Big Bang reforms: India unveils 7 steps for revamping PSU Banks


On the eve of India’s 69th Independence Day, India’s Finance Minister Arun Jaitley unveiled a slew of measures to revamp the Public Sector Banks that have been bleeding for a while now.  In what could be seen as one of the most aggressive banking reforms by the finance minister till date, the move is expected to receive a positive feedback from the banking sector and revitalize capital starved banks. Mr Jaitley proposed seven new measures to revamp the Public Sector Banks. This revamp will be the most comprehensive since the nationalization of banks in 1969, said Minister of State for Finance Jayant Sinha. These seven steps included:

  • The first measure is appointments. Two bankers from the private sector are said to have been appointed as heads of PSU Banks in a much hyped move.
  • Government to set up Bank Board Bureau and each bank would be monitored for key performance indicators
  • The government will inject a capital of a total of Rs. 25,00 crore into debt laden state banks and over the enxt four years would infuse a capital of Rs. 70,000 crore.
  • De-stressing of bad loans at state run banks that have doubled in the past four years
  • More flexibility will be given to banks to hire manpower
  • Considering Employee Stock Options (ESOPs) for PSU bank managements looking to set up holding companies
  • No decision to merge the Bharatiya Mahila Bank with any other public sector bank.

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