Date:08/07/2006 URL: http://www.thehindubusinessline.com/2006/07/08/stories/2006070802300600.htm

Back Indian Bank chief speaks in defence of bankers

Our Bureau

`We do not want to give money to a person who does not deserve credit within our risk framework'

Chennai , July 7

The Chairman and Managing Director of Indian Bank, Dr K.C. Chakrabarty, on Friday put up a spirited defence of bankers in the face of adverse comments from trade and industry about delayed and high-priced credit and poor service in banks.

Delivering the keynote address at a meeting organised by the Southern India Chamber of Commerce and Industry (SICCI), Dr Chakrabarty said that banking in India had come a long way from the time when the best credit officer was the one who raised the highest number of queries in a loan application.

Lending for consumption was once considered illegal, but today, it is the order of the day. Banks not only market retail loan products, but also sell other financial products such as insurance and mutual funds.

Dr Chakrabarty wanted the trade and industry to look at banks' operations in the light of this transformation.

Earlier, the President of SICCI, Mr S Ramanathan, had spoken of "inability of banks to take risks."

He said, "credit is not only delayed but often denied."

Responding to this, Dr Chakrabarty said that a loan application "is not like an ATM card where you put it in and the money comes out."

Pointing out that banks were custodians of public money, he said: "We do not want to give money to a person who does not deserve credit within our risk framework."

On the point about pricing of loans, Dr Chakrabarty said that the interest rates were determined by the market.

"If the rate does not suit you, then don't take the loan," he said, noting that nobody questioned the prices at which commodities were sold in shops.

On the other hand, "I always tell my banker friends, `please do not quote too high rates'", he said. The customer who accepts a high rate of interest is probably not a good customer, he noted. "If a customer says, `give me the money at any rate of interest', it means that he has made up his mind not to repay either the principal or the interest," he said.

Sorting Complaints

On the point of deficient services in banks, Dr Chakrabarty said that in Indian Bank alone 6.20 lakh transactions happened each day. This was about two per cent of all the banking transactions in the entire banking system. Even if `poor services' was just 0.1 per cent, it meant 620 customer complaints a day. This would appear to be high. "All we can say is, if there is a problem, bring it to our notice and we will act on it," he said.