With successive Cobrapost sting operations revealing widespread violation of RBI guidelines and rules by state-owned banks, private Indian banks and even foreign banks, how can the system be streamlined so that the banks tow the line? CNBC-TV18's banking editor Latha Venkatesh joined IBNLive readers for an interaction on the issue.
Q. Can aadhar bring some transparency in the banking sector or it will be a joke like KYC norms where poor are exploited while rich get away without following any norms. Asked by: Rajesh
A. I should think aadhar will bring some transparency in the banking sector. Assuming your fingerprints cant be duplicated, all you bank accounts will be known and it should be possible to track black money as well. Again people with credit card loans can't go around to different banks and keep taking more cards and more loans. But really catching the black money hoarders requires political and administrative will also.
Is violation of banking norms more widespread than believed?
Q. Is is not true that what has been exposed is just a tip of iceberg , are banks willing partners in this , Why cant the CEO take responsibility rather than just sacking few scapegoats. Asked by: ram
A. 23 banks have bankers caught explicitly saying they can help put untaxed cash in bank accounts. What's point in sacking 23 bank chairmen. Are their Eds and GMs any less to blame. And who will man the banks if you keep sacking. No I don't think sacking the CEOs helps. RBI has to think of a way of keeping them and harassing them regularly.
Q. Pressure of achieving targets is one of the reasons for such violations. Your take please. Asked by: Shyam Vadalker
A. I agree. Even in PSU banks where there is no performance bonus, targets nevertheless have to be met. But that doesn't mean I will condone these fellows. It is like saying pressure of getting a good rank leads to copying. You are supposed to meet targets and meet them honestly.
Q. Is the slide of rupee a temporary process as economy is weak at this time and with elections in a short time govt is not going to invest time and money on reforms except on election campaigns. Asked by: Kavi
A. Rupees fall doesn't look temporary. There may be more. Global causes are more important now. But yes we can screw up domestically as well. My own sense is that the rupee fall is so costly for India, it will hopefully prevent the govt from undertaking reckless policies like the food security bill. They will see a further exodus of dollars.
Q. Why do big media houses give awards to big CEOs of such banks without checking their credentials as it is hard to imagine that such behaviour is a news for channels as it has been going for quite a long time. Asked by: Shailesh
A. I agree they should not.
Q. Why does your channel not take lead in expose like these rather than covering up such type of scams as your most shows show investment driven news and not underbelly of society and corruption. Asked by: Shailesh
A. There is a need for investment news and there is a need to expose those who violate the law. I think our media serves all purposes. I personally also think that the bank sting didn't tell us anything new. Everyone knows that people deposit black money in banks and get away. The cobrapost expose told us what we know. It wasn't a sting that uncovers who has the black money. That will help more.
Q. Is the India's balance of payments situation weak as such type of freefall of rupee has never happened and do you feel comparing that with other countries will give results as other countries are not import dependent as India as countries like Philipinnes and Malaysia are not import dependent so depreciation of currency won't effect much. Asked by: Arvind
A. All countries are import dependent. Malaysia and Philippines too. We have become vulnerable because we didn't correctly price our fuels - diesel, LPG, kerosene. So people used these resources recklessly. Once you pay the correct price, you will use carefully, and our current account deficit would never have risen. Again our fiscal spends more money than it earns. The difference is filled by printing notes which created inflation. High inflation economies prefer gold. So you see one ill leads to another. If we didnt ahve subsidies or fiscal deficits, we wouldn't have been hurt much by the rupee fall.
Q. Is it true to say that Employee Unions have a large hand in PSU Banks which may or may not effect the efficiency of the banks? Asked by: Birabrata De
A. Yes unions are powerful They sometimes come in the way of efficiency.
Q. Have the Chidambaram's reform initiatives like in gas subsidies or opening of retail chains been an damp squib as economy is failing and now rupee is at record low thus forcing govt to put restrictions on gold imports. Asked by: Manav
A. We have to reform and nto simply because we want to protect the rupee. We have to reform to make ourselves a competitive economy.
Q. Is the cobra post expose India's story of Lehman brothers as in America there is speculative and risky behaviour in banking and in India it is black money which calls the shots through collusion of banks and stops economy from growing. Asked by: Manav
A. Not comparable. Lehman was as you say a story of speculative excesses. I don't think the cobrapost expose will burst anything. What it tells us is that bankers help tax evaders hide their money in banks. But we always knew that. See in cobrapost's case one guy posed as a politician and asked for help to launder. If I am clever, I wont even ask the banker. I will simply deposit 49,000 rupees at a time in several branches over several days. I can create black money without banks. I can launder black money without the bankers knowing.
Q. Is sacking few executives an solution to such menace as such executives would get back into system after some time and any way few executives out of lakhs of employees can't dictate terms especially at lower level so it is CEOs, RBI and politicians who are all accountable Asked by: Arvind
A. No, I think sacking will work. You have to give some exemplary punishment. All of us have to believe that it is wrong to flout the law.
Q. It is well-known fact that several big corporate houses have not repaid thousands of crores of loan to nationalized banks. Is it not a violation of banking norms? Is the list of such big defaulters in public domain? Any action being taken against such defaulters? Asked by: rajesh
A. Yes it is a crime. yes banks hound them. many names are in the public domain. many more will come into the public eye in the days to come.
Q. Is it the pressure of performance and incentives that is driving executives to follow any means to get customers or is it an well thought out strategy at CEO level to get HNI customers as even 1 percent of such customers can give more profits to the bank in comparison to other 99 percent. Asked by: Hitesh
A. I am not sure it is only a profit-oriented thing. PSU bankers were also caught recommending ways to avoid being caught with black money
Q. How much is corporate advertising responsible for this criminal behaviour of banks as they have patronage of media that by giving ads of few crores they can buy media. Asked by: Manush
A. It not advertising alone that gags the press. Often journos go soft so that they can get the next story from their source in the bank.
Q. Is it fair to be thinking of giving licenses to big corporates at a time when such type of notorious acts are going unnoticed and there is no enough regulation to check such type of malpractices. Asked by: Hitesh
A. I would have been wary of giving bank licences to corporates even without cobrapost telling us that bankers are helping hide black money. Most countries don't give bank licences to corporates and I agree with them.
Q. Surprisingly cobrapost investigation deleted correct procedure narrated by bank officers, only telecast edited version why? Asked by: samir
A. In the last round they put out some honest bankers who refused to allow laundering.
Q. The practice of violation is both in Pvt and PSB. Does that mean RBI is inefficient in it's inspection? Asked by: sundar1950in
A. Inefficient may be a strong word. I would say it needs to be a lot tougher. But then there are limits to inspection. You cant put a policemen behind every banker and every banking transaction. We as Indians need to be honest. What will we do if all the examiners in all school exams take bribes and pass kids. You can't fight such widespread dishonesty. I would expect people to be largely law-abiding and decent. RBI cannot enforce fundamental honesty.