority of India and the stock exchange had the Securities Exchange Board of India. For banks, it was the Reserve bank of India. The Government should stop with regulating without interfering in the routine business.

In the telecom sector, Indian entrepreneurs were able to prove themselves and the tariffs had slumped. "There is hardly anyone without a cell phone and the telephone density has increased exponentially". This sector could be deemed an example for banking sector also.

To a question, he said that most of the banks had been able to tackle the legacy of bad debts. `The economy pick up has been good and the credit off take has improved."

The industrial recovery had just started. The major demand was not just from the retail segment; the infrastructure and industrial segments reinforced it as well.

`However, sustaining the recovery depends upon the policy that we are going to pursue, whether they are bold and aggressive."

According to him, the major bottlenecks that need to be sorted out were putting up a strong infrastructure on the agricultural front and dealing with infrastructural issues such as power, roads, ports and airports.

On the economic performance and the diverse opinions voiced in this regard, he said, "the current growth rate is real and industry has become globally competitive. Achieving a 10 per cent growth rate is well within our reach at the speed with which we are progressing."

Regarding the performance of the banking sector, he said the last two years had been good, as a majority of the banks had made good profits from treasury operations. "These profits have not been frittered away. But the pressure is mounting."

Although the interest rates had declined considerably, he expected them to look up commensurate with the pick-up in the economy, probably in two to three years.

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