Banking Reforms

09-03-2015

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Banking Reforms
Posted on March 1, 2015, 3:21 pm By CurrentAffairsEdu.com

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Performance of Public Sector Banks has remained suboptimal so far. The Government is taking various steps to
improve the situation both on governance side and
otherwise. The focus of these reforms is to improve the
quality of deliberations in bank boards, leading to better
asset quality and further resulting in better market
valuations.

What has been done

1. Separation of the post of Chairman and Managing
Director.
2. Enabling provision for the appointment as MD & CEO
in five major banks, so that wider choice is available.
Both Public Sector and Private Sector bankers can
apply. Higher salary can be given in appropriate
cases.
3. Revamping of present selection system which interalia includes structured three separate interviews,
allotment of banks on merit-cum-preference basis.
4. Blue print for road map for reforms on the basis of
deliberations carried out in GyanSangam, a two days
top level retreat organised by the department.
5. Allocation of capital purely on the basis of efficiency
parameters so that banks start focusing on these.
6. Clear instructions from the department regarding no Recent Posts
interference whatsoever in any matter whether related
to HR issues or credit decisions or even otherwise.

Policy Rates:
Bank Rate : 8.50%
Repo Rate : 7.50%
Reverse Repo Rate :
6.50%
Reserve Ratios:
CRR : 4%
SLR : 21.5%

What Next

Exercise Surya Kiran VIII : Joint

India Nepal Exercise Concludes

1. In order to improve the Governance of Public Sector

Banks, the Government intends to set up an
Veteran journalist Vinod Mehta Dies
autonomous Bank Board Bureau with professionals as
its members. It would be responsible for search andat 72
selection of heads of PSBs, as also for Non-Official
Directors on the Boards of Banks. This would be an
President Pranab Mukherjee
interim step towards moving in the direction of
Inaugurates Festival of Innovations
having a Bank Investment Company.
2. Guidelines relating to appointment of non-official
directors is being revisited to ensure that bank boards
Reserve Bank of India eases norms
get people with relevant expertise. Anybody eligible
would be able to apply through a website which willfor home loans
soon be available in the public domain.
3. Governments role in relation to public sector banks is
RBI cuts Repo rate by 25 basis
that of promoter. As a promoter, the banks have
been entering into anMoU for achieving certainpoints
objectives known as Statement of Intent. The whole

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Banking Reforms

09-03-2015

objectives known as Statement of Intent. The whole

system of Statement of Intent is being revised with
provision for higher cash incentives.
4. Government wants to encourage Bank Boards to
restructure their business strategy and also suggest
way forward for their consolidation and merger with
other banks if it is win-win for both.
SME Banking in India
Small Business Banking

(pib.nic.in)

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