• Investment World
• eWorld
• Catalyst
• Mentor
• Life
• Canvas
• Praxis
• Urban Pulse
• Brand Quest

Dinesh Narayanan
N.K. Kurup

MUMBAI, Oct. 29

THE Reserve Bank of India has been consulting with Centurion Bank and Nedungadi Bank to find medium-term (three to five years) solutions to some problems that the banks have. Not only them, the RBI is in dialogue with all banks that have a problem, Dr Bimal Jalan, Governor, Reserve Bank of India, has said.

Speaking to Business Line after the mid-term review of the credit policy, Dr Jalan, indirectly admitted that some of the old private sector banks, especially the ones based in the South, are not in great shape. The solution to the problems of each of these entities would have to be specific to them. He was replying to a question whether the RBI's response to all the troubled banks would be the same as that in the case of Centurion and Nedungadi.

Some of the well-known South-based old private sector banks are in a deep mess with many of them inadequately capitalised, according to reliable sources.

Without naming the banks, Dr Jalan said, "The nature of problems of these banks differs from one another. Some of them are troubled by NPAs, some have high costs, some have large high-interest rate deposits... so the Reserve Bank as part of its supervisory responsibility is in discussion with all these banks". However, the response to the troubles of these banks will be specific to each one of them. "The supervisor is in dialogue with each one of them on the direction they should move in,'' he said.

On the foreign holding in banks, the Governor said the situation is still a bit fuzzy. "It is still under discussion up to what level FII investment in banks can go up to," he said. Dr Jalan, however, declined to say whether effective foreign holding in banks could go up to 98 per cent. "That is a difficult question to answer," he said. On the norms that will govern bank branches in special economic zones, Dr Jalan said foreign exchange transaction norms for these branches would be completely free. "The whole point of an SEZ branch is to fence out its liabilities. It will have complete freedom to transact in foreign exhange,'' he said.

Send this article to Friends by E-Mail
Comment on this article to BLFeedback@thehindu.co.in

Stories in this Section
Kelkar panel for pruning export promotion schemes

Copyright © 2002, The Hindu Business Line. Republication or redissemination of the contents of this screen are expressly prohibited without the written consent of The Hindu Business Line