AIBEA opposes amendment

Chennai, Jan 12 (UNI) All India Banking Employees Association (AIBEA) today opposed the Centre's proposed ordinance to amend Section 24 of Banking Regulation Act.

In an official release here, AIBEA said the proposed decision of the cabinet to promulgate an ordinance to amend Section 24 (2A) of Banking Regulation Act 1949 would have an adverse impact on the banks, as they would be tempted to uncover themselves with lesser Statutory Liquidity Radio (SLR) and lend more money, thus increasing their risks.

The Association pointed out that the additional amount that would be available for lending in the present trend of bank credit, would go more and more towards financing stock market operations, speculative business, real estate business and not for agriculture sector, rural development or employment generation.

"Further, this proposed ordinance would discourage the banks from mobilising more deposits. Hence, to find resources for lending, banks have to reduce their liquid assets to increase their advances and loans", AIBEA added.

Of every Rs 100 collected from the people as deposit, the banks had to maintain Rs 5 as Cash Reserve Ratio (CRR) and a minimum of Rs 25 as SLR and only the balance of Rs 70 was available for lending.

This would be a well designed cover for the banks to meet their urgent liabilities to repay the demand deposits of the customers, the release said and added by the proposed ordinance, RBI could reduce the SLR limit at its discretion.

UNI