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'No threat to supervisory system of regulatory bodies due to convergence in banking sector'

The Reserve Bank of India, or RBI, Governor Bimal Jalan has ruled out any threat to the existing supervisory system of regulatory authorities in view of the convergence in the financial sector, in light of Internet transactions.

"There is continuous dialogue between the regulatory bodies in the financial sector and they have adequate arrangements to tackle the situation," Jalan said, replying to questions posed by mediapersons at a press conference in Bombay.

On being pointed out by the newsmen that in view of Internet banking and trading, chances of financial mismanagement is likely to occur in the future, the RBI governor has ruled out such threat and affirmed that all the regulatory bodies have an adequate security mechanism.

"There is no need to be concerned on the issue. As far as banks are concerned, the RBI has its own mechanism to keep a strict vigil on banking transactions," Jalan said.

The RBI governor further added that all the regulatory authorities interact with each other on a regular basis and have better coordination between them.

On being asked about the domestic financial institutions seeking entry into the insurance sector, the governor said that although these financial institutions do not fall under the purview of the RBI, the RBI has referred the same guidelines to the central government and recommended that these be made applicable to the financial institutions interested in the insurance sector.

Replying to another question, Jalan said that the public sector banks entering into the insurance sector will not have to suffer losses incurred in their insurance joint venture.

"Since the joint venture will be an independent company and there are no chances of transferring the losses incurred in the insurance business to the origin bank," he said.

Commenting in general on all of his policies, Jalan said that he has started the tradition of consulting with all the participants in the market before finalising the policy documents.

"Although we have discussed the issues with them, the policy is not a final document and we still expect suggestions and recommendations from market participants,'' the RBI governor said.

About the non-banking financial companies, Jalan said that with the available powers of the RBI, it has strictly dealt with the non-banking finance companies, or NBFCs, violating rules and regulations.

UNI

ALSO SEE

RBI Governor Bimal Jalan's policy statement

RBI's Credit and Monetary Policy 2000-2001

RBI's Credit and Monetary Policy 1999-2000

RBI's Credit and Monetary Policy 1998-1999

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