MUMBAI: Coming out strongly in support of
depositor protection
,
HDFC chairman
Deepak Parekh on Thursday said that there is no greater cardinal sin in finance than the misuse of the common man's hard-earned savings.
"It seems brutally unfair that we have allowed a system of loan waivers and write-offs every now and again, but we do not have robust enough financial systems to protect the honest, common man's savings," said Parekh. The veteran banker's comments come at a time when over four lakh depositors of the failed Punjab and Maharashtra Cooperative (PMC) Bank are finding their savings stuck.
According to Parekh, the financial system was the backbone of the Indian economy. "That a lot of the system still needs fixing is well known," he said, adding that while efforts were being made to get the economy out of the soft patch, more could be done.
"In unusual times, as we are in right now, fiscal and monetary policy tools need to be accelerated in a timely, yet prudent manner. There is consensus that a slight increase in the fiscal deficit target can be accommodated as long as it stimulates growth," said Parekh.
Parekh also highlighted the impact on customer trust. "It takes years to build a reputation and seconds to destroy it. Trust and confidence are the backbone of any financial system. Never underestimate the power of ethics and values. It is a pity that this is so often eroded," said Parekh. He was speaking at the launch of the Centre for Financial Studies at the SP Jain Institute of Management and Research.
Speaking on what is required for India to become a $5-trillion economy, Parekh said that the country needs two things from the world - capital and oil. "About 30% of global bonds worth $17 trillion are trading at negative yields. Investors are craving for higher yields and India has demonstrated that it can deliver attractive returns," said Parekh.
To attract this capital to India, Parekh said that the country needs to continue working towards further improving the ease of doing business, reducing the cost of doing business and ensuring a stable and fair regulatory framework. "We must always bear in mind that India is not the only game in town. Several emerging market economies too are fiercely competing to attract global capital."
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