Press Trust of India
New Delhi, August 14: To revive the fortunes of public sector banks, government Friday unveiled a seven-point plan encompassing Rs 20,000 crore immediate fund infusion, creation of a single holding company and minimising political interference. Announcing the revamp plan named ‘Indradhanush’ that also includes setting up of a Bank Board Bureau (BBB) for broad-level appointments and a performance-based monitoring mechanism, Finance Minister Arun Jaitley also allayed fears of any panic over mounting bad debts at the state-run banks.
Under the plan, asset reconstruction companies will also be strengthened to deal with bad loan situation. Moreover, the government has also resolved to set up a Bank Investment Committee, which will act as a holding company for shares on behalf of the government. Observing that the problem of the bad loans, which has remained unattended by the previous government, can be attributed to the slowdown in some sectors, Jaitley said that “even though challenging situation did exist, there is no cause for panic… cause for panic or alarm does not exist.”
“Since the present government took over, our policy was that commercial decisions must be taken on commercial considerations and the level of political interference in the functioning of banks has to be minimised.” The minister further said that the government has been taking steps to deal with the problem of bad loans and improve the health of the state-owned banks. “The government has been from time to time reviewing health of these banking institutions. The nature of the problem is such that some initiatives which we have taken, it has partly been fixed and it is capable of being fixed,” he added.
In order professionalise PSBs, the government also announced 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. The government has decided to inject Rs 70,000 crore in PSBs in four-year period starting this fiscal with Rs 25,000 crore, of which Rs 20,000 crore would be given within a month. The remaining Rs 5,000 crore would come in the last quarter of this fiscal.
