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Post Info TOPIC: PSU banks' overhaul, inducts pvt sector execs in key slots


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PSU banks' overhaul, inducts pvt sector execs in key slots
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Aug 15 2015 : The Times of India (Chennai)
 
Govt unveils PSU banks' overhaul, inducts pvt sector execs in key slots
New Delhi:
TIMES NEWS NETWORK
 
 
Bad Debt To Be Cut, Rs 20,000Cr Equity Infused
The government on Friday announced an overhaul of public sector banks and for the first time since nationalisation drafted executives from the private sector to run at least two state-run lenders. The move is part of a strategy to professionalise bank boards and improve the performance of governmentcontrolled banks that account for 70% of the deposits and loans extended by banks. At a press conference, finance minister Arun Jaitley also unveiled major changes in the appointment and oversight processes, while signaling that the government would not frown upon merg ers and acquisitions in the public sector space.

The reform measures have been in the works for a year. It began soon after the arrest of Syndicate Bank chairman and MD SK Jain on corruption charges last August and comes at a time when lenders are reporting steep fall in profits due to mounting non-performing loans. The process included Prime Minister Narendra Modi holding a first of its kind interaction with bank chiefs, which was followed up by individual presentation by 22 banks to the finance ministry . On Friday , the govern ment released details of the capitalization plan and announced the names of five new bank MD & CEOs and an equal number of non-executive chairmen, a first for public sector banks.Of the five MDs ­ PS Jayakumar (Bank of Baroda) and Rakesh Sharma (Canara Bank) ­ are from the private sector, while the other three ­ Usha Ananthasubramanian (Punjab National Bank), MO Rego (Bank of India) and Kishore Kharat Piraji (IDBI Bank) ­ are with state-run entities.Similarly , two of the chairmen ­ Ravi Venkatesan (independent director at Infosys) and TN Manoharan (director at Tech Mahindra and Public Health Foundation) -are also from the private sector.

On January 1, TOI was the first to report that the government is scouting for executives from the private sector to run public sector banks. And on July 11, TOI was the first to report about the appointment of Jayakumar and Sharma.

Although these appointments have been done through a revamped selection process, from April 1, the government is putting in place a Bank Board Bureau which will deal with the issue. In addition, the entity comprising four external experts would be tasked with working out individual bank strategies.

The BBB is an interim arrangement till the finance ministry works out a bank holding company that would hold shares on behalf of the government. The move requires legislative changes and is expected to reduce the burden on the to provide capital, while cushioning banks from interference. For the moment, however, the government said, it has prepared a roadmap for equity infusion of `70,000 crore, with major focus on performance-linked capitalization for which a new set of performance indicators have been put in place. This is expected to help banks raise another Rs 1.1 lakh crore from the markets by diluting government equity .

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