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'India not to dilute government equity in LIC, GIC'

Union Minister of State for Finance Balasaheb Vikhe Patil has indicated that his ministry will usher in customer-friendly and socially oriented guidelines for insurance companies within the next 15 days.

He, however, said that there will be no dilution of government holding in Life Insurance Corporation or General Insurance Corporation.

Patil gave this assurance at an interactive workshop on 'Reforms in banking and insurance sectors', organised by the All-India Association of Industries, or AIAI, in New Delhi on Tuesday.

He said the equity cap for foreign insurance firms would be 26 per cent, while turning down a suggestion that insurance broking firms should be allowed a higher 51 per cent.

The minister said as announced in the Budget proposals, there would be no closure of nationalised banks.

Welcoming him, AIAI president V G Kalantri said a new dynamism should be infused in the banking and insurance sectors and time-bound implementation of reforms should be taken up at all levels.

"There is an imperative need for bankers to change their mindset towards small and medium enterprises. As a beginning, specialised branches may be opened to cater to small and medium enterprises," he said.

Patil said banks should improve their customer services and adopt a user-friendly approach. "The top management of banks should be actively involved in this process which should percolate to the branch levels as well."

He also advocated surprise visit to branches and setting up of complaint counters in banks to provide a better credit delivery and redressal mechanism. The minister said the government was willing to protect any fair action in good faith.

Regarding transparency in banking procedures, Patil said the industry at large and borrowers in particular wanted the banks to initiate action for recovery of loans.

"Is it enough for banks to discipline themselves?" he asked, and countered that bad habits should be punished severely.

"The only way to resolve the mounting non-performing assets is to instil fear for wrong-doings, perhaps through social boycott," he said, adding that the government was prepared to publish the list of big defaulters.

UNI

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