Staff Reporter

BANGALORE: Banking unions have opposed the budgetary proposal to acquire the Reserve Bank of India (RBI)'s equity holding in the State Bank of India (SBI). This is another way of saying that they will acquire ownership of the SBI.

Joint General Secretary of All India Bank Officers Confederation G.D. Nadaf told The Hindu that this move, for which Rs. 40,000 crore has been allocated in the Budget, would adversely affect the banking sector.

He said the SBI, owned by the RBI, was a professionally managed bank and had a "free-hand" in taking decisions. It enjoyed a different status from other nationalised banks.

He suspected that the Government's acquisition of the RBI's shares would introduce red-tapism and hit its professionalism.

The RBI had 59.73 per cent share in the SBI. This should not be disturbed, he said. He suspected that the Union Government might later disinvest the shares acquired from the RBI. "This is not necessary at all," he said.

Mr. Nadaf said the All India State Banks Officers Federation, of which he is the general secretary, and the All India State Bank of India Staff Federation had written to the Finance Minister opposing the move.

Rural banks

Though the proposal to open regional rural banks (RRBs) in areas that had no banks was good, the Government should give priority to open regular banks in such places. The proposal to allow non-resident external accounts and foreign currencies would benefit the rural banks.

The budgetary proposal raising the ceiling on withdrawal of money from banks from Rs. 25,000 to Rs. 50,000 per day for individuals and Hindu Undivided Families would help financial institutions. This would encourage people to save money with banks.

Reverse mortgage

Another good measure was the announcement of reverse mortgage scheme in the housing finance sector. Reverse mortgage was an innovative option being given by banks to the aged, he added.