This refers to the report “Finmin diktat sets stiff targets for PSU banks” (November 28). As an owner, the government’s anxiety to ensure that public sector banks (PSBs) meet its expectations with regard to performance is understandable. But setting up almost uniform levels for achievement under several parameters in which different banks have varying competencies may not bring the desired result.
Forcing memorandums of understanding (MoUs) will add pressure on the top management. It may also encourage unethical practices, if one would agree that financial products are different from other consumer products and marketing in the financial sector cannot be compared with buying and selling consumer articles.
The finance ministry, at this late stage, should think in terms of (a) encouraging individual banks to do business in areas in which they are better equipped and have a competitive advantage in terms of outreach; (b) redefining the role of various categories of banks considering their background, skills and capabilities; (c) and involving the regulator, the Reserve Bank of India, for conveying the government’s expectations, so that multiplicity of guidance is avoided. Sporadic efforts like the present one will only destabilise the financial sector.
M G Warrier, Mumbai
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