Saturday, Jul 13, 2002
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By Our Special Correspondent
NEW DELHI, JULY 12. With scams breaking out in leading financial institutions and non-banking finance companies (NBFCs), the Union Finance Minister, Jaswant Singh, today expressed his preference for a single regulator to oversee the functioning of such companies.
Mr. Singh today had his first interaction with some members of Parliament atta..ched to the Consultative Committee of his Ministry where he said the existence of many regulators for similar financial operations such as NBFCs, private chit fund operators and private finance companies caused confusion and created hindrances in checking irregularities. Consequently, he directed the setting up of a committee under the Secretary (Financial Sector) to examine if a single regulator was feasible. The report from this committee is expected within four weeks.
Mr. Singh also agreed to the suggestions of members that the rural credit delivery network needed strengthening and announced the setting up of another committee under the Minister of State (Banking, Insurance and Expenditure), Anant Geete, to examine the issue and come up with practical suggestions. his committee too has been asked to submit its report within four weeks.
Mr. Singh prefaced his announcements at the meeting with the comments that an environment had to be created for borrowers of loans to realise that it was their duty to repay the loan.
In this context, he said the recent ordinance on setting up of asset management companies and securitisation was aimed at providing banks and financial institutions with a window to market their non-performing assets (NPAs).
The members of Parliament also expressed concern over high NPAs of commercial banks and made suggestions such as setting up a body to look into each case of NPA, going in for negotiated settlement of dues, exemplary punishment for wilful defaulters and strengthening of bank's vigilance system for preventive action.
In his intervention at the meeting, the leader of the Opposition in the Rajya Sabha, Manmohan Singh (Congress), suggested that banks pay more attention to the needs of small industry, agriculture and rural industry.
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