'Operational efficiency should be considered for consolidation'

Mangalore, Feb 17 (UNI) Corporation Bank Chairman and Managing Director B Shambamurthy today opined that allocational and operational efficiency should be taken into account before taking any decision on consolidation of banks as part of banking reforms.

Inaugurating a symposium with an interactive session with the members of an independent Commission on Banking and Financial Policy, organised by the Corporation Bank Officers' Organisation here, he felt that there was a need to draw a line between economic sub-scope and economic sub-scale as the former was more important in the customer's point of view. It was also not rational thinking to compare Indian banks with those in the United States and the United Kingdom. There were about 10,000 banks in the US and about 4,000 in the UK, most of which were local and community oriented, he added.

He said that even after more than four decades of nationalisation of banks, millions of rural masses were still out of any banking activity. As part of financial inclusion, the Corporation Bank had taken up a novel initiative at 300 villages in Goa with a pilot project of issuing smart cards. If this scheme was found to be successful, the bank would extend it to other States too, he added.

EPW Research Foundation Director and Commission member Dr S L Shetty, who initiated the interaction, stressed that ''we need a stronger banking structure moving to rural areas, benefitting the poor. We should have rural credit structure with banking presence collaborating with local bodies for financial inclusion.'' The Commission, which had released its report on the status of banking reforms, had made a critical review of the impact of reforms in the financial sector and given a blueprint for an alternative banking policy.

However, he made it clear that the Commission was not against reforms, but insisting on doing it systematically, keeping the larger interests of the common man.

UNI