Gyan Sangam set to kick-start financial sector reforms

Gyan Sangam set to kick-start financial sector reforms

McKinsey to guide bank chiefs in suggesting reforms; finance minister to be present at conclave.

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Bank chiefs will submit their recommendations for reforms in India’s banking sector, hit by bad loans and the economic slowdown, to Prime Minister Narendra Modi

Bank chiefs will submit their recommendations for reforms in India’s banking sector, hit by bad loans and the economic slowdown, to Prime Minister Narendra Modi at the two-day Gyan Sangam “Bankers’ Retreat” in Pune starting on January 2. Experts including consulting firm McKinsey will aid bankers in formulating strategies.

In the first such mega conclave in the financial sector, chairmen, managing directors and executive directors of public sector banks (PSBs) will be joined by chairmen of insurance companies and financial institutions, top finance ministry officials, RBI Governor Raghuram Rajan, Deputy Governors and chairpersons of insurance regulator IRDA and Pension Fund Regulatory Authority to brainstorm on the way forward.

“Three experts will give their addresses and your recommendations for reforms in the banking sector will be presented to the PM,” said a note prepared by the National Institute of Bank Management (NIBM) to the financial sector chiefs. “Six groups will be formed for brainstorming on six issues identified for reforms,” it said.

The government has already short-listed the reform agenda. The six selected issues are: achieving universal financial inclusion; leveraging technology & digital to improve cost efficiency; fostering profitable priority sector lending; effective risk profiling and recovery mechanism; building a robust people motivation strategy for public sector banks; and consolidation and restructuring of PSBs for better efficiency, governance and capital efficiency.


“McKinsey will help you organise the deliberations. There will be faculty support from NIBM and CAFRAL as rapporteurs to finalise the recommendations,” the note said. “In the Retreat, there will be a dedicated session for showing best practices that most of you have undertaken for improving the life of the poor where application of technology has brought down cost substantially, or where financial strength of the beneficiary has improved, financial access and inclusive technology etc. has taken place,” it said.

The draft report on the reforms agenda will be presented to the Prime Minister on Saturday. Finance minister Arun Jaitley will also be present at the Retreat at a time when over 10 crore bank accounts were opened as part of the Jan Dhan programme. “The government will get a direct first hand report from the bankers themselves on the reform agenda. Hot subjects like appointment and tenure of CMDs, government interference in PSBs’ functioning, loan recovery, lowering of government stake and salary structure comparable to private banks are likely to come up for discussion,” said a senior official of a PSU bank.

The Bankers’ Retreat is taking place at a time when gross NPAs have touched 4.45 per cent of advances, the number willful defaulters are rising, profitability of PSU banks is under pressure, big projects worth Rs 18 lakh crore have stalled and credit offtake has remained sluggish. Many big corporates have sought restructuring of their loans. The PJ Nayak Committee had earlier this year recommended several far-reaching reforms relating to the board of directors, government’s equity stake, tenure and splitting of the CMD post.

A section of bankers feel that before calling them for such a conclave, the Centre should have appointed CMDs for over half-a-dozen PSU banks which have been headless for many months now. The conclave is being organised by NIBM, CAFRAL (Centre for Advanced Financial Research and Learning) and the department of financial services in the ministry of finance.

Not just interest rates — Music, bonfire and yoga too

MUMBAI: It’s not going to be only hardcore banking — a dull subject for hoi polloi — for financial sector captains.

The organisers have arranged music, yoga and bonfire to add colour to the conclave. Gyan Sangam will have a session on yoga which will be led by Dr Hasmukh Adhia, Secretary, Department of Financial Services, who also holds a doctorate in yoga.

There will be a unique music programme where participants and delegates can showcase their talents. “Bonfire arrangements are being made to keep the atmosphere warm and to enhance the ambience further,” said an official. ENS