|Letters to the Editor
Limits on bank ownership
Hats off to Central Bank officials for putting its foot down firmly on bank raiders by enforcing the 10% rule on bank ownership at last. It will go on a long way towards protecting the depositors who have always been the losers. Our minds go back a few years when we remember finance companies failing one after the other. Fortunately there havent been many recently and depositors are beginning to forget what a bank or finance company failure would mean to the depositors, many of them pensioners and those who have taken voluntary retirement packages.
There are rumblings that even some of the seemingly stable ones are not that solid on closer scrutiny which is overlooked by the ordinary investor who is attracted only by the high rate of interest. Past records of directors, capital strengths, lending procedures, correctness of published accounts, honesty and integrity of directors and staff are all forgotten in the face of high interest offered. The proverb "higher the risk higher the reward" is almost unknown.
The ruling on bank and finance company ownership being enforced at last will make sure
that no single party can start a bank or finance company and use depositors money to
enrich themselves. The 10% limit will mean that at least 5 investors have to get together
before being able to influence the Board of Directors and offers a simple but effective
safeguard to the depositors. But this rule will be of no value if Central Bank is going to
permit connected parties to get together to achieve the same end. These authorities have
in the past failed miserably on this count leading to collapse of many a finance company.
Lets hope that Central Bankers will be wiser and braver this time.
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