Public sector banks to see reforms 3.0; set to be first major changes made after 69, 98 reforms
Finance minister Arun Jaitley
New Delhi: In order to revive the public sector banks (PSBs), finance ministry on Friday unveiled a seven point plan Indradhanush which includes setting up a banking investment company to hold government’s stake in banks and getting professionals from private sector.
As part of the plan, the government will immediately infuse Rs 20,000 crore into the banks and will also look at the possibility of giving stock options to the top management of PSBs and minimise political interference.
“The government will own the shares of this company (banking investment company) and this company will inturn will own the shares of the banks,” said finance minister Arun Jaitley. He said that as a first step towards banking investment company, which the government has proposed to set a Bank Board Bureau.
Mr Jaitley said that government is looking if it is legally possible for the banks to go for campus hiring as done by the private sector. The finance ministry has also formulated a new policy where each bank will be monitored now on basis of key performance indicators.
Speaking about the banks’ holding company, secretary, department of financial services (DFS), Dr Hasmukh Aadhia: “The new entity will be able to raise money from the market and give more capital to the banks and also supervise some of the function right now done by the government.”
The proposed reforms will be the first major bank reforms undertaken by the government after 1998, 1991 Narasimhan Committee reforms and 1969 bank nationalisation.
On BBB, Mr Aadhia said that it will be a body of eminent professionals and officials, which will replace the appointments board for appointment of whole-time directors as well as non-executive chairman of public sector banks.
“They will also constantly engage with the board of directors of all the public sector banks to formulate appropriate strategies for their growth and development,” said the secretary.
He said that the members of BBB will be selected in the next six months and it will start functioning from April, 2016. Bank Board Bureau will have a chairman and six more members of which three will be officials and three experts (of which two would necessarily be from the banking sector).
Mr Aadhia announced the appointment of two private sector bankers to head Bank of Baroda and Canara Bank while also making appointments to three other large state-run banks from within the government sector.
Rakesh Sharma, head of Laxmi Vilas Bank will be CEO of Canara Bank and P.S. Jayakumar, CEO of real estate developer VBHC Value Homes will head Bank of Baroda. He said that government is looking at the possibility that the PSBs can appoint professionals at middle level too.
( Source : deccan chronicle )
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