The Finance Ministry is proposing to appoint public sector bank heads for five years, in a move to bring in moretransparency in the appointments. “We are proposing that they should be appointed for five years — initially for three years and a furthertwo years based on assessment,” said G. S. Sandhu, Secretary, Financial Services, Union Ministry of Finance, on the sidelines of the 67th annual general meeting (AGM) of the Indian Bank’s Association (IBA) here on Wednesday.
Mr. Sandhu said the ministry was also considering two models for bank investment holding companies to vest the government shareholding in public sector banks. “While one view is that there should be a single holding company for all banks while the other view is that we should have a holding company at the bank level for banks with a large number of subsidiaries like State Bank of India. Each of these will have a holding company and above this would be an apex holding company,’’ he said, adding that some issues still needed to be addressed before a decision could be taken and the structure was being discussed with the Reserve Bank of India (RBI).
He said to strengthen the hands of banks in making recovery process from willful defaulters time-bound and effective, the government proposed to amend the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI) to legally bring about a change in the management.
Reiterating the significant role of banking, he said that most of the growth in the economy was due to the role of banking, “particularly in infrastructure funding. Unfortunately, now due to lower rates of growth, the sector has been experiencing a lot of stress and in the last 3-4 years, non-performing assets (NPAs) have increased, overall stress on assets is visible and there is not much credit offtake.”
Mr. Sandhu said recapitalisation of banks was being taken up in a big way, “but banks have to manage their affairs by taking care of theirown affairs. We are preparing a blueprint for public sector banks to become strong enough to provide growth in the economy and will startthe process during the year. If there is a shortfall, it will come from the budget, though we want to depend as little as possible on the budget.”
