fifty years ago December 15, 1967 Archives

Plan for social control of banks

The proposed Bill on social control of banks will provide for reconstitution of the Boards of Directors and prohibit advances or guarantees to Directors and the concerns in which they are interested. The Bill will also provide for acquiring the business of a particular bank if it defaulted in complying with the provisions of law or directives issued thereunder. The Bill, which will confer additional powers on the Reserve Bank, will be introduced in the next few days. In a statement in the Lok Sabha to-day [December 14, New Delhi] announcing the decision of the Government to introduce social control over commercial banks, the Deputy Prime Minister and Finance Minister, Mr. Morarji Desai, stated emphatically that mere acquisition of banks would only severely strain the administrative resources of the Government while leaving the basic issues regarding banking system untouched. What was of primary importance was to ensure that particular clients or groups of clients were not favoured in the matter of distribution of credit and whatever the character of the shareholding, its influence was neutralised in the constitution of the Boards of Directors, and in the actual credit decision taken at different levels of bank management. The social control scheme formulated by the Government was conceived and built on this basic postulate, said Mr. Desai. Stating the Indian banking system had attained stability and strength over the last 15 years, Mr. Desai expressed the confidence that the implementation of the social control measures would lead to a positive reorganisation of the banking system on sound lines and enable it to fulfil the role that was required of it.

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Printable version | Sep 24, 2021 1:29:13 AM |

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