The $1.77 billion (about Rs 114 billion) scam in PNB involves billionaire jeweller Nirav Modi allegedly acquiring fraudulent letters of undertaking (LoUs) from a branch in Mumbai to secure overseas credit from other Indian lenders.
"The PSU banks, ironically, are slipping from one crisis to the other and there is a limit the government can keep bailing them out at the cost of taxpayers' money, even if it is the principal shareholder in these lenders, Assocham said.
It claimed that top banking positions are treated as extension of a government job and the senior most managements spend bulk of their quality time, receiving and implementing directions from the bureaucrats even for innocuous issues.
In the process, the core banking functions, including all important risk mitigation and management, take a back seat, it said.
Once the government equity in the banks
is reduced below 50 per cent, there would be much more autonomy along with accountability and responsibility of the senior management, it added.
The boards should then be truly taking the policy decisions while the CEOs would run the banks
with full authority, coupled with the commensurate responsibility, instead of looking towards the bureaucrats for directions.
It observed that the problem has become more grave with the banking sector adapting to new technologies which can prove both boon and bane, depending on how effectively they are implemented.
Assocham Secretary General D S Rawat said it was time the industry also did some introspection.
While we seek more autonomy for the banks, we from the industry must also set certain standards for us for ensuring a clean and best banking and business practices, Rawat said.
He called upon the Reserve Bank of India to take a lead and engage with the industry in finding ways to do clean business in the entire financial sector, be it the public sector or private sector banks or even the non-banking finance
Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.
As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.
Support quality journalism and subscribe to Business Standard.