Halting banking reforms will promote a blinkered view: Montek
Planning Commission on Sunday said that halting banking sector reforms due to the global financial crisis will promote a "narrow blinkered view" and he favoured instruments to hedge interest rate risks.
By PTI |
NEW DELHI: Planning Commission on Sunday said that halting banking sector reforms due to the global financial crisis will promote a "narrow blinkered view" and he favoured instruments to hedge interest rate risks.
Emphasing that private sector banks should be given total freedom to open branches and ATMs to compete with public sector banks, the Commission's Deputy Chairman Montek Singh Ahluwalia said all the derivative products should not be considered bad.
"You need interest rate futures to guard against interest rate risks. We should be cautious in our choice of new products, but we should keep moving forward. And we should introduce appropriate regulations to cover derivatives," he said.
At the same time he cautioned against excessive liberalistion and said "there are some (banks) who still argue for rapid capital account liberalisation without any restriction. We are not in favour of that. But to say that all the banking reforms should come to a halt will be a very narrow blinkered view."
Ahluwalia was responding to query on whether bank reforms should be halted, as suggested by senior bankers like K V Kamath of ICICI Bank who complemented the government and RBI for conservative banking policies that saved the day for India in the face of global financial meltdown.
Emphasing that private sector banks should be given total freedom to open branches and ATMs to compete with public sector banks, the Commission's Deputy Chairman Montek Singh Ahluwalia said all the derivative products should not be considered bad.
"You need interest rate futures to guard against interest rate risks. We should be cautious in our choice of new products, but we should keep moving forward. And we should introduce appropriate regulations to cover derivatives," he said.
At the same time he cautioned against excessive liberalistion and said "there are some (banks) who still argue for rapid capital account liberalisation without any restriction. We are not in favour of that. But to say that all the banking reforms should come to a halt will be a very narrow blinkered view."
Ahluwalia was responding to query on whether bank reforms should be halted, as suggested by senior bankers like K V Kamath of ICICI Bank who complemented the government and RBI for conservative banking policies that saved the day for India in the face of global financial meltdown.
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