Pull up socks, RBI tells banks

“Banks have to strengthen the Corporate governance. If you dont do, micro management will come from the owner (RBI),” RBI Deputy Governor K C Chakraborty told reporters on the sidelines of banking conference ‘Bancon 2011’ organised by Indian Bank’s Association and Indian Overseas Bank here.

He said, “As a regulator it is my job to caution. We must strengthen our corporate governance.”

Asked whether a monetary and fiscal action was required to contain food inflation, he remained affirmative and said all inflation required monetary and fiscal measures.

“You see if inflation is going up it absolutely requires monetary and fiscal measures. How much measure has to be taken will be decided by the Governor of Reserve Bank and the fiscal position will be decided by the Finance Minister and the Parliament,” he said.

On Thursday, the food inflation rose to 12.27 per cent while headline inflation remained at 9.27 per cent in September.

Earlier in his address at the conference, he said Indian banks were making lot of money riding on the customers as in the last 40 years Indian banking industry has not seen any competition. “Indian banking is the second largest profitable business in the world,” he said.

Banks not only need to know about their customer norms, but also their businesses and the risks involved, he said.

Banks to get  Rs 14,000 crore capital infusion

Chennai, pti: The Finance Ministry has approved Rs 14,000 crore as part of capital infusion in banks for the financial year 2011-12, Minister of State for Finance Namo Narain Meena said. Approval to the banks came at a time when they were asked to project their (capital) requirements, for 2011-12. “Banks projected Rs 18,000 crore (as capital requirement) for 2011-12 and Rs 19,000 crore for 2012-13,” he said. For the year 2010-11, about Rs 20,000 crore money was infused in the banking sector. “Rs 14,000 crore as Tier-I capital and Rs 6,000 crore was in the holding,” he said on the sidelines of the banking conference ‘Bancon 2011’.   “Indian economy needs to brace up for a difficult year from a macro economic perspective.”