The proposed public sector bank board, which would be independent and part time in nature, is likely to oversee the functioning of lenders and even the much talked about consolidation exercise in the banking space. It is set to find the "right match" and do the required ground work. The board would closely work with boards of various state owned banks.
The government would not get involved in the process, a senior finance ministry official told HT.
The board is expected to be set up in the next few months. Finance minister Arun Jaitley had announced the setting up of the board in his budget speech.
"The board would act as a consultant while identifying banks that could be possibly merged with another one, exactly the process followed in the private sector," a source familiar with the development said, adding, the final decision would be taken by lenders.
While there have been talks of consolidation activities among public sector banks, nothing has fructified, with the unions strongly opposing the idea.
The proposed board would be a link between the government and banks and would have less than 10 members, of which five would be professional ones. There would only be one government nominee on the board. The board would do the job of a consultant as well as a headhunter for finding the right talent.
The board would also help in bringing in more autonomy in banks, thereby enabling them to take their own decisions. "The government is very serious about creating a professional environment for public sector banks to operate in... more autonomy would be given in terms of daily operations and human resource issues," a senior government official added.