Governance Reforms for PSBs to Revamp Functioning


Ajit Kumar AJIT KUMARWISDOM IAS, New Delhi.

Union finance minister on August 14, 2015 launched a seven pronged plan-- Indradhanush--to revamp functioning of public sector banks.  
The seven elements include appointments, board of bureau, capitalisation, de-stressing, empowerment, framework of accountability and governance reforms.
 The Indradhanush framework for transforming the PSBs represents the most comprehensive reform effort undertaken since banking nationalisation in the year 1970.
Governance Reforms
The process of governance reforms started with “Gyan Sangam” - a conclave of PSBs and FIs organized at the beginning of 2015 in Pune which was attended by all stake-holders including Prime Minister, Finance Minister, MoS (Finance), Governor, RBI and CMDs of all PSBs and FIs. There was focus group discussion on six different topics which resulted in specific decisions on optimizing capital, digitizing processes, strengthening risk management, improving managerial performance and financial inclusion.
The decision to set up a Bank Board Bureau which was subsequently announced in the Budget Speech of Finance Minister, came out of the recommendations of Gyan Sangam. Also, at this conclave, Prime Minister made a significant promise to the bankers that there would be no interference from any Government functionary in the matter of their commercial decisions. This promise of Prime Minister was immediately translated into a circular issued to all banks assuring them of “no interference policy”, but at the same time asking them to have robust grievance redressal mechanism for borrowers, depositors as well as staff.
The Gyan Sangam recommendations included strengthening of risk management practices. Each bank agreed to nominate a senior officer as Chief Risk Officer of the bank. A special training programme for Chief Risk Officers was recently organized by Centre for Advanced Financial Research and Learning (CAFRAL). The Government has been constantly engaging with the Banks through review meeting and sessions for strategic reviews etc. The focus is on improving HR management practices and removing barriers so that the Banks can share and work together on common resources. Various steps have been taken to empower Bank’s Boards.

Monday, 04th Jan 2016, 05:47:14 AM

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