Public sector banks play a vital role in development of our economy by providing finance to vital sectors of our economy like infrastructure and industries but these sectors faces various issues like delay in construction ,regulatory approvals,hurdles in land acquisition which turn the loans of these PSB’s in non performing assets which effect the profits of PSB’s and added up to NPA’s of banks.
To solve these problems faced by PSB’s, GOI has taken various steps to revitalize these PSB’s:-
1. Appointments
In appointments for post of MD and CEO’s of PSB’s private candidates are allowed to apply and in subsequent process two MD & CEO of major PSB’s was appointed from private sector and post of chairman has been separated from MD &CEO to bring transparency in the working of PSB’s.
2. Bank Board Bureau
The Bank Board Bureau(BBB) will replace the Appointment Board for the appointment of Directors and non executive chairman of PSB’s.The BBB will engange bank board of directors of various PSB,s and formulate policies for growth .
3. Capitalization
Government of India has provided adequate financial assistance to PSB’s bank to meet Basel III norms and also taken steps to built capital buffer over and above basel norms Government has decided to allocate 70,000 cr to banks in four years. In current financial year i.e 2015-16 -25,000 cr will be infused by government and in 2016-17- 25,000cr, 2017-18- 10,000cr,2018-19- 10,000cr.
4. De- stressing
To distress public sector banks as major recipient of loans from PSB’s are core infrastructure companies which faces regulatory issues in clearances of different project thus leading to NPA for banks. Thus government has set up Project Monitoring Group within concerned ministries for speedy clearances of stalled or new
project and flexible restructuring of long term project loans.