SBI chief favours calibrated action by Reserve Bank

‘If you have to press buttons, do it in a free and fair manner’

State Bank of India Chairman Pratip Chaudhuri, on Wednesday, called for free and fair action by the Reserve Bank of India, saying that its recent measures has severely affected the bond market besides choking liquidity.

Addressing a banking conclave organised by FICCI, he said that the recent measures by the central bank to defend the rupee, by restricting access under >liquidity adjustment facility (LAF)—to check liquidity—could have been done differently.

“Interest rate is the proper lever for managing the money market, bond market and G-Sec market… if you have to press buttons, do it in a free and fair manner,” he said, adding that any change, especially measures that seriously impacted the market, should be implemented in a calibrated manner. “It is my view that RBI should provide at least 1-15 days to allow the market to adjust to the new liquidity measures,” he said.

“We pray for a roll back at the earliest opportunity,” Mr. Chaudhuri said.

On new bank licences

The SBI chairman welcomed the impending entry of new private sector players in the banking sector. “It will do a lot of good… we welcome as many participants,” he said, adding that the presence of private players had been a wake-up call for public sector banks, including SBI. “We are today doing many things differently,” he said. He also admitted that there was need for a little more enterprise in taking initiative on new products.

On the day’s topic, ‘Indian Banking Industry — Capturing New Growth Opportunities’, he said that retail funding had become extremely important. Banks were required to invest more in retail products, he added. here were also issues pertaining to human resources, he said, pointing out that there was need to increase staff productivity while empowering juniors to carry out routine downstream functions. On the issue of merger of SBI’s associate banks, Mr. Chaudhuri said that a roadmap had been worked out for this capital-intensive exercise.

“It takes about Rs. 10 lakh per employee,” he said later while talking to journalists. He said one merger was likely within this year. The entire matter was being evaluated by a committee, which would submit its report soon, he said.