Govt nominees on PSB boards told to review reform path

The government has asked its nominees on the boards of state-run banks to actively review the three-year business reform roadmap of their respective banks. The move is aimed at ensuring that big lenders support smaller banks in key areas such as loan underwriting, information technology and human resource development.

“Banks have also been directed to set up cross-functional teams for faster implementation of the reform agenda,” said an official, who did not wish to be identified.

Government nominees on bank boards, mostly senior officials from the finance ministry, will periodically review and suggest course correction if needed, the official said, adding that the Indian Banks’ Association has also identified representatives who will oversee bank-specific roadmap.

Public sector banks (PSBs) will be further nudged to build partnerships and achieve synergistic outcomes. As per the plan envisaged during PSB Manthan, held earlier this year, lenders will look at operationalising co-lending partnerships, with a focus on priority sector areas such as home loans and other retail portfolios.

According to a report submitted by the banks, co-lending disbursements increased 4.5 times to Rs 2,901 crore in the last quarter of 2021-22 from Rs 643 crore a year ago. “This has been led by mid-sized public sector banks that took the lead in forging and operationalising co-lending partnerships,” a bank executive said on condition of anonymity.

A common talent pool with senior level domain experts from all PSBs is also being worked out. While Indian Bank will lead this initiative for Chennai-Bengaluru banks, Punjab National Bank will be the head for Delhi-Kolkata banks, and for Mumbai-Pune banks, State Bank of India and Bank of Baroda will jointly spearhead the programme.

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