Bankers' take on India's finance minister

These days bankers no longer perform the ritual of visiting the Capital with their quarterly performance files. And, they hardly miss that chore. Neither do they get moral persuasion doses (read diktat) at regular intervals from their owner on what their asset-liability committees should do.

Bankers are also glad that the boss - Finance Minister Pranab Mukherjee - has directed his officials to speed up the appointment process for top jobs in public sector banks. Earlier, the post of chairman, managing director or executive director would lie vacant for months.

But now, the message from the North Block is that the appointments should be made at least a month before the post falls vacant.

Mukherjee succeeded a man who kept the bankers on their toes all the time. P Chidambaram, now the home minister, was known to act with the professionalism of a chief executive officer who had important statistics of any bank on his finger tips.

Mukherjee's style is much more relaxed. Because of the many hats he wears - the chief of them being the government's main troubleshooter - it took bankers about three months to meet him.

The quarterly meeting rituals were given a quiet burial. In November, Mukherjee planned to meet bankers separately in four groups, classified on the basis of four regions, but only the East zone meeting took place. All other meetings were indefinitely postponed due to the minister's preoccupation.

But bankers said their initial impression of the new finance minister being a distant person faded away soon. "He may not meet us regularly, but when he does, he is quick enough to respond and resolve our problems," a public sector bank chief says. "He is not into micro management, but has a vision," said another. Mukherjee's fast track decision making also helped Kolkata-based United Bank of India overcome a major hurdle in its effort to list the bank, which just launched its initial public offer.

The number of independent directors on the bank's board is less than what Clause 49 of the listing agreement mandates. But, with the finance minister's intervention, the Securities and Exchange Board of India has now allowed the bank for listing with an undertaking that the bank will increase the number later.

In the Union Budget also, bankers are looking for finance minister's intervention for enabling them to raise long-term resources. Indian banks, which are increasingly getting worried due to asset-liability mismatch, have sought the government's approval to float tax-free bonds.

Though this demand was there in previous years as well, the need for such an instrument gained prominence this time around, as average tenure of deposits got shorter in the last one year due to unattractive rates for longer maturities.

But, banks' expectation and requirement from the finance minister will not end with the Budget. Government banks face a bigger challenge in raising capital to fund their growth requirements.

Though the World Bank has approved $2-billion (around Rs 9,200 crore) loan for recapitalisation of Indian banks, the government is yet to draw a roadmap on how the funds will come.

Banks are now avidly awaiting word from the government about the time and schedule of the World Bank funds which will enable them to boost their capital and support economic growth.

Photograph: Courtesy, PIB