MUMBAI: In a strong pitch for phasing out the government’s role in top-level appointments at PSBs, RBI governor Raghuram Rajan on Tuesday suggested empowering their boards to take all major governance decisions freely, without having multiple “constituencies to satisfy”.
Suggesting a major reduction in government and regulatory oversight of PSBs, the outgoing governor also proposed withdrawing the central bank nominees from their boards.
“Today, a variety of authorities — Parliament, the Department of Financial Services, the Banks Board Bureau, the board of the bank, the vigilance authorities, and of course various regulators and supervisors including the RBI — monitor the performance of PSBs. With so many overlapping constituencies to satisfy, it is a wonder that bank management has time to devote to the management of the bank.”
He also raised the red flag on exuberant lending by banks. “The focus should move to improving the operational efficiency of stressed assets and creating the right capital structure so that all stakeholders can benefit.” PSBs’ gross NPAs are currently around ₹5.76 lakh crore.
On stressed assets, Rajan suggested simultaneous action on two fronts — a creative search for new management teams, including the possible use of public sector firms or private sector agents, and well-structured performance incentives. He also suggested bringing in more in-house expertise for project evaluation.
{{/usCountry}}On stressed assets, Rajan suggested simultaneous action on two fronts — a creative search for new management teams, including the possible use of public sector firms or private sector agents, and well-structured performance incentives. He also suggested bringing in more in-house expertise for project evaluation.
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