Reforms helped banks better operational efficiency and cushioned them in adverse times
The freedom given to banks came in handy for them to lend below their respective prime lending rates (PLR) and gave them a cushion to react to market developments at a time when corporates are turning to debt, and credit offtake itself is not picking up.
For instance, banks had all the leeway to quote favourable rates to exporters and other creditworthy borrowers.
Recounting how the focus of banking sector reforms this year was to create an enabling environment for growth, the Economic Survey 2001-02 says banks could address the concerns of senior citizens by giving them higher interest rates.
Correspondingly, banks were given the freedom to tune their operational efficiency by cutting down excess manpower.
The voluntary retirement schemes implemented by the banks in 2000-01 led to the reduction of the workforce by 1,01,300, till December 31, 2001. This constituted 11.7 per cent of the total workforce in the banking industry as on March 31, 2000.
As the Banking Service Recruitment Boards were abolished, banks got freedom to hire their own staff. However, they still have to strictly follow the central government
