Government should control its part in banks: RBI

INDIA: The Source bank RBI on Friday indicated concern over the govt "occasionally exercising" its possession privileges in economical organizations and banking organizations through programs outside of their forums, and requested it to demonstrate exceptional business government.

"There are questions about how the govt will play out its possession part. This is not limited to Nabard, it is something which is being performed out in a number of organizations such as the professional economical organizations," Subbarao said at the 30 groundwork day function of Nabard here.

In 21 economical organizations, such as SBI, the govt has greater part share. Besides, it has greater part possession in many FIs such as 4 general insurance coverage companies and one lifestyle insurance provider, LIC.

"Occasionally", Subbarao said, "there are issues over the govt training its possession privileges not through the established route which is the panel procedure, but outside of panel.

"I don't think that it is a excellent example of excellent business government. One thing for the govt could be to demonstrate exceptional behavior of business government and exercise their possession privileges through the panel. I think that would be excellent for all banking organizations, such as Nabard."

There have been events when the govt is considered to have became popular upon the state-owned banking organizations as owner and informally instructed them to take certain economical choices.

There were reviews that in the recent share sale of ONGC, the govt had requested state-owned LIC to pick up the volume of share. However both the govt and LIC had declined the accusations.

Life Insurance Organization (LIC) had injected in over Rs 12,000 crore and bought 95 percent of the value in ONGC to help out the national disinvestment in the oil PSU in April.

On town loans, Subbarao said, "We need to do many things to enhance the performance of our farming sector; helping the flow of farming credit ratings is one of the important ones."

This needs effort from all the 3 institutional sections - professional economical organizations, Local Non-urban Banks (RRBs) and cooperatives, he said.

Commercial economical organizations need to find modern ways of attaining out to cultivator, RRBs need to make use of on their relative advantage and cooperatives have to enhance their government components, Subbarao said.

As the elite public organization in farming credit ratings, Nabard's part is crucial in this respect, he added.