Tarapore against bank rate cut

Tarapore also spoke against infusion of funds for recapitalising weak banks. "Public funds are sacrosanct and good money should not be thrown over a lost cause," This statement attains importance in context of finance minister Yashwant Sinha’s budget announcement that the government would not allow any banks to close down. Sinha also made it clear that the weak banks would be capitalised if the bank management came out with a viable strategy.

Tarapore said that the issue of corporate governance would come to the fore when the government gives up the majority ownership of public sector banks. There is a danger that responsibility for running banks can end up in a vacuum and no clear line of responsibility would emerge, he observed. The official stance that the public sector character of banks will be retained should be viewed as the government continuing to take responsibility of the banks. It is envisaged that banks would progressively become institutions run by the board of directors, he said.

Banks need to give a meaningful disclosure of their performance compared to the industry as a whole on certain key parameters so that the depositors who are the major stakeholders are aware of the performance of the bank, Tarapore pointed out.