RBI governor Raghuram Rajan said public sector banks in the country would need to improve their monitoring mechanism to get rid of the ‘bad apples’ and ‘bad practices’ and win the war against bad assets. Speaking at a banking conference in Mumbai, he said the public sector banks would do well in eliminating the process of outsourcing assessment of creditworthiness. “We need better evaluation using in-house skills, not intermediaries. I think one of the problems that has emerged in recent years and in recent scandals is the fact that evaluation has been outsourced,” he told the bankers. “Evaluation is so central to banking, it’s impossible to outsource it. It has to be brought back in-house and competency generated. We have to move towards engaged, informed banking and not banking driven by outside intermediaries and middle men,” he added. He mentioned that public sector banks had good people manning critical functions byt there are ‘bad aples, bad practices and weak capabilities’, which needed to be rooted out.
