AIBOC CIRCULAR NO. 91 DATED 18.12.2009

AIBOC has issued its circular no. 91 dated 18.12.2009 on establishment of Local Area Banks. We are reproducing the same here for our readers.

CIRCULAR NO: 91               DATE: 18.12.09

TO ALL AFFILIATES/MEMBERS: 

AIBOC OPPOSES THE ESTABLISHMENT OF LABS

INTERVENTION OF THE MINISTRY OF FINANCE SOUGHT

          We have to-day sent a communication to the Hon’ble Minister of Finance, the Government of India, New Delhi, conveying our resentment over the reported initiative of the RBI for raising the issue of the establishment of Local Area Banks which was shelved long back due to the pressure created by our organization.  A copy of our communication is enclosed. 

2.       All our affiliates/members are requested to await further developments in the matter. 

With greetings,

 Sd/-

(G.D. NADAF)

GENERAL SECRETARY

No.1454/245/09                18.12.09

To,

Shri.Pranab Kumar Mukherjee,

Hon’ble Union Finance Minister,

Government of India,

New Delhi – 110 001.

Dear Sir, 

RBI INITIATIVE TO ESTABLISH LOCAL AREA BANKS (LABS) 

          Our attention has been drawn to some of the press reports appearing in regard to the new initiatives of the Reserve Bank of India on establishment of Local Area Banks which was dropped during the middle of 1990s, due to resistance from Unions and also the bad patch that the NBFCs’ were going through along with the Regional Rural Banks which were facing serious operational problems.  The issue was put on backburner and efforts were made to consolidate the position of the Regional Rural Banks who were already well established with a good network all over the country, in order to reach the common man in the interior parts.  The role of Regional Rural Banks in meeting all the targets set by the Government in the area of priority sector lending and subsequently the larger issue of inclusive banking, which the Central and the State Governments, have been taking up with full force at their command.

2.       The creation of Local Area Banks at this juncture, when there are other financial institutions, which are more than adequate to achieve the objectives of the Government, will only result in creating yet another financial institution which will result in overlapping of the operations that are already undertaken by the Public Sector Banks by themselves as well as through the Regional Rural Banks.  There is no need to create one more agency in the name of Local Area Banks by the Reserve Bank of India, in the interest of helping the consolidation of the Regional Rural Banks as also the Public Sector banks, who have a wonderful branch net work all over the interior parts of the country.

3.       We therefore request you to kindly advise the concerned in the Reserve Bank to drop such move to re-establish the Local Area Banks in the interest of the Public Sector Banks as well as the Regional Rural Banks. 

4.       Please treat the matter as urgent.

Thanking you,

Yours faithfully,

Sd/-

(G.D. NADAF)

GENERAL SECRETARY