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`Reforms have benefited banking sector'

By Our Special Correspondent

BANGALORE DEC. 27. Financial sector reforms had brought about significant progress in the use of information technology, human resource development, market discipline, and supervision and regulation in the banking sector. All these had increased the strength, resilience, and competitiveness of the Indian banking system, said a majority of bank CEOs, who attended the 24th Conference of Bank Economists here today.

Speaking on "Towards a new banking order," R.V.Shastri, Chairman and Managing Director, Canara Bank, said reforms were introduced in the sector following strain and pitfalls in the profitability and efficiency of banking.

Prudential norms and accounting standards were areas where Indian banks still lagged behind their foreign counterparts, he said.

Convergence in the international financial fabric, thrust on proper regulatory and supervisory safeguards, prudent corporate governance, and likely implementation of the Basel II recommendations from 2005, forced banks to change their traditional system of banking, he said.

The Indian Bank Chairperson, Ranjana Kumar, who spoke on "Restructuring debts - the best bet for bankers and the borrowers," said banks had geared themselves to tackle the problem of non-performing assets (NPAs) and NPA management, consisting of recovery and upgradation.

Arresting slippage of assets assumed great importance especially after deregulation of interest rates as bankers had to operate with thinner margins and could not afford to have any negative impact on their bottom lines due to NPA norms. It was also found that more than lending afresh, arresting of slippage could contribute substantially to profits, she said.

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