Bank Board Bureau To Replace Appointment Board of PSBs: FM

Government is in mood to overhaul the total system of Public Sector Banks and in this line government is setting up a new governance reform procedure. Under this procedure a Bank Board Bureau (BBB) will be setup and it will replace the Appointment Board for appointment of Whole time Directors as well as Non-Executive Chairman of Public Sector Banks (PSBs) to formulate appropriate strategies for their growth and development. This was told by Finance Minister Arun Jaitley during his pre budget consultative meeting with bank and financial institutions officials. He also informed that there is mark improvement in the basic saving bank accounts (BSDAs) during FY16 under PM Jan Dhan Yojana and now BSDAs reached 440 million for the period ended September 2015 as against 398 million for the year ended March 2015. In another major development government, has now replaced the earlier mechanism of statement of Intent on Annual Goals for the banks with key performance indicators that is common for all the banks and are more generic.

During the meeting various suggestions were made by representatives. Banks nominees suggested to anyhow increase in the habit of savings and requested to increase in exemption limit to Rs.2.5 lakhs for savings under the Income Tax Act, incentives for encouraging cashless transactions including through Debit/Credit cards, focus on promoting growth and increase in public spending till private sector investment picks-up. Suggestions like listing of non-life insurance public sector undertakings, broad based Government capex spending, allow banks to issue off-shore INR bonds to cater to infrastructure requirements and regulatory treatment of these bonds at par with the domestic infra bonds guidelines were also been given.

Representatives also demanded that reforms were also be pushed much more aggressively and broad based FDI in agriculture sector, introduction of a New Crop Insurance Scheme backed by technology and fully integrated financial inclusion and biometric authentication initiatives of the government should be taken very fast. Other suggestions included interest rate of small savings schemes need to be rationalized and fixed at a five year Government Security yields. This alignment could be done on a quarterly basis so that small savings rate does not become an impediment in the monetary transmission process. Meeting was also attended by Jayant Sinha, Minister of State for Finance, RP Watal, Finance Secretary, Shaktikanta Das, Secretary, DEA, Dr. Hasmukh Adhia, Revenue Secretary.