A recent press report said that Mr. D. Subbarao, governor, Reserve Bank of India has favored bifurcation of the posts of chairman and managing director in state-run banks. He said that the experience of such a split in the private sector has been satisfactory.
He said that the central bank was in discussions with the government to split the posts of the chairmen and managing directors of state-run banks. He also said that the RBI will discuss the issue with the government and give its own positive experience, as well as the global endorsement for the separation of these posts.
Mr. Subbarao said that the experience is not only good for the private sector banks (in our country), but has also been proved to be value-adding in international banks. He also said that it was always not good to give too much power to one person.
The RBI has recently hiked lending rates by 25 bps which is likely to make all retails loans (home loan, personal loan, car loan etc) and other loans costlier to the borrowers.