INDRADHANUSH, 7 - POINT AGENDA FOR BANKING REFORMS
The Union Government unleashed second generation banking reforms with a rainbow of measures (Indradhanush), the reform measures including a heavy dose of recapitailsation, setting up of a Bank Board Bureau and streamlining appointment process to spur bank credit and economic growth.
These reforms are called big thing in Indian banking since nationalization.
Indradhanush, to revamp functioning of public sector banks, the main aim of these reforms is to revitalize capital-starved public sector banks. The government announced 7-point agenda which will support these reforms.
The seven points are appointments, bank board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms. During the announcement FM said there is no cause for panic or alarm as far as banking sector situation is concerned.
1. AppointmentSeparate post of CMDs and MD and CEO in PSU. Two bankers from the private sector have been appointed as heads of PSU banks.
2. Bank Board Bureau: The government will set up Bank Board Bureau. It will be link between govt and bank and through it performance of state run banks will be monitored. Bank Board Bureau will be operational from April 2016.
3. Capitalization: The government will inject a total of Rs 25,000 crore of capital into debt-laden state banks in this fiscal. Rs. 20,000 crore injected in a month. Over the next four years, the government plans to inject Rs 70,000 crore. SBI will get the highest capitalization worth Rs 5,511 cr.
4. De-stressing: A Cell in dept of FS to monitor stressed assets, meanwhile the govt has assured that the situation of stressed assets is not so bad.
5. Empowerment: More flexibility will be given to state-run banks for hiring manpower. Greater autonomy to PSB and govt is also looking to set up bank holding company.
6. Framework of accountabilityNew indicator to measure performance of PSBs has been announced.
7. Governance reformsPerformance link incentives will be announced.
Bank Board Bureau: The government has decided to set up a Bank Board Bureau, BBB through which two dozen public sector banks PSBs would be monitored for key performance indicators. The BBB will start the functioning from 1st April next year and the selection of its member will start in the next six months. The BBB 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 PSBs
According to the Union Finance Minister, Arun Jaitley sectors including steel, power, and highways are predominantly responsible for the stress on Public Sector banks.
He informed that in 2001 the NPAs was 13.11 percent and now in 2015 it has reduced to only 6.03 percent. The government is also insisting the banks to have robust grievance redressal mechanisms for customers and staff.
The Union Government unleashed second generation banking reforms with a rainbow of measures (Indradhanush), the reform measures including a heavy dose of recapitailsation, setting up of a Bank Board Bureau and streamlining appointment process to spur bank credit and economic growth.
These reforms are called big thing in Indian banking since nationalization. Indradhanush, to revamp functioning of public sector banks, the main aim of these reforms is to revitalize capital-starved public sector banks. The government announced 7-point agenda which will support these reforms.
The seven points are appointments, bank board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms. During the announcement FM said there is no cause for panic or alarm as far as banking sector situation is concerned.
1. AppointmentSeparate post of CMDs and MD and CEO in PSU. Two bankers from the private sector have been appointed as heads of PSU banks.
2. Bank Board Bureau: The government will set up Bank Board Bureau. It will be link between govt and bank and through it performance of state run banks will be monitored. Bank Board Bureau will be operational from April 2016.
3. Capitalization: The government will inject a total of Rs 25,000 crore of capital into debt-laden state banks in this fiscal. Rs. 20,000 crore injected in a month. Over the next four years, the government plans to inject Rs 70,000 crore. SBI will get the highest capitalization worth Rs 5,511 cr.
4. De-stressing: A Cell in dept of FS to monitor stressed assets, meanwhile the govt has assured that the situation of stressed assets is not so bad.
5. Empowerment: More flexibility will be given to state-run banks for hiring manpower. Greater autonomy to PSB and govt is also looking to set up bank holding company.
6. Framework of accountabilityNew indicator to measure performance of PSBs has been announced.
7. Governance reformsPerformance link incentives will be announced.
Bank Board Bureau: The government has decided to set up a Bank Board Bureau, BBB through which two dozen public sector banks PSBs would be monitored for key performance indicators. The BBB will start the functioning from 1st April next year and the selection of its member will start in the next six months. The BBB 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 PSBs
According to the Union Finance Minister, Arun Jaitley sectors including steel, power, and highways are predominantly responsible for the stress on Public Sector banks.
He informed that in 2001 the NPAs was 13.11 percent and now in 2015 it has reduced to only 6.03 percent. The government is also insisting the banks to have robust grievance redressal mechanisms for customers and staff.
No comments:
Post a Comment