(Adds Jaitley quote, context)
NEW DELHI Aug 21 Indian Finance Minister Arun
Jaitley said on Thursday that the government was working to
tighten up risk management in the banking sector, responding to
recent scandals that have raised doubts about lending practices
at state banks.
Jaitley did not name any bank, but his comments followed the
launch of an investigation into whether the head of
state-controlled Syndicate Bank took bribes to roll over a loan
to family-controlled Bhushan Steel.
"Some recent instances have been disturbing," Jaitley told a
banking audience in New Delhi.
"I would only hope that they are a drop in the ocean and we
have all learnt the lessons from such incidents, and there will
be no repetition of them."
The investigation into Syndicate Bank has raised broader
concerns about weak oversight, corruption and politically
directed lending at India's dominant state banks, which are
weighed down by bad loans.
In his maiden budget last month, Jaitley said state banks
would need $40 billion in fresh capital by 2018 to meet
international capital adequacy standards. Much of this cash is
expected to be raised on financial markets.
The Central Bureau of Investigation has arrested the
chairman of Syndicate Bank and is questioning the head of
Bhushan Steel, which owes $6 billion and was this week put under
tighter scrutiny by its creditors.
The companies and their heads all deny wrongdoing.
(Reporting by Rajesh Kumar Singh; Writing by Douglas Busvine;
Editing by Malini Menon)