The Reserve Bank of India (RBI) needs to develop a software to monitor the banks and also interact with leading market players to keep track of the implementation of the financial regulations passed by it. These views were expressed by Amitabh Ghosh, former RBI governor, at a panel discussion organised by the Indian Institute of Management, Lucknow during its annual leadership summit.
Stressing on the need to regulate the financial sector, Ghosh cautioned against the over-regulation. He said the RBI has been passing regulations which are often ignored by the banks. “There is no meaning of instructions until they are implemented and it is not possible for the RBI to monitor the banks on a day-to-day basis,” said Ghosh.
This is where a good IT system can play an important role, Ghosh opined. “The RBI should develop a software that captures all important day-to-day aspects of the bank, particularly the adverse aspects and the incumbents of the Central bank should take cognisance of the information. Only with such a monitoring system would it be possible for the RBI to control and regulate the sector,” he said.
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Ghosh also said the RBI should have a time-to-time interaction with big players of the market and see the regulations passed by it are practical. Talking about the turmoil in the microfinance sector, Ghosh said: “If people get timely and need-based credit, they do not mind paying a bit more. The loans must be given for an extended period and the time of repayment should be structured keeping in mind that such loan recovery would be less in the initial period.”
Other speakers at the event included CEOs and corporate heads. Pointing that the focus of the economic activity in the world has shifted from the west to the east, Vikas Vasal, the executive director of KPMG said India needed to devise strategies to tap the massive growth potential.
Students of other institutes including IIM Indore and Management Development Institute, Gurgaon, also participated in the summit.
Source:http://www.indianexpress.com/news/rbi-needs-to-develop-software-to-monitor-banks-functioning/717535/0
