In the coming months the Public Sector banks will undergo fast development with the increase on the number of employees, activities and above all in the increased capital influx. About 65,000 new staff are going to be recruited and the top banking institution the State Bank of India will be the biggest employer.
Union Finance Minister Mr.P.Chidambaram has announced that for credit expansion the Public Sector Banks require more capital to meet the requirements of disbursing the loans. The Central Government has taken a decision to invest 15,000 crores in the PSU banks and budget any provisions had already been made in the last Central Budget.
Due to long drawn domestic as well as global economic recession the financial institutions world over faced the most severe impact of sluggish national economies.
The Indian Banks suffered the worst with the adamant Reserve Bank of India increasing the bank lending rates continuously for 13 times and there is still no change or respite from it. It starved the industrial sectors of capital in the competitive world markets. The rates of interest is US and Euro Zone are around 2 to 3 per cent while in India it is 15 to 18 per cent.
The Government, Planning Commission, top economic Advisor Mr.Rangarajan are well aware of plight of industrial manufacturing sector and also realize that without heavy capital inputs on low banks rates, the industrial growth rate cannot be revived.
The Reserve Bank provided some relief by cutting slightly the CRR (Cash Reserve Ratio) to increase cash with the banks and liquidity in the market. In the present condition only domestic loan seekers for residential houses and cars are coming up that too in constant reducing numbers. These loans and numbers are calculated in aggregative form. The banks feel business boom only when huge loan amounts are sought by big industrial houses for big and heavy industries and mega investments.
Despite allowing private sector banks to operate still 70 per cent of financial transactions are carried out by the public sector commercial banks. With no sign of changes in RBI bank rate policies, these banks are considering to reduce the interest rates on fixed deposits. But it affects the middle class and senior citizen very adversely. Most of them not accustomed of business investment and other trades safe invest their saving in fixed deposits and make it their regular source of income. By lowering the FD rates such section of society face the economic difficulties and reduction in his fixed income. Even in the Parliament concern for such classes were expressed and downward changes in the FD rates were opposed.
To take the bank activities upto rural areas and to encourage them to keep money in banks the Government of India has asked all the banks to convert Kisan Credit Cards (KCC) into Bank ATM cards and to open ATM in rural areas also. There are about 11 lakh 39 thousand kisan credit cards in circulation.
In the banking sector even the private banks despite competitions from big Public Sector banks are making good progress and its profits are also going up.
Founder : Late Shri Ramgopal Maheshwari