Government to ensure better risk management in banks
The government will ensure better risk management in state-run banks in the wake of recent scandals involving lending practices, Finance Minister Arun Jaitley said Thursday.
"Some recent instances have been disturbing," Jaitley said addressing the foundation day event of the public sector Indian Bank.
"I would only hope that they are a drop in the ocean and we have all learnt the lessons from such incidents, and there will be no repetition of them," he added.
Earlier this month, Syndicate Bank chairman S.K. Jain was arrested by the Central Bureau of Investigation on charges of taking bribes to sanction a loan to Bhushan Steel Ltd.
The finance minister stressed the need for state-run banks to increase the level of professionalism, as well as to maintain their credibility.
Indian banks have traditionally been both conservative and professional, which has stood them in a good light in the wake of the sub-prime crisis in the US and Britain that brought on the global financial crisis of 2008-09, Jaitley said.
The finance ministry has ordered a forensic audit at the Oriental Bank of Commerce and Dena Bank for misappropriation of deposits by some bank officials.
Besides plans to clean up the boards of banks by inducting professionals, the government is also looking at giving bank chairmen a fixed tenure of up to five years to ensure greater accountability.
(Posted on 21-08-2014)