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Syndicate Bank-like scams won't be repeated, vows Arun Jaitley

PTI 22 Aug 2014, 10:44:52 AM IST
New Delhi: Concerned over instances of corruption in the PSU banks, Finance Minister Arun Jaitley  on Thursday said that government is taking steps to professionalise the management and help them strengthen their risk management system.

"Professionalising the management of the banks, we have taken some decisions in this regard. We expect banks to have better risk management. The Department of Financial Services has been actively working in this regard" Jaitley said at a function organised by Indian Bank here.

Without specifying names of banks, the Finance Minister said "some recent incidences have been disturbing. I only hope that they are drop in the ocean. We have all learnt the lessons from such incidents, and there will be no repetition of them."

His statement assumes significance in the light of scams in the state-owned banks.

Earlier this month, Syndicate Bank Chairman and Managing Director (CMD) S K Jain was arrested for allegedly receiving a bribe of Rs 50 lakh to enhance credit limits of Bhushan Steel and Prakash Industries.

Besides, some officials of Oriental Bank of Commerce and Dena Bank were suspected of misappropriating funds worth Rs 436 crore from their fixed deposit customers.

The government has initiated a forensic audit in the alleged scam.

Finance Minister, however, expressed hope that an enhanced level of professionalism will further strengthen and improve credibility of the banking system.

"Credibility is of extreme importance as far as banking system is concerned. We must endeavour improved standards of credibility," he added.

The Finance Minister also said the government accords high importance to re-capitalisation of PSU banks.

"While maintaining the public sector character, the surplus liquidity (government equity) is to be offloaded and the entire capital that you (banks) so earn is ploughed back in the banking industry for purposes of expansion," he said. Jaitley in the Budget speech had said, "Financial stability is the foundation of rapid recovery.

Our banking system needs to be further strengthened. To be in line with Basel-III norms, there is a requirement to infuse Rs 2,40,000
crore as equity by 2018 in our banks. To meet this huge capital requirement, we need to raise additional resources to fulfil this obligation."

While maintaining the public ownership, the capital of these banks will be raised by increasing the public shareholdings in a phased manner through sale of shares largely via retail to common citizens of this country, he had said.

"Thus, while the government will continue to have majority shareholding, the citizens of India will also get direct shareholding in these banks, which currently they hold indirectly. We will also examine the proposal to give greater autonomy to the banks while making them accountable," he had said.