Bankers retreat gets down to business on urgent reforms in PSBs

GN Bureau | January 2, 2015



With public sector banks under intense pressure to reinvent the services, a big step was initiated on Friday with major stakeholders deliberating reforms “to make the banking system robust’.

A retreat for banks and financial institutions” called “Gyan Sangam” was inaugurated at National Institute of Banking Management (NIBM), Pune on Friday. Areas that call for immediate intervention and some long term policy changes were taken up for discussion at the retreat.

The government has already made a major policy change in the appointments when on December 31 it announced the splitting the post of chairman and managing director. It means that for first time PSU banks will have a non-executive chairman, giving operational responsibility to managing director and chief executive officer.

Jayant Sinha, minister of state for finance who addressed the bankers said that as the changes in the economic environment are taking place at a very rapid pace, reforms are required to be taken up urgently.

Public and private banks working methods were also debated. Commenting on the issue financial services secretary Hashmukh Adhia said, “there is a wide disparity in the performance of public sector banks and private sector banks. It is in this context that we need to rethink about the strategy for the public sector banks and come out with something formidable.”

Discussions were also held over reforming the structure in manner that helps banks to raise required capital on easy terms from market and the issue of changes in priority sector lending.

Adhia talking about how the priority sector guidelines were set four decades ago, said there is a need for review. He said “ideas will be generated as to what would the priority sector lending prescription of banks be in lieu of the present state of the economy.”

Economic philosophy of the government was also outlined at the retreat which stressed empowerment and not entitlement. “As opposed to rights based approach of the previous government, the new Government is seeking to empower people so that they can live with dignity.” said Sinha.

 Idea of minimum government and maximum governance was reiterated and it was also stated that BJP government is “of the poor while being pro-business at the same time”. “Though this is government of the poor, but at the same time it is a pro-business Government. So the trade-off has to be managed by ensuring that the PSBs are able to function commercially while financing the poor as well’” said Sinha.

H R Khan , deputy governor RBI, in his welcome remarks stated that “it is  a perfect setting for all of us to hope for reforms which can take the banking system out of this current adverse situation because all the experts , practitioners and regulators  are gathered at one place.”

The programme included a separate session devoted to sharing of the ‘Best Practices’ followed by different Banks.  ‘Learning from each other’ was major objective of this session.  

Best practices shared:

 Axis Bank - the Mobile Youth account Retail banking Product design based on life insights.
 IDBI Bank - The Electronically secured bank and treasury receipts and Payments. This also includes electronification of Government receipts for the customers.
 State Bank of India - A Specialized cadre of IT function.  This has created a viable track for specialist talent in public sector banking.
 Andhra Bank - The Objective Key Result Areas (KRA) and Key Performance Indicators (KPI) for a transparent and IT enabled evaluation system of Human Resources. In this system the officers can generate their own annual performance appraisal report.

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