Govt working to tighten up banking risk management, says FM Arun Jaitley

Aug 21 2014, 15:50 IST
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FM Arun Jaitley said that the govt was working to tighten up risk management in the banking sector. PTI FM Arun Jaitley said that the govt was working to tighten up risk management in the banking sector. PTI
SummaryArun Jaitley's comments follow launch of an investigation into Syndicate Bank MD bribery case.

Concerned over instances of corruption in the PSU banks, Finance Minister Arun Jaitley today said that government is taking steps to professionalise the management and help them strengthen their risk management system.

"Professionalising the management of the banks, we have taken some decisions in this regard. We expect banks to have better risk management. The Department of Financial Services has been actively working in this regard" Jaitley said at a function organised by Indian Bank here.

Without specifying names of banks, the Finance Minister said "some recent incidences have been disturbing. I only hope that they are drop in the ocean. We have all learnt the lessons from such incidents, and there will be no repetition of them."

His statement assumes significance in the light of scams in the state-owned banks.

Earlier this month, Syndicate Bank Chairman and Managing Director (CMD) S K Jain was arrested for allegedly receiving a bribe of Rs 50 lakh to enhance credit limits of Bhushan Steel and Prakash Industries.

Besides, some officials of Oriental Bank of Commerce and Dena Bank were suspected of misappropriating funds worth Rs 436 crore from their fixed deposit customers.

The government has initiated a forensic audit in the alleged scam.

Finance Minister, however, expressed hope that an enhanced level of professionalism will further strengthen and improve credibility of the banking system.

"Credibility is of extreme importance as far as banking system is concerned. We must endeavour improved standards of credibility," he added.

Jaitley to tighten up banking risk management

(Reuters)

Finance Minister Arun Jaitley said on Thursday that the government was working to tighten up risk management in the banking sector, responding to recent scandals that have raised doubts about lending practices at state banks.

Jaitley did not name any bank, but his comments followed the launch of an investigation into whether the head of state-controlled Syndicate Bank took bribes to roll over a loan to family-controlled Bhushan Steel.

"Some recent instances have been disturbing," Jaitley told a banking audience in New Delhi.

"I would only hope that they are a drop in the ocean and we have all learnt the lessons from such incidents, and there will be no repetition of them."

The investigation into Syndicate Bank has raised broader concerns about weak oversight, corruption and politically directed lending at India's dominant state banks, which are weighed down by bad loans.

In his maiden budget last month,

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