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“Raise stable deposits for lending”

PUDUCHERRY: Deputy Governor of Reserve Bank of India (RBI) Shyamala Gopinath has stressed the need for banks to raise stable deposits for lending and rely less on wholesale funds.

Addressing bankers in the town on Sunday, she also highlighted the role of the rating agencies in the sub-prime issue.

Even while informing the multiple role played by the RBI as a regulator, monetary authority, development institution and customer protection, she elaborated on the unfolding global crisis arising from the fallout of sub-prime problem.

This time a crisis emerged in developed countries unlike the crisis in the past which emanated in emerging markets, she said. She also delved on the cause and spill over of the credit crisis to money markets.

Ms. Gopinath said the RBI would keep in view the risks involved in credit derivatives while financing and the process of framing guidelines for currency futures market for which feedback had been received on the draft paper.

Highlighting the initiatives of the RBI on customer service, she referred to the Payments and Settlements Act passed by the Parliament recently providing a legal basis for multilateral netting and settlement finality. She also referred to the role played by the RBI in the introduction of Real Time Gross Settlement for high value transactions, National Electronic Funds Transfer and Electronic Clearing Service.

She called upon the bankers to increasingly use the electronic mode of remittances. The RBI, in its draft approach paper had proposed to limit the charges on use of other banks’ Automated Teller Machines to Rs.20 per transaction for cash withdrawal and make it free from April 2009, she said.

She also urged the bankers to make effective use of customer grievance committees with a view to reducing references of complaints to Banking Ombudsman. She asked the bankers to undertake risk profiling of customers in order to apply Know-Your-Customer norms and provide easier access for opening of accounts of the financially and socially disadvantaged. She also invited the attention of the bankers to instructions issued by the RBI on this subject recently.

Ms. Gopinath commended the bankers in Puducherry for their efforts to ensure successful completion of financial inclusion.

She also interacted with all the bankers of Puducherry on issues ranging from rural credit to foreign exchange.

Chairman and Managing Director of the Indian Bank M.S. Sundara Rajan referred to the role of the State-Level Bankers Committee and the cordial relations between the bankers and the government in the Union Territory. He asked the bankers to sanction Over Draft/General Credit Card loans for all the no frill account holders in the second phase of the project.

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