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Sharp increase in credit-deposit ratio will not bring profits: Tarapore

No bank in India has in recent years achieved a turn-around by a sharp increase in the credit-deposit ratio.

Stating this, former Reserve Bank of India Deputy Governor S S Tarapore said most of the success stories have been of banks clawing back their way to profitability by dampening their credit-deposit ratios.

Addressing the first annual seminar on banking organised by Tata Consultancy Services in Bombay today, Tarapore said the financial sector is at the crossroads. ''We have to choose between bravado today and the wages of sin tomorrow or being pilloried today for a better tomorrow.''

The narrow banking concept, which was recommended by his committee on capital account convertibility, may be unacceptable to the authorities. ''If so, a clear and viable alternative strategy must be quickly implemented for effectively dealing with weak banks. We cannot afford to wallow in the bureaucratic brilliance of equivocation,'' he said.

Criticising the monolith attitude in handling the Indian public sector banking system, Tarapore said, ''If the banking system is to become a modern efficient system, it is essential that the monolith has to crack. We cannot operate an efficient system if the monolith is required to develop at a pace dictated by the weakest segments of the system.''

UNI