State interference could destroy banks, says Indian banker
View(s):The issue of government influence in private banks, which the Business Times has been raising in the past few weeks vis—a-vis the situation at Commercial Bank and HNB, came up at this week’s Economic Summit organised by the Ceylon Chamber of Commerce (CCC).
HSBC India Chairperson Naila Lal Kidwani, during her presentation at the conference, referred to governance issues and interference by the government in banks.
Advocating governance, which has become a key issue in public sector banks, she said that the shares of private banks in India such as ICICI Bank and Axix Bank are trading at multiples three to five times higher than the government-owned banks.
“Yes, government-owned banks can raise money but why are they not able to raise (this) at the same rate as the private sector banks? The answer is the governance issues, interference by the government and those banks operating according to government agendas,” she said, adding that the value of the banks will be destroyed if the banks are allowed to fall under the arms of the government.
State control of the Commercial Bank, one of the best managed banks in Sri Lanka, has widened with board changes after Dinesh Weerakkody stepped down as chairman. Five of the eight directors are either direct or indirect government nominees.