Lenders for trimming government stake in PSBs below 51%

The bankers were presenting a seven-point agenda to the Centre.

The chiefs of India’s state owned banks have told the government to move to a structure in which the equity holding of these banks would be lowered to below 51 % by forming a Bank Investment Company or BIC over a period of two years, which will control ownership and to empower bank boards besides minimising the role of agencies such as the CVC, CBI and the CAG.

The bankers were presenting a seven-point agenda to the Centre.

On consolidation of banks, the view of bankers was that it should be left to the boards of banks to decide — something which the government would respect, secretary, department of financial services, Hashmukh Adhia said on Saturday, while briefing the media on the recommendations of bank chiefs to Prime Minister Modi and the finance minister.

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At the end of the two day retreat of top bankers here for firming up a blue-print for reforms in PSU banks, chiefs of these banks told the government to ensure that PSU banks make the transition from being state owned to state linked.

The CMDs wanted the setting up of a Bank Investment Committee and a over all reduction in government ownership to lesser than the present 51 per cent said Hashmukh Adhia, secretary financial services.

Banks also made out a strong case for adopting the recommendations of the PJ Nayak Committee which reviewed governance practices of PSU banks. The committee had submitted its report in May 2014.

The CMDs want the government to establish a Bank Board Bureau comprising professionals and eminent bankers to appoint and empower individual boards. The bureau will support the creation of independent high performing which will drive differentiated strategy”, capital raising, “and Human Resources (HR) strategies”, Adhia said.

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Also over a period of two or more years the CMDs had asked over a transition into Bank Investment Company.

Parthasarathi Biswas

Partha Sarathi Biwas is an Assistant Editor with The Indian Express with 10+ years of experience in reporting on Agriculture, Commodities and Developmental issues. He has been with The Indian Express since 2011 and earlier worked with DNA. Partha's report about Farmers Producer Companies (FPC) as well long pieces on various agricultural issues have been cited by various academic publications including those published by the Government of India. He is often invited as a visiting faculty to various schools of journalism to talk about development journalism and rural reporting. In his spare time Partha trains for marathons and has participated in multiple marathons and half marathons. ... Read More

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